financial zen

Very often I come across articles and bloggers writing about saving money in college. It’s beating a dead horse. It’s the same “tried-and-true” advice time after time. It’s written by people on the outside, looking in. Former students. Graduated professionals.

What? Things have never changed? The same rules apply?

I’m sorry to break it to everyone, but people love to generalize the college experience. They want to trivialize the details - so let’s try and break it out for you:

Rule #1 - Scholarships aren’t a sure thing.
Yes, you can apply until your fingers are numb. But you can’t rely on this type of cash to sustain you, or fulfill your “life-long college dream” choice. I’m not saying don’t apply, I’m saying don’t listen to all the hub-bub about Loans are the devil, you’ll be in debt forever, etc…

Rule #2 - Loans are an excellent tool.
People will moan about paying off their student loans (even more so when they drop out without finishing). Education that is worth money, will cost money. But my question to you is - do you need to take your first two years of classes at the expensive place? My suggestion to you is to research community colleges - some offer “transfer” degrees to institutions - you take the general education classes at community college, save yourself a few grand, and then go drop the big bucks on your Bachelor’s Degree. You’ll save money in more than one way.

Rule #3 - Diversify your food.
Ramen seems to be called the staple of the college diet. Yes, it’s cheap. Yes, it’s not necessarily the healthiest option. My suggestion to any kid in college that lives in or around the campus - find out where the deals are. Dollar tacos? Half-off specials? These places are prime for cheap, good eats (often rivaling the price of making it yourself) - plus they come with the added bonus that you get to hang around your class-folk. People under estimate the value of networking at any stage of college.

It’s equally important to recognize that while you are in college, brand name foods may not be worth their price tag. Generic vegetables all taste the same. Some things you may not want to skimp on - peanut butter, perhaps. Maybe you like a specific kind fo salad-dressing. The point is - don’t splurge on everything except the few items you’ve grown to love (or no generic has been able to match - yet).

Rule #4 - Drink - in moderation.
This is another key networking tool - when used wisely. Boys and girls, know your limits. No one likes the excessively drunk kid. No one likes taking care of the drunk. If you choose to drink in college - pace yourself, don’t give in to peer pressure, and when you call it quits - mean it. I’ve had to help too many people out when they “couldn’t say no” to one more drink. Leaving the party “too sober” is never followed by a story involving drunken accidents, bad one-nighters, or illness.

Rule #5 - Put off new purchases.
I love following this one after the drinking issue. I’ve met a few guys who would buy a brand new outfit (occasionally on credit, occasionally on the allowance their parents give them) and then go out drinking, get too drunk, or are too uptight about “getting dirty” that they come off very stand-offish to everyone. You can get good clothes on sale (or at Good Will, or thrift stores). You really do not need the hottest fashions unless that’s your major (but if you’re a fashion designer, you should be MAKING the hot new things, not buying someone else’s). Guys - seriously, do you need designer jeans? That impresses only people who are concerned if you can buy them expensive things.

You won’t always win.
Just as a quick wrap-up, sometimes, you’re going to lose. You may get an F for the first time ever. You may have a teacher or a class that you just can’t conquer - but that’s reason to talk out, to discuss, to speak up. Break old bad habits - being shy never helps, and in a room full of people that aren’t talking, chances are they’re as shy as you. I’m still trying to crack this shell in myself.

The point is - you can spend cash. you can work part-time. You can work full-time and go to school full-time - I’m doing it for almost a year straight. I’m on the Dean’s list. think about the short-term (community college) along with the long-term (where you’re going afterwards).

Actually, perhaps that’s a better point. Just think. Think about yourself, your education, your money, your future. Think about how you’d want to tell your kids about the kind of life you *really* lead in college - the person that had a few beers, was a regular on $1 taco night, and still pulled a B average, or the locked in the dorm room, stressed straight-A student? When you graduate, it could be the people you made friends with that land you your job (or a future one). They’re not going to care tha tyou didn’t carry a 4.0. They’re going to care you took the time to get to know them.

Good luck, college kiddos, I’m in the grind with you and I know it’s not getting easier - but I know it’s definitely worth it.

So I’ve been writing about this post.

In my own way - I see that we all have deep seeded desires for our children’s future. We recognize that money can be an issue when it comes to something they want (and we want them to experience). We can do so much for them outside the realms of finance by simply listening to them, and guiding them to the best of our abilities. They are lumps of clay rolling down a hill, and we get to shape them a little bit, and guide them down the right path, but there are forks in the road.

I worry that some parents may focus too much on what they want and expect of their child, that it then stresses their child out. I’m not saying “take no interest” or “obsesses over your child” in any length of the word - I’m saying support your child. Celebrate their successes.

