I Loooooove to Buy Presents

Lots of personal finance bloggers have a “no presents” policy.

Not me!

I really enjoy making and buying and giving presents.  I enjoy it so much, that I usually can’t wait for the event, I usually give the presents right away.

A quilt for my niece
A quilt for my niece

My hobby is quilting, and I love giving quilts as gifts.  But because the quilts take me so long to make, I don’t get to give them as often as I’d like.

For kids – most of the presents we buy are for kids – I’ve found that presents are typically super hit or miss, and never the way anyone anticipates.  I was obsessed – obsessed! – with buying adorable twirly skirts for my nieces a while back.  The skirts were crazy expensive, $56 each, but I loved them and I was convinced the nieces would love them too.  Nevermind that I haven’t spent $56 on a skirt for myself in years.  The nieces did not love them.  I’m not sure that they’ve ever been worn.

The twirly skirts were an important lesson – I now try to spend the least amount of money (aside from the quilts) on gifts, as the “miss” probability is so high. Kids love to get gifts, but they just don’t give a hoot about how much you paid for things.  It’s not on their radar.

I’ve had some success with Venus Fly Traps for kids under 8.  ALL kids under 8 love Kinder Surprise Eggs.  This is a no-fail gift, and not too expensive per kid (they’re a little hard to get, but worth the reward if you can find ’em).  For kids 9 and up, for Christmas and birthdays, I like to go to the bank and get a stack of $2 bills and Sacajawea coins.  $3/kid is very reasonable in my book.  Water guns are a hit at every age, adults included.  Bike bells are another win with younger kids.  I got half a dozen headlamps last Christmas at $2.99 a pop (batteries included) and I was hero for a good 45 minutes.   And who doesn’t love a brand new bouncy ball?

My point is that over the past year, while we’ve been focused on paying off the mortgage, we haven’t by any means stopped giving gifts.  We’ve just re-evaluated and scaled back.

West African Chicken Stew, http://thehealthyfoodie.com/west-african-chicken-stew-well-fed-2/
West African Chicken Stew, http://thehealthyfoodie.com/west-african-chicken-stew-well-fed-2/

For adults, my favorite gift is a dessert or a freezable meal.  The casserole!  Whatever happened to gifting dinner?  Or extending an invitation to dinner?  When and why did giving food fall out of style?  Did it happen as we collectively decided to stop cooking and start squandering our retirement in restaurants for several meals a week?  Food is the nicest gift you can give, so much nicer than a gift certificate to a restaurant.  The recipient knows you put time and love into the gift.

When we spend Big Money on gifts, it tends to be for weddings, and we usually stick with two things: doormats and address stamps.  Doesn’t sound too appealing, right?  But actually they’re both great gifts, I promise.

The personalized 22″ x 36″ $69 coconut husk doormat is the best thing Pottery Barn sells.  Frankly, it’s the only thing they sell that’s worth buying firsthand, in my opinion (I own several Pottery Barn items via Craig’s List).  Grab a 20% off coupon (only a fool would pay full price at Pottery Barn) and order this thing for your best pals, particularly if they now share a last name.

The personalized address stamp is my other favorite go-to.  Practical and pretty!  Sign up for the Expressionery emails and only purchase during 50% off sales events.

If we really like someone, we’ll buy them a t-shirt.  We’ve bought a dozen “Another Beautiful Day in TOWN, STATE” shirts from Ann Arbor T-Shirt Co (also available for men).  Always a big hit, and without breaking the bank.

Gifts don’t have to be expensive or excessive.  A 6-pack of skull spoons is $11.99 – that’s less than $2 a skull spoon!  Affix a ribbon and Voila! You win the night’s gift-giving competition.  Coworkers, gift swaps, relatives – who doesn’t want a skull spoon?

Nostalgic aside:  There was an elderly beekeeper near where I grew up who used to sell local honey for $5/pound.  Even later when he raised the price to $6/pound, it was such a bargain.  It came in a nice jar, with a pretty blue label.  I would buy a dozen 1-pound jars of honey each Christmas season, my husband thought I was nuts.  Sadly the beekeeper passed away a few years ago, in his mid-90’s.  I still kick myself for not having the foresight to buy several years ahead…. it was such an awesome gift.

Back to the point –

The most important thing about gifts is that they work within the week’s budget.  If there’s no money for a gift in a given week, there’s no gift.  End of story.  Gifts are a luxury.

