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Families -
Kids
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Written by Steve Mudie
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When our oldest son was little, and had developed enough language skills to where he learned to ask questions, he didn’t waste any time in putting his new found skill to use. As young parents at the time, my wife and I were thrilled with his questions as it gave us the opportunity to impart the wisdom we had garnered through the years to our eager-to-learn son. Well, okay, perhaps it wasn’t quite that grandiose, but we did enjoy answering his questions. At least we did at first, and then it became old. Like any child, it seemed at times like we were bombarded with the “Whys?”, “Why does it rain?”, “Why can’t I eat candy all day?”, “Why do I have to go to bed?”, and many thousands of similar questions. Like a rapid fire attack from a Congressional panel he asked constantly about the world around him. Most of the answers were easy, but as he progressed from simply learning about the world around him to asking why he wasn’t allowed to do things others could the questions turned hard. The reason they were hard wasn’t so much that we didn’t have an answer but more that we were sensitive as to how we answered. What I mean by that is when Andrew asked why he couldn’t do something that was evidently okay for Terri and me to do, I wanted to give him a clear understanding as to why instead of simply exercising my authority over him. Obviously, there are things that adults can do (drive a car) that little kids cannot but when it came to basics such as “Why can’t I stay up late?” it was tricky. Now I realize that you may be thinking that there lies an easy answer; “Because we are the adults and you are the child.” or the classic “Do as I say, not as I do.” But having been a kid once I was never too keen on either of those answers and wanted to teach Andrew in a different way than I had been taught. Or more to the point, I wanted him to learn and not just be told. I have to admit that regardless of my aim I sometimes missed, and unfortunately dependent upon my mood at the time, he sometimes received one of the old school answers above. However, I made it a point to go over the “whys” with him on a regular enough basis such that he learned. Despite the many questions, and answers though, he also learned from watching us as actions speak louder than words. So as we progressed through his childhood and we made one mistake after another with money, he was there to see – and learn – it all. Without going into the details I’ll give you a brief summary. We bought a house that we couldn’t afford, opened a business whose finances were intertwined with our own, didn’t pay our bills on time or enough and as a result were foreclosed upon, had our only car repossessed out of driveway and ultimately filed bankruptcy. Even after all of that pain though we didn’t learn and went right back into debt and struggled to pay even the basic bills. All the while, Andrew was watching and learning much the same as I had when I was growing up. It shouldn’t have taken as long as it did but after more than 20 years as adults struggling with money, we reached the point in or around 2001 to where we’d had enough. As Dave Ramsey is fond of repeating; “We were sick and tired of being sick and tired.” As you may have surmised, we first heard of Dave around that time and took to his teachings excitedly with the hopes that we could finally end the vicious cycle we had lived in for far too long. It wasn’t until 2006 though, when I first found YNAB, that the budgeting part of Dave’s plan made any sense to me. Since that time, we started down a path that now has us operating with a full buffer, paying off debt and planning for the future with ZERO money worries for the first time in our adult lives. But Andrew missed that part. Or at least he was somewhat unaware of it as his last couple years of high school were filled with activities not the least of which was his earning the rank of Eagle Scout. Now that he has graduated he is out on his own, working at a new job and is about to get married. Where did time go? In any case, he has entered into such a dramatic new stage of life that he has started to ask questions again. Specifically, (thankfully) they are mostly money questions. This time I am more than eager to teach him. I’ve learned a lot about money in the last few years and am armed with rock solid answers for him concerning budgeting, debt, long term planning and more. But even with that arsenal I have to be careful with what I say or how I say it because he can’t help but be influenced by having watched our history of abysmal money management through all those years. The solution to this quandary came to me quite easily, full disclosure. Without hesitation I will talk to Andrew about anything that we have done, and are now doing, financially. Our finances are an open book as we have banished long standing societal taboos about money talk from our home. In our talks I have widened his eyes more than once as I’ve told him of the stupidity that used to reign as master of our money. At every junction I make it a point to teach him why what we did then was wrong and why what we do now is right. If the phrase “Teach your children well” were a metaphor it may just mean that in order for your children to learn and grow to become happy prosperous adults then they need to drink from the “well” of your knowledge. If you don’t know, then they can’t learn, so commit yourself now to reading more, asking more, learning more, and when your children ask, don’t hold back, tell them everything. My overall message about money management to Andrew now is “Do as I do, not as I did.” So far I am pleased to tell you that he appears to be listening, and learning. |
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Everyone -
Saving Money
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Written by Eileen McGuire
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You have probably often heard that when shopping, you should bring a list and stick to it. You probably also know that this is easier said than done! Not only are there items innocently and legitimately forgotten from your list, but the whole store is full of schemes to separate you from your money. This is called marketing and it’s big business in America. It is the business of convincing you to spend more. This article will look at just a few marketing techniques. Knowing your enemy gives you an advantage.
