spending | Squirrelers

Living a Financially Sustainable Lifestyle Now So You Aren’t Shocked Later

Mar 252013

The term “sustainable” can bring about many first impressions. One might evoke an environmentally conscious mindset. As in, long-term ability to continue without resource depletion.

Another meaning, at least that comes to mind to me when it comes to standard of living, is the ability to continue without significant difficulty or intervention. A sustainable lifestyle is one that you can live now and for the foreseeable future without major worry of it being degraded. That degradation, given human nature, is often due to simply not being able to afford the lifestyle any more!

When I look at the life patterns of many people, it seems as though people simply try to live their lives based on the ability of their current income to support a desired level of expenses. Too often, that means that the expenses equal or exceed the income. That’s a difficult situation for many folks, and sadly – some are put into this position unfairly through no fault of their own. However, many simply live irresponsibly whether they know it or not.

When does the lifestyle become unsustainable? I think it’s when people assume that the good times will go on forever, without any problems. Kind of like the mindset of people that expect to work in old age, without realizing that this might not be possible. When they realize that their income and savings might not be able to cover their lifestyle, they end up having to change it downward.

I don’t know about you, but the idea of having a lower standard of living when older doesn’t sound fun. It’s a big source of financial motivation, trying to avoid money issues when older.

Along those lines, I think it’s worth considering how much money you’re on track to have for retirement, and what your cash flow will be during that time:

Income

We may be able to work in old age, but it’s not guaranteed – even if you want to do so. Health issues and ageism can make this a very dicey proposition to be able to count on working.

Social security? That’s not a ton of money, and many people don’t want to count on it getting it anyway. Pensions? It’s not like most people are going to be getting the benefits of one. If you will, that’s great!

So, where is your income going to come from? If you can generate passive income, that would be great. If you have investments, income from them can be a big source of income. Or, you just might be withdrawing money directly from the nest egg. There is a school of thought that believes a 4% withdrawal rate can be manageable to ensure cash flow through retirement. In that case, if you want a $40,000 per year retirement, you would need a $1,000,000 portfolio.

Keep in mind, we’re talking about today’s dollars, and purchasing power. Do you think you will have $1,000,000 in today’s purchasing power saved up by retirement age? Whatever you project to have - be it lower or higher – it can obviously affect your ability to generate income. For example, a retiree having $200,000 saved would withdraw $8,000 annually based on these calculations.

Expenses

I think a lot of us tend to have a belief that expenses would be lower when older. After all, there wouldn’t be any kids around day-to-day that we need to support, and our lives would be simpler overall. However, we generally don’t get any healthier when older. Think about the younger people you know, and the older people you know – who has more ailments, illnesses, conditions, and aches and pains?

With health expenses so outrageous for many people, I think some people just might face higher health care costs in retirement. Especially if long-term care is needed. So, when planning for what expenses we might have when older, let’s keep in mind that they just might be very substantial.

What Does This All Mean?

When you look at the cash flow situation we might have when older, it seems like a lot of people are on track to have to make some massive lifestyle changes.

I think it makes sense to realistically assess where you think you will be in the long-run, and live a lifestyle now that is actually sustainable. In other words, one that you can get used to, and continue to live when older. Why get shocked by lowering our standard of living later? Worse, why put ourselves in a bad position later because we lived it up when younger and healthier? Let’s be nice to the future old version of ourselves

To the extent we can save and invest early and often, while also living within our means, maybe we can put ourselves in position to even have a more comfortable lifestyle when ready to retire. That’s the dream many of us have been sold – or sold to ourselves, anyway. It just takes planning to make it actually happen.

My Questions for You

Do you ever think about how your lifestyle in the future might be versus the one you have now?

Have you done the analysis to project where you are on track to be down the line?

I’m curious how sustainable you think your current lifestyle might be (or might not be), and what assumptions you’ve made in determining this.

TV Commericals Glorifying Materialism

Current Events 7 Responses »

Mar 142013

Have you ever seen any of the State Farm “Discount Double Check” ads on TV? The one that might come to mind is the original one with the Green Bay quarterback seeing his signature move being used along with the discount double check. He gets hazed a bit from some customers who don’t believe he’s a real quarterback in this one. There have been subsequent commercials as well, with other Green Bay players, as well as him in a school. Pretty good commercials, I think!

