To Carry Cash Or Not Carry Cash

Some people find that cold hard cash in their pocket is an invitation to spend.  Others feel that carrying cash makes them spend less.

Some people spend exclusively by cash.  Some would prefer never to have cash.

I started thinking about it and wondering where I fit in.

I used to spend pretty much exclusively in cash for most everyday purchases except for groceries and laundry, where I think I’ve pretty much always used a credit card..  When I’d go out to eat, I’d pay in cash.  When I went out with friends, it was cash.  Things like the dry cleaners, haircuts, clothes were all done with cash.

When rewards credit cards came into play, I moved more and more of my spending to credit.

It was only when my wife and I combined our accounts that I converted nearly all of my cash spending to the use of the debit card.  Since then, I can take out ten bucks and it will often last a month or more.

I find that when it comes to whether I spend more or less with cash, I think that I actually spend more. With me, it all boils down to percentages.  Meaning, that the less I have in my wallet, the greater percentage of cash that each purchase will make.

Say I have $100 in my wallet.  If I pass by the vending machine and decide that a $1 soda looks good, I can think to myself ‘That only represents 1% of my total cash, so why not?’.  In relative terms, the purchase represents 1% of what I have, which, to most is ‘no big deal’.

If I only have $5 in my wallet, suddenly that $1 soda represents 20% of what I’m carrying around.  For me, that will turn a potential purchase into an empty-handed walk away from the soda machine.

Meaning for me, the less cash I carry, the less overall spending that I do.

I think people are wired differently.  Some people see the use of a debit card as a black hole and so they prefer not to use it.  Personally, I track our debit card spending almost daily and we have a pretty strict monthly spending limit, so each purchase definitely makes me consider whether I really want to spend money on it knowing that there might be other uses for those dollars.

I think the trick, no matter what, is to create spending limits, track them, adhere to them, and modify them if necessary.  You need to modify them if you’re finding yourself short on essential things like food, gas, or other important things.  Allowing yourself more so that you can buy a new pair of shoes every other week probably violates the spirit of spending limits.  The key is to set realistic spending goals, and also to track your purchases.

Either way, I think every person should understand their ‘cash’ preference and how it affects their spending.  With so many options available for many people, it only makes sense to make the adjustments that will reduce your discretionary spending.

A Few Life Lessons From An Eight Month Old Who Is Learning To Stand

Our eight month old son is learning new things and advancing right before our eyes.  It seems not a day goes by that he doesn’t figure something new out. In the recent weeks, he has mastered crawling and the latest skill that he’s working to perfect is to pull himself up to a standing position.

Watching him learn and hone this new skill makes me realize that there are things he does in his learning process that we can apply to just about anything, whether it be saving money, getting out of debt, adjusting to a new job skill.

Here are just a few lessons that he is teaching or providing a refresher course on as he takes on the quest that is learning to stand:

  • Look for opportunities – Baby Beagle is always looking for new places that he can pull himself up.  At first, he started small using low objects like the sofa (with a cushion removed by mommy or daddy so he could reach), but once he got the hang of that, he went for the areas on the sofa that had the cushions in place, various toys, tables, whatever….
  • Practice makes perfect – Once he gets the hang of it, he’ll plop himself down and pull himself right back up.  He’ll do this over and over until he can get to his ‘new’ position quickly.
  • Know when to ask for help – Baby Beagle is pretty independent, so he likes to do and figure things out for himself.  Still, when he’s trying something new or going after something that he hasn’t attained yet (a higher pull-up for example), he’ll let you know when it isn’t going well, and will look for an assist.  This might be repeated a few (hundred) times until he catches on, but eventually he’ll master what it is your helping with and make it on his own.
  • Look for re-assurance when things don’t go as planned – Babies are babies and, just like in life, not every attempt works out as planned.  Though there have been hundreds of times where standing has worked out, there have been a few misses that have resulted in a bonk on the head or a face dive into an unyielding object.  The accompanying tears are a cry for re-assurance and comfort, a reminder that it’s not always possible to succeed 100% of the time, and to have people close by to help you during the times that success doesn’t come.
  • Take pride in your success – Very often, when Baby Beagle pulls himself up, he takes a second to look around, smile, and give a little cry of happiness in his accomplishment.  If you cheer him on, he’ll get even more excited often to the point where he topples over!  He celebrates and takes pride in his accomplishments, which gives him the motivation to repeat his accomplishments and to try for greater things.
  • When you fall, pick yourself up and try again – So many times, the first attempt doesn’t go as planned and the solution is just to try again and again.  Don’t give up.

It just goes to show that as much as we teach babies and help them learn, there is a lot that they can teach us as well!

Review of 2009 Financial Goals / New Goals for 2010

I track our net worth, and the components that comprise our overall net worth, on an Excel spreadsheet.  At the end of each year, I put in ‘goals’ for each category for how I would like the upcoming year to play out.

