the why factor

Anyone out there a Storage Wars fan? I bet you know my answer:

thanks, dave

Anyway, Darrell "The Gambler" Sheets is always talking about "The Wow Factor", but I'm going to talk about "The Why Factor". This past week, I've been listening to a few podcasts about money and my favorite by far is Adam Baker's Man vs. Debt podcast. Seriously, I have about four pages of notes/quotes on the subject. Here's a little nugget:

We've been sold a myth...that the pursuit of a living environment filled with things is going to grant us security- even grant us happiness. In the pursuit of these things we start to identify with these things... [without stuff] it's easier to bounce back of anything negative that came into life... what happens when you need to adapt? Either physically, emotionally, financially to any situation? At best, you're restricted, you're clogged, you're congested...How much more fufilling would life be if you started collecting experiences instead of things

That's just a brief synopsis - he talks more about how we're in a cycle of working longer & harder in jobs we don't like and rewarding ourselves with more stuff which is putting us deeper in debt so we have to keep working. I make no bones about the fact that I don't like my job all that much, but I stay because of the salary. How great would it be if I could take a pay cut and not worry about whether I could pay my bills? (the answer: super great).

Today is the hubs' and my first wedding anniversary. On Saturday, we invited some of our friends over to have a little get together. Afterwards, we were in the kitchen talking and I asked him what our goals should be for Year 2 (the goal for Year 1 was just not to kill each other). He looked at me kind of strange at first, but I kept talking about what we should be working towards as a couple and how by researching topics for this blog I had learned a lot about goals. And I essentially admitted to him I had more credit card debt than I was comfortable with (I didn't give him the exact number), but I was ashamed to tell him about it. Of course he told me I shouldn't have been worried and he expressed he felt like he wasn't contributing as much to the household as I was and that's probably why I felt like I was coming up short each month.

While we didn't set exact goals, we agreed to work together towards paying off my debt. It was really nice to have an in-depth conversation about what we wanted - which we dont do nearly as much as we should - and I hope it's something we can continue to do in the future.

Back to the podcast (this all relates, I promise) - the central theme Baker talks about is "Your Big Why":

[the] real, honest, transparent, selfish reason that you are getting out of debt or you are stepping up to take back control of your finances. The real reson.

He says there are three levels: In the first level, we take the "why" at face value-

"Debt is bad. Being rich is good. So I'm going to pursue this thing that's good and not this thing that's bad." Baker says "We simplify that much because we aren't willing to really dig deep and analyze the big why, the deep why, the real reson that we're doing this - why do you want to get out of debt? why is debt bad?"

Obviously, my first level is along those lines as well. But why? In the second level, you answer that why. It may be because you want to have extra money to buy expensive things with cash instead of credit. Baker emphasizes it's okay to be selfish here. He literally says what my second level is in the podcast "I just want to get away from the stress. The stress of having to pay bills. The stress of this debt. The weight of this debt. I just want to get it off of me." But why?

Your Big Why exists three levels down... Why do you want to get rid of the stress of your debt? What's the real reson deep down?"

I feel like I'm falling short of what I really want out of life. The hubs and I have talked in the past about moving out of state and I would love to be able to do that and not worry about if I'll be able to find a job that pays what I make now. I want to be a person who works because they love what they do, not because they have to. I want to be able to explore other career paths without fear that we won't be able to afford our monthly bill payments. I used to be this really fun, spontaneous person who was always up for anything and now I feel like I plan everything and I don't do or experience as much as I used to because I'm always concerned about money. I'm sick of settling.

Today's step of Financial Literacy Month is about making the commitment. They recommend creating a visual map of your goals and surrounding yourself with them. That's definitely something I'll be doing in the coming days so I can be reminded daily about why I'm on this journey.

What's your Big Why?

Monday Spent: $3.84 Wawa breakfast
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Monday Saved: $0.00

goal tending

In continuing the theme from Wednesday's post, we're going to sail on into Financial Literacy Month with more tips. This weeks FLM topics seem to be centered around goal setting and goal tending. Ironically, I was listening to the Man versus Debt podcast yesterday and Baker interviewed a blogger who believed in a "no goals" theory.

I'm not sure yet whether goals are for me, but perhaps that's because I have a hard time setting realistic goals. Or even if the goals themselves are realistic, I can't deal with slow results. I'm a "needed it yesterday" kind of person. I want immediate results, whether it's in my finances, weight loss, the house, etc. So as you can imagine, I'm often disappointed when things don't happen as fast as I think they should and I abandon whatever the goal/resolution was. I'm honestly surprised I stuck with the Lenten goal (for the most part) even when I wasn't able to make big dent in the debt overall.

