Queercents

I know a lot of people are struggling to find employment (or keep it), establish a budget, pay off debt, amass an emergency fund and put aside money for retirement. I also know how challenging this is because I’ve been there and done that. Today I’d like to write about a concept that might be of interest to those who have accomplished most of these basic planning goals or as further incentive to those en route. There is enormous value in building a solid financial basis and it is rewarding in its own right on so many levels. Much has been written on this site alone about the psychological and physical health benefits of taking control of your financial life, establishing goals and achieving them.

But then what? How do you maintain a solid financial base and start to incorporate perhaps a bit more fun? We are very fortunate to have met our basic financial goals (though continued income is an ongoing challenge) and we’ve been experimenting with a concept we call the “slush fund”. Our income is variable while our budget is fairly strict and represents, for the most part, “needs” versus “wants”. At the end of each month, we total up income and subtract actual expenses. The remainder (hopefully positive) is “deposited” in our slush fund. For us, this is not actually a separate account though it could be. Rather it lives in our checking account. Out of the slush fund comes an allocation for a trip we have planned in Summer 2011 but otherwise it just sits there as a tantalizing fun pot. Read the rest of this entry »

This has to be one of the most difficult financial situations through which to navigate. Important relationships are at stake and it seems to me that the most socially acceptable (and easiest) thing to do is to give if you have it. Money problems are one of our last cultural taboos and so anyone revealing theirs is already feeling vulnerable but it is very difficult to consider giving or lending money without wondering how they got into the bind in the first place.

About a year ago, an email request came from a member of our social group soliciting donations for another member of the group, I’ll call Sue, whose business had failed and who needed money for a certification program which would hopefully launch a new career. It sounded like a good cause and we were doing okay so we sent her a check for $100 which she did in fact use for that purpose and for which she was very appreciative. In a subsequent conversation with Sue she explained how she was very frugal and though she shops at Ann Taylor for her clothes, she was considering holding off on the purchase of a new car since her current 5 year old model wasn’t yet giving her any problems. Now I’m really working on my nonjudgement but considering that I shop at Goodwill and other second hand stores (with the occasional splurge at TJMaxx) and my well maintained 11 year old car suits me just fine, I’m no longer certain that the donation went to a good cause. Read the rest of this entry »

We just returned from a 10 day trip back “home” to Michigan to visit friends and family. Part of our time was in rural countryside and part in the Metro Detroit area. While staying with a close friend in rural MI, we were very appreciative of the extensive garden, the land to pick wild berries and the venison we were served, also from the property. The family heats their home with wood from their land, has a septic system and a well. We noted how close they were to living from the land and how valuable we thought those skills were nowadays. They nodded politely but didn’t fully understand our interest.

During a conversation with long time friends in suburban Detroit, we related this experience and spoke of our desire to find some land, possibly in MI where it is pretty cheap right now, in case we needed a refuge. We explained how we wanted to build a tiny home as off the grid as possible, grow our own food and possibly even learn to hunt. Hesitantly we divulged our suspicion that our country’s oil-dependent lifestyle might not be sustainable given economic and climatic conditions.

Our friends thanked us for “coming out of the closet” about our fears and defensive plans. We all discussed how it is difficult to discuss these beliefs without sounding paranoid. Then we got to talking about ways we might be able to share skills and resources going forward and possibly buy land together. This is only the beginning of a much longer discussion but it was a relief to learn there are others who share our concerns. Read the rest of this entry »

We have a lovely friend who is staying with us this month. He was in the process of moving anyway and he had agreed to stay with our cats for 10 days while we are on vacation. Besides, he would have needed to borrow money for August rent at his new place. Buying food this month is enough of a challenge. He is a 38 year old artist and art instructor and won’t see another payday until mid-September. I’ve been helping him budget and generally discussing issues of money with him so you can imagine my surprise when he declared last night that while he is willing to save some money once it starts flowing again he “deserves a vacation and plans to take a long weekend for his birthday in September to get up to the Appalachian Trail (12 hour drive from here) and hike for 4 days.”

