Money To Live

February 18, 2013

Santa or the Grinch?

Filed under: defining moments,negotiation — by moneyconsciously @ 11:53 am

Shortly before Christmas I listed an item on an online sales board. I priced it reasonably, albeit near the top of the market range because I thought that this amount more accurately reflected its value (I don’t believe in ultra-disposable consumerism).

Most of the responses I received were for offers less than half the asking price. I was unwilling to sell at those prices, so I declined those offers and waited.

On Christmas Eve one person, J, asked: What was the lowest price with which I would be happy? I thought this was a great, fair question because she would get a lower price than listed and I would still be happy. I answered honestly; J accepted my price gladly and with appreciation.

However J could only pick it up on Christmas Day. This was a risk for us both: a) if this stranger didn’t show up, then I would lose a chance to sell before Christmas and would then be in a saturated market; b) if I didn’t honour my word, then J would not have a Christmas present to give. Yet I agreed to hold it for her.

Later that day, I received another offer. Although it was again too low, this person was willing to pick it up on the same day. Although I explained that I was holding the item for someone else for Christmas, this second person tried many times to convince me to change my mind. I could have had cash in hand with no risk to myself.

I waited. I chose to honour my agreement; and I trusted that J was equally honorable.

The result: J got the Christmas present she wanted at a price she was happy with. I received an amount that I was happy with. We were both thrilled with the positive interaction. We both wanted, successfully negotiated, and behaved according to our values to have more money to live.

October 2, 2008

Defining Moment: Helping the economy

Filed under: defining moments — by moneytolive @ 5:00 am
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Defining Moments is a series about how we remember money and how it has shaped our lives.

Fern always found the best deals. If she knew a bottle of shampoo was a nickel cheaper at another store, she would wait and buy it at the other store. If Fern missed out on the best deal, she agonized and vowed to get the best deal next time. This all changed when her then-boyfriend-now-husband told her that by spending an extra nickel on shampoo, she was helping the economy.

Fern and her husband have talked about this a lot and now think of spending money in terms of “voting with our money.” The are conscious to spend money at places they like and that share their values.

For example, each summer they buy a CSA share, and regularly purchase locally grown produce from the grocery store.

Like many people, Fern will pay more money for better customer service.

Fern also said she will spend more for a good shopping experience. While most books cost less on Amazon.com than at a brick-and-mortar Barnes & Nobles, Fern enjoys browsing for books in a bookstore and will pay more (occasionally) for that experience.

On this topic, Fern is quick to bring up the time that she and her husband did not vote enough with their money. When their favorite local Thai restaurant closed unexpectedly, they lamented that they had not patronized the restaurant enough. Now when thy discover a new restaurant, they are quick to go back and support the restaurant, lest it goes the way of the Thai place.

September 18, 2008

Defining Moments: It starts with a credit card

Filed under: defining moments — by moneytolive @ 5:00 am
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Defining Moments is a series about how we remember money and how it has shaped our lives.

Fellow PF blogger, Trent Hamm, tells his story of financial recovery at The Simple Dollar. Trent has shared two defining moments in his life.

Trent first took on consumer debt with what he calls “The Single Biggest Money Mistake I’ve Ever Made”:

So I got up and went to the local department store, which had the game in stock. I stood there looking in the case, mulling it over … and then I called over a clerk to get the items out for me. Not just an N64 and not just GoldenEye, but a second controller and two other games as well. I plopped about $400 on the credit card and walked out of the store.

His life changed eight years later when he reached what he calls his “Meltdown”:

One night, I came home from work and found five bills in the mail that added up to more than I had or would have for the next two weeks. I literally didn’t have the money to put food on the table at that point. I walked into the house and down the hallway to my son’s bedroom, where I saw my infant son bundled up in his bed taking a nap. I looked at him and realized that everything that I was doing was setting things up to make a very difficult childhood for him, not the wonderful one I wanted. I was worried all the time about money and I had learned that all he really needed from me was my love and attention.

I looked at him and I decided to change things, right then and there.

Trent’s story in college is so common. He wanted something he could not afford and had a credit card, so he charged the purchase. I like the story because it shows the long-term impact of such a small decision. In isolation, making a purchase on a credit card is not a big deal, certainly not the end of the world. But it marked the beginning of a pattern that led him to a difficult place.

Thanks, Trent, for sharing your story and all your tips for reaching financial security.

The mathematician in me will take this opportunity to tell you about an concept in advanced mathematics: a stopping time. The formal definition of a stopping time is very complicated, but the informal definition can be understood by anyone. An event is a stopping time if you know it is happening exactly when it happens (and it is ok if it never happens). For example, the time that the first person walks into the grocery store every Friday is a stopping time. If instead you wanted to talk about the time that the last customer enters the grocery store on Friday, this is not a stopping time. Another “last customer” could always walk in 1 second later. In Trent’s story, the beginning of his financial troubles (buying a video game system on credit) is not a stopping time because he did not know it happened until later.

