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Author: PineLevel Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308881  
Subject: How we got into this mess Date: 9/16/2005 2:34 PM
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We got into this mess basically by combining two things that don't really go together -
1. Being a one-income family for about nine years (stay-at-home mom raising kids until everyone is in grade school), and
2. Lifestyle of a two-income family. Looking back, maybe I was embarassed to have it become obvious we couldn't "keep up" with people who had new minivans, sent kids to overnight camp, bought computers, took vacations, etc. So, we charged things.

Other factors include impuse spending on non-essentials (craft supplies, new clothes, books, make-up); and "magic math" where you spend what you have and then act "Surprised!" by periodic bills for car insurance, household repairs, etc.

For the past eight months I have kept pretty meticulous records of our spending, trying to work up to tackling this. Tonight I'll summarize our income/expenses and find out what y'all think.

Thanks for all the advice and encouragement!
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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210924 of 308881
Subject: Re: How we got into this mess Date: 9/18/2005 12:10 PM
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<<We got into this mess basically by combining two things that don't really go together -
1. Being a one-income family for about nine years (stay-at-home mom raising kids until everyone is in grade school), and
2. Lifestyle of a two-income family. Looking back, maybe I was embarassed to have it become obvious we couldn't "keep up" with people who had new minivans, sent kids to overnight camp, bought computers, took vacations, etc. So, we charged things.

Other factors include impuse spending on non-essentials (craft supplies, new clothes, books, make-up); and "magic math" where you spend what you have and then act "Surprised!" by periodic bills for car insurance, household repairs, etc.

>>


Congratulations, it sounds like you are looking the real world in the face with this analysis. As you have apparently discovered, that is the way to maximize the happiness of your family long term.

And frankly, the biggest waste of money is to buy things to impress other people (or fool yourself). While I have well over $1 million in net worth, I've never found it worthwhile to buy a new car, and rarely buy ne clothes and such. I personally find it a good hobby to find ways to spend 10 cents for things most other people are spending a dollar or more to buy. Of course, that's half the reason I have that substantial net worth (the other half being the courage to invest the savings that low cost living allowed me to accumulate).

Still, I pretty much have the same junk other people do. I just pay a LOT less for it.




Seattle Pioneer

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Author: xraymd Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210926 of 308881
Subject: Re: How we got into this mess Date: 9/18/2005 1:05 PM
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And frankly, the biggest waste of money is to buy things to impress other people (or fool yourself).

Greetings, SP, I am replying to you but my thoughts are really meant as food for thought for the original poster.

Getting out of debt for me took two crucial shifts. The first shift was to DO SOMETHING DIFFERENTLY than I'd been doing. This meant looking very hard at how I spent money and rethinking whether there were a thriftier way to do so, or actually NOT to do so. Then dollars not spent could then be diverted towards accelerated debt repayment, and later towards savings to build my net worth for my future. In other words, I had to cease thinking that every dollar that came into my pocket was 100% available for spending and needed to start thinking that some predetermined portion of it was meant to go towards other purposes, as mentioned above.

The second shift was maybe even more important: I had to literally learn to love to be frugal. That was an inside-out, 180 degree turnaround from what bombards us as a society about what we "should" be spending on. So WHAT if the neighbors have a new computer or a new car or a deluxe vacation? - it does not have to mean jack to you if it doesn't fit with your personal goals. Rather than feeling diminished by what you "can't" have, it is the most liberating feeling to flip the script and begin to feel proud of your own new savvy at conservation of resources, bargain-hunting, judicious purchasing and overall fresh attitude that it isn't about how one SPENDS one's money as much as it is about how one SAVES one's money, and for what higher purpose, that leads to that great sleep-well-at-night feeling. As I've stated many times here before, I flat out refuse to buy into what I "should" be driving or buying or spending. Again, my secret pride has come from living modestly and loving what I have while amassing my own resources in the service of my certain-to-come future. I still take vacations, I still eat out, I still buy considered consumer purchases - but not before I have saved for them and have found them at prices I like. So I don't live like a deprived person - far from it - but how and when I do spend has undergone a titanic transformation to the point that I now LOVE to pay my bills since every payment represents a step that much closer to freedom-from-debt day. No amount of unconsidered spending that would saddle me with payments for something I don't think makes very much difference in my life feels anywhere near as good as draining the debt pool cycle by cycle. And this is completely irrespective of what anyone else around me is doing - it has ceased to have any influence over me.

