The Almighty Dollar

Pressing your luck could cost you

2006-04-28T11:32:00.000-04:00

In this wide world of passwords and PINs, keeping track of your car's permit expiration dates seems like such a hassle. As my friend just learned the hard way, putting off a renewal could cost you double or even triple the original amount.

His tags and parking permit expired four months ago, but until this week, he had been driving and parking on DC roads without incident. I guess you can say he's been lucky. Well, his luck ran out on Monday when his car got towed.

Sometimes he can be a bit flighty, but the bottom line is he didn't want to pay the $87 to renew his permits. Now it appears he will have to pay more than triple that amount to get his car back up and legally running. Here is the breakdown of costs:

Registration renewal = $72
Zone permit = $15
Car tow = $100
Tow storage ($20/day) = $80 (he picked it up yesterday)
Taxi to towing lot = $20

Whopping total = $287

Not to mention all the time he's spent trying to clear up this mess. His friend took him to the towing lot twice, and both times left without the car. First time the lot was closed. Second time they refused to let the car off the lot without proof of registration payment. At the DMV, he waited in line (of course!) to learn that his safety inspection had also expired, therefore, he could only get a temporary permit for his car. Since the towing lot is open during work hours, he cabbed it to the lot during lunch, and finally got his car.

Phew! And that doesn't include the horror he'll face at the safety inspection station...

(P.S. My husband points out that this presumes his car indeed passes inspection and no additional service work is needed!)

Re-evaluating our portfolio

2006-04-27T15:50:00.000-04:00

Although I've been absent from blogging, this past week has been quite important for me PF-speaking...

My husband and I have spent most of last weekend and early this week re-evaluating our retirement portfolio. It's been an encouraging experience overall, seeing how much it has grown due to healthy returns and diligent saving on our part.

We are in our early 30s (I'm 30, he's 32) and didn't really begin socking away money for retirement until a few years ago. Before that, we focused on saving as much as we could for our wedding and a home down payment. While things worked out okay, I still wish we had put more aside in our IRAs back then.

What frustrates us most is having our retirement savings spread out in multiple accounts: brokerage, traditional and roth IRAs, SEPs, and recently a self 401K. To reduce our taxable income, we focus first on maxing out our tax-deferred accounts. However, since the maximum contributions in IRAs are so small (only $4000), it's hard to build a portfolio in these accounts when the required minimum fund purchase is often $2500. So we really have to focus on the bigger picture and not get bogged down in each individual account.

I think it's wise to regularly monitor your investments. Make sure you like what you have, dump what you don't, and look for something new. Markets and industries change, and your portfolio should be smartly balanced for the times. When we started out, it was difficult to build a diversified portfolio with our small holdings. We did our own research and bought a handful of mutual funds in different categories. Over time, we dumped a couple that were underperforming and bought new ones, all with a longer-term outlook in mind.

Now that our portfolio is over $100,000, we wanted to examine our investments and make sure we were spread out enough. We felt that we were not well-balanced. Basically, we were heavy on a medical/health fund and were lacking in small-cap exposure. Also, our large cap fund has ballooned and was recently closed to new investors. While it's performed admirably, we are beginning to look into other large cap funds that are smaller and more nimble.

With these changes, we feel more secure about the way ahead.

Know of a truly accurate retirement calculator?

2006-04-21T14:46:00.000-04:00

Every once in a while, either myself or my husband will plug our numbers into online retirement calculators to see how we are doing. This exercise helps us to stay focused on our goals, motivates us to continue socking away money, and to be honest, we find it pretty exciting (I know, we're nerds).

However, I have yet to find a comprehensive calculator that takes into account both tax-deferred (401Ks, Traditional IRAs) AND non tax-deferred savings (Roth IRAs). Can you point me to an online calculator like this? Surprisingly, I can't seem to locate one, although it seems easy to make one up. If I knew how to create it, I would.

Mom and Dad to the rescue

2006-04-20T10:48:00.000-04:00

The New York Times highlights the increasing burden of parents supplying financial assistance to kids (can I say adults?) into their 30s.

A study by the Institute of Social Research says 34% of those aged 18 to 34 get cash from Mom and Dad every year. Parents help in other ways, giving generous presents, cars, and down payments for homes.

I know it depends on each individual's situation, but generally, I think the sooner we are able to support ourselves, the better. It's not the same when there's always a cushion to fall back on.

Not all bbq grills are created equal

2006-04-19T14:53:00.000-04:00

In anticipation of hosting guests at the end of this month, my brother had mentioned wanting to buy a new lawnmower and grill. Since they are arriving this weekend, I asked if he had bought them yet. While he still plans to get the lawnmower, he has decided to wait on the grill until next summer.

I should tell you now -- grills are a sore spot for me. My condo is on the first floor and has a beautiful, private patio perfect for outdoor dining and relaxing. Gas grills were permitted when we moved in, and we immediately got one. For a year, we savored many grilled chicken breasts and kabobs by candlelight. But, unexpectedly, the association switched to a new master insurance plan that prohibited grilling of any kind at some distance from the building. (Apparently, this is a DC law but no one complies!) So we were forced to get rid of the grill and miss it terribly.

My brother doesn't have these restrictions and certainly has the space for it. He and his fiance bought a new home last winter. They chose to forego a patio, because they planned to build a backyard deck. This project has been slated for next year.

He told me that the grill he wants is very expensive, so he doesn't want to spend the money on it now. Instead, he plans to buy it next year after they've built the deck. Since I'm in grill-denial, it seems silly to waste two summers without bbq just so he can have an ultra-lux, stainless-steel, triple-burner grill (an assumption, but knowing my brother, I'm probably right).

I said, who cares what it looks like, as long as it grills well? He said, looks matter.

Yes, you read that correctly, and we weren't talking about Dolce & Gabbana jeans. For god's sake, it's a grill.

Keeping secrets about money

2006-04-18T19:01:00.000-04:00

There are days when I miss my family so much and wish that I lived closer to them. But those feelings evaporate instantly when the topic of money comes up.

Over the phone, I was explaining to mom why my husband had to cut short the visit to his parents' house this past weekend. It's a long, complicated story, so I'll spare you the details.

Basically, he drove back to DC in order to make a last-minute IRA deposit for his parents on Monday. The contribution would give them an additional tax refund of $1400.(Later, we realized they could have mailed it, but just in case, he wanted to make the deposit in person.)

Anyway, the trip was worthwhile, because we learned a lot about his parents' financial situation. It's a relief, since they've kept us in the dark until now. We never wanted details, only a general idea of where they stood. After they talked about wanting to retire in 5 years, the numbers show that's not a realistic option. Even still, they are much better off than my parents, who are older and have almost nothing saved for retirement.

Whenever I discuss money with my mom, she gets very defensive. She says it's insulting when I mention how unprepared they are for old age. She tells me not to worry, that she is capable of working if something happened to my dad. When I say I'm being realistic, she says I am crushing her hope and optimism. Then she accuses me of expecting them to save every penny until their death -- thus never enjoying life. And predictably, she points out that we all lead different lives; she has her way, I have mine. End of conversation.

It astounds me how often I see people reject sound financial advice. Some people feel ashamed, because they know they haven't been doing the right thing. Others get defensive, because they feel stupid for being ignorant. And then there are people like myself, who are open to any advice or criticism that could help improve my life.

I think the worst thing people can do is to NOT ask questions, especially when it comes to finances.

