Money Well Spent Part II

In my previous post on money well spent, I explained some of my thoughts on the relationship between money and experiences. Essentially, I feel that while refraining from spending money on frivolous expenses, such as lattes, is the "right" thing to do financially, it isn't always the best choice. Instead, I argued that certain experiences are worth the money.

Let me take that idea a little bit further. One of the reasons that this whole idea came up was because I have often read about how much money a person can save simply by cutting back on small everyday purchases, like coffee. They say that $4 a day is like $1400/year, and that's a huge amount of money saved, and that's true! You can't argue with the math. Therefore, some financial experts recommend cutting back on certain expenses, like four dollar lattes, in order to save yourself a huge amount of money. And I agree with them.

This might sound like it is in contrast to my previous post, and my previous point, but it is not. While I did advocate certain experiences, I did not encourage certain expenses. The difference comes from the originality and uniqueness of the experience. The reason that the cafe crawl we went on was so good was because a) I had never done it before, b) I had a great time with old friends and new friends, and c) I got a memory I can cherish for years to come. A daily latte cannot, and will not do that.

In fact, I would argue that a four dollar latte on a regular basis would actually cheapen the experience. If I drank coffee every single day, having a coffee is no longer special. Just ask my fiance, who works at a coffee shop. When she first started working, she would drink free coffee (because its free!) until she was sick and couldn't sleep at night. Now, she's learned to moderate herself, but there is nothing unique or special about drinking coffee, as it is done on a regular basis.

As soon as a fun, cherished moment becomes routine, it also becomes mundane. If you are buying a coffee out of sheer habit, then stop. It's not worth the money. Save your money for something unique, an experience, a present, a treat. Not only will you save money, that four dollar latte will become the treat, the present, and the experience. And that's worth paying for.

A Priority Shakedown

I often have the chance to go into schools while I'm reading meters. A couple weeks ago I was in a high school where Caucasian was the clear minority. On Tuesday I upset some preschool kids as they had to move their desks so I could access a closet. Today I was in an elementary school, and while I was waiting for the engineer to let me into their electrical room, I read some of the work the students had posted on the hallway walls.

With St. Patrick's day coming up, the kids had all drawn four leaf clovers on a big sheet of paper. In the middle, they were clearly instructed to fill in the sentence, "I'm lucky because..." I read about a dozen of these one sentence insights into the human soul, and it was easy to recognize a clear pattern as there were only two responses. I am lucky because I am in relationship with a person, or I am lucky because I have this cool toy. Now, they weren't exactly in those words. They were more like, "I am lucky because I have a PS3/Nintendo DS/lots of Wii games", or "I am lucky because Nicky is my friend/I have a cool teacher/I have a nice family". Of those dozen responses, only one was different. They were lucky because they had a sweet teddy bear.

It shocked me, because at such an early age kids are already prioritizing what is most important to them. When they think of their life, and what makes them lucky, it is either a person or a thing. It makes me wonder what I prioritize in my life, whether that's my PlayStation 3, my fiance, or my teddy bear. What makes me lucky? Sure, I am lucky to have a video game console, a nice TV, and a bottle of scotch. But even if I didn't have those things, I would still be lucky because I have a number of good friends, and my girlfriend said yes when I asked her to marry me.

So if people and relationships are my priority (and I think that it should be), then how does my money reflect that? As I mentioned in my last post, I think we would agree that it would be great if our lives were a little less complicated, and a little less stressful. So how do I go about making my financial life work for me, towards my priorities? If my priority is a financially stress free life, with a focus on my relationships, how do I make my money work for me? How does my spending reflect my priorities?

I want to be clear though. The purchase and acquisition of things is not wrong, it is not bad, it is not sinful. Buying a television or a new pair of really nice jeans is something that should be enjoyed, and treasured, and cherished. For me, however, that joy should not supplant relationships, and it should not put me in a financially precarious situation. Each of us is going to have to figure out that balance in our own lives.

So what about you? What are your priorities? How does your lifestyle and spending habits reflect that? Want something to change? What makes you feel lucky?

Have you opened an online savings account yet? Don't think you need one? On Monday I'll show you how I put $30 in my account for just a few minutes of work.

What Kind of Money Do You Want?

My job allows me to see lots of different houses. I see old houses, overgrown with weeds, fallen trees, and the scrap metal from a couple of generations. I see freshly built duplexes, ancient apartments, and mansions that fill an entire city block. As I read meters, I always steal glances into the windows and lives of the houses I walk by. Some windows are boarded off, others have curtains closed. Some display the marble floors and nine square foot paintings that are professionally hung in the hallway. Others show me a library of books, and some smell like tomato soup, or curry. As I see the houses, I imagine myself living there. Which one would I want to own? Do I want the one that needs a gardener (or two) to maintain the lawn, or do I want the one that is close to being torn down?

It's the same question I have with money. What kind of money do I want? Do I want a limitless bank account, or am I okay with living paycheck to paycheck? Do I want finances that need constant attention? Do I want something that's ready to be torn down?

All I want from my money is the ability to live the life that I want without stress or strain. I see money as a means to an ends. I do not see the point in hoarding money, but I do see the benefit of saving for emergencies. I do not feel the need to buy the newest, or most expensive vehicle, but it would be nice to have a way to get around town. So what does my ideal look like?

