Jul 26, 2011

Getting Your Children to go to College

William Elliott III, Ph.D., a professor at the University of Kansas recently published findings that "kids with a savings account in their own name are six times more likely to attend college than those without an account."

Dr. Elliott continued, "It's helping them to be thinking of college, to have it on their mind in a more concrete way than simply saying, 'I expect to go to college.  They've taken some actions, they've got a savings account, they're saving some money.  Positive expectations aren't quite enough."

Would these conclusions have been true for you or your children??

Jul 7, 2011

Dave Ramsey video about buying cars (Carole)

So, after a long winter's nap, here I am with a great video from Dave Ramsey on buying cars.  Hope you enjoy it and get a little bit of inspiration!

May 18, 2011

CSA (Janssen)

I've mentioned on my personal blog that I've signed up for a CSA this year (if you're not familiar with the CSA format, it stands for Community Supported Agriculture and you pay an upfront cost to get a box of fresh (possibly organic, depending on the CSA) locally grown vegetables every week).

We subscribe to Johnson's Backyard Garden (which is an organic farm) and it costs $300 for ten weeks. We have some friends that we split it with (which also means we can split up the weekly pick-up), so it's $15 a week. It's a LOT of produce - we really have to work to get through it all.

Do I think it's worth it?

Depends on what your goal is. If it's to spend the least amount on food you possibly can, it's probably not worth it.

On the other hand, if you're trying to increase the amount of vegetables you eat, want to support local industry, and don't want to pay the really high sticker price for organic produce at the grocery store, this is a great way to go. For me, I've decided that it's worth a slightly higher price to eat better and put a fairly large percentage of my grocery budget into my local economy.

I feel like I've been able to keep our grocery bill fairly stable even with this addition, because I now plan my meals around our vegetables, rather than meat. Instead of vegetables being a side dish, they are part of practically everything we eat.

Plus, we've now eaten a ton of things I'd never tried before and very likely would never have purchased on my own (bok choy, rainbow chard, kale, escarole, fennel, etc). 

Anyone else do a CSA?

Apr 26, 2011

Are You Wealthy Yet? (Carole)

Recently I ran into an old friend.  I don't see her very often, but I hear about her through the grapevine from time to time.  She is a lovely person with a great family and many talents.  She and her husband are also quite wealthy.  They own at least two multi-million dollar homes (I think there's also a large cabin out there somewhere), they travel the world on a pretty regular basis and drive very nice cars.  But if you just met her at the grocery store, you would really never know they were loaded.  They don't talk about their possessions or travel and don't dress in an expensive way either.  They are just good people -- even their children are delightful, which I think is a quite an accomplishment when you have lots of money.

A few years ago, a mutual friend mentioned that this family earns about $3,000,000 per year.  I did the math and that works out to $250,000/month!  Of course, they lose probably half of that to the IRS, but still.  That's a lot of moo-la.   I find it interesting to see what people spend their money on.

If you had millions to spend, what would you do with it?  Would you be quietly generous?  Would you flash it around in certain ways?  Would you just buy stuff just because you could?  I hope I would be frugal still and be a good steward with what I had.  I know I would travel.  And I'd probably still watch for cheap fares and good deals at hotels.  In that vein, here is a interesting blog,  Help Me Travel Cheap, that I recently found that helps those of us who are still working for a living, travel the world without breaking the bank.  Being able to travel and experience new places, makes me feel like my life is wealthy.  Maybe you feel that way too.

Apr 20, 2011

Frugal vs. Cheap

In my mind, the difference between frugal and cheap is this:

Frugal is saving money by limiting spending on yourself; cheap is saving money by limiting spending at the expense of someone else.

For instance, when my husband and I go out to dinner, we don't spend a lot of money. We usually get one entree and perhaps an appetizer to share. We are water drinkers and dessert is usually something I prefer to have at home (because my list of desserts to make is so long that if we have dessert when we go out to eat, I'll never ever make a dent in this list). So, generally our bill is fairly small. I would call this frugal.

But the tip? We always leave a good tip. My husband's standard is to leave (he claims that if the service is really bad, he'll do 15% or if it is truly terrible, 10%, but I have never once seen him do this). And if our meal was so inexpensive that even a 20% tip would be less than five dollars, we generally round up to at least that. Trying to save money on eating out by shortchanging the waiter seems cheap to me.

