Tomorrow, I will head off to one of my numerous part time jobs. This one differs from the rest in that I don't receive a check. That's right, the good old-fashioned barter system at work -- have you tried it lately?
Last year, I got the opportunity to work in the office at the music school where my children take lessons and was to receive both an hourly wage and a 25% discount on lessons. With four kids taking piano, that made one child free, which is a great deal. Unfortunately, the economy being what it is, and music lessons being a real luxury, the school was unable to pay me starting this fall. I offered up the option of barter, and was immediately taken up on it. If you look at the barter system, it can equal real money on the the part of both people, the school is getting quality work for no cost, while my kids get quality lessons at a reduced cost to me. So far, the system is working well for both parties.
Now, being my financially creative self, you can imagine that the barter story does not end there. The value to me for the school year is nearly $1,300, but I got to thinking about what would happen if the barter option dried up? I have no reason to think that it will, and believe that the hourly wage may even return at some point, too, but I tend to be cautious with money. I decided that in addition to getting the discount on the lessons, I would also pay myself out of the kid activity account, assuming that I might someday have to come up with the actual cash.
Based on made up, somewhat complicated math, I settled on paying myself $40 per week for 40 weeks, which is a little longer year than the music school year, and a higher rate than the hourly wage I was receiving. If all goes as planned, I will have $1,600 come next June, which is more than a term worth of lessons in the bank, as well as a profit of $300 in additional savings. It has been a little dicey lately to have enough kid activity money for all the fall start-up costs, but I have been able to manage things so far.
I love the idea of paying myself, hiding money away, and creating any extra savings that I can. Between the barter, and the other paying part time work, if I save it all, I am going to be able to take the family to Disney World, or redo the kitchen, or pay for the braces. We may not be in the same position financially as other people we know, but we are trying to have a little bit of fun with the challenge!
Wednesday, October 13, 2010
Monday, October 4, 2010
A Little Savings goes a Long Way
My dad tells a story about a colleague of his who lived paycheck to paycheck for years, always worried about the next disaster. One day over coffee, my dad and some others got to talking about the value of saving just the littlest bit of money, ten dollars a paycheck, and putting it into a savings account. This guy thought they were all crazy, $10 would never amount to anything, but somehow they all convinced him to give it a try. To this day, I have no idea why he tried it, whether it was an attempt to prove people wrong, just the right moment, or an act of total desperation, but this man started putting $10 a pay into a savings account, every two weeks.
Time marched on, with the occasional comment about the increased balance in the account, maybe particular notice of milestones of $50 or $100. At some point that year, they all received a small raise and discussed how much could be added to the savings rate from the raise. After all, you were fine before, you won't miss what you didn't have. The man added a bit to his $10 per pay, and the account kept growing. Months passed.
Imagine the shock of my father and the others when, one day, the recent saver came in to the break room, sat down, and said, "My savings account is empty." Knowing my dad as I do, I can see the look on his face, and imagine the reaction as somewhat close to having a heart attack! How could this have happened? This colleague had done so well for so long, what could have cause this slip?
The man said to all his friends, "Wait, you don't understand! My hot water heater died over the weekend. I walked into the store, and I paid for the new one with cash. I have never in my life had the money to fix a problem like that with cash."
Listening to my dad tell that story, you can hear the pride in his voice for his friend's success, you can feel the saver's pride in himself, you can have your own lightbulb moment that a little savings can go a long way. 30 years later, I have never forgotten the lesson.
Time marched on, with the occasional comment about the increased balance in the account, maybe particular notice of milestones of $50 or $100. At some point that year, they all received a small raise and discussed how much could be added to the savings rate from the raise. After all, you were fine before, you won't miss what you didn't have. The man added a bit to his $10 per pay, and the account kept growing. Months passed.