September 4, 2008

Defining Moments: An Enlightened Moment

Filed under: defining moments — by moneytolive @ 5:00 am
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Defining Moments is a series about how we remember money and how it has shaped our lives.

This is a story from my yoga teacher, AM, about when she was first living on her own with her daughter.

One day when her daughter was young, AM did not have money to buy milk. There was absolutely nothing in her wallet. But there was food in the pantry, and her daughter had already drunk some milk earlier in the day. She repeated to herself, “I have food, I have shelter, and I am warm.” When she needed it, AM was able to buy more milk for her daughter.

I love this story because (1) it has a happy ending (AM and her daughter are doing very well and have plenty of milk) and (2) it is a positive response to a scary situation. Rather than worry about what is going wrong, AM focuses on what she already has, which is everything she needs in the moment.

For further reading, I recommend Lesson 75 “All Your Needs Will Be Met” by Gurudeva.

August 28, 2008

Defining Moments: Katy runs out of money #1

Filed under: defining moments — by moneytolive @ 5:00 am
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Defining Moments is a series about how we remember money and how it has shaped our lives.

The first time I ran out of money I was 16-years-old. I was attending a boarding school and had an allowance (from my parents) each semester of $500. Since my tuition, housing, cafeteria plan, and books were all paid for separately, this was an ideal situation for running out of money.

Near the end of my second semester away from home I went to the ATM and realized that only $24 remained in my account. The next day I signed up as a tutor, which paid $5.15 an hour (minimum wage).

Looking back, this is what I notice.

I did not immediately apply for a credit card. Since I was 16, I would not have qualified anyway. But if this had happened when I went off to college at 18, it is possible that I would have been tempted by a credit card.

I was able to get a part-time job immediately. Debt is often incurred when a person cannot find work quickly and pays bills using credit.

I did not ask my parents for more money — and I do not know what they would have said if I had. This is a theme in my life; I did not ask my parents the second time I ran out of money. I attribute this to trying to assert my independence (while still being financially dependent). The funny thing is that now, in a pinch, I would ask my parents for money.

August 14, 2008

Defining Moments: Success is paying the bills

Filed under: defining moments — by moneytolive @ 5:00 am
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Defining Moments is a series about how we remember money and how it has shaped our lives.

A while back, I taught a personal finance course for women in Trenton, NJ. At the first class, each woman introduced herself and said something she was proud of financially. Here is what one woman said.

When I was a [exotic] dancer, I was always behind on rent. Now, I make much less money working at JC Penney, but I always pay my rent on time.

Financial success does not mean earning more; it could be the security of having enough money on hand to pay the bills.

July 31, 2008

Defining Moments: Katy bounces a check

Filed under: banks,defining moments — by moneytolive @ 5:00 am
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Defining Moments is a series about how we remember money and how it has shaped our lives.

At the end of my first year of graduate school, I stayed in the dorm one extra week before leaving for the summer, and for this I owed the housing office $110. I wrote a check to the housing office, withdrew all the cash from my checking account, and hit the road.

When I got back in the fall, there were three important letters in my departmental mailbox:

Credit Union: notice of a bounced check

Housing Office: first notice of unpaid housing bill

Housing Office: second notice of unpaid housing bill

My stomach in knots, tears welling in my eyes, I called the housing office. The receptionist told me not to worry and to pay whenever I had the money. She must have heard the worry in my voice. Or maybe she thought I was a humanities grad student.

Next I called the credit union expecting the worst: a bounced check fee, overdrawn account fee, late repayment fee, etc. The credit union, however, said there was no charge!

This is what I learned:

I was lucky. In college a friend was hit with nearly $100 in fees after overdrawing her checking account. The Federal Reserve estimates that an overdraft of $80 could lead to $75 in fees.

Obviously, be more careful when closing an account. Wait a few months before withdrawing the balance to make sure all outstanding checks have cleared the account.

Credit unions are awesome. Credit unions are not-for-profit, which enables them to offer high interest rates for savings accounts and low interest rates on loans. Also, they are not looking to make a profit off a customer’s mistake. Find one near you.

If you are hit with overdraft fees, there are a few things you can do.

Request that the fees be waived. Though this may or may not work (it often work with credit card fees), it is good practice to ask for extra fees to be reduced or removed.

Consider making a link to a savings account or switching to a bank that allows you to link to a savings account.

Write to your representative in congress asking for support of fair overdraft protection programs.

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