LivingAlmostLarge

So to follow up the smart car, I have to admit something now, DH and I have completely stopped looking at cars.  We made a very conscious decision that even as our finances are getting better in someways, rising gas prices make bigger cars undesirable. 

We considered selling both our cars this summer and we would have about $8k from the sales. And we’d have another $3-5k saved to puchase a very decent cars for $12k.  Bigger sedan, probably we’d buy a subaru impreza or outback station wagon.

Anyway last night I mentioned how we had been considering selling our two cars for one nicer, newer, bigger car.  And DH said ”I don’t think it’s a good idea.”  Sure we’d save on insurance, but how much of that would be eaten up in gas costs?  AWD is not great for miles per gallon, but we still love snowboarding and on our dead end street it’d be fantastic.  So if we were buying a newer car we’d get the AWD we want. 

So we talked a bit more and while gas prices aren’t hurting us, we spend $120/month now and it will be $150/month from just increase in prices, it’s not horrible.  We fill one of our cars weekly or every 10 days.  But the truth is now it’s not the price of the vehicles holding us back, it’s the mileage.

We’d go from 30+ mpg to maybe 20 mpg.  This might increase our consumption to $200/month or more.  Plus AWD is more expensive to repair than either of our vehicles.  And we while we do carpool with each other and our roommate, we don’t need a larger car.

So this “recession” we’re in has forced us to reconsider moving up in car.  Instead we have decided it’s not worth it.  Maybe we’ll reconsider once we have kids, but for now, we’re sacrificing to live as cheap as possible.  By the way if you had told us 5 years ago we’d be making 6 figures and not buying a bigger car because of gas prices we would have laughed. 

Instead I wonder how people making less money manage to afford nicer cars that have horrible gas mileage?  If it were me, I might start crying at the pump.  At nearly $40 to fill our super tiny tanks DH nearly cried.  I can’t imagine us having a tank which cost $80-100.

 I imagine this summer’s rising prices will be crushing people’s budget.  I believe DH got a raise less than the increased cost of gas and utilities.  I’ll write later about how much our natural gas went up!  Just got the news in the MAIL today.

I love saving money and I enjoy recycling because it’s good for the environment and better for the pocketbook long term.  However, here’s an article about the safety of the smart car. 

 I have to say I love the smart car and would love to drive one.  However, I really question it’s feasibility of driving it in the US.  Mostly because people in the US have a love affair with large SUVs and trucks.  Perhaps if I lived anywhere else, where people drove smaller cars I’d easily hope into a smart car.  But here in the US I don’t think it’s a wise decision.

When you read the article it states that while the smart car gets excellent safety ratings, it’s only for it’s class of car.  Across all classes of cars it doesn’t fare so well.  And obviously because of the size of the car when compared to people driving Expeditions, Suburbans, F-150s, etc.  And the truth is in the US you aren’t driving in areas of only small cars.

People here love their big trucks and SUVs.  And perhaps they need transportation so large.  But the truth is until we as a society in general start downsizing in across the board, I feel it’s very dangerous to be riding around in such a tiny car.  Right now even in my corolla I sometimes feel tiny compared to the many large SUVs and trucks next to me.

But maybe with rising gas prices people will become more concerned about larger cars.  And maybe I’ll be able to steal a deal when the time comes I start looking for a larger car.  But for now I guess I’ll appreciate my super tiny putt-putt car and wince when I see my fill up bill, but laugh when I see everyone else’s.

MP Dunleavy writes about the potential financial problems facing the next generation of children.  Apparently there is a strong consensus that public school should be teaching our children about finances.  That we need to pay more taxes and have classes in school to teach them they must pay back loans, interest rates and loan lengths, and credit card disclosures.

 I gotta say I understand where MP is coming from but the ideas she’s writing about from Jumpstart, a program that is to teach kids finances, is plain old stupid.

Personal finance starts at home.  But I understand why people want it taught in school because right now we’re in the midst of basically no one understands personal finance at all.  So where else are we going to educate younger people?