xraymd

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Author: martybl Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210931 of 308881
Subject: Re: How we got into this mess Date: 9/19/2005 1:43 AM
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And frankly, the biggest waste of money is to buy things to impress other people (or fool yourself). While I have well over $1 million in net worth, I've never found it worthwhile to buy a new car

I'm in a similar financial situation, but I wish I could be as "comfortable in my own skin" as you seem to be. I really do find your posts to be inspirational, but I occasionally have a hard time being as unconcerned with appearances as you're able to be. Maybe it's underlying insecurity, but nobody knows what your brokerage account has in it, what your ING account has in it, or what other investments you have.

OTOH, everybody can see where you live and what you drive. Case in point - we live in a little gated community with one of those common clusters of mailboxes. A couple days ago, I was stopped at the mailbox, and the high school junior from two doors down pulled up, in a new, 2006 Jeep Liberty. We exchanged pleasantries, before her cell phone rang and we both drove off. I ought not to care about these things - my car is dependable and fun-to-drive, and I don't really want anything else, but I kept thinking, "So, let me get this straight, I'm a mid-career professional, I deal with life-and-death decisions on a daily basis, I'm making a very good income, have a substantial investment account, and I'm driving a car worth less than the that of the high-school girl down the street???"

I kept thinking - well, maybe if I'd get a new Porsche or Corvette, it'd be more impressive. Of course, I don't really want a two seater - no place to put the kid's carseats. . . maybe a BMW M3 - undependable, abysmal gas mileage, funny styling, but at least a place for carseats. I truly don't know why this incident struck home, but it did. I don't really care what this particular casual acquaintance thinks, but I do care what the totality of my casual acquaintances think. I think all but the most self-assured of us look at other's reactions, and homes, cars and clothes are the first things that others react to.

martybl

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Author: Polywilliams Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210932 of 308881
Subject: Re: How we got into this mess Date: 9/19/2005 2:25 AM
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Very candid martybl. I have four words for you:

The Millionaire Next Door

Buy several copies and pass them out to your neighbors. It'll be far cheaper than a new Porsche!

;)
Polywilliams

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Author: xraymd Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210941 of 308881
Subject: Re: How we got into this mess Date: 9/19/2005 10:13 AM
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I don't really care what this particular casual acquaintance thinks, but I do care what the totality of my casual acquaintances think. I think all but the most self-assured of us look at other's reactions, and homes, cars and clothes are the first things that others react to.

Greetings, martybl, this is something you can decide to mute within yourself. My take on it is that when the others (whom I would try to impress) are the ones paying my bills or directing my future goals, only THEN could their opinions have any sway. Tell me, do you look askance at anyone else who is not driving a 2006 Jeep Liberty? So why would you spend any energy at all being sensitive to whether anybody else is looking askance at you?

There is no feeling as liberating as deciding to become immune to others' impressions of oneself. This is your life - do you wish for it to be judged by others? That seems like a particulary uncomfortable and potentially fragile way to live, not to mention expen$ive to you if you feel any drive to keep up with the Joneses.

xraymd


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Author: xraymd Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210942 of 308881
Subject: Re: How we got into this mess Date: 9/19/2005 10:16 AM
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P.S. I am an internist. Most of my partners drive SUVs less than 5 years old. I drive my paid-for 1992 Toyota Tercel (with glee). And if you looked at my brokerage account, it's done well enough given that I don't have to worry about spending money to inflate someone else's opinion of me!

xraymd

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Author: NaggingFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210947 of 308881
Subject: Re: How we got into this mess Date: 9/19/2005 12:18 PM
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I think all but the most self-assured of us look at other's reactions, and homes, cars and clothes are the first things that others react to.