But back to Step 12: Set short, mid, and long-term goals. Their default goals are: Pay down debt (short), establish emergency savings (mid), and Retirement (long).

My goals would be:

Short (one to two years): Build our emergency savings back up & save for a new car

Mid: (two to five years): Pay off credit card debt (we established back in February this would take me at least four years)

Long: Continue contributing to my retirement accounts and increase the contributions back to 10% once the debt is paid off. Establish a solid long-term savings. Sell our house and buy one I actually like in Atlantic County.

Step 13 of FLM covers a topic we're super familiar with around these parts: methods to pay down debt. They provide the examples of Debt Snowball (lowest balances first) and Debt Avalanche (highest interest rates first). I'm not one to beat a dead horse, so here's a handy debt pay-down calculator if you're interested.

Moving right along... we're going to bang out Steps 14 & 15 today as well, since I'm a bit lax on the weekend blogging.

Step 14 talks about the importance of an emergency savings account. This is an area I've been worrying a lot about lately, since our savings was wiped out after the bat removal. If we hadn't just received our tax return, I don't know how we would have managed. I know most financial websites recommend saving three to six months of living expenses which would put us somewhere between $7,377 & $14,755. Yow-za. I think we have $1,300 in the account right now (all thanks to the hubs).

Step 15 makes me feel better since it's about preparing for retirement and I'm all over that. Prior to this debt paydown journey, I was contributing 12% of my salary to a Roth IRA and a Deferred Compensation plan. This was in addition to our mandatory pension contributions (which, to be honest, I wish I could just opt out of since I doubt NJ will have the money to pay it back to me when I retire). For now, I'm contributing 2% while I focus on knocking out my debt, but I'm look forward to getting back to fully funding my retirement accounts once my credit cards are wiped out. The Hubs also contributes a lot (I don't know the percentage off the top of my head) towards his 403(b) plan so we're on track to spend our retirement golfing (him) and at the beach (me).

What are your financial goals? Do goals motivate you or do you get discouraged like me? Any tips for better management?

April is Financial Literacy Month

Did you know that? I didn't until I was doing research on a different topic for the blog.

Money Management International is sponsering a Financial Literacy Month Challenge as well as guest bloggers on their Blogging for Change website which highlights each days "step". You can enter the Challenge for a chance to win $500 - you know I did!

I'm a bit behind on the steps, so lets kick this baby into overdrive to catch up, shall we?

Step 1: Commit to Change. Done!

Step 2: Assess Your Finanical Situation. I scored 12 points on their quiz, which "reflects a good effort to manage your money effectively. The 30 step plan can help determine changes that can be made to improve your financial well-being."
Step 3: Clearing Out Financial Clutter. I will give myself a pat on the back for being pretty organized; I usually alway toss receipts (except for major household purchases), I print & save our utility bills for one year to compare costs. I'm hit-or-miss on saving credit card statements. Lately, I've just been reviewing them online.We have a big bag of bills I need to get around to shredding then burning in our fire pit. I need to add our paystubs to the pile now that we've received our tax return. The blog post for day 3 lists an interesting tip about carrying three different registers - one for cash, one for your bank/debit card, and one for credit cards. The author also mentions people who struggle with their finances may need to document their spending for longer than a month (ugh!)

Step 4: Set Yourself Up for Success. I would consider myself the Family CFO, meaning I track and pay the majority of our household bills. Again, I'm pretty organized with our paperwork. We're half & half on automated payments- I should probably work towards full automatic payments. I couldn't view the webcast at work though, unfortunately.

Step 5: Get Copies of Your Credit Report. Done - over 40 pages!

Step 6: Clean Up Your Credit Report. Easy-peasy since there were no errors from the three reporting agencies.

Step 7: Make Your Money Count. Using their Income Worksheet Form, I calculated a monthly take home of $2,553.24 (a bit more than my previous estimates due to knocking down my retirement contributions in the short term).
Step 8: Identify Your Starting Point. I calculated my net worth at $1,130.87. Woo-hoo! In the positive! I didn't have the information on the balances in my pension & IRAs so I just estimated some rough numbers based on my last year & a half of contributions. I did not factor in our joint savings because I haven't recently contributed anything to it (whomp whomp)

Step 9: Passing the Debt Test. I answered "yes" to four questions:

Is an increasing percentage of my income going towards debt payments: yes, but that's because I'm riding the debt meteor

Is my savings cushion inadequate or nonexistent: bats- 1, savings account- 0

Are you at or near your credit limits: depends on your interpretation of "near", but I answered yes anyway

If you lost your job would you be under immediate financial strain: hell yes. this scenario gives me nightmares.

The guest blog posts lists "5 Great Reasons to Have Less Debt". They all sounds fabulous.