Since December is the last month, and I’ve already done our net worth analysis for the month, I can look back at the last twelve months and see how we did.

Away we go!

ASSETS

HOUSE
2009 Goal:   -5.1%

2009 Actual:   -11.6%

2010 Goal:   0.0%

Comments:   Based on the performance of the housing market, I had estimated that the value of our home would continue to fall.  I had hoped it would ‘only’ fall around 5%, but unfortunately, it fell quite a bit more than that.  The encouraging thing is that the rate of decline has slowed over the past few months, so I’m hoping that things level off.  Therefore, I will be happy if the value of our home stays the same over the next twelve months, and have set that as my target for 2010.

CARS
2009 Goal:   +25.4%
2009 Actual:   +43.4%

2010 Goal:   -8.2%

Comments:   I had planned on purchasing a car, which we knew would be necessary once we had Baby Beagle.  Therefore, I was counting on the value of our cars to go up for the year since we would be replacing our least valuable car with a more expensive car.  This took place.  I don’t anticipate any change in what we own in 2010, so I simply anticipate regular depreciation.

INVESTMENTS
2009 Goal:   +14.6%
2009 Actual:   +33.9%
2010 Goal:   +4.7%
Comments:   I had hoped for somewhat of a rebound in the stock market, and this was answered….and then some.  While the overall value of our investments are disappointing compared to what we paid for them, we saw a recovery of a good portion of our 2008 losses.  I think that the upward trend of the stock market will slow down or even reverse slightly in 2010, so I’m setting a conservative goal for this category.

CASH

2009 Goal:   +17.8%
2009 Actual:   -3.3%

2010 Goal:   +11.6%
Comments:   I didn’t have any real reason for forecasting an increase here except for possibly being too optimistic.  I knew that we’d be purchasing a car which would reduce our cash holdings.  This happened, and explains a slight decrease for the year.  We are not currently planning any major expenditures for 2010, so I’m hoping to boost our cash savings by a modest 11%.

RETIREMENT
2009 Goal:   +53.0%
2009 Actual:   +77.1%

2010 Goal:   +18.8%
Comments:   I was more aggressive in forecasting our retirement savings (compared to the Investments category), but there were several reasons.  First, is that I am making regular contributions.  Second, I had anticipated that my employer would continue matching those contributions.  Third, because retirement is so far away, the investment classifications are overall more aggressive.  All of these played into a substantial gain for the year.  This would have been more, but my employer cut their matching contributions in early summer.  I’m forecasting an 18% gain, which would basically happen if there was a modest gain in the market and we continue our rate of contributions.  Should our employer start kicking in again, this could be higher.

DEBT

MORTGAGE
2009 Goal:   -1.5%
2009 Actual:   -1.4%
2010 Goal:   -1.7%
Comments:   This is probably the most boring category, as we simply make the minimum payments on our 30-year fixed rate mortgage.  Eventually, within a couple of years, I’d like to start paying this down more aggressively, but for now, the numbers are pretty self-explanatory.

CAR LOANS

2009 Goal:   $0
2009 Actual:   $0
2010 Goal:   $0

Comments:   I didn’t do percentages here because you can’t divide by zero.  We didn’t have any car loan debt coming into the year, and it was my goal to not add any new debt in this category.  Mission accomplished, as we paid cash for our upgraded car.  Since we’re not planning on making any changes to our car ownership this year, our goal for 2010 is simply to keep the $0 balance here.

CREDIT CARDS

2009 Goal:   $0

2009 Actual:   $0

2010 Goal:   $0

Comments:   Actually, the same goes here as in the car loan category.  While we do use our credit cards, we pay off our balances every month, and this is reflected here.  Our goal for 2010 (and forever) is to keep this at $0.

STUDENT LOANS

2009 Goal:   -29.3%
2009 Actual:   -25.4%

2010 Goal:   -26.0%
Comments:   Any extra payment we have towards debt goes towards two student loans that we have.  We are paying the higher interest one off first, and were able to lop off 43% of that balance.  The minimum payments on the second, lower interest loan, allowed us to pay off 8% of that balance.  Overall, we came pretty close to meeting the target.  While we won’t be able to put as much towards them in the upcoming year (since we’re a single income family now), the percentage paid off is actually targeted to be about the same as last year.  This is because the beginning balance is lower. 

OVERALL

NET WORTH

2009 Goal:   +39.4%
2009 Actual:   +40.6%
2010 Goal:   +20.7%
Comments:   Even though the value of our house was a major drag, the stock market recovery offset this so that we were still able to meet our goal.  I’ve been tracking net worth since 2001, so this is the eighth full year I have to compare, and the 40% increase is the biggest percentage increase I’ve noted since I started tracking.  While this is nice, it’s still dampened by the fact that the 40% increase follows a 42% decrease that took place in 2008, showing that our personal recovery is still a long, long ways off.