Perhaps the LBYM tip is to gain self-assuredness, then. I care what my friends think about me, sure. But why would I care what the people I casually interact with think?

Contrariness may be a part of it, too. I'm much prouder of my fifteen year old car than I would be of a brand new car. I always feel embarrassed when I'm in a brand new car.

Then again I couldn't imagine spending more than a few hundred dollars on an engagement ring because I couldn't see turning something really useful (several thousand dollars) into a fragile symbol (a diamond ring).

- Megan

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Author: mew5280 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210951 of 308881
Subject: Re: How we got into this mess Date: 9/19/2005 12:42 PM
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I've been using my car as an example lately. It's 1997 Jeep Cherokee sport. I've had it 8 years and have tried to take good care of it. The body of the car is fine but the paint on the bumpers and some other places is peeling a little. My husband had a fender bender and now the front bumper is dented in and the side plastic bumper ends are gone. I'm not having it fixed yet because it's not essential but I feel like I'm driving a junker sometimes!

The example I use is, together, we make about $95K/annually and we cannot afford a new car! Now, I am paying for several years of on/off employement and debt but still. I drive to work and it seems that 75% of the other cars I drive near are pristine, new, shiny cars. I often think how nice a new car would be and then stop because I have no car payments and that is worth more to me, not to mention a lower insurance rate.

My husband's car is paid for, too, he bought a used car recently.

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Author: SeattlePioneer Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 211030 of 308881
Subject: Re: How we got into this mess Date: 9/20/2005 1:32 AM
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<<OTOH, everybody can see where you live and what you drive. Case in point - we live in a little gated community with one of those common clusters of mailboxes. A couple days ago, I was stopped at the mailbox, and the high school junior from two doors down pulled up, in a new, 2006 Jeep Liberty. We exchanged pleasantries, before her cell phone rang and we both drove off. I ought not to care about these things - my car is dependable and fun-to-drive, and I don't really want anything else, but I kept thinking, "So, let me get this straight, I'm a mid-career professional, I deal with life-and-death decisions on a daily basis, I'm making a very good income, have a substantial investment account, and I'm driving a car worth less than the that of the high-school girl down the street???"

I kept thinking - well, maybe if I'd get a new Porsche or Corvette, it'd be more impressive. Of course, I don't really want a two seater - no place to put the kid's carseats. . . maybe a BMW M3 - undependable, abysmal gas mileage, funny styling, but at least a place for carseats. I truly don't know why this incident struck home, but it did. I don't really care what this particular casual acquaintance thinks, but I do care what the totality of my casual acquaintances think. I think all but the most self-assured of us look at other's reactions, and homes, cars and clothes are the first things that others react to.

martybl>>


Heh, heh! Well, I understand your concerns, but the part I have a hard time understanding is why you are concerned what some spoiled teen ager thinks about your life.

I do have some luxuries, which I value. The biggest of those is financial security and financial independence ---the reasonable assurance that I have more money than I expect to need for the rest of my life, and don't need to work unless I want to do so.

I achieved that luxury in 1999, at age 49, when I quit regular employment with the utility I used to work for. Now I operate my own furnace repair company, and my business aim is to do only the work I am HAPPY to do.

That's really a large part of my other big luxury, the freedom to do what I want, and not to have to report to a job or a boss. With my furnace repair business, most of my time is free time from about April through Labor Day, and I cut out the last of my advertizing because I didn't want to do as much during the winter, either.

Now I mostly get work from people I've done repairs for before, or referrals from people or businesses.

