Family members have come and gone now, keeping me busy in the meantime. My parents visited for 4 days, plus my sister, her hubby and two sons. We all had a good time and managed to get along quite well.
My sister brought some bad news. They will likely lose their home to foreclosure in a few months. My brother-in-law lost his job 2.5 yrs ago. After 3-4 months, he found another job at half the pay. My sister is a high school teacher. Together they make about $100k, down from $150k. Unfortunately, they had been living like they made $175k, so they REALLY couldn't afford to lose any income, much less $50,000.
Also, their house lost about 30% from its peak. They had borrowed off this house at its peak to buy a rental home. They are OK on payments for the rental home (thanks to steady renters), but behind on their primary home and just can't keep up with payments. I assume they are under water on it.
It is one of those situations in which a couple that makes twice the U.S. median income, drives very nice cars, and has premium cable, iPhones, Tivo, season ski passes, etc. is "forced" to stop payments on their home. Because, you know, iPhones and cable and Tivo, etc are necessities. And selling that beautiful Volvo and buying an old but reliable car "just wouldn't be worth it." And my sister couldn't possibly work over the summer, like those younger teachers at her school do. And no way would she rent out the separate entrance basement living space--who could suggest such a thing!
Either we don't pay for those things to begin with, or those are all things we would do or cut immediately. Definitely before we lost our home.
Their plan is to move into their second home. It is in a 1950s neighborhood--old but not old enough be be charming (not at all). Fortunately, it is zoned for great schools. They will have to downsize from 2800 square feet of living space to 1100 (that includes the converted garage). Ouch.
What will they do with the money they save? Who knows--though it is safe to say that they won't put it towards retirement. We'll have to up our own retirement savings to be able to support them in their old age. But it will be rough given that it is already clear that my S.O.'s brother is going to need help too.
I'm kidding, but only kind of.
I'll have to write later about the fact that my sister's husband drinks like a fish. I don't think it has affected his work, yet. But given the financial crises they've already had, this makes me all the more nervous for their long-run stability.
Showing posts with label personal finance. Show all posts
Showing posts with label personal finance. Show all posts
Tuesday, December 28, 2010
Saturday, September 25, 2010
Cheapskate! Yes, that's me
A few weeks ago, a U of Chicago law professor wrote a very silly blog about how hard it is for his family to live on their "a bit more than" $250k income. And how Obama's proposed tax hike for the rich would put them over the edge--maybe even force them to sell their house and cars!
As many, many have pointed out, he's ridiculously whiny. He is also ignorant about how tax hikes work. But the blog generated some great discussions. And Mommy/Prof had an interested blog on living below one's means.
We're pretty good about living below our means--slightly below our means. In addition to our jobs' mandatory payments to 403b or pension funds, we max out our Roth IRAs and put some into our kids 529 accounts. But more would always be better. My significant other has rather substantial school loans to pay off; we've barely made a dent in them yet, even though we pay more monthly than required.
Now that my daughter is in kindergarten, we're saving about $300/mo. Plus, it looks like we'll have about $120 - $360/mo less in medical expenses for her this year. Big bucks! I better dedicate it to savings before it magically evaporates.
Now, what about actively saving money? I have to say that although we bought a house within our means (according to sources like Money magazine), I often think life would be easier if we had a less expensive and smaller house. House-wise, there is a lot to be said for living below your means. Less house = flexibility. Flexibility to move more easily, to make less money, to spend more on vacations, to save more for retirement.....
We've had some great money saving methods, some of which have gone by the wayside. I only recently started paying someone to cut my hair. For at least 15 years, I cut my own hair. It didn't always look perfect, but it didn't always look so great when someone else cut it either. I also cut my kids' hair. A conservative estimate: $2780 in hair money in the bank! (See below for details).
What else? We don't often buy coffee to go or buy lunch at work. What if we each had one additional coffee ($2) and lunch ($8) per week for the last 15yrs: $15,600! OK--even I am shocked.
We didn't have cable for our first 12 years: $10,800 in savings. I have to say, $10,800 was more than worth it. I wish we didn't have cable now, but I'm over-ruled.
I've been yearning for an iPhone for the past two years, but I'm too cheap. But what if I, like my sister, my grad students, and the instructors in my dept, weren't too cheap? $2160. Wow, that's close to all my hair money saved over 15 years!
And we buy used cars and drive them until they almost die. One car is a 1999 and the other is a 2003. Savings are hard to calculate in this case. What if we had gone through one additional car (purchased used) in the last 15 yrs? Conservative estimate: $17,000.