Seeing that most of us aren't money experts, the only way to obtain information is to seek it out. That's why I value the pf blogging community. It's a give-and-take atmosphere and a great network of people from various backgrounds. Keep up the blogging and sharing!

That gym membership can help you retire

2006-04-14T10:47:00.000-04:00

Consider your gym membership to be an investment in your retirement, according to USA Today. With the ever-rising cost of health care, staying healthy could save you tons of money in the future. I mean hundreds of tons of dollars in savings -- about $200,000 per couple.

A Fidelity study reports that a couple retiring today would pay this amount towards health costs over a 15-year period, a third of which would pay for prescription drugs. What's scarier is that this number does NOT include dental or long-term care, or over-the-counter medicine costs.

Not only is being healthy good for the mind and body, it's good for your wallet -- in the long run.

When it comes to health, older folks have harder choices

2006-04-13T11:36:00.000-04:00

I have another story that reinforces my previous post about the importance of insurance. My father-in-law recently learned that he had cysts in his throat. The doctor informed him that his thyroid needed to be removed.

I know this procedure isn't that unusual. In fact, my husband's co-worker had hers taken out, and she can function perfectly fine with daily medication. However, my father-in-law is nearing 60 years old, and the risks for complications are much higher in older folks.

He had his surgery two days ago and was released from the hospital last night. Barring a few minor problems, he is recovering nicely. My husband is traveling to see his parents over the long Easter weekend (well, long for him, not for me -- I have to work).

His unexpected surgery made me recall a conversation I had earlier with my mother-in-law. When I visited the in-laws this past winter, she told me they had changed their health insurance plan to a cheaper one, hence, getting less coverage than before. They felt it was worth paying a higher deductible to save on the recurring monthly premiums. I was a bit concerned about their decision, because I felt that it was wiser to enhance, not reduce, health coverage as one gets older. At the time, their health was generally good, but by no means perfect.

People have a tendency to neglect their bodies' warning signs, until a problem becomes serious, and therefore, expensive to fix. Now I wonder if the small monthly savings was worth changing to a cheaper plan.

No tax refund for me

2006-04-11T09:36:00.000-04:00

Judging from the posts of other personal finance bloggers, it seems like I'm the only one who OWES money to the federal government come April 17th!

At last, our taxes are finally done. Bad news is we owe about $900. We don't plan on mailing in our forms until the end of this week, since I see no rush to give Uncle Sam our check until it is absolutely required. Although we may seem like procrastinators, actually, we have been working on our taxes over the past 2 months.

My husband isn't technically a contractor, but due to a complex system created by his employer, he is considered self-employed for tax purposes only. Honestly, I don't even fully understand it, so I let him deal with the taxes. My situation is very straight-forward. I am an employee and get a W-2 every January.

Before we were married, my husband paid an accountant to do his taxes. In order to qualify for an early-bird discount, he would organize his papers in advance. Still, the bill would usually come out to $200-300. I always did my own.

The first year of our marriage we used the accountant for fear that we would screw something up in our newly-merged financial state. But dishing out $500 in accountant fees, in addition to paying taxes, seemed like a waste.

Thank goodness for TurboTax Premier. We've used it for the last 2 years. Not only do we save money, but doing our own taxes has helped us understand our finances better. I now know that we had about $10,000 of unanticipated taxable income last year, which explains why we owe money. Hopefully, we will be able to come up with more accurate numbers for next year.

Do it yourself investing or hire a professional?

2006-04-07T17:28:00.000-04:00

I'm curious how many of you rely on professionals for investment advice and whether it is worth the cost.

When we were starting out, my husband and I initially considered hiring a financial planner, but then opted against it. Our then-accountant remarked that if people spent the time to do their own research, they could invest just as well as a professional and pocket the fees. At first, we were skeptical, since neither of us have a background in finance. But we hate paying people to do things we could do ourselves, so we started reading. And reading, and reading.

In this day and age, there is a vast amount of information available online. The hard part is sorting through it all and determining what details reflect a well-managed fund or company. We also decided on our investment strategy -- basically we wanted to focus on investments with a longer-term outlook. No day trading for us. Although savings and investing are priorities, we aren't willing to devote the time to watch a stock's performance on a daily basis. Our goal is to build a nest egg for our future.

The bulk of our investments are in mutual funds and ETFs. We tried to buy individual stocks, but always had bad luck with them for one reason or another. That said, we have chosen strong funds that have outperformed the Dow over time and have built a diversified portfolio that some may consider too international-heavy. We are comfortable taking slightly greater risks at our age, but by no means are we stupid.

Overall, we are very pleased with how our investments have done over the years. This makes me wonder,

For those of you who have hired a professional, are you happy with your investments? Is it worth the extra cost?

I ask, because a few of our friends who use brokers have complained about their investments. Some have bought seriously under-performing funds with high fees. Others own stocks that were purchased at inopportune times. All of these decisions were recommended by their brokers. It seemed like with simple research, it would have been obvious that these picks were unwise.

Just save -- it's that simple

2006-04-07T14:24:00.000-04:00

Bloggers, journalists, financial analysts and managers keep asking the same questions about our retirement. Are we saving enough? Are we saving too much? How do we know what is the right amount?

We can debate this topic to death, but there still won't be an answer to satisfy each individual's situation. In fact, I think the whole debate is silly and can be simplified into one question:

If and when you retire, would you rather have too much money or not enough?

I think it's pretty obvious that most people would prefer to have a little extra in their bank accounts than to scrimp until our last living day.

So stop talking about it. Just save as much as you can, as early as you can.

You're never too young to buy life insurance

2006-04-04T16:58:00.000-04:00

I found out one of my relative's cousins died last week from lung cancer. He was in his late 20s and never smoked. The family learned that his wife was pregnant during the same week he was diagnosed with cancer. Now three months along, she will have to go on without him.

The news broke my heart. It also made me realize how important it is to have life insurance, even for young couples. My husband and I purchased life insurance more than a year ago. We had discussed doing it right after our marriage, but laziness and home buying got in the way. Thankfully, we finally got our act together and did it. I can't tell you what peace of mind it brings to each of us.

When you are young and newly married, it is so easy to put off this task. You're healthy and have many other plans with your money. Although you vowed 'til death do you part, no one really wants to think about that!

As grim as it may sound, buying life insurance is one of the most thoughtful things you can do for your loved ones. Neither of my parents has life insurance, and that freaks me out. I try not to think about it and trust that we will be able to cope with the situation when it comes. They are just too old (and have pre-existing heath conditions) to consider buying any insurance now.

My brother and his wife have a small amount provided through her company, but it's certainly not enough to cover a big mortgage and daily expenses. He tells me that if something were to happen to either of them, the house would be sold and life would go on. If they have kids, he said he would reconsider.

Even though we don't have children, my husband thought of it differently. He said having life insurance brings him a sense of security, knowing that if he were to die, I wouldn't have to struggle with money while in mourning. He wanted me to have the option to pay our mortgage in full. Of course, I want the same things for him as well.

I don't know if my relative's cousin had life insurance. Considering their young ages, it's likely they didn't. Now with a baby on the way, my warmest thoughts are with the mother.

Trust me, we are not poor

2006-03-31T09:33:00.000-05:00

Lately a number of bloggers have written about feeling poor. My Open Wallet's post garnered dozens of comments, and NYC Money described a recent conversation she had with her husband about this topic. Boston Gal's Open Wallet drew our attention to a site that calculates how rich you are based on salary compared to the rest of the world.