Imagine the shock of my father and the others when, one day, the recent saver came in to the break room, sat down, and said, "My savings account is empty." Knowing my dad as I do, I can see the look on his face, and imagine the reaction as somewhat close to having a heart attack! How could this have happened? This colleague had done so well for so long, what could have cause this slip?
The man said to all his friends, "Wait, you don't understand! My hot water heater died over the weekend. I walked into the store, and I paid for the new one with cash. I have never in my life had the money to fix a problem like that with cash."
Listening to my dad tell that story, you can hear the pride in his voice for his friend's success, you can feel the saver's pride in himself, you can have your own lightbulb moment that a little savings can go a long way. 30 years later, I have never forgotten the lesson.
Tuesday, September 28, 2010
Teetering on the Brink
I have to admit, I started this blog on a bit of a whim and, not surprisingly, failed on the follow-through. I have found, however, that I still mention it in conversation, or continue to think about topics, and even find people who sound interested in reading it! After a few weeks of contemplation --because if I start again, I plan to continue -- I have decided to give it a whirl! Enjoy and pass it on!
Where has life taken me since last we met? Unfortunately, down a path of financial drama, for a variety of reasons, that has led me to a place I haven't been since finishing college and starting my first job. That first job paid me a whopping $20,000 a year, with one week of vacation, and no additional benefits. Luckily, I had a health plan that I could buy into through my job, but they paid zero. I'm not sure people appreciate benefits as much as they should!
Anyway, two months into the job I found myself, after paying for the health insurance, car insurance, security on the apartment I was about to move into and various other odds and ends, with $50 in my savings (my personal retirement plan) and a few dollars of grocery money in my wallet. At the time, I was keeping track of my catagories (my baby version of Seven Checking Accounts!) in a small notebook -- I still remember that it was blue, with red flowers on it. On that day in August, every column, except the $50 for retirement, said $0. Zero dollars. Makes me hyperventilate just thinking about it. Somehow, even when the bills are paid, those zeroes are really scary. I remember telling my mother, and having her point out that the bills were paid, so the zeroes didn't matter, things would recover and all would be well. She was, of course, right. Time marched on, the paychecks rolled in, the catagories recovered, and everyone got a Christmas present from me that year!
So here I am, more than 15 years later, having that hyperventilating feeling come back as I look at zeroes in my checking accounts after a summer that financially kicked my butt. Which just goes to show you that a) you can't plan for everything to go smoothly all the time and b) if you manage to plan somewhat, you can teeter on the brink of disaster without actually falling over. Which is something to be proud of, anyway.
I could have titled this entry "Plague and Pestilence" as my disaster came from those two source; Plague being a euphemism for medical expenses, and Pestilence being, well, pests. After an unexpected house repair of $2,500 -- that account was no where near ready to handle that -- caused by carpenter ants (assisted by birds, bees and a few mice), I broke one of my rules (don't borrow from one account to pay for another) in order to follow another (don't go into debt if you have money available to pay for something). The choice here being the weather tight, livable house over the new car that we really, really need, but the old one still runs! As for Plague -- how my four reasonably healthy children can continue to cost so much medically is astonishing and somewhat alarming!
I was really taken by surprise in the past few weeks, as the zero balances started showing up. I added a few fall clothing items for the kids to the mix, and stocked up the larder with some gluten free supplies, plus paid for the usual fall activities, and suddenly found myself with no wiggle room financially. It doesn't help that I was informed recently about some upcoming expenses -- braces, school trips -- that need to be accounted for in the budget that is already to the penny. I have woken up in the night with bad money dreams, I have found myself checking and re-checking balances, and I have put a personal moratorium on spending. I even have a hard time spending on groceries!
Which brings me back to why I have chosen to restart my blog now. Since I think about money all the time, I might as well share my thoughts with others. It gets some of the thoughts out of my head, helps me realize that I am lucky enough to have a system -- even when it looks bleak, and hopefully myexperiences will help someone else.
