What I Really Want

I’ve been reading a lot of craft books. Things that tell me books should be all about plot, and tension, and making characters miserable until the very end. But maybe, just maybe, that’s not what I want to read.

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Please let it be a kissing book!

Yeah, I know. Kind of a revelation to me, too.

But the deal is life has been pretty stressful.

There’s hurricanes like Irma and Harvey, issues with North Korea, Las Vegas shootings, NYC terrorist attacks, trade concerns, Russia investigations, debt ceilings, border walls, and whatever else is gobbling up the news. It feels like a constant stream of ugliness and negativity. Maybe it’s always been there, and I was better at not noticing.

There’s family and work and health issues and . . . Well, you get the idea. You probably suffer from all of it, too.

So maybe, just maybe, when I slip into a fictional world, I’m not looking for heart wrenching agony. I’m not looking for Game of Thrones level treachery, betrayal, and angst. Maybe, I just want a nice romance with a few obstacles to overcome and then a happily-ever-after.

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Yeah, that’s kinda ugly to admit. But it’s true.

I have a rather large stack of books to read. Most of them romance, so I should get my happily-ever-after. Yet, I don’t want to read about a lot of things in them. I never have the stomach for rape. I’m really not looking for characters that keep making bad choices as we watch the suspense build.

I don’t really want to be on the edge of my seat. I just don’t have it in me to care. Or, if I do care, I’d rather save it for something else.

I want to slip into a book and let it be a nice ride. Give me some bumps and challenges to overcome, but that lets me escape into it. I don’t find fear or horror relaxing. Or suffering.

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While maybe it’s not good storytelling and doesn’t follow the rules of craft, this is what I want right now. What I’ve been reading. What entertains me. And for me, that’s all that matters at the moment.

Maybe I’m alone. And that’s okay. It won’t be the first time, and it won’t be the last.

 

How about you? Ever find yourself too wrung out for high-intensity fiction? Am I the only one that watches reruns of Bob Ross to relax some evenings?

Why Skipping Chai Lattés Won't Help

Personal finance is, well, personal. Everyone has their unique needs and budget to meet those needs. However, the other day when a co-worker was lamenting that her husband said she had to cut out her couple of chai lattés a week so they could do a better job saving, I raised an eyebrow.

Now, I won’t disagree. I won’t give $5 for a cup of coffee or a chai latté. But when you think about it, is a chai latté habit really the lynchpin to savings?

I’m no expert on personal finance, and this shouldn’t be construed as “advice”, but a  bit of research from experts may change your mind.

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I’m going to argue “no”. At $5 a piece, having a latté five days a week means you’re looking at $25 a week and $100 a month. Significant, yes, and probably a good thing to make a Saturday treat rather than a daily ritual, but not exactly the key to retirement.

Even then, it only contributes to savings if you take every dime you are saving from not buying those lattés and actually saving it.  Meaning, it goes directly into a bank account or to pay down debt. If you cut them out, but then spend the money on something else, you haven’t saved anything.

This why shopping a sale and “saving” 50% isn’t really saving. Not unless you would’ve spent the full amount anyway, and you then put the amount you “saved” into the bank.

The three main things most America spend their money on are food, housing, and transportation.  Not necessarily in that order, as it depends where you live, your income, and what phase of life you’re in as to what eats the largest part of your check. But for most of us, it’s still these three things.

 

Housing

Housing is the single largest expenditure for most Americans. A part of me wonders how much of this has to do with Americans buying far more house than they actually need. Certainly, if you live in New York City, there is no way to not spend a fortune. A 750 square foot one bedroom apartment runs over $3,000 a month. But if you live in the rust belt (excluding Chicago ) like I do? Well, this is where it gets tricky.

There is a tax incentive to buy a larger and more expensive home. For example, if you have a $100,000 mortgage at 5%, you pay $5,000 in interest for that year. Most people will be able to write off $1,250 from their taxes that year, making the interest only $3,750.