Some people wrote that not being able to pay the bills or being unable to afford a house made them feel poor. Others described feeling poor as a child growing up in a financially tight household, but less so once they were working and became independent. I was struck by the honesty and emotion behind these words.

But the comments also showed me how our perception of being poor is relative to the environment and people around us. And, boy, what a small world it is that we live in.

My family has always struggled financially, as do countless other lower and middle income households across the country. It's pretty easy to come up with instances that make you feel poorer than the next person. Someone has a nicer or newer shirt than you. The latest basketball shoes. A walkman when you only had a radio. Even the rich could probably come up with an example.

I still resent my parents for always pointing out ways they were unable to provide for me. Things like clothes, books, tapes, and cars that all of my peers had, but I didn't. I know it was partly because they felt guilty. They wanted me to have the best of everything. Since they couldn't give me that, it made them feel inadequate as parents.

Growing up, I believed I was extremely poor -- until I travelled to a third world country for the first time. Then I realized that I was rich. I apologize for the cliche, but that trip changed my life.

A salary calculator can compute how much wealthier you are in numbers, but there's nothing better than first-hand experience. Expand your world. Widen your vision. See how others survive on much less, but are easily the most generous people you will ever meet.

I think it's unhealthy to dwell too much on being poor. Some people can use these feelings to create better lives, but most are left feeling hard, unsatisfied, and especially bitter. It's natural for us to feel unfulfilled in some way or another, but I guarantee there is someone in this world who would love to have what you have.

Admiration for young parents

2006-03-29T16:39:00.000-05:00

Tonight after work, I'm heading over to our friends' house to babysit their two young children for the evening. Honestly, they never would have asked me if their normal babysitter hadn't cancelled at the last minute. I admit, I'm hopeless with kids and never know what to say or do around them! It just doesn't come naturally to me. Anyway, their kids are sweet, so I was happy to do it.

This gesture will also save my friends a bundle of money, since they normally have to dish out $75 for a babysitter before spending anything else for the night. I am amazed and always wonder how young parents do it. It makes me appreciate how my husband and I can go out to a restaurant for dinner on a whim, not have to make arrangements beforehand, without starting out the night in the hole.

A few weeks ago we invited these friends over to our house for a drink and then dinner at a nearby place. The dinner was reasonably priced, but with drinks and tip, it came out to atleast $75 per couple. But for our friends, the night was more even more expensive. They had to pay that amount just to leave the house for a few hours, plus the added cost of entertainment.

They tell me it's worth it, just so they can have a life and feel like adults once in a while. If I were in their situation, I'm sure I would do the same.

More outrage about cars

2006-03-28T12:01:00.000-05:00

I hate to harp on this subject again, but I really need your help to figure out why people care so much about their cars.

"It's a form of transportation to get you from point A to point B," my husband remarked last night. I agree with him. I take a crappy, run-down metrobus to and from work everyday. I could care less what the bus looks like, but I'm relieved that it allows me to stare out the window and veg first thing in the morning.

Why do people spend huge amounts of money on cars, even paying extra for personalized plates and such, for what is essentially a heap of metal and plastic painted in pretty colors?

Since my brother places a scary priority on what he drives, I asked him numerous times why his car is so important to him. His answer never satisfies me. He tells me that everyone cares about different things, and cars are important to him because he spends a lot of time in them. That's true, he lives in the 'burbs and has to drive everywhere.

I think his response is a bit dishonest. Plain and simple, the car represents his financial success. When he pulls up to a family function in his fancy car, he is seeking the wow factor and an opportunity to brag a little. And for some unexplicable reason, people are in awe of it.

Aren't we smart enough to know that many people carry upside-down loans or lease their cars? Most people don't really own their luxury wheels, and it's likely their net worth is not a source of pride, but one of concern.

It all seems superficial to me, and frankly, immature.

Your clunker is my treasure

2006-03-27T16:13:00.000-05:00

In my family, it all comes back to The Car. I've written about it before, but here I go again...

Last week, my brother declared Mom's 5-year-old Volvo a "piece of junk." The culprit this time was the check engine light. Well, it lit up. The mechanic quoted them a few thousand dollars to repair whatever he deemed was wrong with it. When I asked my brother what the exact problem was, he didn't know. But he said the car's suspension system was shot anyway, and that it was time to replace the clunker.

Clunker? Piece of junk? My Honda was 5 years old when I bought it, and I was thrilled to find it still on the lot. It was in good condition and had low mileage. Driving it, I finally felt like an adult. Before that, I had a 15-year-old car that despite its age, drove smoothly. In fact, I killed it by letting the oil run dry.

Since my parents paid off the car only 6 months ago, they were hesitant to take on new payments. This is actually a wise decision, considering how my parents are already overextended financially. My brother's solution was to lease a new car for 3 years and make the payments himself.

Now I suppose he just wants to do something nice for my parents, and that's thoughtful. But I wish he would help them out with something that seems more fiscally responsible. Perhaps pay for the repairs himself or shop for a reasonably-priced used car. By leasing a fancy car they cannot afford to buy just smacks of Keeping up with the Jones'. It's like playing pretend for the next 36 months.

I'm back

2006-03-26T18:35:00.000-05:00

Phew, it's been a busy week! I was called out of town on short notice, but I'm back and ready to blog some more.

Don't blow that extra paycheck

2006-03-19T17:46:00.000-05:00

Last night, I celebrated my friend's good news. He had accepted a great job offer -- and with it, a higher salary. The pay difference isn't huge, but it is significant considering my friend's financials.

He is single and makes good money. Despite that, he lives paycheck to paycheck, saves little, and can't seem to get rid of a few thousand dollars in credit card debt. He told me how his poor state has taken a toll on his self-esteem and confidence, particularly among his peers.

Knowing all of this, I was surprised to hear him announce that as a gift to himself, he was going to use the extra money towards guitar lessons. (I was relieved to know he already has a guitar and won't have to buy one.)

Now, I am all for learning new languages, pursuing hobbies, doing what makes you happy. But in my friend's case, I think he is being foolish for not paying off his debts first. The lessons should come later.

By enrolling in these classes, he wouldn't be lowering his debt burden, but rather, adding to it. Although he's avoided the expense of buying a new guitar, other things are required in order to play seriously. For starters, he mentioned needing to purchase a tuner. The list goes on and on.

It is decisions like his that make me unsympathetic to people who say, if they only made a bit more money, then they'd pay off the debt. Let's be honest here -- that's just an excuse. How you spend every dollar counts.

Treating family -- when to say enough is enough

2006-03-18T11:47:00.000-05:00

Consider me old-fashioned, but I think it's a matter of common courtesy to say thanks when someone is thoughtful enough to treat you, whether it be to a meal, a beer or a coffee. The more considerate among us will usually reciprocate the gesture at some point. But when it comes to family, are the rules the same?

For years, my husband and I had treated my brother and his fiance (now wife) to numerous lunches, dinners, and drinks. Since we live in different states, these instances would occur either when we were visiting family or when they came and stayed with us. Usually what happened was we would invite my parents to dinner, my brother and his fiance would join us, and we would end up footing the entire bill.

I enjoy treating my family and friends. I do it often, and they consider me to be quite generous. What bothered me was how my brother and his fiance always sat still when the bill came, never offered to pay even their share, nor offered to get it next time. And they never said thank you.