I almost forgot to add in the money I save not paying for campus parking for the last 4 yrs (I have a free bus pass from the university): $1680.
Just for those cheapskate ways mentioned above, the savings is about $50,000! While we now have the dreaded cable, plus I indulge in haircuts every 4 months or so for myself and my son, these calculations have renewed my commitment to continue to save in the other ways.
Very important point: my cheapskate ways do not involve a lot of time/effort on my part. Haircuts can be a pain, but when you only cut your/kids' hair every 4 months, it doesn't add up to much time. Particularly if you calculate the alternative: making the appointment, driving to the salon, waiting, PLUS the haircut itself. And while our cars age, we love to take the bus to work. I get an extra 40+ minutes of work done on the bus every day! Cable TV, as we all know in our heart of hearts, is a huge time suck. So is having an iPhone--I really should not have 24/7 access to the internet and email. And I think that half the reason I don't buy a coffee on the way to work or eat lunch out is the extra time involved--I usually eat at my desk.
I can't decide if all this makes me feel better or worse for spending $460 on trees and tree supplies today..... At least it isn't a habit of ours, blowing money on our landscaping.
Footnotes:
Homemade haircuts: $35 x 4 times/yr x 15 yrs = $2,100. I also cut my son's hair: $17 x 4 x 8yrs = $544. My daughter: $17 x 4 x 2yrs = $136. Total: $2780
One additional coffee ($2) and lunch ($8) per week: 2people x 15yrs x 52wks x $10 = $15,600.
Cable: 12ys x 12mos. x $75/mo = $10,800.
No iPhone: 2yrs x $90/mo x 12mos = $2160.
No parking lot fee: $35 x 4yrs x 12mos = $1680. Yes!
As many, many have pointed out, he's ridiculously whiny. He is also ignorant about how tax hikes work. But the blog generated some great discussions. And Mommy/Prof had an interested blog on living below one's means.
We're pretty good about living below our means--slightly below our means. In addition to our jobs' mandatory payments to 403b or pension funds, we max out our Roth IRAs and put some into our kids 529 accounts. But more would always be better. My significant other has rather substantial school loans to pay off; we've barely made a dent in them yet, even though we pay more monthly than required.
Now that my daughter is in kindergarten, we're saving about $300/mo. Plus, it looks like we'll have about $120 - $360/mo less in medical expenses for her this year. Big bucks! I better dedicate it to savings before it magically evaporates.
Now, what about actively saving money? I have to say that although we bought a house within our means (according to sources like Money magazine), I often think life would be easier if we had a less expensive and smaller house. House-wise, there is a lot to be said for living below your means. Less house = flexibility. Flexibility to move more easily, to make less money, to spend more on vacations, to save more for retirement.....
We've had some great money saving methods, some of which have gone by the wayside. I only recently started paying someone to cut my hair. For at least 15 years, I cut my own hair. It didn't always look perfect, but it didn't always look so great when someone else cut it either. I also cut my kids' hair. A conservative estimate: $2780 in hair money in the bank! (See below for details).
What else? We don't often buy coffee to go or buy lunch at work. What if we each had one additional coffee ($2) and lunch ($8) per week for the last 15yrs: $15,600! OK--even I am shocked.
We didn't have cable for our first 12 years: $10,800 in savings. I have to say, $10,800 was more than worth it. I wish we didn't have cable now, but I'm over-ruled.
I've been yearning for an iPhone for the past two years, but I'm too cheap. But what if I, like my sister, my grad students, and the instructors in my dept, weren't too cheap? $2160. Wow, that's close to all my hair money saved over 15 years!
And we buy used cars and drive them until they almost die. One car is a 1999 and the other is a 2003. Savings are hard to calculate in this case. What if we had gone through one additional car (purchased used) in the last 15 yrs? Conservative estimate: $17,000.
I almost forgot to add in the money I save not paying for campus parking for the last 4 yrs (I have a free bus pass from the university): $1680.
Just for those cheapskate ways mentioned above, the savings is about $50,000! While we now have the dreaded cable, plus I indulge in haircuts every 4 months or so for myself and my son, these calculations have renewed my commitment to continue to save in the other ways.