Then, I came across a commercial where the discount double check is mentioned again, but this time it’s in the context of two women shopping at some trendy clothing/accessories store. A far cry from a pro quarterback, right? Well, in this one, the women run over to a few attractive purses that they spotted by a window, clearly impressed by the bags. One of the ladies says the usual “like a good neighbor…” line. Lo and behold, POOF! - out of the blue and agent show up.

She then asks the agent how much her discount double check saved her, and the guy tells her $150. Her next move – to immediately and enthusiastically say “Done!”, while prancing over to the cashier to presumably buy the purse. The message that some my get from this – save money on one expense, and then you’ll have more to spend on something fun!

Now, I’m all for having fun and getting things we want. However, in this case the clear connection I made was that money saved was now available for a splurge. I’m not linking to it here, but you can easily find it on YouTube to see what I mean.

It reminds me of how some popular songs seem to glorify spending. There was the song involving Katy Perry mentioning maxing out credit cards, and another artist bringing up music and money in the context of not paying rent. Not exactly sending messages about the merits of frugality and personal finance!

I’d like to see a revised commercial, where the woman holding the purse drops it upon hearing about the $150 savings. Then, maybe she could exclaim things along the lines of:

“Oooh…Emergency Fund!”
“Cha-ching! More for retirement!”
“Paying down that remaining debt, baby!”

You know, some excitement over having extra money – and how great it is to use it for personal finance goals!

I suppose that’s advertising that might not be such a hit with the masses. But it would be a winner with me

My Questions for You

Have you seen this ad – or did you search for it to check it out? What are your thoughts?

What do you think of the notion of celebrating saving and financial responsibility, instead of materialism?

What would you think about doing with $150 you just found out you saved on another purchase?

Spend to Save: 4 Car Maintenance Tasks You Should Pay For

Saving Money 13 Responses »

Mar 072013

I generally prefer not to spend money frivolously. Okay, if you regularly visit here, that’s not exactly a newsflash! In fact, you might even be similarly inclined when it comes to being interested in sensible spending as a part of your approach to personal finance.

Of course, there are are times when we need to spend money. It’s a theme I’ve touched on lately, and this topic fits into that framework. One of these times is when we need to make sure that we do the right maintenance and repairs. We’ve explored the topic of saving money for home maintenance, and how it’s important to make sure we take care of keeping things in good shape before big problems occur.

The same concept applies to car maintenance. It’s almost like taking care of our health, and relating it to money. Of course health itself is paramount aside from money concerns, but if we eat well and keep ourselves fit, it can only help us financially. With car maintenance, if we do the right things along the way during the life of the car, we may be able to enjoy car longevity and avoid spending extra money. As far as that money is concerned, if we need to spend it we might have to utilize cash loans, but doing the right things regularly can help us control expenses better.

So, here are 4 car maintenance tasks that are worth spending money on:

Oil Changes

When you get an oil change, you’re taking a step that can keep the engine safe from heat and friction. There are also additives included that can help your engine in a variety of ways. If you don’t change the oil, the impact on the engine can be devastating.

It’s simple and doesn’t take much time. I know there are a few folks that want to do this themselves, but considering the concept of time is money, I will use a coupon and go someplace to get the oil change done.

Tire Maintenance

So, how do you “maintain” tires? I think it’s multi-faceted. One way is to make sure that you regularly check tire pressure. Having the right pressure can help the health of the tire (thus avoiding shortening its life), and can also help with fuel efficiency. Another way is to rotate tires. I’ve done this every few oil changes, but what’s best for you might depend on how you drive your car and the type of car and tires.

Also, needless to say, replace tires when this needs to be done. This is of course good for safety.

Air Filter

These things aren’t overly expensive, but they’re important. If the air can’t flow, it could impact the cleanliness of oil as well as the ability to keep the engine working properly. It’s something that’s not top of mind, but if you don’t change it, the performance of your car can suffer. Meaning, you could end up spending a ton of money you wouldn’t otherwise want to. So just check it periodically, and change it when needed.

Fluid Levels

Certain fluids are important for your car’s ability to work right. Transmission fluid, brake fluid, coolant, and the like are all vital to keep an eye on. It the fluid levels are low, your car might not function properly and there could be risks of breakdown and maybe even safety in certain cases. Monetarily, it’s worth it to spend when necessary.