For each other, we also work gifts into the budget.  It’s not like birthdays and Christmas hit us out of the blue.  Most years I end up buying my husband a t-shirt for about $20.  I need to come up with a new gift this year, he’s run out of space and begged me to stop buying t-shirts 🙂

If you see that a huge portion of your money is going towards gifts, it’s time take a step back and re-evaluate.  Spend time with the people you love.  Call them on the phone, write them notes.  Buying and giving gifts is a blast, but you don’t need to spend a whole bunch of money to let someone know you care.

I’m not gonna Work Hard to Give You My Money

We generally live by the rule that we refuse to work hard to give away our money.

Why should we?

That means:

  • If there’s a line at a coffee shop, we turn around and walk out.
  • If no one acknowledges our presence at a sales counter within about 30 seconds (this seems to happen a lot in coffee shops), we walk.
  • If we sit at a bar and don’t get acknowledged for several minutes (and the bar tender is not serving other customers), we walk.
  • We don’t put our names on waiting lists at restaurants – unless we’re very thirsty and don’t mind waiting with a cocktail 😉
  • We don’t wait in line all night for new products.  We don’t get on waiting lists for new products.
  • If a salesperson is rude, we walk.
  • If I’m at a store and ready to pay, but there’s a crazy-long line (Victoria’s Secret, Anthropologie, Old Navy, Costco, TJ Maxx and Marshall’s come to mind) I put down my would-be purchases and leave.
  • If it takes a contractor too long to call us back, or give us a quote, we call a different contractor.

This saves us a good bit of money, and also generally helps to keep us out of stores.

I want to feel good when I part ways with my money.

Will a Pedicure Derail me Financially?

Around here, a pedicure costs $28 (before tip).

I was looking at my consolidated annual credit card spending report last week – it was extremely illuminating!

Most of the charges ranged from $30 – $70, but to a quick eyeball analysis, the numbers that seemed most frequent were in the $30-range.  Tens of thousands of dollars spent $35 at a time.

This summer I finally changed my mindset from “it’s just a pedicure” to “what a damn stupid way to waste my money, I can paint my ugly toes myself.”

I struggle with beauty-related spending.

On the one hand, I don’t wear much makeup, I don’t buy perfume (but I sure try to grab samples whenever I can!) I don’t get massages, I don’t wear fancy clothes or have a shoe addiction.

But on the other hand, I’ve been known to get my hair highlighted and low-lighted and glossed and cut for up to $190 and pay $60 for a few ounces of skin cream from the department store.  I love pedicures and botox and acupuncture.  I did Crossfit for two and a half years ($140 – $190/month).  It never occurred to me that any of the costs were excessive.

But now that we’ve set a goal – to pay off the house as quickly as possible – I’m re-evaluating things.

I switched to a different stylist and tried Nice’n Easy the last time I colored my hair.  I haven’t gotten a pedicure this summer.  I’m not currently Crossfitting.  I’ve been using up all the half-full bottles of fancy shampoo and conditioner and soap and mascara and given up my Venus razor for the Dollar Shave Club.  I have more laugh lines this year than ever before.  I’m plain old running outside instead of burpeeing and squatting and kipping (“that’s the kind of stuff they do in prison,” my husband mused, puzzled, when I started CrossFit.).

My feeling is this:  we’ve set a weekly budget for ourselves.  If I decide that one of those things is super duper important to me, my husband and I will have a discussion and maybe make room for it within our weekly budget by cutting out something else.

But for now, I’ve been getting along well enough without pedicures.  I haven’t even bothered to paint my toes myself.

The biggest take away that’s come along with all of my beauty “downgrades” – no one has noticed!  No one has noticed that my toe nails are naked, or that my hair cut is less expensive, or that I’m using Oil of Olay.

The most important factors in looking nice – eating well, and not too much; staying active; keeping out of the sun; avoiding sugar; staying hydrated; avoiding alcohol – don’t cost money.  That said, I do miss the botox, not gonna lie.  But I just can’t justify it right now.  It doesn’t make any sense.

Instead of losing our money $35 at a time, we’re paying off the mortgage $35 at a time, and that feels really good.

 

Life isn’t fair, Princess.

  • Income inequality exists.
  • Some inherit heaps of money.
  • Some have more than others.

Just because your friends have X, doesn’t mean you “deserve” X.

A whole bunch of someones will always have a whole bunch more.

Don’t make crappy financial decisions and then start screaming that you’re a victim.