Very important point: my cheapskate ways do not involve a lot of time/effort on my part. Haircuts can be a pain, but when you only cut your/kids' hair every 4 months, it doesn't add up to much time. Particularly if you calculate the alternative: making the appointment, driving to the salon, waiting, PLUS the haircut itself. And while our cars age, we love to take the bus to work. I get an extra 40+ minutes of work done on the bus every day! Cable TV, as we all know in our heart of hearts, is a huge time suck. So is having an iPhone--I really should not have 24/7 access to the internet and email. And I think that half the reason I don't buy a coffee on the way to work or eat lunch out is the extra time involved--I usually eat at my desk.
I can't decide if all this makes me feel better or worse for spending $460 on trees and tree supplies today..... At least it isn't a habit of ours, blowing money on our landscaping.
Footnotes:
Homemade haircuts: $35 x 4 times/yr x 15 yrs = $2,100. I also cut my son's hair: $17 x 4 x 8yrs = $544. My daughter: $17 x 4 x 2yrs = $136. Total: $2780
One additional coffee ($2) and lunch ($8) per week: 2people x 15yrs x 52wks x $10 = $15,600.
Cable: 12ys x 12mos. x $75/mo = $10,800.
No iPhone: 2yrs x $90/mo x 12mos = $2160.
No parking lot fee: $35 x 4yrs x 12mos = $1680. Yes!
Tuesday, September 14, 2010
Professors--elitist fashionistas or still wearing clothes from grad school?
The NYT had a funny op-ed by Douglas Coupland yesterday, in which he provides new dictionary terms for the near future. I've been thinking about one of them in particular:
"BLANK-COLLAR WORKERS Formerly middle-class workers who will never be middle class again and who will never come to terms with that."
One of my passions is personal finance. I'm fascinated by the decisions people make in terms of their money and their sense of who they are.
I know some people who fit the above description of "blank-collar workers." It's both a sad reflection on our economy and also throws a dim light on blank-collar workers' retirement. I know many others who could use the advice: "Stop acting rich" (or at least spending like you're rich). But none of those people are professors.
I'm sure I'm not the only one to have watched friends and relatives spend and consume conspicuously and beyond their means. But this recession is one of those instances when you hate being right. Kind of like when I was right about war in Afghanistan. Fate of the eternal pessimist, I guess.
One thing we can say about professors--as a group we are quite sensible with our money! But on average we're also not paid so extravagantly. Just take a drive through the faculty parking lot of your nearest university. Then drive through the student parking lot. Who has better cars? At my university, the students drive more expensive cars. That should tell you something.
One "end tenure" book recently reviewed in the NYT claimed, "today's senior professors can afford Marc Jacobs"! Hah! Most of us professors would have to look up "Marc Jacobs" to get it, and then we would laugh at the claim once we saw the price of that clothing line (at least I laughed).
What an outrageously stupid point. Even a quick look at the AAUP Faculty Salary survey reveals, in my state, that full professors at a few institutions average $120k-$125k and more average $63-$75k. At the lower end, it is certainly a livable wage--but Marc Jacobs? What a small world those authors must live in--projecting NYC elite institutional norms (and fashion sense) on to higher education nationwide.
"BLANK-COLLAR WORKERS Formerly middle-class workers who will never be middle class again and who will never come to terms with that."
One of my passions is personal finance. I'm fascinated by the decisions people make in terms of their money and their sense of who they are.
I know some people who fit the above description of "blank-collar workers." It's both a sad reflection on our economy and also throws a dim light on blank-collar workers' retirement. I know many others who could use the advice: "Stop acting rich" (or at least spending like you're rich). But none of those people are professors.
I'm sure I'm not the only one to have watched friends and relatives spend and consume conspicuously and beyond their means. But this recession is one of those instances when you hate being right. Kind of like when I was right about war in Afghanistan. Fate of the eternal pessimist, I guess.
One thing we can say about professors--as a group we are quite sensible with our money! But on average we're also not paid so extravagantly. Just take a drive through the faculty parking lot of your nearest university. Then drive through the student parking lot. Who has better cars? At my university, the students drive more expensive cars. That should tell you something.
One "end tenure" book recently reviewed in the NYT claimed, "today's senior professors can afford Marc Jacobs"! Hah! Most of us professors would have to look up "Marc Jacobs" to get it, and then we would laugh at the claim once we saw the price of that clothing line (at least I laughed).
What an outrageously stupid point. Even a quick look at the AAUP Faculty Salary survey reveals, in my state, that full professors at a few institutions average $120k-$125k and more average $63-$75k. At the lower end, it is certainly a livable wage--but Marc Jacobs? What a small world those authors must live in--projecting NYC elite institutional norms (and fashion sense) on to higher education nationwide.
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