My Questions for You

How often do you perform these car maintenance tasks?

Do you do any of these yourself, or do you pay others to do them all?

Do you have any others to add?

5 Things For Which It’s Worth Spending More Money

Other 10 Responses »

Feb 182013

It’s almost like a default approach for many of us who prefer not to spend money, where we try to search for the cheapest alternative for a given purchase. Give me 3 choices, and my eyes will first scan for the prices and I’ll be most interested in the option with the lowest price. The burden of proof will be on the more expensive options to demonstrate that they’re worth the extra money!

While this can be the case, I’m realizing that there are times when it is worth shelling out a little bit of extra money for a more expensive alternative with value. Here are 5 examples of this:

Nutritious Food

Let’s say you could buy canned veggies for $0.75, or get the same food fresh for $1.50. Which would you choose?

Or, you could buy a fast food value meal for $4 – with the alternative being a freshly made, healthy meal at home that would cost you $6 and an extra 30 minutes. In this case, which would you choose?

If you choose the cheaper options, the amount you save can really add up over the course of the year. Who knows, maybe you could save over $1,000 annually by selectively choosing the more inexpensive choices. Over 20 years, when invested, that can really add up!

But it’s not worth it. The long-term effects of choosing less healthy foods just might be there for your health, thus inhibiting your quality of life. Why deliberately negatively impact our lives just to save a little bit of time or money? Honestly, I have done this too many times in the past, but am glad that I look at things differently now. Without health, what’s the point? Besides, being unhealthy can inhibit the ability to make money, as the role of money in life is one of interdependency of money, health, and relationships.

Professional Services

There are people that don’t like to pay others to do things for them. There seems to be a large contingent of folks out there that take pride in being self-sufficient to the point of wanting to take a DIY approach to as many things as possible.

Well, I think that when considering the choices of DIY or professional, it’s important to be realistic in assessing our own limitations and shortcomings. We aren’t all jack of all trades, who can do everything well. There are times when we simply need to hire a professional. I’ve talked about hiring a pro to do taxes, but it could also apply to certain legal advice, plumbers, electricians, mechanics, and even health care professionals! The latter should be obvious, but may not always be!

Basically, there are times where you may have to spend a lot more money up front to use a professional, but it could end up saving you money and maybe even help mitigate some risks.

Home or Car Maintenance and Repairs

A lot of people, I’m convinced, don’t think about the importance of saving money in order to do basic maintenance. We do need to regularly save money for home repairs and maintenance. It’s also important to save money (and yes, spend) on car repairs and maintenance.

If we neglect these basic needs, things can fall apart. It’s best to plan ahead for such expenses, and budget for them. When we have already resigned ourselves to the reality that we’ll need to spend money, it becomes easier to avoid being too cheap. Plus, if we do cheap out on these types of periodic expenses, we may end up cost ourselves a lot of money in the future.

Professional Appearance

Surprised to see this one here? This wasn’t on my original list of 5, but then I thought about a person I know who is an acquaintance that works with a friend of mine. This acquaintance is supposed to be a very smart guy, very analytical and bright in business. However, he dresses without much thought. He doesn’t put any time or effort into looking professional (while working in a professional environment), and basically just buys cheap stuff without a second thought. The guy is known for tropical shirts!

He also has a haircut that looks like he just came here from the 1980′s. While I realize that the question of how much to pay for a haircut is one where I’ve supported low costs, this guy literally looks like he cut it himself. There was talk about him cutting his own hair, and I’d like to assume it was a joke!

Just spend a few bucks to look like a professional. One need not splurge to excess, but appearance matters to some degree.

Family

Want to know a good example of penny wise and pound foolish, as the saying goes? I know someone who did not buy his wife anything whatsoever for Valentine’s Day. Nothing. She bought him nothing either, but as we all know (if we’re being genuine with each other and ourselves), it’s the guy that is the one who really needs to be the gift-giver on Valentine’s Day. Yes, I know not all couples give gifts, but in most cases, if the guy buys or does absolutely nothing, he’ll be in the doghouse. That’s just the way it is

Yes, I do think that it is critical to save money. And yes, I personally would much rather see money saved, rather than have my money spent on me for a Valentine’s gift. But that’s my male perspective, and I realize that my line of thinking may be practical on one dimension, but it’s not something one could actually do. That’s where my friend misses the mark. Sometimes it’s better to be generous and happy, instead of being right!

