The Road To Financial Armageddon #5: Love and Marriage

Yesterday, we learned about my immature behavior in handling a large steady income. I was starting to sink further into debt without really acquiring any assets, and I was building up a lifestyle based around extremely poor spending decisions. Yet, I was about to embark on a path that would make matters much worse.

I was about to fall in love.

I wound up falling in love with an acquaintance from my high school days. We were in different social circles then, but we kept bumping into each other and finding that we had a significant overlap in terms of interests, personality, and mutual friends. Soon, we were dating and before long, wedding bells were about to ring. And I was about to jump off of a financial cliff.

I erred right off the bat by presenting a grossly inaccurate picture of my personal finances. I gave off the impression that I was making significantly more a year than I was. Although my wife was not a gold-digger in any fashion, my treatment of her in the early days of our courtship set the bar pretty high, and through my own egotism, I refused to lower that bar even though it was killing me to maintain it.

The second mistake I made was that I set the engagement and wedding expectations way too high. Rather than sitting down with my bride-to-be and talking about some realistic expectations, I not only allowed but encouraged those dreams to take root and grow. The end result is that there was too much spending on the engagement, the wedding preparation, and the wedding itself.

Before you start thinking to yourself, “Wow… what a sucker!”, I want to point out that these mistakes were entirely my own doing. My bride-to-be often encouraged me to spend less than I was spending on many things, but I was too caught up in my own spending glut to realize it.

The big, big mistake came after the wedding, however: I vastly overspent, beyond any reason, on our honeymoon. We flew to London first class, stayed in a suite overlooking Hyde Park for a week, ate like kings and queens, attended lots of shows, and basically drowned ourselves in excess. Then we repeated that week in Edinburgh. I had a credit card with a huge limit on it and just put everything, no matter what, on that. I didn’t even try to keep a running total or even look at prices at all beyond a perfunctory glance.

Needless to say, when we returned home and I saw the bill, I nearly choked. I resolved to get this paid off as soon as possible, but now we were a young married professional couple. Did I turn our finances around, or did I continue down the path of destruction? Tune in Monday to find out.

Want to jump quickly to the other Road to Financial Armageddon posts? Here’s an index to help you out.

The Road to Financial Armageddon #4: The First Taste of Real Money

The Road to Financial Armageddon #3: Cash And College

The Road To Financial Armageddon #2: Early Profits … Lost

The Road To Financial Armageddon #1: The Earliest Mistakes

Saving On A Child’s First Birthday Party

We wanted to create a first birthday party for our child that would be full of memories for all of the attendees and would make for a great home movie for him to watch later (as he is too young to remember it himself), but since he is only one, we didn’t want to have to spend a lot on it. How did we do it?

Our theme involved participation of all of the guests. Our theme for his first birthday party is “rubber ducks.” He loves bath time and he has several rubber ducks that he insists upon having in the bath with him. So, in order to build on this theme, we asked every guest to bring a couple rubber ducks with them as part of his birthday gift. When guests arrive, the birthday boy’s cousins will collect the ducks and place them all around the house as decorations. Then, at the end of the party (when he is covered in chocolate cake - another family tradition involves the first birthday celebrant to have his or her very own chocolate cake to mangle with their hands), we rinse the boy off, put him in the tub, and put all 50+ ducks in there with him at once as a memorable end to the party. The key here is that we were able to cut down on decorating costs by involving all of the attendees in a big part of the decoration.

We involved the grandparents extensively. We had them help pick out the theme, decide when and where to have it, and decide what decorations were useful. In the end, one set of grandparents agreed to host the party and get some of the decorations and food, while the other grandparents are procuring the cakes and the rest of the food and beverages. We didn’t ask for them to do this; they wanted to because we involved them in the planning stages. It became less expensive because they had great ideas and wanted to be involved.

We kept the invitation list fairly low. This enabled us to use a home as the location for the party, rather than having to use a public space that might have costs attached to it. Plus, it is a comfortable place for the boy - since there will be so much going on, it will be comforting for him to be in a familiar place surrounded by mostly familiar people.

We made our own foods (and some of our beverages). We wanted to include a simple meal with the party, so rather than having some food prepared, we made everything ourselves. It was simple food - grilled hamburgers and hot dogs and vegetables, some finger foods, and a potato salad - but it was filling and we prepared everything ourselves. This meant that our only cost was the raw cost of the food, which was much less than we were expecting.

We made our own decorations. We also made many of the decorations ourselves. We made streamers out of extra ribbon from the previous year’s Christmas wrapping and we made a banner out of leftover construction paper from an art project (we printed large letter outlines on them, cut the letters out, then tied the letters together with the ribbon and hung it up). We also printed some rubber duck outlines we found online on some pieces of yellow construction paper and cut those out as well. It turned out quite cute - and very inexpensive.

Children can often be quite expensive, but if you carefully plan your spending, you can quite often do wonderful things for little cost.