Let them fall, and show them how to better pick themselves up again. There will be times in life when you see that they’re going down a rough patch and “if they’d only just listen to you.” You realize you sound like your parents now, right?

It’s not about telling them what to do or how to do it. It’s about your kids needing to experience it for themselves - maybe they’ll succeed where you failed (or thought they’d fail). Maybe they’ll fail where you thought they’d succeed - the only way to know for sure is to let them live their lives when they need to - and let them know that no matter what you’ll always thinking of them - even when they think you’re just not thinking of their best interests.

Parenting, it’s… it is its own beast. I look forward to the future little Zens, but I also know how much heartbreak I’m in for! Best of luck to all parents out there - I know you’re trying, and I hope your little ones surprise you.

This is a continuation of an earlier post.

Trent (from The Simple Dollar) wrote an article about personal finance and education of children that really got me going. Please check out my last entry to catch up!

Benefits of an Earlier Emphasis on Educational Spending:
There are a lot of assumptions here, and I hate seeing people set their kids up for success - in their mind. They send their kids to the “right” schools, they travel, they pursue their child’s interests… but then their child isn’t so bright. He’s not a straight A student. His interests are more outside the norm, or maybe he talks about how nice it would be to work at a factory - doing good, honest work, getting dirty - instead of pursuing your well laid out plan to send him to Harvard Law (or maybe to study literature, who knows?).
This is a double-edged sword. All the factors can help - or they can do nothing except make you put unrealistic pressure on your child. He may feel your sense of urgency and need for him to succeed, and no child deserves that kind of pressure.
A co-worker mentioned to me about kids - remember when, growing up, you were told to sit still and be quiet, because that’s what good kids do? That’s an outright lie. That’s what good adults do. Good kids play, they have fun, they learn to explore and test their limits - be it singing, figuring out stuff for themselves, digging through books (or digging in the earth). The point is - good kids do these things and make sure their parents know about it.

Think Different:
After all this, I love the wrap up. Trent and his wife contribute to a 529 plan AND a special savings fund. They’re thinking about the little one’s future. Writing is a flowing process, and it seems he and his wife have a great grip on what to look forward to - they may need to tap into this money to send their kids to Europe for a summer camp. Maybe buy a piano. Maybe make their desire to go to a private school come to fruition. The point is - the money will be there, should we need it.

Coming up… wrap up!

Trent at The Simple Dollar wrote an interesting article - one that got me thinking quite a bit that I’m going to split this out over a few days.

Is there too much emphasis on saving when we discuss children’s education and personal finance?

He lists a few “overlooked opportunities” that, in my opinion, are a little too general.

High Quality Day Care and Preschool, Private School: I’m a firm believer that your child has to want to succeed in order to succeed (read Freakonomics yet?). You dropping $20k to put them in the best schools won’t make them want to learn anymore than you did when you were younger.
It’s understandable. You want the best. You recognize your squandered youth, and all of your missed opportunities - but it starts sounding like the parent forcing the child to be what they were (or weren’t) growing up. The former high school football player who forces his kid to play. The mother that puts her daughter in every beauty pageant. You want your kids to succeed, but you can only do so much! You can set them up, but they’re the ones that have ot make those decisions.

Now, it’s possible that starting them on the right foot helps. Say - put them in the nice preschool/daycare that costs a little extra. Ask them what they want to do. Keep their wants and desires in mind. They may have the choice of going to High school A or B or Private School C. They may surprise you and choose B - and succeed, go to Harvard on scholarship, and cure Cancer (I’m just sayin’). Thinking that if you don’t drop a large amount of cash to get them into C won’t make them worse off.

Educational Opportunities:
This is the one section that made me second guess his logic behind his thinking. Trent starts to relate on all the things he missed out on growing up - because of money. All the things he missed out on, all the opportunities - are his parent’s fault. I know that is me digging into the psychoanalysis of the situation, but when you start to relate your childhood - you need to think about where you are today, and what was really the benefit?
Having said that - I also feel for him. I work non-stop, I’m in school full-time, and I’m not stopping. I’ve got plans laid out, I’m establishing contacts to lay out my future a little better - so I can be a better provider for my family. I want money to *not* be an issue - but at the same time, just because I have the money, it doesn’t mean my son will get to go on every trip/cause/function that needs money. My children will have to genuinely want it, need it, or if it’s something that I - I know, I’m making implications - think they should experience, I’ll help make it happen.

