What Makes you Feel Rich?

The other day, I got to thinking about why some folks that seem to struggle with money also seem to be eating in restaurants a lot. I’m not judging, as food is the single most troublesome category in our budget… I just sometimes ponder things like that. I thought back to my days of being broke and in debt (read: 1987-2012), and searched for reasons my spending was so inconsistent with my financial reality. What I recognized about myself was this: I overspent because I wanted to feel rich. I never thought I could be a homeowner, or afford a nice vacation, or a luxury automobile, but dangit, I could absolutely have a fancy salad at a sidewalk cafe on Sunset Boulevard, or spring for the deluxe facial treatment– on a credit card, of course– at the best spa in town. And if your “town” is Los Angeles, that’s a pretty pricey indulgence.

So I posed the question on my own social media page: What makes you feel rich?

I was thinking along the lines of spa days or minibreaks at lovely bed and breakfast inns, but the vast majority of responses revolved around time spent with loved ones, days off, and the chance to sleep in. Even the “stuff” people wanted was more about sharing meals with people or indulging their loved ones. People, or at least the ones I know, feel rich when they get to be human beings instead of “human doings.”

In her comment-turned-article, This Is Why Poor People’s Bad Decisions Make Perfect Sense, Linda Tirado explains: Rest is a luxury for the rich. Grocery shopping takes time, cooking (and cleaning up afterward) take time… and if you’ve got two hours after work to spend with your kids before their bedtime, you might not want to spend it in the kitchen, or with the mending basket. Frugality may be increasingly popular with the shrinking middle class, but it’s not a poor– or broke– person’s game. I suspect that people’s expenditures on restaurant meals are more about sharing time with friends and family than about eating fancy food.

Upon further consideration, I re-examined my own list of the material things I now consider luxuries, and realized that most of them could be accomplished for very little money, or none at all, given enough time. Things like a clean, well-appointed home, a freshly-waxed and vacuumed car, and a fresh mani-pedi. Perhaps those things feel like such indulgences to me because with my new status as a full-time worker, if I make the time to do them, I won’t have time to enjoy them… and choosing to deep-clean my home, do my own nails, or hand-wax my car takes precious time away from my relationships. It sure is tempting to throw some money at my discontentment and go for a salon mani-pedi with a friend or enjoy a bloody mary brunch with the gang while my car is getting detailed. As it is, most non-essential tasks remain undone these days, because we’d rather save for our house than pay someone else to do them, and we’d rather be with our people than do them ourselves.

But there are times when I look at the smiling faces over a potluck meal on my smudged glass table, raise a jelly jar full of discount wine with my unmanicured hand, and feeling like a wealthy woman indeed, offer a toast to my loving husband and to some of the Finest Friends in the World. It doesn’t get much better than that.

What makes you feel rich?

More Than Money (Hidden Emergency Fund Ideas)

Last week, we got word from my sister-in-law that my husband’s mother had taken ill, and needed to be hospitalized. She’s home now, and on the mend, thank goodness, but we were naturally on high alert, preparing for the possibility of traveling the thousand miles that separate us from her. We’ve got a decent number of airline miles that we’ve accumulated for use in the event of an emergency requiring last-minute travel in the continental United States (we’d have to use our Emergency Fund to get to our loved ones in Hawaii, if the need arose), and that got us thinking about what other non-cash resources could get us through an emergency or hard times.

Years ago, I read an article by personal finance writer Liz Weston called “The Emergency Fund You can Eat.” In it, she wrote of maintaining a fully stocked pantry and kitchen as a first-line defense in the event of a financial crisis. Picking up an extra item or two with each visit to the grocery store may be easier for some people than trying to pile up a month’s or more worth of cash, but might ultimately yield the same results: if the money stops coming in for a time, a person or family wouldn’t go hungry while they sorted out their next steps. Bonus points for keeping a garden, no matter how small. This particular strategy has come in handy for us countless times: when we’ve been too sick (or too busy!) to get to the grocery store, during the gap between starting a new job and receiving our first pay, and since we moved to Austin, during the occasional Severe Weather Alert, when it’s safest to stay off the roads.