Where has life taken me since last we met? Unfortunately, down a path of financial drama, for a variety of reasons, that has led me to a place I haven't been since finishing college and starting my first job. That first job paid me a whopping $20,000 a year, with one week of vacation, and no additional benefits. Luckily, I had a health plan that I could buy into through my job, but they paid zero. I'm not sure people appreciate benefits as much as they should!
Anyway, two months into the job I found myself, after paying for the health insurance, car insurance, security on the apartment I was about to move into and various other odds and ends, with $50 in my savings (my personal retirement plan) and a few dollars of grocery money in my wallet. At the time, I was keeping track of my catagories (my baby version of Seven Checking Accounts!) in a small notebook -- I still remember that it was blue, with red flowers on it. On that day in August, every column, except the $50 for retirement, said $0. Zero dollars. Makes me hyperventilate just thinking about it. Somehow, even when the bills are paid, those zeroes are really scary. I remember telling my mother, and having her point out that the bills were paid, so the zeroes didn't matter, things would recover and all would be well. She was, of course, right. Time marched on, the paychecks rolled in, the catagories recovered, and everyone got a Christmas present from me that year!
So here I am, more than 15 years later, having that hyperventilating feeling come back as I look at zeroes in my checking accounts after a summer that financially kicked my butt. Which just goes to show you that a) you can't plan for everything to go smoothly all the time and b) if you manage to plan somewhat, you can teeter on the brink of disaster without actually falling over. Which is something to be proud of, anyway.
I could have titled this entry "Plague and Pestilence" as my disaster came from those two source; Plague being a euphemism for medical expenses, and Pestilence being, well, pests. After an unexpected house repair of $2,500 -- that account was no where near ready to handle that -- caused by carpenter ants (assisted by birds, bees and a few mice), I broke one of my rules (don't borrow from one account to pay for another) in order to follow another (don't go into debt if you have money available to pay for something). The choice here being the weather tight, livable house over the new car that we really, really need, but the old one still runs! As for Plague -- how my four reasonably healthy children can continue to cost so much medically is astonishing and somewhat alarming!
I was really taken by surprise in the past few weeks, as the zero balances started showing up. I added a few fall clothing items for the kids to the mix, and stocked up the larder with some gluten free supplies, plus paid for the usual fall activities, and suddenly found myself with no wiggle room financially. It doesn't help that I was informed recently about some upcoming expenses -- braces, school trips -- that need to be accounted for in the budget that is already to the penny. I have woken up in the night with bad money dreams, I have found myself checking and re-checking balances, and I have put a personal moratorium on spending. I even have a hard time spending on groceries!
Which brings me back to why I have chosen to restart my blog now. Since I think about money all the time, I might as well share my thoughts with others. It gets some of the thoughts out of my head, helps me realize that I am lucky enough to have a system -- even when it looks bleak, and hopefully myexperiences will help someone else.
Thursday, April 22, 2010
Kids and money
Over the weekend, there was an article in the paper about how introducing kids to saving and spending in junior and senior high school might be too late. I couldn't agree more! The earlier the better!
Last night, I took my 8-year-old to the store to buy something she had been saving for -- it cost $35 and she has been saving since Christmas. In January, she started getting $10 a month in "pocket money", plus the tooth fairy paid a couple visits, and she got some birthday money. Even at 8, she was very aware of what she wanted, how much it cost, and what she neede to do to get there. A few years ago, at 9, another daughter saved up -- for over a year! -- so she could by an American Girl doll and one accessory herself. It cost $130, and she bought nothing else with her own money until she had it. I cannot tell you how proud I was!
About a week ago, my husband and I started a conversation about upcoming activities and the costs we were anticipating. We did not mean for the children to get involved, but they were around, and soon caught on to the discussion. Imagine my surprise, when a little while later, the kids had made the decisions about what was important to them! So, instead of a summer vacation this year, we are saving for Disney next year. Instead of bidding on a silent auction item where they could spend a day with their teachers from school, they chose to spend a day with the family at the State Fair. Without having been exposed to making choices about money before, they would probably have not been interested in the process, and would have begged for everything. It really eases parental guilt when the kids get a chance to make the choices and you know everyone is satisfied.