So having my personal freedom and liberty is my other great luxury, along with financial security and financial independence.

To me, those are far greater and more important luxuries than having an expensive car.

In this country, we talk a lot about the importance of freedom and personal liberty, but most people seemed chained to a job that monopolizes their time. I maintain that I have a lot of real freedom and liberty.

Frankly, I could have my freedom and liberty and more in the way of luxuries, too. But I really have no use or interest in fancy cars and such. Paying top dollar for consumer junk seems a poor bargain to me.

And I'm posting these comments just to describe my values and outlook, not to persuade other people that they should do what I do. I really don't give a hang how much other people spend, or for what.




Seattle Pioneer

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Author: xraymd Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 211032 of 308881
Subject: Re: How we got into this mess Date: 9/20/2005 2:14 AM
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I've been using my car as an example lately. It's 1997 Jeep Cherokee sport. I've had it 8 years and have tried to take good care of it. The body of the car is fine but the paint on the bumpers and some other places is peeling a little. My husband had a fender bender and now the front bumper is dented in and the side plastic bumper ends are gone. I'm not having it fixed yet because it's not essential but I feel like I'm driving a junker sometimes!

Greetings, mew5280, my 1992 Toyota Tercel amazes those who've worked on it because they consider it uncharacteristically clean. But it spent the bulk of its life till now in a winter climate and suffered from rust spots in places. I decided that since I keep the rest of my enviroment neat (at least I try to, especially at work) that it would mirror me best to choose to have the car detailed and the rust spots corrected. Total cost for this degree of vanity: $400. Total number of years since I've had a car payment (car was paid off in 1994): 11. The math speaks (shouts) for itself. I saved that $400 by putting away $20 per paycheck and had the total saved in under a year (given that I am paid every other week). It was a sweet day when my reliable little car was returned to me all shiny and new - it made me puff up with pride every bit as much as any new car would have, and I was glad to save up to have it done.

xraymd



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Author: mew5280 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 211051 of 308881
Subject: Re: How we got into this mess Date: 9/20/2005 12:28 PM
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I love Toyotas, drove a 1985 Corolla for 8 years (bought it a few years old) and sold it for $500, not bad.

Another key for me is finding a good, reliable mechanic. Everytime I take my car into my neighborhood fix-it shop for maintenance, I tell myself that $1000/year more or less is nothing compared to a monthly car payment. Here's a great story...

This particular neighborhood shop is closed on the weekends so when my husband had a flat on Friday at 4 PM, I called the shop for a referral. I was going to take it to a Tires Plus store near me but was advised not to go there but to another store on the same street. So we showed up Saturday morning (he was driving on the spare) and explained that we needed the tire looked at, hopefully it will be something small they could patch so we don't have to buy a new tire. They jacked up the car and took about 10-15 minutes, returned to us and said "we fixed the tire, pumped it up you're ready to go." I went in to pay and the guy who helped us said "It's on us." What? Are you sure? "Yep, have a good day."

It's so nice to have things like that happen, of course I refer everyone I know there. : )

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Author: Smurfette823 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 211206 of 308881
Subject: Re: How we got into this mess Date: 9/22/2005 3:34 PM
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I have four words for you: The Millionaire Next Door. Buy several copies and pass them out to your neighbors.

Three cheers for that! That book sure set me straight.

Smurfette

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Author: Booa Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 211245 of 308881
Subject: Re: How we got into this mess Date: 9/22/2005 7:26 PM
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OTOH, everybody can see where you live and what you drive. Case in point - we live in a little gated community with one of those common clusters of mailboxes. A couple days ago, I was stopped at the mailbox, and the high school junior from two doors down pulled up, in a new, 2006 Jeep Liberty. We exchanged pleasantries, before her cell phone rang and we both drove off. I ought not to care about these things - my car is dependable and fun-to-drive, and I don't really want anything else, but I kept thinking, "So, let me get this straight, I'm a mid-career professional, I deal with life-and-death decisions on a daily basis, I'm making a very good income, have a substantial investment account, and I'm driving a car worth less than the that of the high-school girl down the street???"