The last straw came during a visit over Thanksgiving, when my brother and fiance stayed with us for 4 days. We stocked the fridge, treated them at a nice restaurant upon arrival, cooked a masterful turkey dinner with all the fixin's, and had lined up plenty of fun things to do while they were here. One day, I ended up lunching and museum-hopping with his fiance, while the boys went to the hardware store for some home repair equipment. We went to a casual eatery, the kind of place where you order upfront, pay the cashier, and wait at a table until your number is called. After we each placed our orders, I was taking out my wallet and saw that my brother's fiance had already sat down. She assumed that I would be paying for this lunch, too.

Needless to say, I was incredulous. My brother is less than 2 years younger than me, and is certainly not bashful about his high salary (it's double what I make). His fiance does well, too. So we're not talking about young college grads surviving on pennies.

I held my tongue until he returned home -- and then battled with him over the phone. At first, he was defensive, stubborn, and called me cheap. But within days, he realized where I was coming from and admitted that he had been taking my generosity for granted. Now he is so insistent on paying for meals that it's become almost uncomfortable.

Ironically, my brother told me yesterday that he was having a similar problem with his sister-in-law (out of fairness, she is a recent college grad still trying to make it on her own). His wife is hesitant to say anything to her sister and hopes she will eventually come around.

I'm not so sure. I have no regrets about confronting my brother on such a sensitive matter. If I hadn't, I don't think he would have changed. It's hard to know where to draw the line, because you love 'em and they're family.

How much money you make is important

2006-03-16T17:24:00.000-05:00

There are two great posts by Financial Freedumb about revealing one's salary: why some people do it and others don't.

On The Almighty Dollar, I don't publicize any of my personal information, such as net worth, debt or income. Instead, I have written extensively about my history with money and how it has shaped my thoughts and opinions about spending.

I know there are bloggers who post all of their numbers, but then choose to keep their salaries secret. I suppose there is no harm in wanting some privacy. However, income is actually a significant factor for those who use their blogs to hold themselves accountable and to judge their progress.

Here's an example. Take two single people, both aged 30 with no debt. One makes $50K a year and has $150K in cash and retirement savings. The other makes double the salary and also has $150K in savings.

Indeed, they are both in great positions at their age. But I would be more impressed with the financial habits of the person making $50K than the one making $100K. Who do you think is doing better?

New credit scores, but still the same faulty system

2006-03-14T16:39:00.000-05:00

Our borrowing power lies in the hands of the 3 major credit bureaus. Today, they announced the creation of a new credit scoring system called VantageScore.

After reading this story, I still don't understand what the differences are:

Our scores will still be 3-digit numbers.
Our scores will still be categorized into ranges, the higher the better.

Only now, these agencies will be grading our credit histories. "A" is for the best among us, and "F" are failures. I guess I won't have to go to grad school to be a student again.

I find this announcement very frustrating, because it doesn't address the main problem with the scoring system.

My score differs by agency, because each one receives selective information about my credit. For example, some agencies have a record of one of my credit cards, but others do not. Thus, one agency has a more comprehensive picture of my credit history than another agency. So how does the new system ensure that every bureau receives all of my credit information in its entirety?

Life is too short to live with debt

2006-03-13T12:42:00.000-05:00

Last week I received an anonymous email from someone seeking non-professional advice on how to deal with a large amount of credit card debt.

Since I am not a financial expert, initially, I was reluctant to respond. But after giving it some thought, I provided my opinion about how I would handle the same situation, as I would to anyone who posted a question on a message board or a close friend in need.

What troubles me most about people struggling to become debt-free are their spending habits. I strongly emphasize taking an honest look at one's spending: Have you really cut out all non-essential costs? Are you paying more for goods that would be cheaper if you made them yourself?

A lot of debt-ridden people would admit they have not pared down spending enough.

I can't figure this one out. If you carry huge debt and feel stressed daily because of it, why aren't you doing everything possible to get rid of that stress?

If I had tons of credit card debt, I would eat peanut butter and jelly sandwiches every day. I would not go to movies or happy hours. I would not buy clothes or books. I would get rid of cable and other unimportant services. I would re-evaluate housing and auto expenses, and downsize if necessary. I would cut my spending to the bare minimum, because that is what I'd have to do to get out of debt.

Some of you might say life is too short for such extreme measures. But I think that debt-ridden folks probably feel even greater stress, because they haven't taken extreme measures. Thus, they feel helpless in their situation.

Take control of your spending, because life is too short to live with debt!

Banks suck!

2006-03-10T16:58:00.000-05:00

If any of you are fully satisfied with your bank's customer service, please tell me which bank you use.

My husband and I have multiple accounts at a local bricks-and-mortar bank and an online bank. I opened my online account years ago, mostly because I was so fed up with my local bank. The tellers were rude, they screwed up basic wire transfers (it was for my wedding, no less!), and miscellaneous service charges appeared sporadically on our statements.

At the time, I was uncomfortable moving all of my money online, especially since online banks were so new, and chose to keep my local bank account open. I only keep a minimal amount of cash in it and transfer most of my money to the online account. Still, I prefer having the option of physically walking into a bank, if necessary, but mine only has branches near work and none in our neighborhood.

This past weekend, we decided to move our accounts to a local bank that has a branch up the street from home. My husband went to the bank's Web site and saw it offered an online application. Great, that sounds easy! So he filled it out, hit submit, and received a message saying the application could not be fully processed and that a representative would call him.

Isn't the point of offering applications online so you can avoid having to speak to a person or physically go to the bank? Plus, we wanted to open a joint account, but apparently this option was not available online. The site never mentioned that.

For the next few days, my husband got annoyed at playing phone tag with the representative, and finally told him to forget about it. I guess if we want to open an account, we will have to go into the bank.

Now I'm not sure if I want to go through the hassle of changing banks, since this one seems little better than my current one. And I haven't been thrilled with my online bank either. Its Web site is fine, but could definitely use some improvements. And there are frequent technical problems, requiring me to wait for 10 minutes on the phone or 3 days by secure email, before they are addressed.

At this rate, I'm tempted just to stash my cash under the mattress!

What does $100 mean to you?

2006-03-09T17:26:00.000-05:00

To continue my examination of when money comes between friends, does each side have a rational point of view?

The Loaner's Logic:
"I casually mentioned the show to the Borrower, and he enthusiastically agreed to go together. I didn't pressure him at all. Since I would be passing by the ticket office later that day, I offered to get the tickets for us. That way, we could get the best available seats. Sure enough, ours were third row.

With each passing month, I avoided the topic of the tickets, because I did not want to make it a big deal. I know the Borrower has debt. And yes, he makes less money than me, but that doesn't mean he should get everything for free. Actually, I think it's wrong that the Borrower's friends are always treating him, just because they make more money and are aware of his credit card troubles. The Borrower is an adult, heck, we are nearly the same age. He makes a decent salary, but the main problem is his poor financial management. If friends are treating him all the time, the Borrower will never get his finances in order."

The Borrower's Defense:
"I heard great things about the show and really wanted to see it. The tickets were expensive at $100 a piece, but everyone's told me it was worth the price. I am tight on money now, but then again, when aren't I? I'm sure the Loaner won't mind if I pay him back later for the tickets. He makes way more money than I do, and it won't kill him if he doesn't get the $100 bucks immediately. The show is a few months away, and I can definitely get him the money by then.