Out of four children, I do have one worrier -- about everything, but, lately, about money. She "hates" money, worries that we don't have enough, about how much things cost, and, especially about how much her activities cost. I am so glad we are open about things now, because she would have years of bottled up anxiety by the time she got to high school! I am pretty sure that is how we get overspenders and hoarders later in life! Kids need a healthy exposure to money and all its roles in life long before they need to be the ones focused on the big financial picture so that they know what they are doing when the time comes.
Last night, I took my 8-year-old to the store to buy something she had been saving for -- it cost $35 and she has been saving since Christmas. In January, she started getting $10 a month in "pocket money", plus the tooth fairy paid a couple visits, and she got some birthday money. Even at 8, she was very aware of what she wanted, how much it cost, and what she neede to do to get there. A few years ago, at 9, another daughter saved up -- for over a year! -- so she could by an American Girl doll and one accessory herself. It cost $130, and she bought nothing else with her own money until she had it. I cannot tell you how proud I was!
About a week ago, my husband and I started a conversation about upcoming activities and the costs we were anticipating. We did not mean for the children to get involved, but they were around, and soon caught on to the discussion. Imagine my surprise, when a little while later, the kids had made the decisions about what was important to them! So, instead of a summer vacation this year, we are saving for Disney next year. Instead of bidding on a silent auction item where they could spend a day with their teachers from school, they chose to spend a day with the family at the State Fair. Without having been exposed to making choices about money before, they would probably have not been interested in the process, and would have begged for everything. It really eases parental guilt when the kids get a chance to make the choices and you know everyone is satisfied.
Out of four children, I do have one worrier -- about everything, but, lately, about money. She "hates" money, worries that we don't have enough, about how much things cost, and, especially about how much her activities cost. I am so glad we are open about things now, because she would have years of bottled up anxiety by the time she got to high school! I am pretty sure that is how we get overspenders and hoarders later in life! Kids need a healthy exposure to money and all its roles in life long before they need to be the ones focused on the big financial picture so that they know what they are doing when the time comes.
Wednesday, April 7, 2010
Making Choices
This is always a tough time of year in my system, because I have to pay for spring and summer activities at the same time. It involves some creative accounting, and making choices about what to pay for, and what to put off. It means that I can't do those little extra things that I like to do for the kids. Since they have no sense of time, it is hard to make them understand that they will get the good stuff, just in August instead of right now!
This year, I am a bit lucky, because I have a small buildup in my clothing account. Who knows why, and it will disappear quickly when bathing suits get purchased, but for the moment, I can use it to cover other expenses. Even doing this is a choice that I hate to make, because it temporarily messes with my numbers, and means I have the stress of keeping track of what is going on. I don't like stress, which is the whole reason I started this in the first place! Every year, I tell myself I will have a buildup by spring, and every year, I don't.
I will say that this is basically the only time this happens, and I know it is better than wondering all the time about where the money is coming from. The kids need activities like music and sports, and you have to set aside the funds on a regular basis, there just is no other way to make it work!
This year, I am a bit lucky, because I have a small buildup in my clothing account. Who knows why, and it will disappear quickly when bathing suits get purchased, but for the moment, I can use it to cover other expenses. Even doing this is a choice that I hate to make, because it temporarily messes with my numbers, and means I have the stress of keeping track of what is going on. I don't like stress, which is the whole reason I started this in the first place! Every year, I tell myself I will have a buildup by spring, and every year, I don't.
I will say that this is basically the only time this happens, and I know it is better than wondering all the time about where the money is coming from. The kids need activities like music and sports, and you have to set aside the funds on a regular basis, there just is no other way to make it work!
Friday, March 26, 2010
C is for Clothing and K is for Kids, or C is for Children and K is for . . .
