Friday, January 22, 2016

The Real Benefit of Savings

I seriously loved this article. It reminded me of how I ended up marrying X in the first place. And staying with him for as long as I did.

I didn't marry him until I was 7 months pregnant with our second child. At that point, it seemed inevitable. When he asked, there didn't seem to be any real reason to say no. I figured having kids with him was a bonding enough experience, so why not get the marital benefits out of it?

Except, of course, marrying the wrong person can be the worst mistake you can make - emotionally and financially.

Because he was such a drain on our finances, it wasn't long until I felt I wasn't in any position to leave him. Finally, the timing worked out where I was both 1) ready to leave him emotionally, and 2) had a tax refund to get out of there.

My daughter has previously asked me why I make her save 20% of each paycheck, and also, why I always say "no" when she wants to dip into it. Now, granted, her financial needs are low and her salary is low. But she already has more in her Emergency Fund than I ever had until just about 2 years ago.

Oh sure, it can sound romantic and noble to have nothing, to be reminded that money isn't everything (which it isn't), but I think it's time for a new financial story.

We need protection from our own bad decisions or unlucky twists of fate.

I can remember more than once calling my sister in tears because of yet another financial consequence of that truly terrible decision. I remember wondering, when will it end? Why wasn't it enough that I was raising the girls on my own while working full-time (and for many years, going to school part-time at the same time)? When would I be done paying these dues?

Without a financial safety net (whether you call it an Emergency Fund, a Freedom Fund or a F*** You Fund), it took me about a decade.

Now, if all that sounds too maudlin, here's another perspective. I hope the first time we both think it's okay for Sylvia to dip into her Emergency Fund is for a happy twist of fate. I hope that it's to help pay for a move for a great new career or education (without draining the Fund completely, of course). There can be opportunities that require a little investment to get started. Of course, I hope it's for something like that.

The real benefit of savings is to minimize the disruption of a bad decision/unfortunate event or maximize an opportunity. To take care of you when you need it.

Monday, January 11, 2016

eBook on sale!

First, an apology. Wanted to get this done for New Year's, but couldn't get my act together in time. Then again, if you're like me in that sense, this will be perfect timing!

My eBook is on sale Jan 10 - 17! Check it out!

Wednesday, January 6, 2016

Balancing the Middle Class

CNN has this nifty calculator where you can find out if you are in the middle class where you live.

While the value of this information is limited, I do think it helps to understand where you stand in your community, particularly living somewhere like L.A., where living costs are high, but incomes vary.

I'm practically as middle class as one can get, which surprised me a little because I don't feel middle class. Not that I feel dirt poor either, but I guess working class or lower middle class is more what I thought we were.

Of course, it begs the question, what it does mean to be middle class? To me, it means that one doesn't have to struggle to meet their daily/monthly needs. Crazy, but I feel like like we're there...which I wouldn't have said just a few years ago.

I think it's important, however, to stick to that scarcity mentality one has to develop when their income is less than middle. Even if/when you've reached middle or beyond, it doesn't matter how much your annual income is; there is still a limit.

If discovering you're middle class or above comes as a shock, that might be a sign of not practicing enough scarcity mentality.

This is why I like the Warren/Tyagi method in All Your Worth: The Ultimate Life Money Plan. If you can keep your needs (housing, food, transportation, monthly bills) to 50% of your income, then save 20%, you can use 30% towards wants. I'm still not there yet, but I like using that as my ultimate goal.

If I actually got there, I might even feel like I'm in the middle class.