Anyway, the Loaner knows I've been trying to be better with my money. I've already told him that I cut back on my 401K contributions to put more money towards my credit cards. He knows that I've had tons of expenses lately. I had to borrow money from my sister for that wedding, and there are three parking tickets in my inbox waiting to be paid. I'm trying hard to get rid of my debt, but I still have to live my life! Since I'm back in the dating game, I can't stay home every night. Plus, I save money in other ways, like bringing my lunch to work, going to happy hours for half-price beers, and only buying clothes on sale."

What Does $100 Mean to You?
Depending on your situation and how you value money, $100 may be a little or a lot. From my perspective, it is a lot.

As a one-time deal, I agree with It's Just Money that $100 is certainly not worth breaking up a friendship. But what if $100 becomes $1000, or one instance turns into multiple?

In all cases, it is the Borrower's responsibility to fork up the money as soon as possible. If the Borrower doesn't have it, let the Loaner know. Remember, this is your friend, not some slimy car dealer.

And for G*d's sake, do not put the Loaner in the position of having to ask for it!

I think most Loaners will agree this is the worst part about lending money to friends. The Borrower is being inconsiderate by spending money frivolously in the Loaner's company, and ignoring the loan will only foster deeper resentment.

Growing up, I turned down invitations to dinners and parties, because I didn't have the money and didn't want to borrow it. I hate feeling indebted to anyone, even if it's over a dollar. Borrowers, you can say NO.

In my adult life, I am finally in a position to loan money. I've lent small and large amounts, but do so conditionally and cautiously.

You may call me judgmental, but I have decided not to lend money to people I deem careless spenders or serial borrowers. Nor would I really want to be friends with them.

When money comes between friends

2006-03-08T13:00:00.000-05:00

To borrow or not to borrow? To lend or not to lend?

The Loaner makes good money, has saved up a sizeable emergency fund, but has put very little towards retirement.

The Borrower makes a salary that is modest but plenty for one person to live on, has credit card debt in the low thousands and no savings, but has put a significant amount towards retirement.

Both are in their early 30s, single, and sociable.

Last fall, a popular comedy show announced it was coming to town this spring, and advance tickets went on sale. My friends begged me to go, but I refused primarily for two reasons: the show didn't appeal to me, and I thought the tickets were too pricey at almost $100 per person. To get the best seats, the Loaner quickly bought tickets for the two of them, and the Borrower promised to pay him back.

Last week, they went to the show and had a fun time. But the Borrower still hasn't paid back his loan.

During the several months between purchasing the tickets and attending the show, these two friends frequented many bars and restaurants together and in groups. Yet no money for the ticket has exchanged hands.

The Borrower hasn't forgotten about the loan, but says he needs to pay off parking tickets and other debts first. The Loaner, who has since seen the Borrower spend money on social outings, is becoming increasingly annoyed by the excuses.

Surely you are shaking your heads, because at some point, we all have been the Loaner, the Borrower, or both.

Who do you think is at fault here? Is the Loaner wrong to be upset? Is the Borrower wrong for having fun instead of paying back the loan sooner?

In my next post, I want to examine the two perspectives. (Personal disclaimer: Having been burned before, I have decided not to loan money with the exception for emergencies.)

Don't shortchange your honeymoon

2006-03-06T16:53:00.000-05:00

A shout out to all couples in the wedding-planning stages: Don't shortchange your honeymoon -- it's the best part!

Let's face it. Planning a wedding is a stressful experience and one you don't want to repeat in the near future. You spend months worrying about annoying details, such as which chairs to rent for the reception (gold or silver) or should the centerpiece be a fruit or a flower? After it's all over, your guests won't care and neither will you.

What you will care about is putting that whole wedding business behind you and spending quality time getting reacquainted with your new spouse (yes, that person you pledged to be with your entire life). So doesn't it make sense to devote just as many resources to your post-wedding period as the ceremony itself?

I am surprised that the honeymoon seems to be an afterthought for so many couples. Call me crazy, but I think I began planning my honeymoon at the same time, if not before, my wedding! For those of you new to my series, I wrote earlier that my husband and I were married on the Amalfi Coast and from there took a train to the southernmost part of Italy for two weeks of R & R.

Although we are avid travelers, for most trips we keep a tight budget, stay in cheaper places and often dine out in grocery stores. For our honeymoon, we loosened our purse strings a bit and stayed in slightly better hotels and ordered wine with our meals without guilt. We foot the bill for our wedding and honeymoon, so naturally money was a concern and priorities had to be set.

In the end, we spent the same amount for both -- I think it came to about $2500 each. It was worth every dollar. When I look at my wedding pictures, they still make me smile. But when I look at my honeymoon pictures, I wonder when can I go back?

My first Carnival!

2006-03-06T09:34:00.000-05:00

Just wanted to celebrate my first contribution to the 38th Carnival of Personal Finance hosted by Canadian Capitalist.

Check out my post on Why I Said No To An Engagement Ring!

P.S. Also many thanks to Free Money Finance for linking to my site and encouraging new visitors.

P.S.S. A much-belated thanks to Consumerism Commentary, who had faith in me and linked here early on.

The typical American family has...

2006-03-05T10:34:00.000-05:00

$3800 in the bank and an average credit card balance of $2200.

The Washington Post takes a look at new data released from the Federal Reserve about American families and savings. The article gives a detailed breakdown of the average household by life stage: young, mid-career, retired, lower income, and upper income. Some scary stats:

- Only 40% of households under 35 have a retirement account.

- More than half of mid-career households (45 to 54) have a retirement account, but the median value is just $55,000.

- Upper income folks make more money but only have a median value of $70,000 in their retirement accounts.

People, we need to save more!!!

If you're on a tight budget, consider marrying in Europe

2006-03-03T11:18:00.000-05:00

If you've been following my manual on getting married, here is my story about how we pulled off a beautiful wedding in Italy and saved money doing it.

I promise to be brief on the non-financial parts -- after all, this is a personal finance blog!

When considering a European wedding, you must first look into the legal requirements of each country and decide what works best for you. Once you've decided on the location, I highly recommend seeking out a local wedding coordinator who can assist you in satisfying the paperwork and other legal demands in country. With the growing popularity of overseas weddings, there is a wide range of agencies offering budget to luxury services. (I won't go into all the details here, but please e-mail me if you have questions!)

Now here is where the savings come in:

In most countries, you will be permitted to choose between a religious or civil ceremony. As those who have travelled to Europe know, the architecture of European buildings generally look spectacular. Luckily these buildings often house the city's town hall and its churches, where the wedding will take place. Our civil ceremony was held on an outdoor terrace overlooking the Mediterranean. The view was absolutely breathtaking. So there was no need to buy fresh flowers or other decorations to make it look beautiful -- it already was.

We selected a coordinator who specialized in the area and packaged their services. Typically you can add on or subtract services to your liking. We chose a basic package that included all of the legalities, and then added music (a violinist), upgraded the photos (everyone who sees them gawks), and transportation to and from the wedding and reception for all of our guests. For the reception, we hosted a dinner at a restaurant down the coast, where we have fond memories from a previous trip.

The entire cost of our wedding equals what some people here pay for their wedding dress or photographer alone.

Obviously, the more expensive costs are accommodations and airline tickets to your destination. You can easily find a decent price for tickets these days, especially if you are planning in advance. But consider part of your honeymoon paid for with those tickets, since you could extend your stay and hang with your honey for another week in Europe.

As for hotels, you are better off staying in one of the numerous independently-owned hotels or pensiones common in Europe. Not only are they way cheaper, but they ooze with character you will never find in the average American chain hotel.