Travel:
I love traveling. I grew up camping, so I’m used to the fires, the bugs, the bears, and the people. I hated it at different times - it didn’t fit my schedule, it wasn’t what I wanted to do - but now I look back wishing I really utilized those times. I really want to go to Europe and have my son experience it. I want him to grow up to have my understanding and tolerance of the world at large.
But taking him anywhere, without his interest, isn’t going to get him to be any different. The parent can only do so much with a child, guiding, discussing, assisting, and by just thinking that taking your kids and having them do things that they may not (Trent doesn’t say this) want to do.

Exploration of Interests:
Yes, that old hat. The “my parents couldn’t afford to nurture my gift.” There is genuine, natural talent (like some Juliard students). And then there are some people who pick an interest, and get into it, their parents drop a few grand on that interest, and then something else comes up and now THAT’S their new interest.
It’d be great to nurture every interest. But there is more than money (and ways to work around it) to nurture interests. Trent’s example is about a kid that passed being in a band because of the cost of a piano - the instrument comes later. You can save up for instruments - especially if it’s something you (or your child) is passionate about. But dropping money just because they’re interested this week? You’re going to become more frustrated as you start “nurturing” your child but see him blow through his interests rather quickly.

So - don’t just “buy” stuff for the sake of “nurturing.” You can only guide so much, and you’ve got to trust the communication foundation with your child for him to say “Dad, I want to play guitar” or “Dad, I want to be an artist” or “Dad, I want to study beatnik poetry.” It’s his choice, not mine. I can only support him, and be there to pick him up when he falls. He’ll get burned out on a topic - so be it, he’ll find a new one. But I hope I have talked to him enough, and know him well enough that if money is an issue - he’d talk to me about it so I could help figure something out.

So I got a few answers in my educational quest on estate taxes. I talked to an accountant that said if the deceased had paid taxes all ready, than I have nothing to worry about unless it’s property that needs to be sold.

Of course, I used my google-fu to supplement this answer and the always informative bankrate.com has the answer:

*Ohio has no inheritance tax.

*Because federal tax law totally repealed the federal credit allowed for state death taxes for dates of death occurring on or after Jan. 1, 2005, the Ohio Additional Tax on estates is constructively repealed. This change is prospective and applies to decedents’ dates of death occurring on or after July 1, 2005.

So now, once the cash is “in hand” I need to constructively figure out how I’m going to leverage it towards investing it - and doubling it!

Mrs. Zen and I have long been battling the decision of a dual income, or having her be a stay at home mom. As much as I’d love to be a stay at home dad, I’m the main bread winner - her income is basically pure profit, free to spend as we desire (and mind you, it’s going towards debt reduction). We recently traded in my 1996 Honda Civic for a 2005 Honda CRV - mainly because we had the extra income to do a large down payment, and trips to Grandma and Grandpa’s with packed bags, stroller, and dog in tow. Once in the Civic was enough - and with a dual income we could more than afford a new(er) car.

As was pointed out - the after tax and childcare income is about 13k. But let’s make some adjustments:

Our childcare is about $2,340 due to our baby-sitter service. We only use them for one day a week - for now. If Mrs. Zen becomes full-time salaried, that will change, but no matter how you look at it - her additional income is after all bills are paid.

Let’s tackle their considerations:

• Career Advancement Goals - There is *always* more to a career than money! What about happiness? Mrs. Zen desires a career in paramedicine - she enjoys staying at home, but she also loves her work (as do I!)
• How to Return To Work? - I can’t really argue this one - leaving for eyars ad coming back in - that’s potentially ‘resetting’ your career unless you continue your work part-time.
• Extra Expenses - I’ve got to agree - working has expenses, just as staying at home. If no one is home, the heater/AC is off, less electricity, and at work you may have “job functions’ - happy hours, lunches and the like (I *DO* consider these essential - I owe my current job due to lunch-time networking! And pizza.)
• Breadwinner May Become Workaholic Career Freak - C’mon, really? This is a personal thing, and if you can’t balance your career and life, you need to reassess your values.
• Coupon Clipping - I’ve got mixed feelings here. My brother-in-law works from home (ebay business) and is an excellent father and cooks, while also shopping at night. He’s thrifty and is business than some other people I know. Coupon clip, regardless, I say.
• Schools - This is something I’m still looking into. I moved into a certain area for its reknowned public schools - you can send your kids to a private school so that by the age of six they know three languages and a head start on other students. Do you really want to make your kid go through that? You’ve got to focus on your kids being kids and not being “intellectual geniuses” or “young athletes” - they’re not here to live out your dreams. Do what you can to provide, but don’t force your kids to be something other than children.

Now the stay-at-home parent conundrum is an interesting one - I’ve talked to work-at-home, stay-at-home and day-care parents, with plenty of pros and cons. Your children need you to be their parent, but htey also need to develop social skills and learn to go out on their own - not developing an attachment on you, needing you for everything. I’m a parent, and the wife and I are working on him not developing separation anxiety, but I’m still reading on the psychology of it all (which is a never ending quest!)