Savings can take on many forms, and one of the ways we’re ready for emergencies is that we’ve saved up some of our paid sick days and vacation time at work. Well, Mr. Vega has, anyway… Being new at my full-time job, I have yet to accumulate much paid time off, but it’s my intention to get and keep a couple of weeks’ worth banked to use if an emergency should arise. Not everyone has this option at work, but some places will let you swap shifts or cover for each other. Helping co-workers out when you are able can also act as a sort of Rainy Day Fund: even if it won’t replace your lost income, having people willing to cover for you can save your job when you have to miss work.

To that end, maintaining good health is another crucial component of a cashless Emergency Fund. Cooking up some of that healthy pantry and garden food, staying hydrated, sleeping well, and getting regular exercise can not only prevent missed work days and lower medical expenses, but it can also provide the ability to physically respond to crisis. It’s easier to handle the loss of a car for a person who is in good enough shape to ride a bike to work, or walk to and from a bus stop. Someone who finds themselves unable to afford their rent is also likely unable to hire movers; having spent some time slinging weights around will make a DIY move much less painful. And healthy bodies stand a better chance of thriving should the need arise to care for an ailing loved one, or to take a second job to make ends meet.

Sometimes it is nice to be able to rely on plastic when times get tough, and that’s when we reach into our wallets for our library cards. I went a year without internet service when I was paying off debt, with the help of free library wi-fi. When I was finished with my work, I’d head over to the easy chairs and spend a little time enjoying current issues of magazines that would have cost me $5 each to buy. I’d leave with an armful of borrowed books, CDs and DVDs that provided a sense of abundance in addition to the information and entertainment I got from them. Most big-city libraries also provide classes in financial and computer literacy, job search help, storytimes for children (it’s not child care, but just letting someone else read to the kids for half an hour can be a real sanity-saver for stressed-out parents), movie screenings (sometimes with popcorn!), and here in Austin, the public libraries even host monthly Adult Craft Nights!  And all of it is free.

Finding money to deposit into an Emergency Fund is difficult, and even when we have the money, it’s not always pleasant. But investing in supportive relationships is a fun way to create a strong safety net for ourselves. Healthy friendships and familial relationships lessen the risk of depression and reduce the length of unemployment. If we remember to stay in touch with and enjoy the people we love when things are going well, then in hard times, those same friends and family will be there so to help each other move, provide care and companionship during illness or after an injury, or even prevent homelessness. While none of us like to imagine it, we wouldn’t hesitate to do the same for them, and it’s important to remember that accepting and receiving help when we need it also provides the giver with a sense of meaning and importance in their own lives. And being part of a robust social network makes us more resilient, so our difficulties are likely to pass more quickly than if we were trying to handle them all alone.

Getting some money in the bank to rely on in an emergency is ideal, but there are also plenty of other ways to prepare for crisis ahead of time. What are some of the ways you’ve found to be ready for whatever life throws at you? 

Nothing Changed When we Paid off our Debt

Mr. Vega and I became debt-free a couple of years ago. It happened quietly, and without fanfare. He’d been working hard to negotiate some old, unpaid credit card bills that had gone to collection, and ended up settling about $10,000 worth of debt for around $4,000, one bill, one phone call, at a time. The only thing left was my car payment, which for some reason, I had been stalling on paying off even as we amassed a healthy savings account. Then one day, on a break from work, I called the loan company and did the payoff over the phone. Just like that, we were free from debt.

And nothing changed.

Not having monthly payments outside of rent and utilities is nice, but we have continued to save so aggressively that our lifestyle hasn’t changed: we cook at home, search out free and inexpensive entertainment, consider even the smallest purchases carefully, and do our best to negotiate the best rate for everything we spend money on. This year, I volunteered to be a support person for our bocce league in exchange for free registration ($45), and a $25 weekly credit, which I share with Mr. Vega, at the team’s sponsoring pub. We exchanged both our juicer and our vacuum cleaner several times because we kept finding lower prices. And on our last Date Night, we hustled over to a local bar right after work because the first sixteen customers that ordered cheese plates (normally $16) got them for free. We chase bargains because it’s fun for us: we like getting a good deal nearly as much as we enjoy whatever it is we’re buying or consuming. Living frugally helps us live a little more lightly on our ailing planet, as well: growing and cooking as much food as we can for ourselves eliminates a lot of packaging, as does buying in bulk. Every article of clothing that we buy used or trade with friends is one less thing that has to be shipped from overseas and then driven by truck to our local store. Our habits and practices are right in line with those of our friends who earn less than we do, or who are busy paying off debt themselves. We also socialize with people whom we suspect make and have much more money than we do, but our friendships revolve around time spent together enjoying activities that don’t cost much, so the subject of money rarely comes up.