If you have a $200,000 mortgage at 5%, you’re writing off $2,500. A $500,000 mortgage means $6,250 in tax savings.

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What this forgets, however, is you are still paying the interest on this and the principal. Sure, you own a more expensive house (maybe bigger, depending on location), but you’re still paying more in interest. Sometimes, a lot more. Plus, you’re paying for the principal, and that isn’t tax deductible.

Your monthly payments for these mortgages over 30 years are as follows:

  • $100,000 house – $536.82
  • $200,000 house – $1,073.64
  • $500,000 house – $2,684.11

So, yeah, you’re getting some nice tax savings, but you have to be able to afford the mortgage payment first.

But a house is a great investment, right? At the very least, you should be able to recoup the principal plus a nice return. Not necessarily. Nobel-prize winning economists don’t think so.

Still, it’s hard to compare investing in stocks versus a house as you get to live in your house. But, it begs the question, could you do with less house and put the difference into the wealth-generating power of the stock market?

You’ll also note that the comparison between owning a home and owning stocks doesn’t do a great job of taking into account several things:

  • Dividends from stocks,
  • Tax ramifications of capital gains, property taxes, or  selling a home.
  • Risk from lack of liquidity
  • Hidden costs of having a larger, more expensive home.

Let’s talk about the last two for a minute.

Risk from lack of liquidity comes from having a home that you must find a buyer for. If you own S&P 500 stocks, finding a buyer is very easy. These are heavily traded stocks and there is an entire exchange set-up to trade them. A house is a harder thing to sell. Location matters, and things can change over time. The factory that once employed 6,000 people is now gone. Maybe you’re facing urban creep. Or maybe you didn’t mind a small yard (less to take care of), but you’re in a town with a lot of young families that want yards.

There is always a risk you won’t be able to sell your home, or sell it for as much as it’s worth if you need to move quickly. This isn’t an issue with stocks.

There are also some additional costs to having a more expensive house. Namely, you have to pay property taxes on it. You also have to heat it, cool it, and maintain it.  Replacing the roof on 1,500 square foot house is much cheaper than replacing it on 3,000 square foot house. There’s yard work, shoveling, etc.

I am not saying to not buy a house. Not at all.There are so many reasons to do it as well. As much as I hate yard work and am allergic to grass, I love having a place that’s mine. A bit of roots and permanence.

You’d need to talk to your financial adviser to see if it makes fiscal sense for you.

Whether you buy a house or rent, for most Americans, housing is still our single largest expense. I know I felt pressure to buy the biggest house I could afford when I started searching for our home. Just the other day, a co-worker asked me when we’re upgrading now that we have children. As we bought our home in a district with excellent schools, I see no reason to move.

 

Transportation

This is something most people understand, but it can still be very difficult to tackle. Most of us get that the longer you own a car, overall, the cheaper that car is going to be.

A $25,000 car kept for 5 years costs its owner $5,000 per year. Keep it ten years, and you’re looking at $2,500 per year. Even if you have to make repairs to the vehicle as it ages, older cars are still cheaper to own. For example, if you had $1,000 of repairs per after those first five years, you’re still looking at total cost per year of $3,500 for the vehicle over its ten year life. And in the last 5 years, your out-of-pocket costs is only the repairs..

Keep the car 15 years, and you’re at $1,670 per year to own it plus repairs.

Americans are currently keeping their cars for 11.5 years, and that’s expected to increase to 11.8 years. As car makers have responded to consumer demand for more reliable vehicles, we are in turn keeping them longer. This offers quite the savings.

In addition to keeping cars longer, it’s also important to negotiate a good price on the car in the first place. There are a ton of articles out there about new car buying, yet I’m amazed how few people read them. A car is most family’s second largest purchase. Yet, the number of people that buy on emotion never ceases to surprise me.