But it starts with the BASICS.  Like how to balance a checkbook and money does not grow on trees.  Step one, learn how to budget and that you cannot afford everything.  People need to start learning how to live within their means!  Actually go through and have people attempt to balance a checkbook.  After all tons of americans overdraft everyday!  How does that happen????

Who cares about paying back loans, credit cards, interest rates???  That’s way beyond what most people know now.  Apparently if 33% of americans have no savings there are bigger problems than paying back loans.  We have to educate people how to live on what they earn PERIOD.  We need to learn to save to buy things and not just charge them.

Second, we need to emphasize retirement savings and starting early.  Previous generations have gotten away with not saving for retirement because of Social Security and generous company pensions.  That’s in the past.  Now we use 401k/IRAs to save for retirement, and that’s the second thing to be taught.  What is a 401k/IRA and how to contribute to it.  Make it automatic.

 Third, explain what a credit card is and how it works.  Explain that you are buying things you cannot afford if you cannot afford to pay off the bill in full every month.  Explain that interest is charged when you cannot afford something.  Go through and show people how interest is calculated on a credit card.

Those three things are the basic building blocks.  HOWEVER the next major thing that should be taught is student loans.  How taking out massive loans can cripple you forever.  What the payments will be as people take out $50k, $100k in loans.
Finally if there really is time teach people about mortgages.  Or else perhaps everyone who gets a mortgage for the first time, the government should instead require a first time homebuyers class and you get a $500 credit to your closing fees or something.  Incentivize it so people will go and learn about mortgages before they buy.

But truthfully, Americans need more basic teaching about personal finance than what the article talks about.  MP Dunleavy can’t even get it through her head that she doesn’t need to go to Spain for a vacation.  But heck, of course she should be teaching her kid the more financially savvy moves of taking out loans and charging credit cards instead of how to balance a checkbook, draw up  a budget, and live within ones means.  She doesn’t do it, so why should they?

And that is the question that will be asked by many, many children.

I’m not a hardcore coupon shopper, but I am quite frugal and thrifty.  And I’ve always been someone who stockpiles good deals.  Well I wanted to address how my stockpile saves me money but not like normal couponers.

I stockpile mostly non-perishables.  I started about 1 year ago really getting into and it turns out has been quite nice.  I have a years worth of toilet paper, paper towels, shampoo, tissue, body wash, etc.  Mostly things which don’t go bad.  This week I’m considering stockpiling 12 packs of soda.  It’s 5/$12 ($2.40/case) which is the cheapest I’ve seen in about 6 months.  I typically stockpile 6 months worth when it hits $1.99/case, but those deals appear to be gone.  I also never find coupons for Coke (only brand DH drinks).

But should you stockpile?  When I started coupon shopping last February, I tried to stockpile food.  Turns out, it was a failure.  We never ate the food quickly enough to justify stockpiling the food even if it were non-perishable.  We don’t eat enough mac and cheese, hamburger helper, etc.  Turns out I ended up donating a bunch of it because well truthfully we don’t like to eat that sort of processed foods.

So I focused on what I did use.  I began to hunt down deals on shampoo, body wash, facial soap I liked for free or close to free.  I have 10 boxes of electrasol tablets, 3 packs of paper towels and 4 packs of toilet paper, and something like 6-12 bottles of shampoo/bodywash/conditioner, etc.  Enough to last me a year. I also have a bunch of cleaning supplies which I run through quickly.

So my stockpile is non-perishable, stuff I like and want to use, and stuff which I’d be buying even without deals.  I’m sure many more people save tons on stockpiling food, but I don’t think as a couple we could finish an entire freezer of meat or 3 pantries of canned goods quickly enough to justify the extra money monthly used for stockpiling.  But I could see how large families could save a lot by stockpiling food.

So my savings comes to about $50/month in health and beauty supplies and household goods.  This in turn has been spent on eating healthier, fresher foods I enjoy.  So coupon shopping is not only savings on foods, but perhaps using it for stockpiling everyday toiletries and household goods which will give you more budget flexiblity to buy food you want.