Everything about a store is designed to get you to spend more. Let’s look at a grocery store as an example. I will not mention any names. All of them do it to a greater or less extent. Smaller “bargain stores” tend to invest the least, counting instead on lower prices (or the image of lower pricing) to attract you instead. Large or high scale chains do it the most. Whether its high quality or best prices, they have an image to promote that will make you think it’s worth it to buy more than you intended. I used the word invest. Stores invest considerable time and money into research and consultants to design the store to induce spending.
First, they want you to be comfortable in the store. Items should be convenient, service cheerful and efficient, and atmosphere pleasant. Let’s look at these three categories one by one.
Why do you suppose they place fresh flowers by the door or near the front of the store? At the beginning of the shopping trip, you haven’t spent any money yet. This is the time you are most likely to be “talked” into (by power of suggestion) a fairly large impulse purchase. The bakery is near the front for a similar reason – just in case you came in hungry! “Would you like a nice hearty bread or a sweet treat?” the layout of the store tempts. You still have hardly spent anything. Why not? (Less expensive breads and treats are much further on in the store.) Then one typically comes to the deli department with its expensive meats and cheeses. Less expensive lunch options are in the grocery section. Less expensive but nearly identical quality cheeses are in the back corner in the last aisle of the store. When you find it, you are tired from all your shopping. Do you really want to walk all the way back to the beginning of the store to compare prices on two nearly identical blocks of cheddar? Most people will assume they are probably close enough in price to not make the trip worth it. Not true.
The bakery and deli are both service areas. These people can greet you with a smile and set you in a good mood for shopping. It is not by accident!!! Then you proceed to the produce department. Time for something nutritious now that our “little” splurges are taken care of and we are feeling good. Why are the lights different here? Why baskets and decorations? They want you to feel like (or imagine) you are at a farmer’s market – where the produce is very fresh. This inclines you to like the quality of what you see. You may buy more. You may be willing to pay higher prices for such good produce. Everything is convenient and attractive.
Turn the corner and the ambience fades. You have had your fun. It is time to get down to the business of grocery shopping. Items at eye level are generally the most expensive. Look around when you grocery shop. You may see something better or at a better price. Items down low are often child magnets. Why do you suppose Mr. Bubble is kept on the bottom shelf? To make it accessible to kids’ eyes, so they will ask for it. These things are found throughout the store. Be aware of them. One time I was shopping with two preschoolers and we came to the frozen aisle. In it there was one of those big cardboard displays, brightly colored, with those little boxes of animal crackers; those ones that look like little circus train cars that have string handles. Why would such a thing be right there? Its first purpose is to attract little eyes with the colors and the fact that it is in the aisle. It is actually in the walking path. (Things in these “in the aisle” display cases (my pet peeves!) are usually expensive items that they want you to notice. Therefore they make them into obstacles that one must walk around.) Why the frozen aisle? It is about half way through the store. The cookie aisle is several rows back. The child is probably not so tired yet that they are misbehaving or in a bad temper, so it’s hard to say “no”. Many parents would not want to go “all the way back” to the cookie aisle to check its price against the just-as-beloved bargain brand. As a result, they may just do the easy thing and pick it up for the child (it’s only small) and spend a high premium without really thinking about it. Are you starting to get the idea, how your feelings are being toyed with to the store’s advantage?