Now I am all for treating yourself well. No one wants to be so consumed with saving money that they never spend any for personal satisfaction. But what was really interesting to me is that the “treat” was getting away for the vacation and that no amount of personal satisfaction was expected from saving money. That was just something that had to be done. I couldn’t help myself of course and gently pointed out to him that he would find an incredible amount of comfort in having even a small amount set aside for “unexpected” expenses like rent and food next semester. I suggested that perhaps a smaller treat like a massage might be acceptable in September and that the trip could be postponed a couple of months until he had some savings and there was a semester break. He was open to this and genuinely surprised to hear that some financial security could be liberating. I did not mention (though I wanted to) that if he had money set aside he could have spent some or all of the 6 weeks he wasn’t working or watching cats to hike the trail or anything else that pleased him. Read the rest of this entry »

Over the last couple of months, we have been formulating our downsize plans. First we’ll move to a smaller rental and eventually use the savings to build the tiny-eco-healthy house of our dreams. Step 1 was set to occur after November when our current lease is up but, as the fates would have it, we have found the perfect place to move to and we are trying to see if these same fates will help us find perfect new tenants for our excellent landlord in time to take advantage of the gem we’ve found.

One of the reasons for the downsize is definitely financial. We estimate the move will save us $540 in direct monthly expenses (rent and utilities). Indirect savings are another $176. Here I have to come out about having a really awesome monthly housecleaner that I haven’t had the heart to cancel. It would be utterly laughable to have her clean our new space, and I’ve found her another client, so it will be a good transition point. The other component of indirect savings is life insurance premiums. This move will bring us so close to financial independence that it will eliminate our personal reasons for maintaining life insurance.

This savings means a couple of things. First, we won’t need to earn the gross income required to net $716 a month. In the 28% tax bracket, this is roughly $11,000 we won’t have to earn. Since our expenses will be reduced so significantly, we can maintain lower cash reserves shifting more of it to work earning passive income. Further, if we maintain or grow our current earned income we can put more of that money toward our tiny-eco-healthy house plans and travel (like, out of Florida in the summertime). Read the rest of this entry »

I read the Queercents Weekly Roundup by Elizabeth yesterday and couldn’t resist her pointer to check out Kiplingers list of 20 ways to waste your money. One in particular caught my eye:

8. Pay too much in taxes on investments. Are you investing in a tax-sheltered 401(k) or Roth IRA? If you’re not maxing out those accounts before you invest in a taxable account, you’re spending too much.

Now I’ve seen this suggestion a hundred times before and, in fact, as a financial coach, I’ve probably given this suggestion a few dozen times. For many people this is fine advice. But it presupposes a number of important things.

1. It is actually possible TO max out your 401k AND contribute to a Roth IRA.
2. There are no options for tax efficient investing in a taxable account.
3. You are making so much money that item 1 is possible and you are in a high tax bracket.
4. You won’t be wanting to use that 401k money until you are “retired” at the age of 59 ½ or older.

There was a time when I was working full time with a nice salary, suitable business wardrobe, a new car, a house full of new furniture, 2 weeks vacation, little time to cook and the means to eat out. I did max out my 401k for a few years and I’m glad I did. Of course I was also miserable, exhausted and sick frequently.

My life today is nearly the opposite of this. Read the rest of this entry »

The other day I helped a friend establish a budget. We did what most people do and set up categories that were meaningful to him and filled in either known or estimated monthly amounts. Few were known. Most were estimated. The end result gave him a much clearer view of his financial picture but I also emphasized to him that budgets are a work-in-progress. Some changes one way or another in his life could considerably affect his bottom line (read amount he can save!).

It is the work-in-progress aspect that I believe gets lost if the well-intentioned budgeter does not track actual expenses. I do not expect my friend to track expenses. The whole concept of budgeting is new to him and it would overwhelm his artistic sensibilities to take on this next step too soon. But for the rest of us who already budget conscious, I cannot emphasize enough how important it is to track real expenses against projected (or target) expenses.

