financial zen

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!)

This upcoming Christmas season, take a moment and reflect on the meaning of the holidays.

I bring this up for more than one reason - not just for the financial impact, but more importantly for the impact of gathering for the family. Make your holidays about your families first - the gathering, the food, the festivities - and not the gifts, the giving, the receiving. Drop the holiday hassle, boycott the consumerist angle of the holiday season.

Still want to “give” something?

Why do you have to buy something? Do you ever feel like you’re buying meager offerings because you feel you “have” to? Instead of giving gifts - make something. Make them a Christmas card, make food, make cookies. Why does it have to be material goods? Donate money to charities in their name. Make the money do something instead of spending money on random items that they may/may not want or even NEED.

It’s one thing when you know someone needs something - a heater, an electric blanket, firewood, food, or even company - compared to buying some $20 gadget because you think they’d like it when they’d rather have the pleasure of your company. This Christmas/Holiday season, how about we step back from the consumer rush and just enjoy some time together?

The real measure of your wealth is how much you’d be worth if you lost all your money. ~Author Unknown

As I wrote about the fundamentals of personal finance success - and the fundamental truth of saving more than you spend to reach wealth, it’s important to recognize what that exactly means.

You can save all your money, live in your car until your debts are paid off, live at home and mooch - basically you can spend as little as possible now so you can have a lot of money in ten to twenty years, sleeping on a couch, eating ramen, and walking everywhere.

Or you can buy a car, live in an apartment, make your own lunch, buy used, and spend less than you earn. You can still have an occasional night out, party on occasion, go to Europe - it just means being mindful with your money. But how can you do this on a limited income?

Very easily. Cut out the unnecessary expenses. No cable, no memberships, no magazines. Okay, you want cable? Get basic. Skip the DVR package and the “VOD - only $10/month!” ‘deals.’ Go to the library. Read more. Go to the park to jog. Pick up some used weights on ebay or craigslist. The point is - be frugal not cheap. You don’t need a huge house that you can’t afford - I don’t care if you think you can afford it in a few more years, that’s moronic. If you knew tomorrow you were winning the jackpot billionaire lottery - but only made $26,000 a year now, and you were thinking of getting a new car/house/xbox/whatever - treat it as if you only had the $26,000. Oddly enough, I heard someone talking to a friend at an old apartment (back when I made $11/hour as a trainer):

You do not go out and buy a Bentley because you think you deserve one. You do not buy one because you think you can afford it in a year. The car does not make the player! When you are set, you will know you can buy the Bentley outright because you can get it if you want it, not because you need it.

There be wisdom in these walls! The guy who said it made a decent living in a factory, drove a convertible, and lived in off-campus housing. Cheap housing that allowed him to buy the material possessions he wanted. Not necessarily the best move financially, but wiser than buying a bentley, a mansion, and maxing out credit cards to give the illusion of wealth. You earn your lifestyle, you don’t choose it.

No doubt everyone’s heard of the guy who tried to flip houses by lying on his credit applications saying he made more money (which they made no effort to check or clarify, either). Here’s a stripper in 24 million debt because she wanted to quit her life and find a new way - and instead of researching she signed her life away, ruining her credit while the brokerage got to inflate housing prices. Do not be duped by easy money. There is no such thing.

Let’s look at it this way - you want to retire rich? Then set aside some money now.CNNMoney has a useful retirement calculator to help figure out how much money you want to live on and when you want to retire. There are a lot of factors involved, and it’s something you should always be working towards - so don’t think your plan is set from day one - it’ll need constant nurturing, but as you watch your retirement fund grow, you’ll realize it’s worth it. Just don’t put off your life until then - I’ve met many an old couple that says they wished they spent more money when they were younger to travel and do the things they can’t do because of their age - and seldom have I met an old couple that regrets traveling or managing their money for trips.

Just remember - manage your debt, spend less than you make, and focus on your long-term goals while keeping yourself satisfied and happy in the present. A delicate balance, but one that you (your loved ones) will enjoy!

(Read more stories of how other people paid off debt at Chris Pirillo’s blog)

My problem lies in reconciling my gross habits with my net income. -Errol Flynn

People are often confused with financial planning - they mix up three basic fundamental ideas, or combine them and create a skewed, warped version that makes financial planning a complicated ordeal. Financial success is meeting our plans and goals and reaching a certain milestone in our expectations of finance:
Security is reaching that point with your finances that you are comfortable with your money and savings that will cover your needs and your wants.
Wealth is having an abundance of money, investments, and resources. A fundamental truth is that in order to build wealth you must spend less than you earn. You must hold off on your current standard of living to reach a higher standard of living.
Happiness goes beyond making more money. It’s about being in a good position of your finances and bills - you are on the way of reaching your goals with well-established, healthy financial goals.

Of course, it seems every way we turn we encounter impediments to our financial success. The second your of legal credit-bearing age the offers start. When you reach college campuses you’re surrounded by companies wanting you to sign with them for credit card offers, loans for an over-priced computer, for a new car you don’t need. Money is thrown at the 18+ crowd by telling them how important it is to build credit, and also to give the appearance that you have wealth - get your Abercrombie and Fitch credit cards and dress for success! Give that illusion of richness by driving a brand new Acura! It doesn’t matter that you’re drowning in debt… does it?

OF COURSE IT DOES! It’s important that you establish your financial foundation - use your current and regular income to provide your basic lifestyle and savings. Once you’ve got your foundation, you can continue on your financial journey (where we will continue down the road).