If you are on a tight budget, consider marrying in Europe. I guarantee that your wedding will be affordable, unique and memorable for yourselves and your guests.

Negative savings: How low can we go?

2006-03-02T16:53:00.000-05:00

We're all living on equity and have no rainy day funds.

That's according to this USA Today story, which gives some insight as to why the national savings rate continues to remain in the red and how long our nation can sustain it.

How to plan a wedding and preserve your sanity

2006-03-02T13:53:00.000-05:00

To all you bride-to-be bloggers, who are normally sane and happy people but whose dark sides have temporarily taken over, do not be concerned. Most of us already-marrieds will admit that at some point during the wedding planning process, we lost it, too.

Maybe it happened once, or even multiple times. Seriously, it's happened to the best of us. For those embarking on this journey, I have some advice for you: Just assume you will breakdown at least once, so you won't freak out when you do.

Having planned my own wedding (and consoled my friends during theirs), I've picked up a few methods on how to stay cool and still make it to the altar:

1. He proposed, you accepted -- yippee! Now before you do anything, sit down with your fiance and talk.

Discuss what the wedding means to you as a couple and what type of wedding each of you wants. Most importantly, be honest. Dream a little. You will be surprised what at first seems impossible may actually be very possible. My husband and I wanted to keep it small; a big white wedding in a church wasn't for us. We tossed around alternatives, like eloping or wouldn't it be great if we could do it overseas? Our idea of having an Italian wedding began as a wild fantasy, but after doing some research, it gradually became a reality.

2. DO NOT TELL YOUR FAMILY AND FRIENDS ABOUT YOUR PLANS until you have reached a decision.

This way, you will automatically have the upper hand from the start. It is astounding how many people think they have the right to tell you what kind of wedding you should have. Your best friend, your aunt, your neighbor, the cashier at the gas station -- they will let you know. And even though you may not care for that person's opinion, it will affect you.

My friend got married last year in a huge church ceremony. She and her fiance weren't religious and didn't want a large wedding, but went ahead with it anyway to please her mother. Throughout the process, everyone pushed them around. Because they never decided what they wanted, they were exposed to the mercy of others and got eaten alive.

3. Decide how to fund your wedding.

In an ideal world, you and fiance would have been saving up for this occasion for some time. If not, try your best to fund as much of the wedding yourselves. From experience, I can tell you it is much easier to maintain your ground when the bucks are coming from your wallet. Every time someone felt it necessary to butt in, I would remind them it was our money and our wedding. That usually shut them up fast.

4. Is bigger really better? As quickly as you discovered that you can't please everyone, you also can't invite everyone.

Friends of friends of your parents won't cry if they're not invited. I have a friend who nearly fought with his fiance over who exactly was considered family, since her side was much smaller than his. In the end they just agreed that each would invite 75 people. He followed my advice to pick his battles carefully. Obviously, money will be a factor in this decision as well. Please don't get stressed out because you can't invite all of your college friends and co-workers. Most reasonable people will understand and just be happy for you.

I strongly encourage you and your fiance to make the big decisions early on in the engagement. Otherwise, you will spend every stinkin' day leading up to the wedding stressing about this stuff!!!

Why I said no to an engagement ring

2006-03-01T17:30:00.000-05:00

Shortly after becoming engaged, I ran into a former female co-worker. We had been friendly but lost touch over the years. When I told her about my engagement, the first question she asked was about the ring. I told her that I didn't have one. Her reply, "Oh, I am soooo sorry, hon'."

Whoa! After that, when people inevitably asked about the ring (or why it was missing), I clearly stated that I didn't want one.

You ladies out there are probably shocked by this, while the gentlemen are quietly cheering.

It wasn't a feminist, women-empowerment thing. Nor was it due to a lack of funds. Nor was it because I'm the type who reserves wearing jewelry for special occasions.

I guess it was because I felt our relationship had already moved beyond what the ring is supposed to symbolize. Our commitment to one another was secure.

My husband and I dated for six years before getting married. Early on, we lived in different cities and conquered long distances with ridiculously high phone bills (this was before cheap cell phone plans and IM) and the occasional visit (we were newly-graduated and poor). Thankfully, he decided to move here, got his own apartment, and eventually we moved in together.

By then, we were completely open about our finances (gracias, Quicken) and what we wanted in our lives. We had been saving for a wedding and honeymoon, both of which we paid for ourselves, and a future downpayment on a home. With this knowledge, an expensive ring just seemed like, well, an expensive ring.

Throughout our year-long engagement, I fended off the sorry looks and societal pressure to get one. At first, my mother said she understood why I didn't want one. But she bowed under the pressure and recommended that I just get a "little stone," so people could see it and it would seem like we were really engaged. As if I was planning a wedding in Italy for pretend. Gosh, even after six years of dating, my husband confessed to being nervous when he proposed!

So it's okay not to have a ring. The wedding will go on without a ring. The marriage will last without a ring. In many ways, your relationship (and your bank account) will be richer because of it.

Getting Married? Tips from a Survivor

2006-02-28T17:02:00.000-05:00

The latest flurry of wedding-related posts from the newly-engaged bloggers among us has inspired me to get on the bandwagon.

Having "been there, done that," I look back on my wedding experience warmly with only a few regrets. I suppose that's natural. It taught me a lot about love, money, and relationships. Sadly, it also made me mourn what was once a beautiful tradition, originally intended to celebrate love, and is now a shallow and commercialized one. The worst part about this unfortunate development is that our society condones, even encourages, it.

I think we can all agree the bridal industry is ruthless and relentless. Heck, it nearly suffocated me. But I managed to survive by knowing what I wanted, what I could afford, and sticking to it. Equally important is knowing what I didn't want. It's that simple.

My husband and I were married on a terrace overlooking a strikingly picturesque Italian village under a clear, blue sky surrounded by our closest family members. From there, our families continued their first trips to Europe while we honeymooned in the south for two weeks.

Not only did we have a unique and memorable celebration, but our wedding abroad cost thousands less than had we done it here.

That's impossible, you say? I say it is possible. It's just impossible to include everything the bridal magazines brainwash you to need and want in your wedding.

Don't be afraid to toss out the predictable wedding rituals. Make your own traditions. Don't succumb to the pressure of others. Do what YOU want.

In subsequent posts, you will find my manual on Getting Married, My Way: the engagement, wedding, and honeymoon.

Penny earned is a penny spent

2006-02-27T16:40:00.000-05:00

Did someone discover the fountain of youth hidden at the bottom of a venti Starbucks cup and not tell me about it?

I'm pretty sure, actually quite certain, that I will be old one day (barring any freak accidents). So old, in fact, that I will be unable physically to go to work every day of my life. But that's fine with me; I wouldn't want to and don't plan to. That's why I save.

An article in today's Christian Science Monitor discusses the negative savings rate in this country and what motivates people to spend, spend, spend like there's no tomorrow.

I'm obsessed with pfblogs.org

2006-02-27T14:05:00.000-05:00

As a newbie in the personal finance blogging world, I am trying not to become addicted to pfblogs.org.

The site is refreshingly ad-free and exceptionally user-friendly. Each time I post, I check pfblogs.org to see if my post made it up and hope that people will click on it. Then I refresh periodically (ok, a lot!) to see if there are any more clicks.

Be careful not to confuse it with the .com site, which is more restrictive and not as comprehensive. Before discovering pfblogs.org, I relied on my bookmarks to visit other blogs not knowing if they would have new posts. No more! Now I just use pfblogs.org.