Toward the end of the store are the things you can’t live without. Good thing. If they were just impulse items, you would probably be too tired to bother. You get your toilet paper and greeting cards, cleaners, holiday items, pet food, and bread and dairy products here. You can’t skip this section. These are necessary items. Many of them are also convenience items and could be purchased elsewhere at significant savings, but you are too tired, at this point, to even think about going to another store. The pharmacy is at the very end. If you dropped off your prescriptions at the beginning, you can pick them up now. If you need something else, you must stop anyway. Can’t go without medicine.
Before the checkouts are stuffed animals, dish sets, and other promotional items, often in large “bargain bin” style displays. These are just for those people who are willing to say, “I’ve spent this much. Why not?” At the checkouts are the candy bars and tabloids – also impulse items, but don’t you deserve a treat after all that hard work? Don’t the kids deserve a reward for being so good in the store? That’s what they want you to think.
Cheerful service and pleasant atmosphere go hand in hand with the placement of items. We have already mentioned the bakery and deli people – your greeters. At some stores they have actual official greeters. They have to train and pay people to do this job. Why do they invest in that position? Think about it. Why do they put up decorations, provide air conditioning in the summer, provide music? They have to pay for all these things. Why do they open more registers if the lines are long? If you don’t have a pleasant experience in the store, you won’t want to shop there. Conversely, if you like the store, you are liable to stay in it longer. Research shows that the longer people shop, the more they are likely to spend. If this wasn’t the case, they would not invest time and money in it. They exist to make money, not spend it. What about “thoughtful touches” like free hand sanitizers, free samples, community bulletin boards…. These are there to help you feel good about the store and your shopping experience so that you will want to do it again.
You may think I am cynical, but I’m not. I’m an optimist at heart. I just know a thing or two about marketing. What can you do about it? 1.) Don’t fall for the marketing!!! Go to the store with your list and use it. Look around you. Notice details. Ask questions. Think about the possible answers. Be wise to schemes and smile at them as weak attempts at manipulation. Don’t be taken in. 2.) Shop when you are neither hungry nor tired nor in a hurry. This will save you money! Be willing to walk by treats you don’t really want or need. Be willing to go back and forth through the store a couple of times as needed to check on prices. Knowing your prices is your number one weapon in enemy territory. Shop by unit price if possible. Bring a calculator to figure it out if needed. (Sometimes one thing is sold by the quart and a similar one by the pint or gallon or one type is sold by the pound and the other by the unit. This may be an attempt to obfuscate so that you won’t bother. Bother! You may need to do this from time to time as prices and items change. It always seems that just when they get me in the habit of buying one particular item, because it is the lowest price, I notice that prices have changed. A similar item is now a better price. It has happened too many times to be coincidence. I think they get you into a habit and then subtly raise the price on the item and hope you won’t notice.) 3.) Again, unit shop whenever possible. I heard a story about a teenage girl whose mother had died. She did the shopping for her family. When she got to the mayonnaise, a friend who happened to be with her that day, noticed her going for the smallest jar available. “Why,” he asked, “did you choose that one?” Her answer was simply, “Because it’s the cheapest.” By unit price, it was the most expensive one there. It was only cheapest only because it was smallest. She was trying to do her best for her family, but she just didn’t know! Unit pricing is how much an item costs per unit. Mayonnaise is usually sold by the ounce, I think. What is the best price per ounce? Which would cost least if you were to buy just an ounce? Most stores have this information near the price on the pricing label. 4.) Remember your budget. We all have a limited amount of money to work with. Don’t forget this important fact. Treat items should probably come out of blow money, gift money, a treat fund…that is also finite. 5.) Consider the psychology of not spending. You will enjoy shopping more if you leave with more cash and less stuff. (More on this in the article called “Feelings”) |
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Everyone -
Saving Money
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Written by Eileen McGuire
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When I was a teenager, I shopped because it was something fun to do with my friends. A couple of us would walk to the mall in our town and spend the afternoon. There were lots of teenagers, older folks, families there doing the same thing. Look in any travel brochure. Shopping is one of the prominent categories. Shopping is mental and emotional stimulation. It is fun to see pretty things, get ideas for what you would like, use your imagination, dream, start conversations with the people you are with…. (Don’t think I am only talking about women here, guys. My husband likes to “haunt” car lots, tractor and boat shops, and motor cycle stores. Same entertainment – different products.)