Plus, I like the idea that the waiter might assume it'll be a pathetic 7% tip or something because we obviously aren't big spenders and then opening up the bill to see that we did right by him.

I think of cheap as trying to get other people to pay for things that you should be responsible for or trying and save money at the expense of someone else.

I always want to live frugally, but I try hard not to be cheap.

Apr 8, 2011

Money and Marriage, Part 3 (Guest Post by Alisha)

Welcome back! This is my last post about how my husband, Neill, and I handle finances. I've already dished on the money situation when we dated and then when we moved in together and in this post I want to share with you how we are handling things now that we are married.

For Neill and I, being open and honest with each other about our finances and our financial goals is very important. So, we've been having lots of frank conversations about spending, saving, and goal setting. We try to be 100% transparent with one another and we've decided to take a big step that will help us with
this.

In my last post, I mentioned that we opened up a joint saving account a while ago that we've used in addition to each of our personal saving accounts. Now, however, having our individual accounts just doesn't seem to feel right anymore. Even though both of us have said that whatever we save individually is really for us, we want to make that thought a reality. So, we decided to totally revamp our organization.

With this new set-up neither one of us will keep a personal savings account. We'll only put money into our joint savings. This certainly wasn't something I would have wanted to do originally, but right now it makes the most sense for us.

We decided to keep a total of two joint savings accounts so that we can save money for different purposes. One is a Save for a Rainy Day Account. This is our six-month emergency fund that is not to be touched unless we have . . . an emergency. The second is a Save to Spend Account. This is where we can save for vacations or a new piece of furniture (like maybe that couch I mentioned in my last post!). The only catch? Our numbers aren't quite where we would like them to be. So, we've started a friendly-competition to get into savings gear. We each have a savings goal (different, to accommodate our salary difference) and the first person to reach their goal wins $500 dollars out of the Save to Spend account.

A bonus of merging our savings is that it motivated us to finally set up an emergency fund. Since Neill is still the primary wage earner in the family it is really important to me that we have an emergency fund set aside. We've always known where we might pull money from if we found ourselves in a dire situation, but this is the first time actually pulling the money, setting it aside all in one place, and taking a hard look at whether or not we have enough. I'm really excited about our new plan because I feel like we are a bajiliion steps closer to following through on our new years resolution to be financially secure.

As you’ve probably already gathered, I don't have any secrets to successfully negotiating finances in a relationship. But for us, communicating and being flexible seem to really help. Since we both keep an eye on our finances and discuss them pretty regularly we are able to realize when something isn't working. And, we aren't afraid to switch things up a bit. Who knows? Maybe in another year we'll decide to merge Finances can be a touchy subject to talk about and I think the uneasiness surrounding money-talk makes it extra difficult for couples. So, I thought I'd quiet that little voice in my head that says discussing money isn't appropriate and lay it all out there for everyone. I’d be lying if I said that it was easy! But, I had a good time writing these posts and I hope you've enjoyed reading them! Please do come over to Married in Chicago and say hello from time to time. I’d love to hear from you!

What are your thoughts on merging finances completely? Do you keep a private saving account? What
motivates you to save money?

Alisha is a 20-something newlywed pursuing a doctoral degree in psychology and blogs at Married in Chicago.

Apr 6, 2011

Money and Marriage, Part 2 (Guest Post by Alisha)

Hi everyone! I’m back with the second part of my story. In my first post, I shared how my husband, Neill, and I handled money throughout the first two years of our relationship. Once I finally found a job, we realized that we seriously needed to get real about how much money we made versus how much money we spent. So, we made our very first budget in good ol' Excel!

To do this, we made a list of all of our monthly expenses. We had 24 in all--from groceries, restaurant, phone bills, household bills (e.g., electric), car insurance, medical bills, money we put in savings, public transportation costs, etc. Then, we looked through our bank statements and wrote down the amount we
spent on each category for the preceding three months. Finally, we averaged these three numbers to determine how much money we typically spent in each category. For example, on groceries we spent $613 one month, $498 the next month, and then $402 the month after that. This averages out to spending $504.33 every month on groceries.