On my various debit cards, I have letters in the signature area to denote which account the card belongs to. This is mostly necessary because all the cards from the credit union look the same and I don't want to mess things up. Saddly, mess ups do happen. When I first chose "C" for Clothing, it made perfect sense to use "K" for kids. Except, of course, for those times when I think too fast and "C" starts to mean children! Since the clothing account often has considerably less money than the kid account does, you can see where this may be a problem! I usually catch things, but have had to handle the occasional overdraft, which just makes me feel dumb and overwhelmed!
I understand that my method seems confusing, and it will take time to settle in. This is partly why I started adding accounts two at a time, until I really felt comfortable adding more. After a while, as I could see the money building up in each account, and always felt like I knew what was available to use, the confusion of the multiple accounts started to feel better than the overwhelming confusion of knowing nothing and trying to pay bills with no money every month.
Sit down for a minute and really focus in on how you feel when you don't know how much money you have, how to pay the bills, and what to say to your kids when they ask for yet another thing. It doesn't feel good, does it? Now imagine yourself knowing what you have and being able to compare that to what you need or want to spend. Even if you have a small amount, the knowledge is powerful! How much easier will it be to say to your child, "I know you want new tennis shoes, but we can't buy them today. If you can be patient, though, I know we can buy them for you in two weeks." Kids love clarity, and it doesn't get much clearer than that!
You will make mistakes, use the wrong card, forget which category has money and which one doesn't, but you will also learn how much you spend and how you spend it. That seems like a great tradeoff to me!
I understand that my method seems confusing, and it will take time to settle in. This is partly why I started adding accounts two at a time, until I really felt comfortable adding more. After a while, as I could see the money building up in each account, and always felt like I knew what was available to use, the confusion of the multiple accounts started to feel better than the overwhelming confusion of knowing nothing and trying to pay bills with no money every month.
Sit down for a minute and really focus in on how you feel when you don't know how much money you have, how to pay the bills, and what to say to your kids when they ask for yet another thing. It doesn't feel good, does it? Now imagine yourself knowing what you have and being able to compare that to what you need or want to spend. Even if you have a small amount, the knowledge is powerful! How much easier will it be to say to your child, "I know you want new tennis shoes, but we can't buy them today. If you can be patient, though, I know we can buy them for you in two weeks." Kids love clarity, and it doesn't get much clearer than that!
You will make mistakes, use the wrong card, forget which category has money and which one doesn't, but you will also learn how much you spend and how you spend it. That seems like a great tradeoff to me!
Friday, March 19, 2010
Seven Checking Accounts
I have four children, who were born within 4 years and 1 month of each other. In many conversations with others, I hear the words, "I don't know how you do it with four kids and . . .
The "and" is followed by any number of statements -- "do all that volunteer work," "get them to all their activities," "knit," whatever happens to fit with the conversation at hand. Most recently, it was "and pay for all their activities on only one income!" So, I gave my stock answer: "Well, I have seven checking accounts."
Just for fun, try telling someone that! The response I get is usually a cross between "you're kidding, right?" and the person stepping back, because, really, who wants to be that close to a crazy person?
I actually do have seven checking accounts. Truthfully, I have eight -- my husband opened a new one last week, but since I don't think my name is on it, and I think seven rolls off the tongue a bit better, we'll keep it to seven. And, lest you think I really am crazy, I will disclose that they are all free (thank you Credit Union!), they all have overdraft protection, and I always get the cheap checks. Believe me, that many checking acounts isn't costing me much, and it is saving me a fortune!
Long ago (before kids, and before husband!) I kept all my money in one little account, and kept track of things on a spreadsheet. Sometimes the spreadsheet numbers got really close to zero, but I always knew how much I had available to pay my bills, save for retirement and splurge on a little fun. Then I married a great guy, who is a whiz with long term finances, but can't keep track of the variables of everyday life. Many of those early marital squabbles came about as he "borrowed" from one of the categories, but never paid it back! We tried so many different ways to have money when we needed it, and did manage to stay out of debt, but the system always felt like a free for all.