The moment is the whole.  What you do day-to-day matters.

Make a financial plan, tune out the noise, and stick with it.

 

 

Time for a new Credit Card

I love credit cards.

To be more specific – I love rewards credit cards.

We charge just about everything.  Gas, groceries, medical bills – I wish we could charge the mortgage payments.  We don’t carry a balance on the cards.  A balance is not an option, it’s a crazy-stupid waste of money to deal with credit card interest rates.  We pay in full about once a week or so.

There are many great options, but I’ve really enjoyed the Capital One Venture card for the past two years.  This card has a 2% “purchase eraser” gimmick.  2% of of your total purchases can be used towards travel (plane, train, car rental, hotel, public transportation) purchases – 2% cash back, in essence.

The best part is the $400 sign-on bonus, which is awarded if $3,000 is charged in the first three months of having the card.

Last week, we closed the Venture card account in my name (to avoid the $59 annual fee) and opened a new account in my husband’s name.

To date we’ve received just under $1,500 cash back from this card.

The new $400 sign-on bonus will go towards our next trip.

I never say no to free money.

 

My Cell Phone Costs $15/month

My husband and I switched from Verizon Wireless to Republic Wireless about a year ago.  We have Moto E 2nd Generation phones, currently $99.

Our Verizon bill was $128/month.

Republic Wireless charges us by our usage, and our combined monthly bill hasn’t yet cracked $30.

I have trouble understanding why anyone would pay so much more for essentially the same product, but it’s a pattern that’s repeated over and over and over again (cars, clothing, wine, computers, etc, etc).  I’m embarrassed that it took me so long to make the switch

Absolutely no complaints.

Brunch is Stupid

We used to go out for breakfast once a week or so.  We didn’t think of it as a big deal.  But it was expensive.  For just the two of us to go to the Watertown Deluxe Diner, the price was regularly north of $30 including tip – that’s crazy!  We weren’t ordering anything out of the ordinary; tea, toast, eggs with cheese, bacon, pancakes… all things that we could whip up in our own kitchen for well under $5 (and with better service at our house, too!).  Even the cheap-o place down the street costs over $20 with tax and tip.  The one time I went to Cinquecento in Boston with a bunch of girlfriends, fuhgetaboutit.  Drinks, pastries, fruit, eggs.  $50 for just me.  I sobered up fast.  Ouch.  We were spending $120+ / month on breakfast.  It just didn’t make any sense.

Once I started focusing on paying off the mortgage, cutting back on restaurants in a big way was low hanging fruit – and cutting out breakfast and brunch entirely was an easy adjustment.

After all – I really like the breakfasts I make at home.

For the past few years, my husband and I eat egg breakfasts during the week.  Our eggs are always exactly how we like ’em.  Our food is always hot (well, my food is always hot.  I don’t think he always heats up his egg muffins in the car on the way to work).  My latte comes out perfect every time (I use Lavazza Perfetto, the Bialetti moka pot and a battery operated milk frother and serve myself in a beautiful ceramic mug.  No crappy, not-hot-enough, wasteful, expensive Kurig taking up my counter space!).

On the weekends we add bacon, which is always crispy.  Or pancakes, and occasionally french toast or breakfast sandwiches and tater tots.  We don’t have to rush to get somewhere before the crowds hit.

Breakfast at home is so easy to dress up – add a saucer for the tea or coffee, put that cute cream and sugar service on the table (if you’re like me, you bought it, so you might as well use it, right?  Here is the opportunity!), sprinkle powdered sugar on the pancakes, put out the real maple syrup (no $1.50 upcharge) and cut up strawberries.  Think of all the stuff that impresses you at a restaurant, and make it your breakfast reality (or at least, your weekend breakfast reality).  Eat on the dining room table you never use – or on the deck, or set up chairs in the grass.  Play music.  Take your time, because no one’s waiting on your table.  Best of all, don’t look at your credit card charges the next week and wonder what you were thinking.

Eating breakfast at home has not negatively impacted my life one iota.  We save money.  We eat more healthy food.  We eat less.  Win-win.

 

How to Plan for Retirement

How much money do you want to live on each year in retirement, in today’s dollars?

This is such a basic step.  It’s so obvious.  But it’s crazy how many people don’t know the answer.  Even people who work with personal finance coaches and planners get tripped up when asked.  “I’ve got someone taking care of that for me,” a friend told me a few weeks ago.  Why aren’t you taking care of it yourself?  It’s not that hard.  I don’t get it, I really don’t.