Step 10: Set Your Priorities. When filling out the worksheet they provided, I could almost place each priority in the "need" catagory, but I decided to be reasonable. The blog tells you to "market to yourself" what your priorities are instead of letting the mass media market to you which I think is a really interesting concept.

Rank 1 (most important): Paying off unsecured debt; Making on-time payments on secure debt; Maintaining a savings account (all ranked as needs)

Rank 2 (semi-important): Buring a car (still more a want than a need), taking a vacation (want), having money for entertainment (want)

Rank 3 (not as important): Saving money for a down-payment on a house. Obviously, we already own a house, so we don't need a D.P. but we should work on increasing our home equity.

Step 11: Set financial goals. They use the acronym SMART:

S - "A smart goal is specific. It pinpoints something you want to change to achieve." (I want to pay off my credit cards before I turn 30.)

M - "A smart goal is measurable. You can measure or count a SMART goal."

A - "A smart goal is achievable. Setting goals too high can lead to frustration." (going to be hard, but achievable)

R - "A smart goal is rewarding. Reaching the goal should be a reward for your hard work."

T - "A smart goal is trackable. Set milestones and schedules for your goals." (first goal: Pay off Card 3 by July at latest)

That brings us up to date on our steps. Are you motivated to take the Challenge now? I'm actually kind of excited about it. I'm definitely a person motivated by challenges/experiences so this is right up my alley.

Treat Yo'self

The above captioned phrase has become quite verbatim in our house. We use it seriously, as a joke, when we're mad, sad, ecstatic, the whole nine yards. We like it so much that we wrote it on a dollar and hung it on the ceiling at a restaurant on Cabbage Key island this past December.

if you already know our last names, great! if not, the mystery continues...

But in order to better understand the science behind "Treat Yo'self/Yourself", we need to watch a little clip, courtesy of Parks & Recreation (seriously, if you're not watching this show, you need to stop reading this blog until you're caught up -- the references aren't going to stop here):

How about one more for good measure? I want to make sure you're fully immersed in the concept:

Ever since this episode came out, I feel like every advertiser is using this phrase in some form. I would be foolish to think the "go on, you deserve it" campaign is a new strategy, when in fact, it's probably one of the oldest tricks in the advertising book. What I didn't realize was how much of a hold it had on me until this past weekend when I was out at the shops (read more about that here).

I started to think to myself: "Self...you've been really good lately. You haven't used your credit card in one month! What's the harm in buying one dinner/shirt/drink/hair product/etc?" Let me tell you, it is a slippery slope back into debt when you start thinking that way.

Even though Lent is almost over, I know my financial journey is still just beginning, especially with this epiphany of sorts. I still have to overcome this almost primal desire to buy and consume. I have to make myself take a step back when there's an item in my hand and ask "Self... why are you buying this drink/shirt/hair product/snack? Are you really thirsty/naked/hungry or do you just want this item for the sake of having it?" Although identifying wants versus needs was an integral component in my rules, I have a bad habit of justifying my purchases instead of admitting I made a mistake by buying it.

I think it's a step in the right direction to be able to identify when I'm using the "treat yo'self" mentality. Hopefully, this will help curb future spending!

For Richer, For Poorer

Today, I thought it would be interesting to see how my peers handle finances within their relationships. You already know I'm not the best when it comes to communicating with the hubs about money. I was curious to see if anyone else had the same difficulties or if I was the only one with my head in the sand. I gave everyone the same three questions to answer, but all the respondents have been together for varying amounts of time (names have been changed).

1. How did you view money before you were in a committed relationship/engaged/married?

• "I would say my husband and I have always been "loose" with our money" - Gloria, married 1.5 years, together 7 years
• "I was actually a better saver before...but I was also working two jobs" - Julie, married 6 months, together 5 years
• "I didn't think about money that much, I would spend it like hot cakes. I didn't save much, or if I did, it was because I wanted something expensive." - Wes, married to Julie
• "Back in the day I was probably the consumer who bought things without researching and double checking. I just did stuff without thinking about the future." - Sophia, getting married in August, together 1.5 years
• "Prior to being in a committed relationship, I viewed money as something to spend on clothes, gadgets, going out, or vacations." - Dan, in a relationship 2 years