So SmartMoney is running an article - Private Colleges Can Be Just as Affordable as Public Ones - showing that Private Schools can be as affordable as public ones. How can that be so?

Private Universities tend to be a bit more open with their pocket books, so to speak.
Why a pricey private school could be cheaper
1. Privates have more money to give
I’ve seen this time and time again, with a few friends and relatives going to a private university - and having bills substantially lower than their in-state public college.

2. They meet a bigger percentage of need

3. They’re more willing to consider special circumstances
Private colleges basically are more friendly and understanding - and I’ve definitely witnessed this with my sister’s dealing with the financial aid office, and my repeated problems dealing with public universities.

4. Your child may graduate sooner
As a fact - my sister did. The relatives in public schools? We’re still trucking towards the five-year (or longer) route.

The point is - never rule anything out. You have to try before you can fail, and be told “NO” in writing before it isn’t an option. If you don’t try, you’ll always fail!

“A failure to plan is a plan for failure”

I don’t know about you, but I fell into the interest of personal finance from getting into reading blogs. The more I read, the more it intrigued me. It reminded me of the past experiences and money mistakes. Perhaps most people are put off by their lack of understanding terms - meaning they need to improve their financial literacy (the knowledge of facts, concepts, principles, and technological tools that are fundamental to being smart about money). This leads to most people learning about personal financial planning and developing and implementing a coordinated and integrated long-range plans to achieve financial success.

In planning, we hold ourselves responsible for our own success, happiness, and establishment of our security and standard of living (in the present and the future). It’s a huge part of our life that many people ignore until it’s too late - and then they learn from their mistakes, but it costs them (potentially) thousands of dollars, or wrecks their credit rating (which can potentially effect your employment, your mortgage, your car purchase… every financial aspect of your life). It’s my goal as I continue my education to get a better understanding and establish a better budget and mind set - I don’t mean miserly, I don’t mean “living like no other today so you can live like no other tomorrow” - I mean being able to save up for vacations without putting it all on credit, buying a car with cash, and using credit card arbitrage to its full potential. It’s a difficult premise, but then again, life isn’t easy.

The Six Steps to Personal Finance Success

1. Financial planning, focusing on establishing and achieving long-term goals through planning and budgeting,
2. Money management, centering on minimizing income taxes and efficient utilization of cash and credit,
3. Managing expenditures, especially for “big ticket” items such as vehicles and housing,
4. Income and asset protection through insurance, so that hard-earned resources and assets are not placed at undue risk,
5. Investment planning, with its focus on selecting the appropriate investment vehicles based on the objectives at hand and the relative levels of investment risk, and
6. Retirement and estate planning, with the ultimate goal of being able to live off of one’s financial nest egg and plan for transfer of assets to heirs.

It’s never just a simple process - fortunately we have trained professionals to assist. Certified Financial Planners can help you plan with these six steps, and Certified Public Accountants can help you get your finances together and straightened out. Over the next few months I’m planning on elaborating on these six points - from an educational stand point, as I am not a CFP, CPA, or any other TLA.

This makes sense, doesn’t it? I think people are starting to realize that MONEY is NOT WORTH IT. Family time, friends time, play time are more important than work. Low stress, good pay - versus high stress and pay? Every is inticed at first by the “big bucks.” They can buy a benz or beamer, they can buy a bigger house, they can spend more money on meaningless crap and never enjoy it!

Honestly, this is why I miss working an hourly job - you got paid based on your output vs. a set amount no matter what. Salary means your performance is imperative to keep up so as not to be cut/down sized/let go/laid off. Hourly means you bust your ass and your work has a lot more meaning to it. You put in forty hours and do great work - or you put in 80 hours and do exceptional work, either way your pay is going to double. You may not always be able to, but those overtime opportunities will come up, though not always. There are always many pros and cons. This could almost be leveraged on a case by case basis, which would take us years to go through - the point is to leverage your current job, responsibilities, and pay vs. a different job with less pay and responsibilities.
small town sleeper is totally different.

Of course, then comes in the education - it’s assumed you need to justify your degree. I know art majors that manage warehouses, and art majors that design websites. Doctorates that do lowly teaching positions, and liberal arts majors that start companies. It’s a mix of education, desire, and determination. Some people succeed with a GED. And of course, some people want to attribute it to luck, family, or faith. Often it’s who you know not what you know. Not always, but sometimes - and sometimes it works against you.

What do you attribute your success to?

It’s reassuring to read it a million times on PF blogs, and once again in class:

“The rich get rich by spending less than you earn.”

That’s right, folks. It’s an educational, economical factoid for your consumption.