Fast forward to those four little ones running around the house, and one day I decided to sit down and figure out how much I planned to spend on kid activities. As my friend pointed out the other day, anything times four is going to turn into a big number! Imagine my surprise when the swimming lessons, zoo and museum memberships, a children's theater subscription for the older ones, music lessons, a couple of half day summer camps and some rec center sports teams suddenly added up to $5,000! You just can't pull $5,000 out of the grocery money over the course of a year, and think that it is going to work out. At the very least, someone is going to get hungry!
So, the checking account system was born. We already had one, of course, and I added two more right away, then another two, and finally last year, two more. Now I have checking accounts for general use, house, clothes, food, gifts, medical expenses, and, naturally, kid activities -- the thing that started it all!
What have I found over the course of 8 years in this system? That, my friend, is what I want to share with you! We're up over $9,000 for those kids now, their feet are growing at an amazing rate, and gift giving opportunities arise at every turn. We always have the money we need (although that medical category has been a kicker in recent months, a story for another day) and I don't feel like the kids are experiencing stress over money, even as they are aware of the tough economy. I hope to share with you how to meet the challenge of family and finances head on, using a little organization, a little discipline, and a lot of checking accounts!
The "and" is followed by any number of statements -- "do all that volunteer work," "get them to all their activities," "knit," whatever happens to fit with the conversation at hand. Most recently, it was "and pay for all their activities on only one income!" So, I gave my stock answer: "Well, I have seven checking accounts."
Just for fun, try telling someone that! The response I get is usually a cross between "you're kidding, right?" and the person stepping back, because, really, who wants to be that close to a crazy person?
I actually do have seven checking accounts. Truthfully, I have eight -- my husband opened a new one last week, but since I don't think my name is on it, and I think seven rolls off the tongue a bit better, we'll keep it to seven. And, lest you think I really am crazy, I will disclose that they are all free (thank you Credit Union!), they all have overdraft protection, and I always get the cheap checks. Believe me, that many checking acounts isn't costing me much, and it is saving me a fortune!
Long ago (before kids, and before husband!) I kept all my money in one little account, and kept track of things on a spreadsheet. Sometimes the spreadsheet numbers got really close to zero, but I always knew how much I had available to pay my bills, save for retirement and splurge on a little fun. Then I married a great guy, who is a whiz with long term finances, but can't keep track of the variables of everyday life. Many of those early marital squabbles came about as he "borrowed" from one of the categories, but never paid it back! We tried so many different ways to have money when we needed it, and did manage to stay out of debt, but the system always felt like a free for all.
Fast forward to those four little ones running around the house, and one day I decided to sit down and figure out how much I planned to spend on kid activities. As my friend pointed out the other day, anything times four is going to turn into a big number! Imagine my surprise when the swimming lessons, zoo and museum memberships, a children's theater subscription for the older ones, music lessons, a couple of half day summer camps and some rec center sports teams suddenly added up to $5,000! You just can't pull $5,000 out of the grocery money over the course of a year, and think that it is going to work out. At the very least, someone is going to get hungry!
So, the checking account system was born. We already had one, of course, and I added two more right away, then another two, and finally last year, two more. Now I have checking accounts for general use, house, clothes, food, gifts, medical expenses, and, naturally, kid activities -- the thing that started it all!
What have I found over the course of 8 years in this system? That, my friend, is what I want to share with you! We're up over $9,000 for those kids now, their feet are growing at an amazing rate, and gift giving opportunities arise at every turn. We always have the money we need (although that medical category has been a kicker in recent months, a story for another day) and I don't feel like the kids are experiencing stress over money, even as they are aware of the tough economy. I hope to share with you how to meet the challenge of family and finances head on, using a little organization, a little discipline, and a lot of checking accounts!
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