2. How has being in a relationship/engaged/married changed the way you view your money?

• " When we first opened the joint account, it took a little getting used to, because we were both so used to just doing what we wanted all the time, and not having to worry about what anyone else was spending...But with the joint account, you have to know what the other person is doing so you don't overdraft. If we are running low in the checking account, I just give my husband a heads up so he can watch his spending until the next direct deposit is put in.  Neither one of us spends too frivolously... With big purchases, he usually just goes by my opinion since I handle the finances." - Aubrey, married 3.5 years, together 9 years 
• "Before we got married, we settled a lot of debt and refuse to use credit cards except for 1 small one to build our credit- less than $500 limit... We have made a point to try to make all big purchases in cash... Overall, our relationship with money has been the same- what's mine is his and vice versa." - Gloria
• "I think of everything WE need, for example if I want to buy a Coke for work, I think is there anything we need at home...Now-a-days money is the third thing I think about everyday!" - Wes
• "As much as I make fun of him for making pie charts and talking in percentages... I have found myself looking at the charts and making sure that whatever I want is #1: necessary; #2: affordable... I used to spend money on crap that I really did not need- only because I didnt have a goal." - Sophia
• "I've always been a saver, so if anything, I've influence my husband to be better with money." - Bridget, married 28 years

3. Do you find it difficult to talk with your significant other/spouse about money?

• "Some times it's difficult to talk about money with my husband, especially after I splurged on something for the house or myself or even when the grocery bill gets a little higher than usual." - Claire
• "It's very difficult because I never had to explain to anyone how I spent my money... We both have a love/hate relationship with payday because we know we have money but at the same time we know we need to sit down and talk bills..." - Wes
• "No. We often have discussions about money." - Bridget
• "There are no difficulties talking about money with my partner, we talk about it all the time, our goals, and how to spend and save." - Dan

It wouldn't be fair for me to ask others about their personal lives without discussing our own, so I sat down with the hubs tonight and made him talk about these topics (spoiler: he wasn't very interested).

1. Prior to dating, we were both spenders and we didn't think about what we were spending our money on.
2. The hubs said "it's easier to save now, but only because I make more money." He thinks he spends money on the same kinds of things he did before we were dating. Obviously, you all know I am trying not to spend the way I used to and (attempting) to save more money.
3. We both think it's difficult to talk with each other about money. He says it's because I "have my own ideas about a situation." I can admit I have trouble listening and/or seeing a different perspective other than my own. I feel it's difficult to talk to him about money because he can be very dismissive about what I see as a problem (for example, how much money should we have in savings).

Feel free to respond in the comments with your answers to the questions as well! I think it's so interesting to hear about others relationships. Must be the sociologist in me. Or I'm nosy. Probably both.

Day Thirty Spent: $0.00
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Day Thirty Saved: $0.00

Changes in Attitude

I started working on a break down of my credit card spending today and was able to complete the catagories on one card. Tomorrow, I'll work on the second card and hopefully have the results posted by Friday. Looking at my spending habits is a real wake up call that I have a lot of work to do when it comes to self-control. This got me thinking about my attitude towards money (and debt) in general.

This article, published in May 2011, talks about four unhealthy attitudes towards money. From those four catagories, I would probably place myself in the "Money Status" & "Money Worship" catagories. Looking back, I think a lot of my credit card use came from wanting to impress others, either by picking up a restaurant tab, buying a new purse, or getting someone the perfect gift (even if it was more expensive). After taking the Financial Values Inventory Quiz (page 3), my "values" (Personal Care, Social, Hobbies, Travel, Housing) reflect that attitude as well.

An article in the NY Times online quotes Eric Mills (founder of ohnomymoney.com): "The taboo around talking about money is ill-founded,' he says. 'When you’re the only person dealing with it, you’re subject to all of the dysfunctions we all have. If we could all be a little less uptight and more communicative and social about it, we’d be getting better advice, and it wouldn’t be the sort of thing that we stress about privately."

We didn't talk about money in my family. I don't remember over-hearing conversations between my mom & dad about money and I don't remember any conversations between my parents & I about money. I remember I was allowed to "spend half, save half" of any birthday or Christmas money received, but there was never any ultimate goal of the money saved. In fact, I don't even know where it went. I assume it went into the savings account my father turned over to me when I was 18, but I can't tell you for sure. As a result, I went to off to college with very little in my checking account, a credit card in my own name, and not a whole lot of common sense. You're correct if you assumed that the savings account was drained rather quickly.

Are you sensing a pattern here? I am.

I still struggle to talk to my husband about our finances as a couple. I feel we never have enough in reserve; He thinks I worry too much. He doesn't know how much revolving debt I'm currently carrying because I'm so ashamed to admit it. It's hard to disappoint the people you love. Don't worry, I'll tell him eventually. Baby steps. Last night I told him I was blogging about not shopping and saving money. He was happy I don't mention him by name.

How did you learn about money? Did your view of money as a child affect your relationship with money as an adult? Do you find it difficult to talk about money with your significant other? (I can't be the only one!)

Day Eight Spent: $0.00
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Day Eight Saved: $0.00

oh oprah, you are so wise.