I assume that like most Americans I grew up not really knowing or being taught much about financial matters. For the most part, I never really thought about money and nobody really brought it up. If I wanted something, I asked…sometimes I got it, sometimes I didn’t. I attended private school, lived in a house with air conditioning (BIG DEAL in the Virgin Islands, even though it wasn’t Central Air), wore nice enough clothes (both my mother and grandmother are VERY fashionable), etc.
But there was no really detailed discussion about where the money came from or how you kept it. I mean, I saw my grandparents and parents go to work everyday and I knew that they got paid but like most kids my money was my money to do as I pleased (It wasn’t a whole lot of money, but it was money none the less).

Even when my father didn’t pay my tuition on time, it never occurred to me that maybe he didn’t have the money, I always assumed that he forgot to pay (I still believe that it was because he was too busy to remember when it was due). My introduction to money management came after he became ill and could no longer work I began to receive social security payments, which looking back, could have been put to better use if I had some solid financial advice. I spent the money on things that seemed to be prorities at the time and saved a little to but a computer when I went to college. I guess looking back I had given more thought to real estate and stocks and more long term things vs. that size 2 designer dress that was oh so cute in 1995 but couldn't even fit my big toe now in 2008!

I am indeed still baffled by financial matters. Last week one of my friends said, “I had more money at 21 than I do now at 31”. I’m afraid that I am in the same boat. By 23, I was already a college graduate and a homeowner…I was also already a wife and mother (great accomplishments, but also expensive accomplishments). Though we were struggling financially, I just expected things to get better with time, and they have, but we are still struggling to rise above the weekly financial shuffle. I find myself spending a lot of time dreaming up ways to make, grow and keep money…but in addition to everything else that I have to do, it gets SO exhausting!!!

Sometimes I look around at other people (sometimes in envy, most times in disgust) and I wonder how in this current economy they are still able to drive HUMMERS and live in palacial homes, stay at home with their babies and shop at WHOLE FOODS MARKET, etc. I don’t get it…My conclusion, I must be doing something(s) wrong!

While I have no desire to drive a HUMMER, I would like to be able to pay my bills (on time) and save some money. I would like to be able to fix up my condo before it falls even further into disrepair and to visit my family in the Caribbean more often. I guess what I’m saying is I’d like to achieve some semblance of financial freedom, so that I could enjoy life and pass the message and benefits on to my children. Currently, we spend most of our time working so that we can pay bills and in the process make more bills...I DONT GET IT! ANY TIPS?


MUD said...

Go to the nearest bookstore and look at any of the books about money management.
Here are the simple rules you must understand.
1. Income must exceed outgo.
2. Only the things you need should be bought until number 1 is achieved.
3. Start small and pay off debts until you are debt free.
4. Children benefit from knowledge and love. Give them love and teach them about the money and how hard it is for you to pay the bills. They will want to help but will continue to want without your help.



Pamela Fuller said...

I find myself equally overwhelmed with my extensive "things to do list" and the goals I have that will put me in a better position economically and in terms of the sort of time I have for my family - and I don't even have kids so I can't imagine how overwhelmed and exhausted you feel with it all.

But the conclusion that I've come to is that a drastic change in the status quo requires a drastic move. For example, I've gained 30 lbs since living in Florida - well, working out once a week and avoiding sweets isn't going to help me loose that weight. But if I commit to work out an hour each day, 5 days a week and put myself on a 1200 calorie diet, no sugars, etc - then I will loose weight. But that is hard.

I agree with the previous post - #1 is that income must exceed outgo. So I think you should think about what you and Simon could do to reach that point. Do you need to go back to school to be a candidate for higher income? Do you need to leave the public sector? Is there a place in the country where teachers are paid significantly better (New Jersey, Connecticut, Massachusettes)? Is there a place where county and non-profit employees get paid better?

And I guess, however exhausting it would be to do any of those things, that's only a temporary exhaustion. You're exhausted for the two years you're in school, or for the year of planning a major move to a different state - but then, you're in a better place. Whereas if you don't do anything drastic, you're in a constant state of exhaustion and frustration forever.



Shani said...

My two cents. . .

~Track your expenses:
Knowing your money is the first step to controlling it. Obviously, tracking your expenses will allow you to see where your money is going. Better yet, it provides an "opportunity for awareness." You can pinpoint opportunities for saving. Example, if you think that you spend $500 a month on food (groceries and lunches/dinners out), but your tracking reveals that you really spend $800, you'll be more apt to shop according to the circular, clip coupons, and find bargains at produce markets.