This struck a chord with me, because I went to the funeral of my best friend's dad this past weekend. I drove my car, because luckily I live within driving distance (400 miles, almost exactly), and luckily I am a graduate student and can take sudden days off from work without too much fuss. And I was teased a bit about how dirty my car was, but not about the fact that it's a '93, or has 150,000 miles on it. In fact, two of my friends borrowed it to use while they were in town for the funeral, since they were staying at a hotel and I was staying with the family. It saved them the money of renting a car, and they really appreciated it.

What struck a chord for me was, seeing sort of the surface things with people (their house, their cars, their clothes, their accessories), and knowing the story beneath it. I don't want to go into too much detail, but here is my best friend, who has much nicer things than I do, but who just lost her father, and is devastated. I would sort of abstractly admire her handbag, or her watch, and then realize, none of that matters at all to her right now. She'd trade it all for five more minutes with her father. My father is healthy, thank God, and my mom, too. And that's something that no amount of money can buy or replace.

I have another friend who came to the funeral, who is working super super hard and makes excellent money, but she has been trying unsuccessfully to have a baby for a while. I think she'd be delighted to be able to solve her problem with money, as she has plenty of that. A friend of mine that isn't related to this group is so gorgeous that she could be a supermodel, she has a face and figure most women would die for--yet she is in love with this guy who doesn't even acknowledge they're in any sort of relationship, but who sort of uses her casually.

I guess the thing is, if you only see someone's surface, and you compare yourself to their surface, you're always going to be unhappy. Someone will always be more rich or more thin or a better windsurfer than you or whatever. Always. But why bother? You don't know what things keep them up at night, what ways they may be envying you. And for everyone that has more than you, there are those who have less.

And really, the most important things in life are not things. If you really must have a Coach bag or Prada shoes, well, there are some *great* deals on eBay. Or prioritize what you most want, save up for it, then buy it. But honestly, is a Porsche going to make you more happy than it'll make you miserable, trying to make the payment? Why would you go into debt just to make other people envy you, or not look down on you? My mother has always said, "It's a compliment to be disliked by some people." If that girl with the new Jeep looks down on you for what you drive, who is really the loser there, her or you?

I am an insanely lucky person. And so are you. We didn't lose everything in a hurricane. I didn't lose my father last week (though I lost a dear, dear friend and will miss him very much). We have drinkable water come out of the tap at our house, we have flush toilets and electricity. I mean, I'd rather be me, in my little apartment now, with my student loans, than the Queen of England two hundred years ago. I mean, feminine hygiene products and toilet paper! IPods! Sliced bread one buys at the store, rather than starting the process with "First you plant some wheat." We live in a time of such unimaginable riches that it's easy to take them for granted, and feel sad we don't have the *really shiny* car.

When you feel some envy (which is just human, after all :-)), take some time and count your blessings, count what you're most grateful for, what makes you the most happy. I bet most of it you couldn't replace with money. And counting your blessings just cheers me up.


--Booa (who wants more than anything to write my thesis, also something I can't get with money, sigh...)

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Author: flowerschild Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 211386 of 308881
Subject: Re: How we got into this mess Date: 9/25/2005 1:16 AM
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and really, the most important things in life are not things.
-Booa


Exactly. I lost my dad early in my life (he got ripped off), but because of his condition, as we grew up, we all knew that he could go at any time. It makes a difference in how you perceive life.

Remember, always remember, that what you own isn't you. Anything and anyone can be changed/gone at any time. You don't need more than you have, despite what the advertisers mold for you. You don't need to be seeking more with regards to objects that you own.

You need to push yourself above your fears/ignorance/limitations and learn what the truly strong know (and I'm not referring to the physical only, though that may be a conduit).

flowerschild

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