I suppose that’s what the car companies are relying on with all of their advertising. They’re trying to appeal to us emotionally and get us to connect with their car. To equate a portion of our self-worth to what we drive, so we’ll want their car to make us feel better about ourselves.

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Okay, yeah, it’s a sweet car. But where am I going to put the car seats?

 

I view my car as a means of getting the kids and me from point A to point B. I want the car to do it reliably and comfortably. Both cars I’ve bought I’m pretty sure will rust out before the powertrain goes.

Making the decision to buy new versus used is another area that needs attention. Yes, we bought our car new even though a lot of people questioned me on it. But as I explained at the time, the price I negotiated combined with the factory incentives, made a new car $1,000 more expensive than a two-year-old used car. We decided it was worth the extra $1,000 not to have to take the 30,000 miles someone else had put on the car when we put less than 10,000 miles a year on a car. But we thought about this. It was a decision.

Just like making the decision on the car to buy. Do you need a SUV, or would a car do? There’s a huge price difference between a Camry and Highlander.

 

Food

This is one area that I think is trickier than the others. Sure, grilled chicken breast with a side salad and sliced mangoes for dessert costs more than hot dogs and macaroni and cheese. But health is a many-faceted thing, and if you look at the graph, you’ll see healthcare is our 4th largest expense.

I’m not sure selecting the cheapest route is the best, though cutting back on eating out is a way to reduce our food budget and get better quality food into our bodies. If you look at the salt content at your favorite restaurants, you may be surprised. I know I was.

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Fueling ourselves with good quality food is better for our bodies, our brains, and help us be healthier and live longer

At the same time, this doesn’t mean you have to have those chai lattés every day, either.

As with housing and transportation, it’s about balance.

 

What about you? Any tips for saving money that have helped you? Do you find your household expenses mirror the same categories most Americans spend? For me, this was missing daycare which costs more than twice my mortgage.

6 Reasons We Don't Take Good Advice

Whether romantic advice, career advice, or financial advice, there are a a slew of professionals out there that offer it . Some free of charge. Some we pay for. Yet, I (and I suspect many of us) are not always good at taking it.  Even advice we’ve paid for.

How many stories revolve around a hero or heroine not wanting to listen to their aunt, brother, sister, mother, uncle about who the right person is for them? Especially if it turns out that person was right?

After doing some digging, here are the reasons I’ve come up with:

1. The Advice is Bad – We’ve all been given bad advice, even by a professional.Sometimes it’s because we haven’t given them the whole story. Sometimes because they don’t understand. And perhaps sometimes because they really don’t know.

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Tried this. It didn’t work. Co-workers looked at me like I was from Mars.

2. The Advice Conflicts With What We Want – I know i’m guilty of this. Not one, but two financial advisers told me not to try to pay off my mortgage as quickly as possible. I didn’t want to hear them. I lived through the Great Recession and remember how much belt-tightening we had to do to get through it when our primary income was cut by 50%. I don’t ever want to go through that again.

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3. Discouraging –  You see this less with professional advice as they are (usually) in the business to help you succeed.

4. Gut Instinct Takes You Another Direction – This is so nebulous, but sometimes, you just know something is wrong. It intrudes on your thoughts during quiet times. You find yourself mulling it over again and again. I have no idea what gut instinct is, (although I suspect it’s your brain working on a problem in the background) but it seems to be right most of the time.

5. It Differs From Other Advice You’ve Gotten – This is always difficult, especially when you’ve gotten advice from two professionals or two very trusted friends/family members.

6. Anger – Or other negative emotions make us much less likely to take even good advice. Here are other good reasons from real psychologists. Granted, these are mostly work related, but they could be applicable.

 

I guess this means I need to look at Point #2 and reconsider the advice an editor gave me on my manuscript. Just because I don’t want it to be true, doesn’t make it wrong.

 

 

How about you? How willing are you to take advice? What makes you willing or unwilling to take advice? How about offer it?