Right now I’m sure a lot of people are wondering why are they contributing to retirement?  Especially if you are in your 20s and you’d really rather spend your money on anything else!  Personally I’d rather be blowing the money too.  But I’m not.  Here’s an article by Walter Updegrave about it (love his book We’re not in Kansas anymore).

Right now is the time to stay the course. Keep on plowing more and more money into your retirement accounts (Roth IRAs and 401ks).  This is the time to buy stuff cheap.  Sure it hurts to see your 401k down lower than the amount you’ve contributed.  Right now DH has lost about 2% for the year, not great when you consider we’re maxing our his 401k.  But we’re not touching the money for another 30 years.  So where else will it go but up?

I know it’s tough to see the long term benefits of it, especially when the balance of your account is stagnating or going down.  But perhaps now would be the time to contribute and not look at till the end of the year.  If you have a weak stomach, keep the statements closed.  As long as you have a balanced, diversified portfolio say 80% stocks/20% or 90% stocks/10% bonds, let it go.  You won’t need to look at the statements for taxes and maybe by the end of the year you’ll end up in some sort of positive territory.  If not, keep the statements closed for another year.

Right now we’re trying our a few new techniques with our investing.  Because of our time frame, about 30 years, we’re investing the 401k in company chosen mutual funds.  But our Roth IRAs we’ve split between DH’s chosen stocks, and a new strategy of no-timing ETFs.  We’re not sure how it will play out. I’ll explain it later when I have more time.  But since we’ve started we’ve outperformed the S and P and substantially decreased our portfolio risk by 100% at the same time.

But for now the #1 factor in having a secure retirement?  Keep contributing.  Don’t Stop and don’t lose faith.

Well a hallmark holiday but still a nice day to remember your mom. This year since I just saw my mom, I didn’t send her anything.  Not even a card.  Yes!  Sounds crazy but sometimes living so far away you overcompensate and send a nicer gift than what you might have sent living close enough to visit.  But when you see your parents once or twice a year at most it’s different.

Hope everyone else had a great day.  I am somewhat enjoying my solitude honestly.  It’s a time of reflection.

My DH shares a lab bench next to a very nice girl going to medical school in the fall.  A very nice, expensive, private medical school.  When she walks out she’ll owe at least $200k in tuition and probably have taken out another $100k in living expenses, we’re in a HCOLA after all.  Ouch right?

Well yesterday my DH came home complaining about doctors (since she’s going to be one), and how they spend money.  First off she’s 25 and she makes $50k/year now.  Not bad, but she’s giving it up for her dream of being a doctor.  Very admirable because it’s a long haul.

Anyway she currently drives an Audi bought by her parents as a graduation gift.  It’s had a lot of problems and she wants to buy a new car rather than repair it.  So she decided to ask her parents for another new car.  Answer?  NO.  She wants a volvo because she doesn’t want a cheap car.

So she tells my DH what’s another $30k in debt if she’s racking up $xxx,xxx of student loan debt for medical school?  Just add it to her tab.  She’ll worry about it later.  He told her it all adds up in the end.  But she says she’ll have to live like a pauper for a long time otherwise, so she might as well keep adding to her tab.

This shocked my DH.  We’re ultra-conservative with our finances in the sense that we’ve taken out $17k in debt for his MBA.  And as we’ve done so it’s hurt our souls to be in debt other than the mortgage.  This is his first student loan debt ever.  And it seemed like a lot.  We’ll likely take out the $8500 again this year, but we are very aware that we’ll come out owing what feels like a lot.

It’s enough to have bought DH a new car.  A nice new car no less.  And instead this young woman just thinks nothing of financing a new car.  She feels she’s in the hole already what’s a little more dirt to shovel out?  Is this the new mentality of people?

Or have we as a society always felt this way?  Is this the reason why car loans are running rampant?  What’s another $20k on top of our $50k of student debt?  We personally can’t justify buying a newer (used or new) car when we have student loans.  It weighs so heavily on our minds.  But it feels like many people just say “add it to my tab.”  I have no idea when does it stop?  When do you start paying it all back?