My Questions for You

Do you think the 5 categories above are worth spending more money on?

Are there any other types of expenses that are worth not pinching pennies on?

Do you have an example of a time you spent more money on something and it was worth it?

If You Enjoy Airline Fees, There is a New One For You!

General, Saving Money 11 Responses »

Jan 242013

In recent days, it has been widely reported that Southwest has now added a new potential fee for customers. Yes, we have another airline fee that jumps out as being kind of interesting!

From what has been reported on various other sites, the fee is regarding early boarding privileges. A passenger can be assured to be one of the first 15 to board, an incredibly grand privilege indeed, for the “bargain” price of just $40. I know, I know….you’re so excited that you simply can’t wait to book a flight and get to be one of the first 15 on board! Just know that it’s reported to be only if space is available, and can be done up to 45 minutes before boarding.

It’s getting comical how these fees are being tacked on for air travelers. Back in the day, it was just a matter of paying your airfare and being done with it, for the most part anyway. Actually, the whole air travel experience was apparently a big deal at one point. People made it a point to dress up a bit, and it was a real special occasion to fly. Meals were served to everyone too!

Now, if you want a real meal, maybe think about flying first class. Or, settle for that snack box for which you’ll be paying more than just a couple of dollars. If you want to watch the in-flight movie or listen to music, you might have to pay up. Actually, depending on the airline, you may have to for such things as bottled water, a blanket, a pillow, or the right to choose your seat. It’s not unheard of to have to pay to be able to store a bag in the overhead compartment.

All of this doesn’t even include the hefty fees now in place for checking bags. This certainly wasn’t that case not too many years ago! I do have to say, I have inadvertently circumvented this once before, and managed to avoid airline baggage fees without even trying or intending to do so!

Anyway, at this point, airline travel is getting quite expensive. I have really, really enjoyed traveling in the past – and flying has been a lot of fun. I’ve traveled more than a bit, as mentioned here a few times. 47 states, plus internationally to Europe, Asia, Caribbean, etc. But as fun as it is has been, all of these fees are adding up to make flying less of a bargain than it might have been in the past. Not that I have time to do much traveling anymore, but even if I did, it’s getting pricey!

Might as well just not worry about it, and instead just get a good laugh at the newest attempts at revenue generation by the various airlines in business today. After the aforementioned trips to Europe, and being faced with paying for water at restaurants and paying to use restrooms, I now keep an open mind to such revenue generation attempts by businesses. At least air travel is optional in life, unlike the things I just mentioned having to pay for!

With all this said, I’m curious of your views on this.

Would you pay $40 in order to be one of the first to board the plane?

What do you think of all of these airline fees that have been added, and which ones are the silliest to you?

Have increased costs impacted the amount of air travel that you do?

Spending More Money to Avoid Dental Pain – And Thankful for Doing It!

Health and Money 11 Responses »

Jan 042013

Going to the dentist isn’t exactly high on the list of fun things to do, for most people. You know when people compare unpleasant life events to being “like getting a root canal”, it’s not meant to be a compliment to the dental procedure!

Having had one of those done before, I know how it isn’t all that fun. Now, the root canal in particular didn’t live up to the hype in terms of being difficult, excruciating, etc. Maybe I have a decent threshold for pain in that way? Who knows, but regardless, it wasn’t fun.

Very recently, I had something done which I thought was a little bit more involved: getting a wisdom tooth pulled. Now, it’s been a while, but I posted on this topic many months ago, when discussing the topic of trying to save on dental care.

In that post, I outlined the options that were provided to me for getting the tooth pulled, from lowest pain relief/cost, to highest pain relief/cost:

Local Injection
Gas
IV Sedation

I had been deliberating whether or not to spend extra to go under, and simply not deal with the pain. However, given that I have handled the root canal experience pretty well, I wondered if I should just save a little money and bypass the more expensive option of IV sedation.

As it turns out, the out-of-pocket costs became lower for me from the last post. Now, I had to pay around $80 for gas, or $117 for IV sedation. To me, that extra $37 expense wasn’t a big deal, and not nearly as much as prior cost difference I noted in the earlier post. It was now a small enough incremental difference in cost that I just thought I would go ahead and agree to it.

