Cursed

I am cursed with a love for the finer things in life. Don’t ask me why, but even as a child, when the Christmas catalogs started rolling in, I always managed to want the most expensive thing in the entire catalog. On every page of the catalog, too, for that matter.

I still love more expensive things, including, but not limited to, jewelry, electronics, craft beer, and the PRECOR AMT 100i machine at my gym. Okay, so the beer and the machine don’t cost a lot, but added up, it’s much like someone else’s costly daily Starbucks run. Also, buying my own 100i machine would run about $8K, which makes the $45/month gym fee seem like small potatoes. The cost of the machine is roughly 14 years of membership fees, so I’m calling it good.

[And I know that if I skipped the craft beer entirely, the whole gym thing would be less necessary, but that’s another issue that has nothing to do with finances.]

All of this to say that I’m going to try a new way of handling my desire for nice things. I opened a few more ING savings accounts (easy with ING!) and labeled them with my savings goals. So now I’ve got a gym membership fund, a travel fund, and a bling fund. I don’t think I’ll be able to add to the latter two accounts every month, but if I don’t spend my portion of fun money each month, I’ll put it into savings instead, and have my husband also add any of his leftover fun money to the travel account, too.

I’m also going to add the gym fee, which we paid up front last year, to our monthly budget and just save that amount each month to go toward the renewal come this fall. I also think seeing that dollar amount in the budget will goad me into going more often, since right now mentally it seems ‘free’ since all I do is show my card at the front desk and I’m in. Not so. I already manage to get there 2-3 times a week, but I’d like to make it more like 4-5, since it pays dividends in the form of stress busting and caloric burn… and I want awesome muscles, which doesn’t come easily or cheaply.

Less clutter, better money management?

I was reading this post from The Simple Dollar on decluttering and money, and I think one of the commenters (chacha1) actually made a brilliant point:

“…[T]he correlation between uncluttering and financial success. You rarely see true financial freedom in a cluttered household. People who have trouble dealing with their Stuff almost always have trouble dealing with their money, too. And that’s because the same emotional triggers and environmental pressures that shape our spending also shape our relationship with Stuff.”

I think this comment is very interesting. I have very few things at my apartment that I’d be hesitant to chuck in the dumpster, donate, or sell on eBay. Most of my clutter-type stuff is at my parents’ house in my former bedroom (childhood toys, mementos from vacations, etc.) but I think I could easily go through all of that in a few days and pare down most of it to a couple boxes. Stuff is just not that important to me.

Clutter (especially stuff on the floor!) drives me crazy, albeit slowly. I can handle a pile of my husband’s laundry waiting to be put away or a stack of art supplies… for a few days. After a few days, though, I lose my patience and just put it away. Part of my happiness project is to just take care of those things right away (especially tasks that take one minute or less) so it’s not a looming project.

In a similar way, I’ve totally lost my patience for paying interest and lack of control over my finances. Having my spreadsheets and my Mint.com account keeping track of everything in an organized way makes me feel much more at peace. There’s not a lot of mental clutter surrounding these things for me, so I just feel free, kind of like being in a clutter-free room.

Ooh, this makes me want to organize a closet…

Knowing what’s important

Part of being wise with money is knowing what’s important to you. Some love to travel, so they’re happy eating budget meals at home in order to save up for trips. Some people play expensive sports like golf and forgo expensive wine.

Personally, I love going out to eat and find it hard to do that within our planned amount, which is rather large to begin with. But there’s nothing like having a lunch date with my husband, since we work opposite hours and most days don’t see each other awake for more than a few minutes.

There are all kinds of recommended budgets out there (we’ll never eat on 5% of our income!), but I think if you’re able to save, splurging in one category helps staying within the lines in the other categories. This goes along with Gretchen Rubin’s happiness theory to “spend out.” Spending and consuming within reason make life enjoyable!

It’s all about the … benefits? … baby

One of the best things about working full time is having the desired benefits package that goes along with being a salaried (or full time exempt, or 40 hours a week, or tenured) employee. One of the things I like best about my benefits is that I can elect where to put the amount of money my organization allocates for benefits. This means that I can choose between putting that money into a 457(b) [Deferred Compensation] plan, or take medical insurance, or any number of other insurance options (long-term care, vision care, etc.). But my absolute very favorite thing is my paid time off (PTO).

My organization used to have separate sick leave and vacation days, but the switch to PTO offers healthy, active employees a fair shake in terms of days off. And you just know that some employees would call in “sick” when it was sunny and gorgeous in June. I was using my company’s PTO calculator to track how many hours I’ll have banked before our annual family summer vacation, and realized just how many hours I can bank in a year [after having 12 years of service on the books]. Holy smokes! Let’s just say it’s way more than the average 2 weeks, and even more generous than 6 weeks. It isn’t a whole summer like teachers get automatically, but teachers also work far more than 40 hours a week for relatively low pay.

Now, obviously, if I get the flu or have my last two wisdom teeth out (pesky things) I won’t be sunning myself in Aruba for two months, but having that time will help prevent burnout. Having this benefit would also make it very difficult to voluntarily give up working where I do for another institution, unless I could negotiate for comparable time off. It would be hard to quantify what PTO is ‘worth,’ because almost no amount of salary compensation would make up for having time to relax and de-stress.