Once you figure out the annual amount you want to live on, look at any pensions, and go to the social security website for projections.

If you think you and your spouse will live on $4,000 / month in retirement, and your spouse will get $1,800 / month from a pension, and you will get $1,500 a month from social security (I’m pulling these numbers out of thin air), then you need:

$4,000 (per month) – $1,800 (pension) – $1,500 (social security) = $700 / month from whatever other sources (Roth IRA/401(k)/rental income/investments/dividends, etc.)

$700/month x 12 months in the year = $8,400 per year

$8,400 / year.  Based on the 4% safe rate of withdrawal rule that personal finance bloggers tend to rely on (I won’t even attempt it — read this article to understand) you need 25x – 32x  (depending on how conservative you want to be) of your annual expenses to achieve the lifestyle you want in retirement.

So in this scenario, the couple would need $210,000 – $268,800 to achieve a $4,000/month spend rate in retirement.

If you wanted to live on $50,000 / year, and were not taking into account social security or pension, you would need $50,000 x 25 = $1,250,000 in investments to achieve that lifestyle.

It’s really not so terrifying once you break it down and set a goal.

2015 was the first year that I maxed out my pre-tax 401(K) account ($18,000), and it felt awesome.  Once we pay off the mortgage, my husband and I will also begin Roth IRAs ($5,500 each, post-tax contributions).  We’ll throw the rest of the money that had previously gone towards the mortgage into a Vanguard or Betterment index fund.

Turns out retirement isn’t so impossible after all.

 

My buddy Dave Ramsey

No one likes to talk about budgeting, or spending less money.  No one likes to hear about it if you’re doing it.  I think it makes people feel guilty.

It’s hard to find people to cheer on your journey to financial freedom.

That’s why I like Dave Ramsey.  I don’t agree with everything he says (his financial projections are based on wildly optimistic growth rates, for example), but a whole lot of it serves as a daily pat on the back – “Good job, Nicole!  You’re on the right path!”

I usually listen to a 45-minute Dave Ramsey podcast each morning while I eat breakfast and get the day started at work.  It’s a nice little boost, and a good way to feel confident when faced with eye-rolls and unhelpful comments from coworkers and friends.  I like hearing people’s stories, mostly.

I also read several personal finance blogs.  More good company to keep.  Some are more extreme than others.  I consider my methods middle of the road.  My money saving “strategies” come from low hanging fruit — don’t go out to eat so damn much; don’t buy things on credit; pay off the mortgage asap; take care of the stuff you already have; don’t be so quick to pull the purchase trigger; set a budget and live within it.  I’m not advocating extreme couponing or buying 50# sacks of rice or only vacationing in a tent (nevermind skipping the vacations altogether).

People spend loudly.  They post pictures to Facebook and Instagram of all their amazing new crap, and their fancy vacations, and every stupid pumpkin beer they’ve ever drunk.  But they don’t post the details of each purchase.  The new car with the caveat, “$380 per month for 60 months” or the $12 martini with a note “will be piled on top of my $4,500 credit card debt which accrues interest at 17%.”  That’s the stuff that interests me.

People don’t advertise their saving so much.  People save quietly.  It’s not exciting.  Finished paying off your student loan?  Reached a savings goal?  Post that to Facebook!  Budgeting can feel downright anti-social.  We’re supposed to be cool enough to spend profligately AND do everything that needs to be done behind the scenes to retire comfortably.

I love talking about saving, and making smarter choices day-to-day with budgeting and money.  But most people don’t want to talk about it because mostly, they consider it private and it causes discomfort.

I can’t recommend surrounding yourself with loud, positive financial voices strongly enough.  I first started listening to podcasts and reading blogs a year and a half ago, and it changed my life and made me realize that I can do better.  Some of these voices are super extreme, and some will be way off base with your value system.  Some of the voices might be good, but just not relevant for you.  My husband and I are DINKs (Dual Income, No Kids).  That’s nice and all, but if you have a handful of kids, and need someone to relate to that, there are plenty of voices from that perspective.

At the heart of it, personal finance boils down to a few mathematical and emotional maxims:

  • Spend much less than you earn.
  • Don’t buy things on credit.
  • Don’t buy so damn much stuff.
  • Put away a goodly chunk for retirement.
  • Stop measuring your worth with someone else’s yardstick.
  • Contentment is the crux to financial and personal happiness.