That’s exactly what I did, and I have to say, it was one of the best examples I’ve had of getting value for spending a bit more.

When I got in the chair, after some conversation and prep work, they put in the IV and then I very quickly faded away. The next thing I knew, I was waking up and they said it was over. It really seemed like it was just seconds apart. I didn’t feel any pain during the tooth extraction at all!

I really think some of that might be due to not being aware in any way of what was going on, and not feeling the psychological stress of seeing what they’re doing, and even hearing the tooth being extracted. Whatever the case, it was totally worth the $37 extra. Frankly, I think it might have been worth a few hundred dollars extra too!

So, 2 takeaways:

Don’t suffer just to save money. Life is too short, and sometime we can be smarter by being less “brave”
It’s entirely possible to get a wisdom tooth extracted and have it be a totally fine, non-stressful experience, simply by getting IV sedation.

My Questions for You

Have you ever had to trade off any physical pain/suffering in order to save on health care or dental costs?

If so, what happened and how did it go?

Have you ever had a surprisingly decent/painless experience going to a dentist or oral surgeon?

Real or Fake Christmas Tree – Which to Buy?

Family and Money 11 Responses »

Dec 062012

If you celebrate Christmas, you’re more than likely keeping a Christmas tree in your home. Many memories from childhood come from the holiday season, and the Christmas tree is often a part of the festivities and center of some of the activities.

One thing I’ve noticed over the years is that many families have regular traditions with the tree. It may decorating the tree the same way each year, adding some long-time ornaments to the tree, or even keeping it in the same exact location. What about the idea of keeping the same exact tree every year?

Depending on your decision when considering whether to buy a real or fake tree, you just might be able to keep that same tree every year for a long time.

Now, I could have called posed the decision as “real vs artificial tree”, but often times the latter really are fakes. They’re generally intended to look like the real thing, not the other way around. They’re fake. But that doesn’t mean they’re bad.

Why Buy a Fake Tree

For me, the reason is clear cut: allergies. My family had a fake tree all the way back to my childhood, for that very reason. So for some people, this makes the decision an easy one.

For others who don’t have that as a factor, there might be other reasons:

Cost. By spending up front, you can spread the fixed cost of buying a tree over many years. Let’s say you pay $200 for a tree and keep it 20 years, you’re spending $10 per year. Not bad! So you want to keep it only 10 years? Well, then it’s still only $20 annually. Sure that goes up if you buy some super-deluxe tree, but generally your average annual cost won’t be too bad.
Convenience. The tree is right there at home, you don’t have to go out and lug a different one home every year. Time is money after all, right?
Tradition. There can actually be attachment to the same tree year in, year out. I still remember the tree from childhood, that we had at my parents’ house. There was a nice familiarity to it, and it was a regular, reliable part of the holiday season. When you have really good memories with the same surroundings, it’s easy to have great feelings for the whole scene – including enjoying having the same tree.
Cleaner. Something that’s manufactured is likely to be less messy than something that was a living, organic thing growing from the ground. Real wood and needles are not as conducive to a clean place than to the fake variety.

Why Buy a Real Tree

Natural. While I have never personally had one, I can totally see how there’s something different about having a real tree. After all, it’s real - not fake. How often is any fake item more desirable than the real thing?
The Environment. Now, I can’t speak to this completely – but it makes sense that a real tree would be more environmentally friendly in the big picture than a fake tree. Can a fake tree truly be as recyclable as a real tree? What went into making the fake tree, and transporting it to its distribution or retail center? Just questions that one can think about.
Tradition. Didn’t I say this above? Sure. Traditions can take many forms, and I can totally see the tradition of going out and finding a nice tree every year. It can be a fun thing to do each year, something to look forward to as a part of the season. While I personally haven’t done this, I can see how it could be really cool for many people.
Scent. This probably goes back to the “natural” aspect, but a fresh pine scent can have great appeal to people. One would think that artifical pine-scented oils and candles can only replicate the real thing so much, from a sensory and psychological perspective.

The Bottom Line

Really, I think many people might have strong opinions on this either way, and already have their minds made up. It really is a personal decision for each household. However, if you have a decision to make, it’s worth considering these factors before making your purchase!

My Questions for You:

Which type of tree do you prefer – real or fake?

Why do you have that preference?

Is this the same type of tree you had when growing up?