Bought A Flawed Product? Here’s The Best Way To Handle It

Once every few months, I will purchase an item at the store, take it home, and discover a serious problem with it. The bread has a very odd taste, or the tortilla chips are very stale, or the salsa is very very watery, or the Glade plug-in doesn’t work. Most people I know react to this by simply tossing the product, chalking it up as a loss, and moving on with life, and that’s what I used to do as well. Others return it to the store, but usually just get a duplicate flawed product from the same group. There is another way, however: a few moments of your time can recoup that loss (and often much more).

If you find yourself with a product with an obvious flaw, look on the package and find the customer service number and do what it takes to get a live person on the phone (usually, this involves hitting “0″ a lot to get through the automated services). Tell the person in explicit detail what’s wrong with the package and tell them that you’ve been happy with the purchase of this product in the past and you want to alert them to potential problems with a shipment and you might have concerns with buying the product again (as you should).

What happens (almost always) is that the customer service representative will offer to send you some vouchers in the mail. These vouchers are usually coupons good for a free replacement product. Even better, I usually receive several of these vouchers whenever I make a call like this. Once, I received about twenty vouchers for containers of Yoplait yogurt (I bought a container, opened it up, and it smelled rather ominous); another time I received about ten $5 voucher coupons for Lienenkugel’s beer (I bought a bottle, opened it, and it smelled kind of skunky, not what Honey Weiss should smell like). Another nice touch is that for most non-technology companies, their call centers are based in native English speaking nations, which means that many of the communication problems you might have with a customer service call to Dell aren’t an issue.

Before you get excited and start dialing numbers, a few words of warning. Only call these numbers when you have a legitimate product complaint, as I have been asked some very detailed questions about the purchase in the past. Also, don’t call very frequently: many companies share a database of frequent callers to their customer feedback hotline and if you call with heavy frequency, you’ll get fewer vouchers in the mail.

Remember, though, you don’t have to accept a flawed product, and you deserve compensation for problems in the product. If you buy something at the grocery store and it is flawed, don’t just chuck it; take a few minutes and call and the effort will pay you back (and often more).

Preparing Your Financial Information For The Inevitable

As my net worth sneaks above the break-even point, I’m beginning to see the light at the end of the tunnel. I have accumulated a small number of steadily growing assets and my primary debt at this point is student loans. As I look forward to the future, I see a house purchase and another child in the next few years.

But when I look at my wife and my son, part of me can’t help but wonder what would happen to them if the inevitable were to happen. What if I were to get into an accident and die? How would they know how to access my life insurance and have information on my savings and investments?

To alleviate this worry, I prepared a binder that contains all of the information that my wife would need in the event of my tragic end. This binder is designed to walk her through the steps she needs to take care of all of my outstanding accounts, as well as provide some personal reminders for her.

The document opens, sensibly, with a copy of my will. Following this, for each outstanding account, I’ve included a page that details all information needed about the account. This includes the account number, online methods of access, and any contact information and forms she might need in order to close the account. I’ve arranged these in rough order of importance, with the largest balances that she can obtain coming first and such items as zero-balance accounts coming last.

I was able to generate this list of accounts by simply going through my own personal records. Any account that I have any record of, whether it be insurance, credit, savings, investment, or otherwise warranted a page (and perhaps supplementary pages) in the binder.

Following this, I included a thorough list of personal assets that she may want to liquidate or save as personal remembrances. These include items such as my autographed baseball collection, my wedding ring, and a few other personal miscellaneous assets that she might need.

I’ve also included a personal letter to my wife, as well as a number of letters to my son at different ages. In each letter to my son, I have included a small financial reward in the form of a savings bond in his name; when he reaches each age, I will remove the letter and that bond from the binder and give him the bond. This enables me to share some of my thoughts with him if he were to grow up without me in his life.

I update this binder roughly every six months, or in the event of a major change such as a move or a major asset acquisition. This binder currently resides in a safety deposit box in a local bank, with the key stored in a very safe personal place for retrieval in a time of need.

I hope that this binder never has to be used, but I have the peace of mind of knowing that if something were to happen to me, my wife is as prepared as she could possibly be.

How Your Local “Alternative” Newspapers Can Save You Money

In my area, there are three weekly “alternative” newspapers, supported by advertisements, that can be picked up for free in the entrance to the local grocery stores. I used to be (at best) peripherally aware of the existence of these newspapers; I’d just stroll right by them on my way in to do my shopping. Now, each Saturday on my routine shopping trips, I pick up a copy of each one and toss it into my cart. Why? I save money because of it.

Here’s why: when I get home, I put these free papers out on the table where I can see them (in the same place where I put any new magazines I get). When I get home from work, I usually grab something off of this stack and read through it. Quite often, I’ll find myself finishing off one of the periodicals in an evening, meaning I’ve filled the free time I have with reading instead of turning on the television or the computer.

What does this mean? These free periodicals are causing me to fill more time with reading (which has no cost) and less time with watching television or playing a computer game (which costs electricity, cable, internet, etc.). It’s not even a conscious choice, really (aside from picking up the free periodicals); I just pick something off of the periodical pile and read it in the evenings if there’s something there to read.

I sat down and figured that picking up these periodicals keeps the television and computer off for two hours a week. All told, during active use, I calculated that my desktop computer and its peripherals gobbles down somewhere around 300 watts, while my large television and cable box use about 125 watts. Together, that means I’m using about a kilowatt less each week, which adds up to about four kilowatts less a month, which means I save about $0.40 a month, or about $5 a year.