This week, I made a long-overdue phone call to roll a 401(k) from a previous employer into a personal IRA. I spent quite a bit of time speaking to a customer service agent at the investment firm, who was gathering our personal financial information in order to ensure I was getting into a product that met our needs (and presumably the company’s need for profit, as well). Part of our conversation went like this:

CUSTOMER SERVICE GUY: Okay now, so, if we were to take all your debts, your car loans, personal loans, credit cards, home equity lines of credit, and student loans… how much money would it take to pay all of that off today, hypothetically speaking?

ME: Three hundred and forty dollars. We use an airline miles credit card that we pay off each month.
(pause.)
CUSTOMER SERVICE GUY: WOW. Well, um… Congratulations!

I really enjoyed the feeling of hearing someone who is privy to the innermost financial workings of thousands of families so taken aback. We are not wealthy, earn a modest income, and in fact, are woefully “behind” in our retirement savings, but simply being debt-free is so unusual, it seems, that it rendered this guy momentarily speechless.

So, nothing about how we live our daily lives changed when we paid off our debt. We didn’t buy fancy new wardrobes, take a vacation, or start upgrading our electronics. But there is an indescribable lightness about us now that we go to work every day because we want to be of service and earn money to save for our house instead of showing up just because we couldn’t make the rent if we didn’t. Car troubles for us these days are inconveniences and not crises. And we moved halfway across the country to pursue our dreams knowing that if an emergency should arise for any of our family members, we could afford to be at their side within a day’s time.

Nothing really changed when we paid off our debt… but somehow, everything is different.

 

 

When Plans go Awry

Last month, we were supposed to fly back to California to attend the wedding of one of our dearest friends. We felt very fortunate that many of our close friends were also on the guest list, so that we would be able to see many loved ones all at once. Our newest niece was born a few months ago, and we were looking forward to meeting her, as well. The flights had been booked and hotel rooms reserved months in advance.

And then I got sick.

Not just a little sick, either… I was running a temperature, my sinus cavities and ears were filled with fluid, I had a cough, and my throat felt like it was on fire. The doctor at the Urgent Care clinic sent me home with some powerful antibiotics and orders to stay in bed. There was no way I was getting on an airplane. What happened next is going to read like an advertisement for the companies we used, but we got such terrific service across the board that they earned the good word-of-mouth!

Fortunately, we had booked our flight using our Southwest Airlines Rapid Reward points, and there was no penalty for canceling the trip. All the points went back into our account. Our hotels had been booked through Hotels.com, and canceling by 6pm local time the day before meant that we wouldn’t have to pay a dime for the rooms we had reserved. Except that I didn’t throw in the towel until about 9pm local time. Mr Vega called customer service and explained the situation… And they let us cancel for free even though we were late! We had reserved our weeklong car rental through Hotwire.com, who also allowed us to cancel without penalty. Finally, we had each gotten some new clothes to wear to the wedding… which we returned, unworn, to the department stores where we bought them.

All in all, our canceled trip cost us… nothing.

I wish I could say that it was all due to my fantastic travel savvy, but the truth is, in a few cases, we were just lucky. To keep costs down, I frequently bid on and pre-pay for non-refundable rental cars at the name-your-own price sites, or reserve hotel rooms that come with very low rates and no-cancellation policies. To us, those are acceptable risks that we take in order to get the savings. This time, the travel gods (or the cancellation gods) were with us.

But in addition to taking extra vitamins in the hopes of making sure that we never have to miss another trip, you can bet I’m going to read the fine print from now on when we book our travel, just to make sure we could get out of it if we needed to.