Live the Life I Want

I'm lucky in the sense that I don't want an extravagant life. I don't want multiple vehicles, or a mansion. For now, I am content with taking the bus and renting. I do want to be able to eat as much as I want, of the food that I want. That doesn't mean I'm eating out every night, but once a week or so would be nice. I would also like to be able to come home and be entertained, whether that means watching television, playing a video game, or going out for an evening. Financially, I want to be debt free, with some money in the bank for emergencies and for the future.

Without Stress or Strain

I think that a significant amount of financial difficulty comes from either spending more money than one makes (and going into debt), or spending every single penny that is earned. It isn't fun to be constantly worried about whether or not I am going to be able to afford going out for dinner or if I should buy new jeans or not. Without stress means that I'm not worrying over every little purchase, and without strain means that there's a gap between my income and my expenses. I want to be able to spend my money on the things that are important to me without feeling guilty or panicked. If I want a new video game, if I feel as though it would be worth $60, then I should be able to purchase it without regret or remorse. That does not mean that I should be getting a new video game every week, and if I am feeling that desire, then I probably have larger issues. However, if I feel as though it is a justified expense, and I have room for it in my budget, then I should be free to spend my money on it.

I think most people have a similar desire. They want to be feel free financially. I think a lot of us 20 somethings feel very trapped by our finances. We grew up with our parents trying to teach us to be financially responsible, or not talking about money at all. They'd either give us a small allowance and then take some back right away, trying to teach us that it was savings, or taxes or some other such rubbish. Or perhaps they would just drop large chunks of cash in your direction, hoping to tide you over for awhile, hoping that you'd figure it out on your own. Our schools forced us to do math in a class that was not math class, figuring that by making us to work with taxes or budgets we'd be fine once we left high school and got real jobs. It didn't work, and it made managing money feel like work. So no wonder we're so lost financially.

We feel trapped, and at a loss. We feel as though debt is inevitable, that everybody is in debt from the minute they're born until they day they day. You grow up in debt to your parents, before being shipped off to a $10k/year college where you spend four years figuring out that you don't want to be involved in your major for the rest of your life. You take your $25k of debt and marry it to someone else's, putting yourself $50k in the hole. Then you get a car ($60k), some furniture ($65k), and start drinking because you just realized you have more debt than the two of you make in 18 months ($70k). Your interest payments take a quarter of each paycheck away, so you say, "screw it" and get yourself a mortgage so that at least your debt is acquiring property ($370k). You work hard for the next thirty years of your life, just in time to put your kids into college, retire without a savings plan, and die.

And every single day, there's a slightly heavier weight on your shoulders, as you slowly watch your money bleed away.

I don't want to feel trapped by my money. I want to feel free. Free to spend where I want to spend, without guilt, remorse, or fear. I think I can accomplish that, and I think you can too. I think that together, perhaps our generation can be the one that says "no more" to credit card payments and stupid debt. Maybe we can be debt free and living the life we want to live without stress or strain. Is that the kind of money you want?

Why Save Money?

It's 10:00 on a Tuesday night, and I'm exhausted. I just got back from a grocery trip to Superstore, and I am trying to write a blog post. The past few days have been incredibly tiring for me. Work was really rough today, and I feel like my body is fighting some sort of sickness. Yet here I am, slaving away on a tip that I want to share with my readers about how they can save themselves some money. I'm writing, and I'm reading over what I'm writing, and suddenly I ask myself, "Do my readers even want to save money?"

There's something about our society that fascinates me. We live in a consumeristic haven of prepackaged lust, where everything is about purchasing power, quality of life, and the bottom line. We strut about with our fancy cars, fancy houses, and fancy purses, proud as a peacock over our pretty purchases. This, we declare, is the reason why we work so hard, so that we can spend our money on lavish purchases. Our self worth is defined by how much money we are able to spend on ourselves.

Yet, you put those same people in the room with a sale sign, or better yet, label something "free", and you can watch the previously content proud cats pounce upon goods and services as if their shiny shiny coats depended on it. We all want to save a buck, we all want to get a good deal, no matter how thick our wallets are. I mean, we'd all like to be able to shrug off $50,000 jewlery, but I think that most of us, somewhere within us, wish that we had a little more money. Maybe not so that we can show off how rich we are, but so that we have a sense of security or safety, or so that we are enabled to live the life that we want to live without stress or strain.

So do you want to save some money? Is saving money worth it? Do you see saving money as something that is difficult, or restrictive, like something that your parents enforced upon you while you were younger? What is your ideal financial picture look like? What feelings does having some money in the bank evoke? What about if you didn't have any money?

Have you ever heard about compound interest, and how if you can invest $1000/year in your 20s, you'll be better off than the guy that saves $1000/year in his thirties, fourties and fifties? Did you know that all that financial advice comes from people in their thirties, fourties, and fifties, that never managed to save $1000/year and now they're regretting it? I don't want to be that guy. I want to be the guy that somehow managed to scrap together a hundred bucks every month and managed to stick it away somewhere so I can say, "Hey, I made a smart decision, and one day I'll benefit from it", rather than say, "Yeah, I could retire, but hey, it was so shiny, I couldn't resist!"

So yeah, I want to save some money. I think that if I can pull together a few bucks now, I'll be saving myself a lot more in the future. I'm thinking that if I work a little harder now, I can work a little easier later. What about you?