People sometimes shop because they are bored, depressed, or have a need for social contact. That’s OK as long as they don’t actually buy anything. “Window shopping” can be a happy and energizing experience. On the other hand, if you buy something to make yourself feel better (a “pick-me-up” experience) it will probably be unsatisfying in the end. The thing you buy doesn’t mean anything to you in itself. It is only a way of temporarily adjusting your mental frame of mind. When your mood changes, you are likely to lose interest in it, perhaps wonder why you bought it in the first place, or maybe wish you had your money again. It’s called impulse buying and it’s usually a destructive thing, because you are spending money frivolously that you could be using in a more satisfying way. Let’s take a closer look at this concept.
I know people who feel so poor that as soon as they get their check at the beginning of the month, they run over to _______ and buy a big cart of stuff, much of which they don’t need. As the month goes on, they think of things they need or want more, which they can’t afford because their money was mostly spent on that first big shopping trip, so they bring a bunch of it back and buy more food and other necessities and just a few treats. By mid-month, they are wishing for pay day because they are already out of money again. They feel desperate enough that when they get paid, they go on a spree all over again. In the summer, they have a yard sale, selling off any of the cheap junk that hasn’t already broken to help them get through that month. This pattern is an attempt to put a temporary fix on a long-term problem. They really don’t have very much money. That’s a real problem. Shopping on payday and getting lots and lots of stuff helps them forget, for a few hours, that they don’t have much money. They feel rich! What a great feeling! (All this is documented shopping psychology, by the way.) But when they get home, they bring it all in and eat the edible treats. They look at their nice new stuff. They look at their mostly empty wallets, and they feel poor. There is a better way.
If you don’t want a short high followed by a long bout of “buyer’s remorse” (both very real things – The bigger the purchase, the bigger the high (yes, a real chemical high created in the brain – that’s why some people really are addicted to shopping and spending) and the bigger the crash.), try this two-fold solution. - Use a budget. A budget will help you remember all your needs and obligations for the pay period and beyond. Use it to not allow yourself to do unreasonable things with your money that will make you feel terrible afterward. Budget yourself some money to just blow for the fun of it. Make it something that you can afford and will give satisfaction, not depression!
- Always ask yourself questions, like: Why do I want this? Do I need it? Will something else do just as well? Do I need this much of it? Where will I put it? Will it go with other things I have? Do I really like it enough to buy it? Is it worth the money? And my favorite: Could I just do without it? Ask yourself the same question in several different forms. Make sure you are buying the thing because you really and truly want and/or need it, not for some emotional reason. If your decision is based on emotions, you will not get the satisfaction from it that you expect.
Here are a few strategies you can use to see if an item will truly satisfy. - Carry it around in the store with you for a while you shop. Look at it. Think about it. You will find your feelings clarify about it one way or the other as you go. If they don’t, put it back and leave the store. How did that make you feel? Was it easy or was it hard? Are you worried someone else will get it or don’t you care that much? Is your mind letting go of it and going on to other things or can’t you stop thinking about it? This should bring you some clarity. Understand yourself, give yourself time, and you will be more pleased with the decisions you make.