All About That Bocce

When Mr. Vega and I moved to Austin last Summer, building a strong social network was (and still is!) a very high priority for us. We’ve read that close friendships prevent depression, extend lifespans, and lessen the likelihood of long periods of unemployment. Oh, also, it’s fun to have friends! Fortunately, Austin has plenty of opportunities to socialize… outdoor films, free music, art walks, fun runs… you name it. One of the activities we happened across was Austin’s inaugural season of Major League Bocce– which sounds more advanced than it is, as beginners are welcome, too! We’d never played bocce before, and we didn’t have a team to join with, so we signed up to be placed with other random folks, and convened in a little park on a hot summer night to see what we’d gotten ourselves into. We were placed with two other couples and one single guy… all of whom had a fair amount of experience playing bocce, but fortunately for us, the learning curve is pretty shallow (mastering the game, however, is another story!). And while the learning curve isn’t steep, the park where we played is We spent the next six weeks chasing our balls as they rolled down the hill into other players’ courts, hollering “Sorry!” and learning how to roll the ball left to make it go to the right. Afterward, we repaired to the local pub for some adult refreshment and conversation. It was a great good time, and we ended up becoming close friends with one of the couples from our team.

We’re constantly looking for ways to be of service in our new community, so when I learned that Special Olympics Texas has a Bocce Competition, we were eager to help out. We had a great time escorting the athletes to their games, keeping score, and cheering them on. Because they had spent eight weeks training for the competition, they actually had more experience than we did, and we picked up a few tips! More than that, we got to see how truly accessible the sport is for people of all age ranges and with a wide range of physical abilities.

We returned to our second season with a renewed enthusiasm for the game, and when we were asked to help out again, we didn’t hesitate. This time it was a special event at a new apartment complex: They have a bocce court on the property, but none of the residents knew how to play, so we spent a pleasant couple of hours on a chilly Fall night showing them the ropes (at least as well as we know them). The neighbors got to know each other better, and we got to drink some free-to-us beer and play our new favorite game!

Season three will find us back on the bocce court, where we’ll team up with some new faces, and deepen our friendships with the folks we already know. I’m also volunteering with the league this season, so I’m looking forward to getting to know people from a different perspective.

Moving to a new city and creating friendships isn’t easy, but organized social events and sports teams provide an opportunity to get to know a group of people who share your interests, and the repeated exposure gives friendships a little time and space in which to grow. And sometimes it’s nice to mix things up a little, even if you’ve lived in the same place for years… you can never have too many friends in your life! Who knows? Trying something new just might open up a part of life you never knew you were missing!

Why I’m Working Full Time

If you do an online search for “full-time work,” you’ll come up with loads of articles about how to fire your boss, escape the cubicle, and travel the world as a location-independent freelancer. I accepted a full-time position last week, and as excited as I am about it, I’m having a hard time finding anything good written about working a traditional schedule. I’ve been a freelancer and part-timer for most of my career, and have enjoyed the higher hourly pay, the flexible schedule, and the not really having a boss thing, but a job came my way that was so well-suited to me that I couldn’t turn it down. So I said “Yes” to spending forty hours each week doing the work that I love, and so far, I’m glad I did.

Probably the most obvious benefit to having a salaried position is knowing that I’ll be receiving twenty-four identical paychecks each year. A quick look at our marriage’s financial history reveals that money tends to get pretty tight each January and July… we’re looking forward to having a consistent amount of money to work with each month. Also, because we’re saving for a house, we’ve always wanted to live on one income, but it’s been challenging having two incomes that can vary so widely month-to-month. We now have an opportunity to try living on our one stable income, and to bank the rest.

Also, my new job, while paying about 75% of the money that I am used to earning as a freelancer, also comes with comprehensive benefits. My new health insurance will save us about a hundred dollars each month over having me listed as a dependent with Mr. Vega’s employer, and the generous retirement package will go a long way toward helping us catch up on the nest egg we started saving for in our thirties, rather than early in our working lives (Millenials, take note: Compound Interest is your friend… start saving now!). Additionally, my new situation will go a long way toward alleviating the stress that comes with my husband’s job in a volatile industry. If his job goes away with the looming corporate merger, it will be unfortunate but not tragic. Or if he chooses to pursue some fabulously creative opportunity that comes without benefits, we’ll be able to keep him covered under mine.

Financial stability aside, it will be lovely to have a base of operations for my work, and not feel like I’m living out of my car during the work week! For the first time in… well, ever, I’m going to have my own office, which means my reference books and office supplies won’t have to compete with my novels and personal stationery for a very limited amount of shelf space at home. Several of my other employers provide break rooms with sinks, refrigerators and microwaves, but I’ve rarely worked in the same place two days in a row, and so leaving food at work has not been a viable option for me. I’m perhaps unduly excited about the possibility of stocking my little fridge shelf with lunches and snacks for the week, and not having to worry about forgetting my lunch when I have a hurried morning!