It doesn’t seem like much, but consider another factor: the local alternative newspaper often has passionate writers and detailed community event listings. I’ve discovered several free events that I’ve attended that, without the alternative papers, I would have never been aware of them. I’m also much better informed on what’s going on in my local community than I would have been even a year ago.

Another way that it saved money is that I found, by adding these to my periodicals, I was starting to not be able to keep up with my subscriptions, so I canceled the magazine I enjoyed the least, a weekly periodical that saved me about $50 a year.

This adds up not only to a cost savings, but a better sense of community and more peace of mind.

Free Baby Toys!

When my son was born, I wanted him to have the best of everything, so at first we spent a good deal of money on all sorts of stuff. Rattles, balls, play pens, and so forth - we dumped a lot of money on these things.

Do you want to guess what his three favorite toys are, now that he’s eleven months old? My old cell phone (with the battery removed), a simple homemade rattle, and a large red plastic cup we got for free at the State Fair.

Before you splurge on expensive (or even inexpensive) toys for your infant or toddler, first give these ideas a try:

Make a homemade rattle. We had tons of leftover baby food jars, so we simply turned one into a rattle. Put four pennies in a baby food jar, make the lid tight, and coat it in a few layers of packing tape (so that if the toy somehow gets broken, the glass will be contained). My son absolutely loves this toy.

Turn over your old unusable electronic devices. My son plays all the time with an old remote control and an old cellular phone. He pushes the buttons and talks on them.

“Laminate” pictures. Print off pictures of family members and laminate them heavily with packing tape (so (s)he can’t chew them up). Make sure the pictures are fairly large so there’s no choking hazard. My son loves these as well - he has a set of pictures of many family members and friends. We also make homemade flash cards, too, with letters and numbers and colors, using the same “lamination” method.

Make a soccer ball out of …. socks! Got some older socks that are starting to wear out? Clean them thoroughly one last time, then make a ball out of them by tying one in a knot, then putting them inside of each other. With the last one, tie a good knot to keep it closed. My son and I roll this “ball” back and forth to each other all the time.

Old plastic cups make great toys. My son has a set of measuring cups he plays with at Grandma’s house; at home, he has a big red plastic cup. He pretends to drink out of it and likes to talk into it because it makes his voice sound funny.

I used to spend money on rattles and other things, but most of my son’s favorite activities and diversions are now freebies.

The Road to Financial Armageddon #4: The First Taste of Real Money

Yesterday, we watched as I stumbled through college making a series of classic financial errors. Yet I finished (albeit in six years) with a pair of degrees, and I was able to find work utilizing both of them. I was suddenly making more money per year than my parents had made combined in any year, ever. Surely the lessons of my childhood poverty would instruct me on how to be thrifty with my windfall? Think again.

Rather than living thrifty, as I had observed growing up, my financial windfalls led me into a giant buying spree. I bought a monstrous television, a state-of-the-art computer, a brand new vehicle, tons and tons of DVDs and music and games of all kinds, expensive gifts for my family (including buying my niece a computer for Christmas)… I bought and bought and bought and bought, because I had learned as a young child that happiness comes from fulfilling every whim of your heart.

Now, this wouldn’t be so bad, but my spending quickly spiraled out of control. I was making a lot of money, but I was soon spending more than I was bringing in. I got a couple credit cards and it wasn’t long before I maxed them out. I just kept buying stuff I didn’t need without any rhyme or reason because I didn’t understand what it all really meant.

It wasn’t long before I was making minimum payments on the cards in the area of $200 a month simply to cover all of the foolish things I had purchased. You would think that this might be a wakeup call, but it wasn’t… I would just pay the bill and then go buy something else that would bring a few moments of joy.

Even that could have been at least somewhat overlooked except for the fact that I had no savings plan whatsoever. I was saving absolutely nothing of what I was bringing in. Even though I had more money than anyone in my family could imagine, I was actually living paycheck to paycheck because I was spending so much on frivolous things.

Perhaps the biggest problem was that I allowed myself to appear much richer to my family in friends than I actually was. They began to have this impression that I was just made of money - and it just wasn’t true. But I felt this desire to keep up the charade because… well, because it made me feel good. I thought I was an inspiration, particularly to my nieces and nephews, and a source of pride.

To sum it up, I became a complete consumer. My focus was on buying things immediately that would make me feel good and I believed that the future would just take care of itself. It is a stage that I fear many people find themselves in today, a stage that I was eventually forced to move myself out of by seeing the financial havoc that I had wreaked not only on myself, but on my family as well.

I allowed this spending to continue on for a while, even as other things in my life were changing. I began to date a wonderful woman and eventually we decided to get married. If you’re thinking “Uh-oh,” you’re probably right. Tune in tomorrow to read the whole sordid story.

Want to jump quickly to the other Road to Financial Armageddon posts? Here’s an index to help you out.

#1: The Earliest Mistakes
#2: Early Profits … Lost
#3: Cash & College
#4: The First Taste of Real Money