35 dollar t-shirt

2006-02-27T09:34:00.000-05:00

Every time I walk into a store these days, I feel like an old lady. And I'm only 30!

As I mentioned earlier, I spent most of last week catching up with my best friend, who came to town for a visit. She had been away on travel for days and wanted to bring back a present for her boyfriend.

Tourists in DC usually flock to one of the ubiquitous outdoor stands selling 3 for $10 tees with the bold letters FBI plastered on the front. She said a T-shirt was OK, but those were tacky. (I always wonder if tourists really wear them back home).

So we browsed around a few stores looking for cool t-shirts when I spotted one that would be great for him...until I saw the $35 price tag. I shoved it back on the shelf, but the tee caught her eye. She asked me how much it was. Reluctantly, I told her, thinking it cost way too much. "Oh perfect!" she exclaimed.

I remember the days when t-shirts could be bought for $6.99 on sale at the Gap. They were versatile, too, appropriate for casual or work wear. Now the exact same shirts are considered a bargain at $9.99 or $14.99.

I understand that inflation is at play here, but I'll be 60 and senile before handing over my $35 for a T.

Following in the footsteps

2006-02-26T17:51:00.000-05:00

My brother has bought more cars than I have deodorant in the last 5 years. I kid you not. Granted I don't sweat much, so one stick lasts me quite a while.

The longest period he has held onto a car was 2 years, the shortest being 6 months. Minus a pick-up truck, he's owned them all: sports car, sedan, SUV, and minivan. When automakers introduce new gadgets in cars, he upgrades in order to get them. Leather seats, seat warmers, CD players, and of course, built-in DVD players. Naturally, he was horrified to learn that I still use his old tape adapter to hook up his old portable CD player to get me through long road trips.

Now you're probably thinking, "Hey some people spend a lot of time in their cars and have a right to buy one that's not only comfortable but looks cool, too." That's true, some people really like their cars.

But in addition to cars, my brother routinely upgrades his clothes, shoes, cell phones, computers, furniture, and his apartments. Since graduating from college, he has found a reason to move every year. Same state, different suburb. And with each apartment comes an additional room, making it necessary to buy more stuff to fill more space.

After years of competing with the Jones', my brother finally surrendered. Aggressive collection agencies phoned daily, threatening legal action until he repaid tens of thousands of dollars in credit card debt. Ignoring them didn't help -- they began calling my parents instead. He fell behind on rent, utilities and car payments. (Before I thought he didn't understand upside-down loans, but he said he did and didn't care.) And just like my parents, he kept his hell a secret and assured everyone that things were under control.

I observed from afar and had my suspicions. I started inserting my financial advice into our conversations and forwarding personal finance articles by email. My efforts later proved worthwhile. He thanked me for teaching him about snowballing debt and credit counseling.

Today he has no credit card debt and just bought his first home. He says he has learned from the past and feels free. I admire him for sticking to a plan and paying off his debts. I want to believe that he is a changed man. But when I hear about another appliance or flat-panel TV he's bought for the new house, not to mention the 2 new cars he got the day after closing, I have my doubts.

Intro to be continued...

2006-02-21T17:44:00.000-05:00

I've got a visitor in town, so posting will be light or non-existent for the week. When I return, I'll introduce you to my brother. Cheers and happy blogging to all!

Parent Trap - Vol. II

2006-02-21T15:37:00.000-05:00

In my circle of friends, the average age is thirty. We bond over this milestone birthday, mostly complaining about the dull state of our lives and wondering what the future will bring. Notably, the one thing we don't have in common is the state of our finances.

I am married without children and own a home. My husband and I save regularly for emergencies, retirement, and travel (it's what makes the world go round for us). In simple terms, we do all right. Despite practicing good financial habits, we still feel uneasy about the future because someday we expect my parents will come to us for help. And who knows how dire their situation will be at that point?

Don't get me wrong -- I am fiercely proud of our financial independence. But I envy friends who don't have to worry about their parents. Their biggest concern is making it through the next week without bouncing a check. When they need a new suit for a job interview, they call Mom and Dad. And most don't think about their own retirements, let alone their parents'.

My childhood was financially instable. Defaulted loans led to foreclosure on the home, which led to an unhealthy reliance on credit cards, which eventually led to bankruptcy. In all fairness, my parents were unlucky victims of certain events that were out of their control.

What ticks me off is that they tried to maintain an unaffordable lifestyle and sought help so late -- just to protect their image. When they were struggling to put food on the table, they still drove new cars and bought nice clothes. They were ashamed at how bad things had gotten, so they didn't tell anyone. That's how I learned the value of prioritizing one's spending.

I vowed never to repeat their money mistakes. So far, I've succeeded. I wish I could say the same for my brother. He's learning the hard way, as I'll elaborate in my next post.

Parent Trap - Vol. I

2006-02-20T10:11:00.000-05:00

A recent phone call from my mother went something like this:

"OmigodIjustgotthepropertytaxbillinthemail,it'ssohigh, I think we have to move!"

It was 9AM on a Monday morning, and I had just arrived at the office when my cell rang. She sounded breathless, like she had just run up a flight of stairs, which only exacerbated the alarming nature of her call.

Before continuing, I should mention that I have tremendous respect and admiration for my parents. Both immigrated to the United States in the early 70s under courageous circumstances, and English is their second language. They are gracious, loving, caring, and always supportive. That's why it pains me to see them struggle in their old age, primarily due to a succession of poor financial decisions.

Fortunately, there is a silver lining in this case. While they may never fully learn from their mistakes, I have.

My parents moved to a newly-constructed home (it had to be the model) in the spring of 2005. This action was finally taken after I staged an "intervention," resembling those of the drug and alcohol abuse kind. I flew out to their Midwest home armed with spreadsheets full of calculations. Basically, they stopped being able to afford their mortgage -- and maintain a business -- ummm, sometime in 2003.

Payments on the luxury car were also weighing them down. It had brought one week of joy and six months of misery since Dad drove it off the lot. (Note to couples: consult your S.O. or else car = bad surprise.) To my brother's astonishment (he said I could never convince them to sell) and mine, they agreed to downsize the car and home.

In ex-urban counties, where housing developments like my parents' are sprouting up, new residents typically are charged a monthly fee to help pay for infrastructure costs, such as water and roads. Property taxes in the first year are also lower. All of this information is available before, at, and after closing.

So about that phone call... Why did Mom panic upon receipt of the bill, when she knew the taxes would go up this year? The simple answer is my parents weren't prepared.

Problem is, they are never prepared.

I know life is hard to predict. But the control we do have, however small, can make a radical difference in the quality of our lives. Use it wisely, and your sons and daughters will surely thank you for it.

Intro to my financial history

2006-02-19T08:21:00.000-05:00

I just came across a personal finance blog, Make Love Not Debt, a newly-engaged couple's chronicle about liberating themselves from a 6-figure debt. They've openly admitted past money mistakes and vowed to correct them. But they are about to face the ultimate test -- how to have a beautiful wedding without going deeper into the red.

What they are doing is commendable, and I hope their blog will hold them accountable for future slip-ups. Because there will be slip-ups. Lots of them. There are kinder, softer ways of saying this, but from personal experience, I must tell you: it's going to be a long, hard slog.