Another exciting aspect of having a full-time job is that I’m no longer competing with colleagues for work. I’ll be able to focus my energy on collaborating with my co-workers to do the work we’ve been hired for, rather than trying to beat them to the next gig, before this one is even over! Everyone in this new workplace has been so welcoming and supportive, and I can’t help but think that their job security is part of the reason why.

All that said, the folks at my other part-time jobs have been so wonderful to me that I’m loathe to leave them in the lurch, so I’ll be hanging in on a part-time basis for as long as I can… one evening a week at one, and half a weekend day at the other. And you guessed it: those checks will go in the House Fund, too.

But I’d be lying if I said I wasn’t a little nervous about my new schedule: for the past week I’ve come home at 5:30, spent a couple of hours making and wrapping holiday gifts, had dinner with my husband, and gone to bed early. When I complained that there wasn’t much time for actual living after work, Mr. Vega replied with a smile “Welcome to full-time work!” I’m sure it won’t be long before I’m one of those folks shouting “TGIF!” and getting very excited about the return of Daylight Saving Time. I’ve already discovered that there’s very little margin for error in my daily schedule: if the dishes don’t get washed before bedtime, breakfast is going to be a disaster, and we haven’t got enough clothes in our closets to be able to miss Laundry Day.

All in all, though, I think the benefits to this particular full-time job will far outweigh the inconveniences. I’m looking forward to finding out more!

Paying Cash for Cars isn’t as Hard as it Seems

My grandfather gave me my first car, which had been his, when his deteriorating vision made it unsafe for him to drive any longer. It was a seven-year-old Oldsmobile that had begun its life as a rental car. It lasted four more years in the negligent possession of my teenage self, before literally going out in a blaze of glory (due to a previously undetected fuel line leak) on a California highway.

I bought my first– and only– brand-new car when I was 22, because I didn’t have the credit to finance a used car (there’s some great logic). The cheapest thing on the lot was a 3-cylinder Geo Metro convertible, which I drove for six years, until it was totalled in an accident that left me unharmed, but also left me with an insurance check that wasn’t nearly enough to replace the car. I worked out a deal with a friend’s brother who was joining the military, and no longer had use for a car. He gave me a great deal on his 10-year-old Honda, and let me pay him in two installments.

When that car was about to die, at the end of my twenties, my terrible credit and I managed to get a decent deal on a five-year-old Miata, but I had to list TEN references to qualify for a loan. I finally began to learn the value of regular car maintenance and started keeping to a budget that allowed my poor credit to recover. When that loan was paid off, I drove debt-free for three more years, but I didn’t set anything aside for the day when I would need another car.

My final auto loan was as well-researched as the car purchase, and I was so proud to walk into the dealership with a check from the finance company, gotten at a great interest rate. I paid the car off early, and went all Scarlett O’Hara: “With God as my witness, I’ll never make car payments again!”

Mr. Vega and I began dating as he was just coming out of a prolonged period of unemployment, and he was driving a 1987 Wag-o-Van that he had gotten through a friend-of-a-friend for $400, and that wasn’t very safe (or even street legal). I only rode in it once, and it was so frightening, I still have flashbacks! He was hired as an outside sales representative, and found himself in the heartbreaking position of having to use his first month’s pay to buy a reliable car for work instead of traveling to attend the wedding of his only brother at a resort in Mexico. He paid all the money he had in the world–$3500– for a well-maintained twenty-year-old Honda CR-X with 200,000 miles on it, and spent the rest of the summer helping me come up with creative recipes from my Project Angel Food box (remember those?), and the fresh produce I got from my friend’s backyard garden. His co-workers ribbed him for driving such an old car, but the jokes quieted down when one of their luxury cars was repossessed from the office parking lot one day, in full view of everyone.

We commuted to our jobs in our paid-for cars as we saved up to pay cash for our own modest wedding. We parked them out in front of the cheap 486-square foot apartment we rented in an edgy neighborhood, while we paid off the last of our debt and began to aggressively fund our Emergency Fund. We looked for Groupons for oil changes, and Mr. Vega did most minor repairs and maintenance himself. We drove those cars to the library to borrow DVDs for our weekend entertainment, and occasionally for a splurge at the $3 movie theater.