Then, we looked at how much we were spending each month on average for personal expenses (e.g., buying a new shirt), bills, and joint expenses (e.g., going out for dinner together). All of this gave us a good snap-shot of what we were spending. For example, we discovered out we spent an average of $970 dollars a month on joint expenses (groceries, restaurants, gas, and miscellaneous items) and we had an average of $3,566.17 hundred dollars of household bills per month (mortgage plus all the monthly bills).The next step was to look at the money going in and compare it to the money going out. Obviously, we hoped to find that the money coming in far outweighed the money going out so that the extra money could be spent on frivolous shopping sprees put in savings.

But, no such luck. Taking a cold hard look at our bank statements and comparing our in-put versus our out-put helped us realize that if we wanted to save the sort of money we wanted to save, we had to readjust our monthly spending habits. Since most of the monthly bills were fixed, one area that we targeted was how much money we spent at restaurants. For example, we reasoned that if we were spending an average of $500 on groceries every month, we probably didn't need to be spending an average of $300 dollars on going out to eat. So, we developed a budget to help us curb our spending on non-essential items so that we could put more money in savings.

Awesome, right?

Eh.

I must admit that I don't think we ever truly stuck to our goal spending in each category. Keeping up with a budget every month is time-consuming and hard work! But, our first foray into money management together was still really helpful. It raised our awareness and forced us to talk about our financial details more than we ever had. It set a precedent in our relationship that each of us would be open and honest about finances. Plus, it gave us a chance to really discuss what our financial goals were. Looking through our past spending also showed us that a lot of what we spent money on was joint expenses. So, we decided to open up a joint checking account.

With the addition of the joint checking account, we had five bank accounts between us! We each had a personal checking account, a personal savings account, and then one joint checking account. Our respective paychecks got automatically deposited in our personal checking accounts and then each time we got paid we would transfer a certain amount of money to the joint account, a percentage of money to our personal savings, and keep a percentage of money in our personal checking accounts to pay our credit cards and use as we pleased. We would use the joint account to pay for groceries and anything we did together. But, the boundaries were (and still are) pretty fluid. If I needed something but had no cash left, I was free to use the joint account. Similarly, if our joint account was empty and we wanted to order food one of us would cover it. While this is basically the opposite of sticking to a budget, it has worked for us. After opening up a joint checking account a joint credit card was the next logical step. This way, we could make big purchases together without worrying about how to split the cost. Even though I knew it made logical sense, I was definitely aware that opening a credit card together was a big step to take. I remember being pretty nervous about what might happen and I refused to be the primary name on the account! I guess I was worried about being in charge of a credit card that I didn't have complete control over.

Making a budget also helped us realized that if one of us spent a big chunk of change it would inevitably effect the other. So, it became less acceptable for one of us to make a big purchase without consulting the other. Do we always consult one another on things we buy impulsively? No. For example, I didn't need to get Neill's permission before I went on my recent shoe buying binge and Neill doesn't need my
permission before he buys accessories for his guitar.

So how do we know what we need to talk about? Since we don't usually keep a lot of extra cash in our checking accounts, a good rule of thumb is that we need to talk it over if we would have to take money out of our savings account or put it on a credit card to buy it. We try to frame the conversation like "I want this. How can we make this happen?" rather than seeking permission, but sometimes we just can’t
make it happen. For example, I’d love to get rid of our hand me down couch in the living room, but have you seen how much couches cost?!? We just aren’t willing to spend that kind of money on a new couch when our current one is still usable. Honestly, we tend to talk over most things we are planning to buy. Not because we necessarily have to, but because we talk and it comes up in conversation. But, I think if either one of us was constantly buying small things impulsively we would have to have a conversation and figure out some sort of system to manage it.

We've basically stuck to this system, with a few added tweaks, for the last three years. Our attention to finances as waxed and wane--some months making a big effort to keep our spending down and other months allowing our selves to put things on the credit card and worry about it later. However, after about 9 months of marriage we decided to make some big changes!

Have you ever made a budget? Where you able to stick to it? If so, what are your secrets? How much do you and your partner talk to one another about things that you buy? Do you keep a stash of money that you're allowed to spend however you want? How do you manage having a joint account or joint credit cards?

Alisha is a 20-something newlywed pursuing a doctoral degree in psychology and blogs at Married in Chicago.