Like most financial coaches/planners/advisers, I spend a lot of time talking about budgeting. Naturally, I have one of my own and thought pretty highly of my estimating skills. Then I started actually tracking expenses. So much for my skills! I was absolutely astonished at the actual versus the projected. This doesn’t render a projected budget useless. It just means that it’s a starting point. Here’s what I’ve learned over the past 5 months or so: Read the rest of this entry »

This past weekend we watched the film The Eleventh Hour. It’s a documentary about the crisis facing our planet which accomplished, at least with us, its goal to both frighten and inspire. Throughout the movie, the phrase “First, do no harm” kept running through my head. You may recognize it as part of the Hippocratic Oath, traditionally taken by newly minted physicians. It comes from the Latin primum non nocere and

It reminds the physician and other health care providers that they must consider the possible harm that any intervention might do. It is invoked when debating the use of an intervention that carries an obvious risk of harm but a less certain chance of benefit. Since at least 1860, the phrase has been for physicians a hallowed expression of hope, intention, humility, and recognition that human acts with good intentions may have unwanted consequences.

It strikes me as a worthwhile mantra for each of us as we approach our daily lives as ____________________(whatever else we are) and health care providers for ourselves and our families, for our planet and for our personal finances. Most of us, I’d argue, have good intentions. We want a safe and comfortable place to live, healthy food to eat, time to spend with friends and family and beautiful places to visit and recreate. In modern times, the pursuit of these worthy goals has resulted in “unwanted consequences” financially, physically and ecologically. Our definitions of comfortable, healthy and beautiful have been shaped by media which is in service to our culture which is characterized by the pursuit of money. Read the rest of this entry »

I am the new owner of a vibrant piece of African inspired original artwork. It has given my kitchen a whole new life which is most welcome because I spend a good deal of time in there engaged in my microenterprise.

Art work is definitely not in the budget these days so I didn’t purchase the piece but rather bartered for it. A neighbor/friend/artist nearing retirement needed financial coaching and we agreed that a trade for art would be mutually beneficial. We had a couple of meetings to work on a financial strategy for her and set a 6 month future check-in date. She took me on a tour of her apartment and allowed me to choose a piece of her work. She was happy not to spend money to make a money plan and I’m happy to receive something beautiful which I would not otherwise own.

This isn’t the first time I’ve bartered. In the past year I have bartered financial coaching for spiritual championing, and ESL tutoring in exchange for authentic Cuban food. I’ve traded financial coaching to the parents of a massage therapist whose massage in trade I gave to my wife as a way to contribute to our family financial community. We have a friend who is an architect which is handy since we are seriously contemplating designing and building a minihome. He is luckily in need of financial coaching as well so another beautiful barter relationship is in its infancy. Read the rest of this entry »

A couple of month’s ago we made a trip out to Sam’s Club at the suggestion of some friends who claim to save a lot of money shopping there. We made a thorough (and exhausting) examination of the items offered to see if we could save on things that we regularly buy. As you know, these stores sell in large quantities and so some basic math is needed to figure out what per item/pound/unit costs really are. But that is really not enough. How do you know if the prices are actually lower than those you typically pay?

One good way is to keep a price book. I resisted doing so for some time because it is somewhat tedious but it has become an invaluable tool. Using the price book, we were able to compare the unit prices at Sam’s Club to prices we could find at our main grocery stores, Target or Walmart. Sam’s Club does not take coupons so the couponed cost (if available) is the one we used for comparison.  We found minor savings on some items but since we do not consume many of the things a typical household consumes (box fruit juices, snack foods, packaged dinners, etc) our choices were limited. Once we considered the membership cost and the gas to get there, we decided it was not worth it for us.

Last week I found an offer online for a 2 month free membership at BJs, another warehouse store. Unable to resist the lure of “free” and when we had another reason to be in that part of town, I packed up the price book and we embarked on another exploration. I admit that I didn’t have a lot of hope that this store would be any different but I was wrong. First, they have significantly more products on offer. Second, their membership cost is 100% refundable at any time during the period of membership (even the last day) and they take coupons! We found many more items that we actually use and because they were offering $10 off your purchases with a paid membership ($45) we went ahead and joined. I’m confident that I will cancel the membership if we find we’re just not making the trip out there or my continually evolving price book informs me that their prices have crept up.

What about you? Have you found these clubs worth it?

Photo credit: BJ’s Photo Gallery