Boycotts, or voting with your $$$

I’ve noticed a number of my Facebook friends posting about boycotting BP due to the disaster in the Gulf. While I can understand their frustration with BP, I was quick to point out that BP-branded gas stations are franchises, owned by small-business folks, not the huge parent company of British Petroleum. Another friend posted Newsweek’s helpful article on boycotting BP, which I found very interesting.

Even aside from boycotting, anytime you buy something, you are essentially voting with your money. By buying what you do, you are keeping one business afloat while leaving the others behind. Shredded wheat vs. Cocoa Puffs, McDonald’s vs. Wendy’s, Wal-Mart vs. Target, and so forth. We don’t think of buying as voting, but over time, it makes a difference.

After a bad experience with a pair of glasses, I only shop at Wal-Mart if they’re the only store that has what I need. I try to keep my money in my community, when possible. I prefer to buy at my locally-owned grocery store, and even shopping at Target is, for me, is, in a way, ‘buying local,’ since I live in Minnesota where the parent company is headquartered. However, one of my favorite ways to save some cash is to buy used on eBay; DVDs, clothes, and electronics can be had for a fraction of the retail price, and somebody gets to put a bit more cash in their own pocket instead of throwing something away. I feel good about both of these decisions, of spending where I do and not spending where I prefer not to.

So, when confronted with a ‘vote with your money’ moment, what do you do?

Saving, or, pay yourself first

One thing that it seems few Americans do is put aside some money each month for a rainy day, or what Dave Ramsey would call “an emergency fund.” It’s hard to do when living paycheck to paycheck. The first step is probably the toughest, which is to live on less than a full month’s pay. A monthly spending plan can help with this immensely.

Once you see everything, I mean absolutely everything, laid out like that, you can see where you can cut back. Or, you can see that you need a part-time job to be able to save that emergency fund. Dave Ramsey recommends pizza delivery, but I also know people who write book reviews or do secret shopping in order to make a few extra bucks a month.

All our saving is done with ING savings accounts labeled for their various needs (like when we were saving for a new vehicle, we had “New Car” and “Emergency Fund” accounts). ING makes it easy to set up recurring deposits, and since there’s a delay when transferring money back to a checking account, it makes you think twice about spending money that isn’t immediately available.

Interest rates on traditional savings accounts right now are poor, but taking that money out of an account where it’s easy to spend and moving it to an account where it’s more difficult to spend sets up a psychological barrier to blowing all our hard-earned money. Also, since I still get to see that money via our Mint.com account, I get to enjoy seeing one category (regular spending) be in the positive instead of the negative (student loans).

High-yield savings accounts or money market accounts are another option for a better rate of return, as are CDs (though CD rates are also low right now). The high-yield accounts usually have a minimum deposit, like $5K, so right now, that’s not an option for us while we aggressively–and I mean, really aggressively–pay off debt.

But here’s where I disagree with Dave Ramsey a bit. He says to take all your savings (if you’ve got any beyond $1,000) and throw that toward debt. I’m not comfortable only having a $1K emergency fund, especially with higher medical insurance deductibles and the likelihood of us moving within the next year (damage deposit and paying rent on two places in one month in order to move slowly is a big ouch!). I think the amount in the emergency fund should be comfortable for the individual family; for most, I’d guess that’s going to be 3 months income/expenses, which could be over $10K for some families, and less than $3K for others.

What do you think? Do you have an emergency fund? Do you feel, like Dave Ramsey does, that having a fund wards off Murphy?

Can money buy happiness?

I’ve been reading Gretchen Rubin’s The Happiness Project, and she puts forth that money can buy happiness, to a degree. I really do agree with this (I would!), because there are some things that I’ve been able to do or enjoy, and without some expendable income, this wouldn’t be possible. Lack of money generally makes people worried and, therefore, less happy. Having a bit of fun money allows us to enjoy those happy benefits.

The first happy benefit of money is the same as Gretchen’s first investment early in her project, and that’s a gym membership. I don’t know why it took me so long to get off the couch and into the YMCA, but when my husband and I finally joined, I discovered just how stress-relieving exercise can be, among other things. I’ve also vastly improved my posture, which means less achy neck/shoulders after a long day, which has definitely increased my happiness.

The second is visiting my sister or having my sister visit home while she’s going to graduate school in Pittsburgh. I spent Thanksgiving with her there, and she came home at Christmas and during her mini-pre-summer-term break in early May, and will be back in August for a month. Without my own ‘fun money,’ and my parents’ generous attitude about flying her home for visits, I wouldn’t get to see her for the length of her 2-year program. I’m very thankful for these visits.

The third is something little that doesn’t take a lot of money, but definitely makes me feel more connected to friends, and that’s going out. Whether it’s to a coffee shop, movie, or restaurant, spending time with friends makes me happy. Now, fun can be had without spending money, but since I currently live in a 1-bedroom apartment (which saves money), it’s hard to entertain a group of friends. Also, since I live in a moderate-sized city, if we go ‘out,’ odds are we’ll run into other friends and that will add to the enjoyment.

What do you think? Can money buy happiness? Why or why not?