Their blog made me realize that I have yet to share with you my financial journey. It is a story also encompassing massive debt, shopping sprees, credit counseling, auto purchases, eviction, and yes, the unspeakable -- bankruptcy. Thankfully, this didn't all happen to me. But it did to my loved ones, thus resulting in great physical and emotional involvement on my part, as well as consultation, on a daily basis.

In my next posts, I will provide some lessons learned from these challenges with a bit of humor and probably a little bitterness. Please bear with me, because they don't all come wrapped in pretty packages with bows on top.

It only takes 5 to cut and save

2006-02-18T10:25:00.000-05:00

I usually spend my Saturday mornings pretty leisurely. Brew a hot beverage, make some toast, and sit down with the newspaper inserts. I don't go through all the sale pages, only the stores I shop at regularly.

Luckily for me, there is a CVS Pharmacy right near my home, which is where I do most of my household shopping. It's especially convenient after having purchased heavy and bulky items like laundry detergent and 12-roll packs of Charmin. Since I don't have a parking space in my building, I am forced to lug my bags from a spot on the street several blocks away. So I avoid buying those items from big box stores that require me to get into the car.

Anyway, I estimate that it takes no more than five minutes total to leaf through the coupons from the paper and cut out the ones for items I use. The $1.00 coupons for Tide, Crest, and Charmin add up to considerable savings, since these products regularly go on sale at my CVS.

This 5 minute time investment often saves me a minimum of $5 every other week. That $5 buys me a Potbelly sandwich on the days I don't bring my lunch to work. That $5 buys me more laundry detergent when it's on sale (the stuff is expensive!).

I've read personal finance articles that encourage coupon cutting. But surprisingly, many stories also discourage it as being a waste of time. Are we so busy that 5 minutes of our time aren't worth 5 extra dollars in our pockets? I don't think so.

How many of us have taken advantage of department store sales offering coupons for 15% off all clearance items? It feels pretty good buying that $25 shirt with a coupon. You saved $3.75 (oops, minus the 5% sales tax, you really saved $2.50 but who's counting?). Still, you got a bargain.

So take the 5 minutes out of your precious day to cut coupons. You'll save just as much, if not more, than that bargain buy at the department store.

Our Fine Presidents

2006-02-17T10:10:00.000-05:00

While sipping my morning cup of green tea, I began skimming The Washington Post newspaper headlines: Updates from Turin (sorry don't care about the Olympics), Iraqi death squads, suicides in Rwanda. Some pretty hard-hitting stories. The Rwanda one particularly interested me.

I tried to continue reading the story on page A16, but couldn't flip to the page on the first try. Instead I landed on page A11 and was blinded by these words in giant bold print: "The Sprint Presidents' Day Sale."

The opposite page had same thing. You can't miss Parvizian Fine Rugs' "Presidents' Day Gigantic Sale" or Bassett Furniture Direct's "President's Day Sale." Nearly every other page contained ads for a sale commemorating this Monday's holiday. Marlo Furniture gets the prize for originality. Its "GW Birthday Mattress Sale" was the rare ad not containing the word "presidents" (where does that apostrophe go?).

At first I was disgusted that these companies will stop at nothing to lure us into their stores. I mean, come on, Presidents' Day? Then I realized I didn't even know what the holiday commemorated. So I googled it. I wanted to find an authoritative source, so I checked out The White House link on Presidents' Day. The link directed me to a kids page lacking any history about the holiday. No mention on the Web pages of Congress either.

Doesn't it seem strange that we choose to celebrate the legacies of George Washington and Abraham Lincoln by fingering brightly-beaded necklaces at Macy's or slipping on a pair of new sneakers at Sports Authority?

I'm not a history buff. I won't be participating in the festivities at George Washington's Mount Vernon estate. But I definitely won't get suckered into spending my dollars on a holiday that no one even knows how to spell.

Was it worth it?

2006-02-16T15:12:00.000-05:00

So a day has passed since showering your Valentine with flowers, candy, love and affection. Maybe you splurged on a prix fixe menu at that four-star restaurant you've always wanted to try but never had the occasion. Or perhaps the evening was spent quietly at home, catered by yourselves -- with a little help from Rachael Ray.

My husband and I spent the holiday in our humble abode. He quickly cooked up a few things from the fridge to nosh on, while I took down wine glasses from the cabinet. Overall, we had a perfectly pleasant meal, listened to music, read our favorite books, and called it a night. It cost us nothing.

However you chose to celebrate, I expect the final tallies should be in by now. With a couple days of hindsight, I'd like to know:

Was it was worth it?

I expect many of you will say that it was worth every penny. OK, fair enough. Now fast forward a few months...

You are writing a check for $1000 made out to the IRS for income taxes due on April 17, 2006. You knew there wouldn't be a refund. You knew you would owe money. Deep down, you hoped it would be less. Either way, it sucks to pay and now you're stressed out, because it's going to be tight for a while.

With a few months of hindsight, let me ask you again: Do you think it was worth it? I bet some of you would have a different answer.

I know it's impossible to anticipate every bill down the road, and yes, emergencies always seem to happen at the most inopportune times. But, generally, we all have fixed monthly expenses (rent/mortgage, utilities), and whatever is leftover is ours to spend.

You didn't mind being price-gouged for a dozen red roses, and you bought Godiva chocolates since the drug store brand would make you look cheap. Fine, maybe it was worth it that day.

Personally, I'd rather spend that money on vacation in South America, where I can treat a family of four to dinner in a respectable restaurant for the same amount. But that's because I am an avid traveler with a modest income and would rather have $100 to spend during my next trip, not on roses and candy.

Prioritize your spending.

The next time you're about to hand over 50 bucks for another sweater, think about that ratty old mattress you needed to replace years ago. Or that Caribbean cruise you plan to take this winter with your best friend.

If nothing else, think about your tax bill that's coming in the mail.

Be My Valentine

2006-02-14T17:00:00.000-05:00

I think it's highly appropriate that my first post falls on Valentine's Day -- and not for the obvious reason that this uber-commercial holiday makes us measure our feelings for loved ones by how much money we spend on them. Whatever happened to the thought that counts? By way of introduction, I'd like to share a V-day story that may help explain my commitment to personal finance and rational spending.

In February 2001, I had been living with my boyfriend (now husband) for less than six months. We were never into the forced romancing that comes once a year -- candlelight dinners and thoughtful gifts happen year-round. However, on this V-day, I wanted to find a present to celebrate our relationship's new phase. Sharing a roof meant more to me than saving a few bucks a month. I knew I eventually wanted to marry this man.

So that night, I surprised him with the latest version of Quicken (yes, I am a true romantic). I'm sure some of you are appalled that I even thought about financial planning software, let alone bought it, on Valentine's Day. But in all honesty, he loved it. (Hey, I included a card with sweet somethings, too!) I guess that's one of the million reasons why we're happily married today.

After reading this story, you probably won't believe me when I tell you that my life is filled with romance. Trust me, it is. I may not wear a huge diamond ring on my finger, and I'd hate it if my husband surprised me tonight with a teddy bear and a box of stale chocolates.

But on countless evenings, I've come home to a set table and a dinner reminiscent of that delectable meal we had at Da Salvatore on Italy's Amalfi coast. Then I notice he still has on the clothes he wore to work, because he didn't have time to change before cooking. Now that is sweet.

Don't let the multimillion-dollar marketing strategy of some mega-corporation tell you how to spend The Almighty Dollar on yourself or your loved ones -- I mean, how unromantic is that?

Thanks for reading, and welcome to The Almighty Dollar!