If this mentality continues I wonder where we’ll end up?  Maybe less in CC debt because people are becoming more aware.  But instead we’ll replace it with car loans and student loans.

I am pretty tired now that my family’s left from their visit.  I love them and adore their visits.  But I feel somewhat overwhelmed by my family.  In my family food = love.  The more food you provide, the more you love your family.  I realized that I have serious food issues mostly from my family.

I used to control our food budget rigidly when we were very broke.  Then we suddenly made 4x the money and our budget went out the window.  I haven’t been honest about it until now because I don’t have complete records of our spending for the first 9 months of our move, but I just feel like we spent a lot of money.  I know we should have easily $6-10k more from those months of wild spending.

Beginning the summer of 2006 I began to get a greater handle on our spending because I needed to with DH starting school.  And in 2007 I began in earnest tracking our spending and curbing it.  Not exactly budgeting firmly, but setting limits. 

I do not budget to the penny even now and if I go over or under by $20 it isn’t a big deal.  But just being aware of our spending really helps.  Turns out I made the move to becoming more financially aware of our spending at the right time.  I’m not sure how I would have dealt with the upturn in spending for groceries due to substantially higher costs over the past year if I hadn’t started to curb our habits.

This week with my family has been eye opening.  I realize that my habits for food shopping and spending money comes from them.  And my DH has no problems spending the same way, turns out his family is the same. 

But back to what happened, we made multiple trips to grocery stores.  Yet in every store each family member went hog wild and bought tons of food.  They bought stuff they liked and just tossed it in the card.  This is how they shop.  Carts are filled with snacks, fruits, veggies, etc.  It was a free for all galore. 

I realized this is probably how the majority of people shop.  But the problem is most people cannot afford to shop and eat without caring about prices.  Even DH and I can’t.  We have a good income but a good amount of expenses as well.  But it is really easy to slip into this habit. 

I think for us personally it’s easier to justify spending on food than anything else.  Yes we can say no to eating out, because it’s obvious how expensive it is.  But when you stand in the grocery store you feel virtuous because you aren’t eating out or drinking out.  But then in your head you start to justify buying whatever you want because you aren’t “overspending/overindulging”.  It’s a funny mindset that it’s “okay” to buy what you want in a grocery store rather than go out to eat.

I am not sure if we’ll ever break this habit.  It’s likely something we’ll have to be consciously aware of for the rest of our lives.  However I am thinking that perhaps in the future we may not need to be so aware because we’ll make enough money to truly indulge our food passions.  But for now check out the counter in my kitchen.

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I bought a ton of reuseable grocery bags.  I decided I was tired of getting a bunch of plastic bags everytime I went grocery shopping.  So I bought these bags for $1.49/each.  They are a light, easily foldable, cotten canvas material weighing a couple of ounces as most.  They are 14″ x 16″ with a nice handle. Gosh I have to say they are GREAT. I love, love, love them and am using them for everything.

Since I bought so many, if anyone is interested I’m willing to sell it for $1.49/bag + s&h, which will be probably $2-3 because it’s light and foldable.  I gave a bunch away to my family who were visiting. Turns out they all loved the bags and the convience of how easy to use they were.  So contact me at livingalmost at gmail.com or us my contact form.

I’m a bit confused and skeptical about this tax rebate.  I filed our taxes for 2007 by mail but recevied our refund through direct deposit.  Therefore I thought we’d have already received our rebate for 2008.  However nothing has happened and when I checked the IRS website for it, it said unable to process.

So I’m a bit baffled.  And yep I spent my rebate.  What’d I spend it on?  Mostly maintaining our cars.  DH’s car needed a lot of work in March/April, and I spent $500 doing some work on my car which I had postponed like replacing bulbs, etc.  Not a huge deal, but just little things.

Anyone got their rebate?  Or ideas of when it’s coming?