By the time my car began to develop problems that a series of mechanics could not resolve, our new frugal lifestyle had left us with enough cash in our Emergency Fund to replace it, or even upgrade (in Los Angeles, car trouble definitely qualifies as an “emergency”). We test-drove a bigger, nicer truck. We tried out a newer model year of the same SUV I’d been driving. Ultimately, we chose a late-model subcompact that used about $40 less in gas each month than my SUV had. Even with the mystery mechanical difficulties, we were offered enough in trade to offset about half the cost of our new-to-us car. We wrote a check for the rest, and our ultra-thrifty habits helped us replenish the Emergency Fund over the next several months, and even begin saving to buy a house someday.

After three more years of  a daily 40-mile round-trip commute, the CR-X was beginning to need more frequent, and more costly repairs, but still had enough life in it to bring it to Texas from California when we moved here earlier this year. We also wanted to make our next car purchase in Texas, where we knew we’d save about $1000 on registration and taxes alone, all else being equal. In addition to saving for a house, we started a little Car Fund and began making small weekly deposits.

Finally, the day came when Mr. Vega had had enough of playing the “Will My Car Start Today?” game, so we sat down to look at our budget and consider our options. We found that over the previous twelve months, we had spent a bit more in repairs than the vehicle was actually worth. He advertised his little Honda (with full disclosures) on Craigslist, for the same $3500 he paid for it, and the offers started pouring in. No one expects a car that old to be trouble-free, and that model is still widely sought-after. The young man who bought it was thrilled to get a “classic” car so cheaply, and will happily spend his weekends working on it in the driveway. The money we got from the sale of that car and what we’ve set aside in our Car Fund paid for about 1/2 of the newer car, and the rest came from our House Fund (we both agreed that this time, our car purchase did not qualify as an “emergency,” and have decided that we are willing to delay a home purchase for a few months in order to purchase the car).

My husband had been wanting a pickup truck for quite some time, and now that we live in Texas, it seemed an obvious choice. He test-drove half a dozen of them, but found the ones in our price range to be about ten years old, and with more than 100,000 miles on them. As reliability was the most important factor to us, we set our sights on something smaller. Since we were replacing a two-seater, we reasoned, we might as well consider another. We narrowed our search to Smart Cars and Miatas, and eventually, the Miata won. We came across a 1997 model with only 27,000 miles on it, but that one was snapped up before we could even drive it (someone got a great deal!). Finally, we found a 2009 MX-5 that was in mint condition. Mr. Vega staged a battle on the showroom floor when they nearly sold it out from under us after he had negotiated a price and announced his intention to buy it, but he emerged victorious, wrote a check, and left his own car in the dealership parking lot to come get me from work in our new roadster. As all happily married men know, “Mama Gets the Good Car,” so I’ll be cruising with the top down while my husband takes the subcompact to work.

Meet our new-to-us car, which I have named "Benedict Cumberbatch"

Meet our new-to-us car, which I have named “Benedict Cumberbatch”

Later that night, he examined the paperwork he found in the glove box: The original owner financed the car when it was brand-new, paid on it for five years, had it serviced like clockwork at the dealership, and the moment the loan was paid off, he got 1/3 of what he paid for it (not counting interest) to use as a down payment on another new car.

What WE got was a five-year-old, meticulously cared-for car with lots of upgrades, for below blue book value. Unless our needs change, and if nothing terrible happens to the car, we’re likely to keep it for a decade or more.

It will take us a few months of hard work and careful spending to get our House Fund back to where it was before this purchase, but we’re fortunate that living far below our means has become a way of life for us. We eat a lot of home-cooked meals, seek out free entertainment, and we only buy clothes and shoes when what’s in our closet begins to wear out. Those things are mostly fun for us, though, and even when they aren’t we do them happily, because when bigger things (like cars and computers) need repair or replacing, we’re able to handle it without going into debt. And most importantly of all, we’re flying back to Los Angeles in a couple of months to meet our brother and sister-in-law’s first daughter… We’re hoping our new way of living means we never have to choose between showing up for family and being self-supporting again!

Have you ever paid cash for a car? Would you even want to? Why or why not?