~Write it down:
Write down your budget. Include all income (wages, interest, business income, etc.) and all expenses (doing the tracking exercise will provide for a more accurate description of your expenses). Placing a copy on the fridge reminds you to make use of everything already in the kitchen (sorry kids, no Papa Johns tonight); actually, it'll be a constant reminder to stay on track with ALL of your expenses. There's also an opportunity for you to talk about financial planning with the kids. Next time they reach for a Jell-O, they might ask what utilities are!

~Pay yourself first (PYF):
You work hard for your money... you should have something to show for it! We've all had "more month at the end of the money" at one time or another, but PYF can provide a cushion when life happens (and it always does!) Set this money aside in a liquid account, such as a money market account or a beefed up savings account. Stay away from certificates of deposits and similar accounts that penalize you for touching the money. Do not use a debit card for this account and avoid linking it to your checking account (humans are so simple, but sometimes we have to play these tricks on ourselves to be successful!) If you have to put the money in a credit union across town, you'll think twice about driving to get it (especially at today's gas prices!) Financial planners recommend that you set aside at least three to six times your expenses for an emergency savings account. For example, if your mortgage, transportation, food, and utilities costs (all of the basic costs required to run your household, and let's face it, you could cut the cable if push comes to shove) average $2000 per month, you should have $6000 to $12,000 in such account. Yes, I know that's a lot of money. But you've got to get started (no matter how small the amount); over time you'll get there. In the meantime, make (write down and post it everywhere) a short term goal to have at least one month of expenses saved.

~Pay on time, ALL THE TIME:
This will save you tons of money in late fees. It will also contribute to your credit score. According to the Fair Isaac Corporation (hey, FICO!), 35% of your credit score is based on your payment history (i.e. paying as agreed). This will save you money in the future when you decide to apply for credit. We all know, the higher your credit score, the lower your interest rates (and vice versa). Paying on time saves you in fees now and lowers your costs for credit in the future.

~Don't use all of that credit:
Just because your credit card limit is $1000 doesn't mean you should use it all. Rule of thumb: use 40% of your limit at the most; in other words, carry a balance of $400 on that $1000 limit card. In the interim, determine and WRITE DOWN all of your liabilities (debts) and your creditors. Also write down how much each of these debts are costing you (ex. annual fees, finance charges, etc.) This will guide your action plan for debt repayment. You can focus on the most expensive debts (while contiuing to pay the other debts) or you can focus on reducing the highest balances (see the aforementioned rule of thumb and don't forget to continue paying all other debts). If necessary, call your creditors to work out a payment plan (get it in writing and stick to it!) A few more notes, as homeowners you and Simon's debt-to-income ratio should not exceed 36%. Example: if your total (monthly) household income is $1000, you should not pay any more than $360 for your mortgage, car payments, student loan repayments, credit card payments, personal loan payments, etc. You can tell your friends who rent that their debt-to-income ratio should exceed 25% ;)
Stop charging: you can't make progress if you continue to charge (freeze the card or cut it up)

~Set goals:
Setting goals (amount to save, amount of debt to pay off, amount of income to increase, etc.) will help guide your behavior. In doing so, write them down! A Harvard study found that people who write down their goals are THREE TIMES MORES LIKELY TO ACHIEVE THEM than those who don't. And put it in sight (the fridge, vanity, dashboard, computer); colorful index cards are my favorite! When writing your goals, be specific, write a due date (VERY IMPORTANT), and determine ahead of time what your reward will be (of course, there's the intrinsic satisfaction if achieving the goal, but a treat at the end of it gives you something else to look forward to). Make sure your reward doesn't set you back!

~A few more tips:
Get creative with ways to increase your income and cut back on expenses.Do you have a skill/talent that your friends need? Do they have a skill that you need? Consider bartering! Do you have anything in your house that's useable, but not used by you? Have a yard sale, take clothes to a consignment shop (let THEM sell it for you), take items to a pawn shop, etc. In general, you shouldn't pay for what you don't use, so if you have 700 premium channels, but you only watch 10 of them, cut your plan and save some money (the same goes for your cell phone plan, groceries, car insurance and any other service where companies like to tag on a "premium" feature). Find out who does what for free or low-cost and frequent them. I love the library for DVDs and books (if I have to buy a book because I absoultely love it, I go to half.com or abebooks.com; Google also has a feature where you can comparison shop - - something you should do for all major expenses (get at least three estimates!)

I hope this is helpful!

Shani said...

Another bit about paying yourself first. . .

~Automate it:
If you have the savings deducted with every paycheck, you'll ensure that you're saving and spending only what you "have". If you don't see it, you can't spend it. If you don't have the discipline to transfer the money to your savings account, save before it gets to your account.