Money To Live

September 27, 2010

Costs associated with working full time

Filed under: career,cost analysis,spending — by moneytolive @ 5:00 am

There are extra costs involved in working outside the home — gasoline and clothing are two common examples.

For me, I would also need to find someone to walk my dog every day. To keep my sanity, I would get a grocery delivery service and a cleaning person. The cleaning costs could vary from $50-$100/ week, depending on how much we needed. I’m estimating at the higher end because in the summer we would have to pay someone to do the weeding and lawn care that I do. If I am honest with myself, I know that I won’t pack a lunch every day, and I’ll end up eating out more frequently.

I spend a non-trivial amount of time making sure that we don’t get ripped off — and it’s resulted in $2-3k of savings this year alone (disputing the purchase of flawed merchandise, holding credit card companies accountable for their advertised rewards, disputing false information on our insurance reports, …). I’ll lump that category into “extra fees” that we avoid by me having the time (and energy) to fight for the money.

To even consider taking full time work, I would need the salary to trump my current annual wages by $23k! Of course, there are some very real benefits of full-time work — employer match to retirement savings and health insurance, to name a few.

What do you think of these expenses — did I leave something out, or do you think this is ridiculous?

I’m earning $X now (where $X could swing +/- 10% in any given year), and I would really only consider working full time for $2X, which would more than cover the extra expenses. But is it worth it?

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September 21, 2010

A debtor to my future self

Filed under: family finances,goals,savings — by moneytolive @ 8:33 pm

I recently wrote about how I like my future self. I save for her to protect her from a rainy day and to give her the freedom to take risks. She’s my friend. My husband, though, has recently been frustrated with his future self.

Over the past year, R got really into saving and saved so much that he couldn’t buy groceries in the days before his next paycheck. He was living paycheck-to-paycheck because of his saving habits. What was he saving so much for? Our wedding, building up a bigger emergency fund, and his current education expenses. While saving is commendable, saving this much made him a debtor to his future self.

Becoming a debtor to your future self is not using money to live, and it can be similar psychologically to paying off actual debt. Saving so much could push a person to abandon saving altogether, much the way adopting too many frugal tactics at once can push someone to stop being frugal at all. There’s a balance between saving for the future and spending today.

Before this, I mainly thought of the differences between saving and paying debts. Having readily available cash skirts the issue of needing to borrow money and take on debt. Most of the time, saving is the better deal — eliminating interest charges and sometimes garnering an additional discount. A different way to look at it, though, is that saving money shifts the cost of a purchase from the future to the past of the object’s purchase/use. While you may get a discount by paying cash (or at least avoid interest charges), you are getting less use out of the purchase by delaying its use into the future.

As we are combining finances, we’re evaluating our savings plan so it won’t leave us feeling broke. As the wedding is over and none of it was financed, that’s one less thing to save for/ pay for. Because R was aggressively building up our emergency fund, we can now reduce our monthly contributions. While we still need to save a little more for his education expenses, we have six months until his final tuition payment is due. When all of these goals are met, we’re going to focus on pre-paying the mortgage. While it seems like there is always more that we could be saving for, at least we’re debtors to ourselves and not to someone else.

September 13, 2010

A simple life is … not so simple.

Filed under: home,insurance,simplify — by moneytolive @ 5:00 am

I hope this doesn’t come off as too whiny, but here goes: A simple life takes a lot of work!

Since moving into R’s house and merging our lives (belongings, finances, etc.), I have been repeatedly surprised by how much work it is. We aim for simplicity. While we are definitely on the path to a simple and low-maintenance lifestyle, it is a long path, and the going is slow.

Combining Insurance

We got quotes for combining our insurance policies, and sure enough, we could save money by merging our policies to one account. This seems like a simple plan, and over the long-term it does yield greater simplicity. In the short-term? A huge and not very simple headache. It took more than one month from getting quotes to receiving the final paperwork for all of our accounts. I sent/received 41 emails with my agent, sent in several checks, and received two refund checks (they sent out duplicate bills to us and the bank; despite several conversations on the details of these transactions, they didn’t send out the proper bills). After we are married, we are changing the names on a few of our accounts (adding each other to car titles, etc.), which will mean another round of emails and paperwork with the insurance agent, which should lead to more reductions in our premiums.

Removing a hot tub

The previous owners of our house had a hot tub. R had it winterized a few years ago and never opened it up again. We thought a lot about whether or not to keep the hot tub, and, ultimately, we decided to get rid of it because the annual costs (and time for maintenance) exceed the enjoyment we would get from using it. Getting rid of a hot tub is not the easiest thing to do. R posted it on Craigslist for free, and four people came to look at it. All said they would come back to get it, but no one did. This went on for several months, with no serious takers. We recently replaced our deck, and time ran out for the hot tub. To remove the hot tub before starting on the deck, we had to pay someone to haul it away. The simple hot-tub-free lifestyle cost over $300. We are glad to have the hot tub gone, and we (mostly/ sort of, but that’s for another post) like the deck that stands in its place.

As we make changes, I try to remember that we’re working toward a simple lifestyle. With the hot tub gone, we have reduced the maintenance for the house. By combining insurance, we’ve reduced our total number of bills and the amount we pay in bills. It took many hours to take care of these, but they are now done. While we will check insurance rates every few years, at least all of our coverage is consolidated.

I think the biggest downside to uncluttering/organizing/simplifying is simply the time and mental energy needed to pare down my life. There are big dividends, which make it worth the effort. What I consider the biggest benefit is that it reduces future the need for time and energy in the future. All of those conversations about the hot tub? Yes, while we had many, many conversations, they’re over now. We don’t have to talk about the hot tub ever again.

September 6, 2010

I put laundry away for my future self

Filed under: Uncategorized — by moneytolive @ 5:00 am

There are some things I just don’t like to do — dishes and laundry come to mind. I got over the dishes thing a few years ago. For 30 days,I washed all dishes immediately after using them (except when I had guests over and it would be rude/socially awkward to clean the dishes; I cleaned the dishes as soon as all guests left). I timed myself and was happy to find out how little time it took to wash dishes when I stayed on top of them.

The laundry thing — my primary motivation for putting my clothes away is so that

  1. I will not be annoyed at stumbling over my basket as I head to the bathroom in the middle of the night, and
  2. I will know exactly where my black tank top is — on the shelf with my other tank tops.

I don’t like the process of putting my clothes away, and I go ahead and do it (instead of, say, living out of a clean laundry basket), so that my future self will have life a little easier. It turns out this thought process may be a part of why I prefer to save money instead of spend it!

Some recent studies show a connection between how much a person identifies with his future self and his financial assets.

“People who saw their current and future self as more alike had real-world financial assets that were worth moreā€”even when the researchers accounted for factors such as age and education.” Scientific American

When I see my future self, it is very much me, and I want the future me to have freedom and flexibility. I don’t want my future self to be late because she couldn’t find an article of clothing, and I certainly don’t want my future self to stub a toe. I don’t want future me to be burdened by debt because future me might want to travel or take a chance on a new career that won’t earn much money for a few months.

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