- Think about your paycheck. What do you get paid an hour? Let’s take an example of $10.00/hour. Next time you lay down $10 for a meal, think “I just gave an hour of my life for that lunch.” Was it worth it? Next time you go to the store and buy something for your own pleasure – a game, a book, a video, a decoration…think, “Would I go to my workplace and work an hour so I could have this?” If you would gladly do so, buy it. If the answer is “no” or “not sure”, put it back. It is not all that important to you and won’t bring you the level of satisfaction you are hoping for.
- Think about how nice it will be to have the money for something else. Money is power to buy things. More money, more power. Less money, less power. When you shop, you are trading buying power (bought with your labor) for an item (or service). Think about which you’d rather have. How many times have you bought something and later seen something else you liked even more? Try to shop so that you have no regrets. Only buy what you feel you can’t live without. Keep your cash for those really special occasions. It feels good just to have money. Make that feeling last. You won’t regret it.
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You Need A Budget -
YNAB explained
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Written by Steve Mudie
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Rule #3 of YNAB is "Prepare for Rain". What this means in a nutshell is that you need to budget aside money for both the expected and unexpected expenses of life that will occur. It's just a matter of time. Since arriving in Bufferland I've found more time to look at the big picture of our budget and in doing so it brought me back to some ideas I had long ago in the days before YNAB. What I was thinking about was how we had various annual expenses such as car registration and instead of getting slapped around in our paycheck-to-paycheck existence then when they showed up “unexpectedly”, I figured out a plan.
It didn’t take a whole lot of guessing to know that annual car registration wasn’t some sort of State secret.
• We knew when it was due next. (the sticker on the car license plate helped remind us)
• We knew how much it would be. (what we paid last time was written right on the registration)
Armed with this information I set about hammering it out on a calculator. Since our only vehicle had an annual registration fee of about $200 at the time it worked out to an easy $3.846153 per week. Okay, just under $4 bucks per paycheck. “We can handle that Honey!” The problem was though that that was about as far as the plan ever got. I would work up all sorts of numbers happily tapping away figuring on 52 weeks or 4.33 weeks (your ‘average’ month) then write it all down only to lose interest and focus as our paycheck was drained in a matter of days each week and nothing changed.
Thanks to YNAB, that has all changed now. As the Cadillac of cash flow planning software, it made it easy to put a plan in place for our money and a way to track it to match the plan that just works. Now, armed with a full buffer, we have shed all stress over money and can now fine tune the overall budget with a clarity we didn’t think was possible.
With a bit of a surplus at hand this month I was looking over the budget trying to figure out where best to put the extra money. Yes, we still have debt but I didn’t want to just blindly throw it at the principal. Don’t get me wrong, we want to kill the debt but I simply wanted to look things over for a minute. It didn’t take long for me to find what I was looking for.
Times have changed and we now have 1 car, 1 minivan and a Class “C” motorhome. All three need to be registered and inspected annually. The thought that popped into my head was to gather the information needed, dates due and amounts, and get cracking on the calculator. The reason I hadn't done so in a while was due to inching our way into a buffer we had no long range plans other than that goal (Bufferland). In any case, it wasn’t long until I had the numbers I needed and figured out the amount where it now rests and grows in the “Registration & Inspection” Category in the Master Category group “Transportation”. The fun part was having to only divide by 12 since we operate on a month-to-month basis now that is far removed from “Rich on payday, broke on Monday” existence like we used to be.
The real focus in this predicted and expected rainstorm came when I realized we had to budget aside $46.04 per month just to meet those costs. “$50 bucks a month! Is it really that much?” I just never thought about it in the past and would simply pay the costs out of the paycheck at hand and move on. There’s not much we can do about the monthly budget amount other than buy and run older vehicles, but that’s an article for another day. The key is that thanks to Rule #3 and our commitment to a plan, the money will be there when the registration comes due and we won't have to scramble to pay it. :)
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