However, the fact that we recovered so much was a bright spot.  The other bright spot is that, although the overall number is way down from all-time highs, the main reason for that is the value of our property.  I actually keep track of our net worth excluding real estate, and that number is at an all-time high!  This shows that our strategy of investing in retirement while paying down debt is working for us, and that while the real estate market is slowing us down, we’re still headed in the right direction.

Since we slightly beat our overall target goal for 2009, I’m extremely pleased.  Of course, now the focus is meeting (and beating) our goals for 2010, so as I said earlier….

Away we go!!!

Review of October 2009 Goals / Setting November’s Goals

Here’s the goals I set for October.  With the month drawing to a close, let’s see how things went:

  1. Get back on the treadmill – I still haven’t gotten up to my full 5-day-per-week routine, mostly because of a cold I had earlier in the month, and some foot issues that arose after failing to ‘ease into things’ properly once back on, but I’m on three times a week, and I’m happy with that, enough to call it a success.
  2. Sell a car / buy a car – Well, I’m happy to report that this afternoon, I sold my car!  I actually did make it happen through Craigslist, despite all my complaining.  The person actually turned out to be a very nice lady, and her and I hit it off from the first exchange of e-mails.  Just as I’d been frustrated with the selling side, she’d been frustrated with trying to buy a car, having found some lemons and people that seemed less than trustworthy.  So, both her and I consider ourselves very lucky.  Though I don’t have the new car yet, it’s all lined up for Monday, so I’m considering this one a success.
  3. Winterize around the house – I never got to this, but am moving it to the next month.  I actually read a cool news clipping about how you can use incense to determine leaky spots, so I’m planning on incorporating this tip, and I’d also like to wash the blinds when doing this, so the scope of the project has been reset.
  4. Donate – Since we never got the bigger car, this didn’t happen.  But it will before I get my garage re-organized for the winter.
  5. Figure out our Netflix plan – We haven’t made it over to the library but I will be by sometime soon as I have a book on hold that I’ve been anxious to read.  We’ve actually been pretty busy, so the low movie plan has worked out perfect, plus some good stuff has shown up on the On Demand section of the DVR, so although we didn’t achieve this, so far there’s no impact.

November Goals

  1. Winterize – See above or last month
  2. Donate – See above or last month
  3. Figure out our Netflix plan – Also carried over from last month
  4. Finalize our Christmas budget – Most of this is done, but we need to finalize it
  5. Get a head start on Christmas shopping – Things just seem to move faster when you have a kid, so I’d like to be over 50% done with our shopping by the end of the month.  Let’s see how it goes
  6. Enjoy the holidays – Can you believe that the holidays will be in full swing in a month?  

My Brush With Identity Theft

I’ve never had my idenity stolen. I’ve read many of the horror stories that come along with it, but have never had to go through that.
But, that doesn’t mean that I didn’t come close. Or at least feel like I came a little close. Because there was one time where someone came pretty close, or at least a little too close for comfort.
A few years ago, I went through my mail, and there was what appeared to be a bill from UPS. I don’t make any shipments, and when I do, I typically pay for them at the counter. The bill was for a few dollars.
So, I thought nothing of it and threw it away.
A few weeks later, I got a second bill, again, not for very much money, but for a larger amount, but still under $50. Again, I discarded it thinking it weird that I was getting bills for something I didn’t use.
They got my attention a few weeks later when they sent another letter indicating that if I didn’t pay my balance, I would be turned over to collections. So, I immediately got on the phone.
My conversation went a little like this:
Me: “I’m calling about a bill that I got for a bunch of packages.”
UPS: “Yes, we need you to pay that.”
Me: “I’m confused, I didn’t send any packages using UPS.”
UPS: “But it has your name and address here.”
Me: “While that’s true, I didn’t ship any packages. In fact, the ’ship from’ location for all of these is in California.”
UPS: “Yeah, and?”
Me: “I live in Michigan. How would I have shipped these packages from California?”
UPS: *long silence*
Me: “How would someone have opened an account with my name and address?”
UPS: “Well, that’s all you need to open an account.”
Me: “You don’t need a credit card? A social security number? A drivers license?”
UPS: “No.”
Me: “So, anybody could just find someone elses name and address and open an account and start shipping packages, and UPS is OK with that?”
UPS: “Yeah, seems a little strange, doesn’t it?”
Me: “So, you’re going to take those charges off my account, the one that I never opened, and close the account, too, while you’re at it?”
UPS: “You’re sure you never opened that account or shipped those packages?”
Me: “Positive.”
UPS: “OK, then, we’ll take care of that.”
Pretty amazing stuff, isn’t it? Now, this was a few years ago so I’m really hoping that UPS does not simply allow accounts to be created in such fashion. It seemed that before, you could just create an account and start shipping with it. Granted, the number of shipments was small, so I’m guessing (hoping) that for bulk shippers, they would have required a line of credit.
But, really, who knows?
At the time, I didn’t really think much about it, but it was about as close I could have gotten to having my identity stolen without it actually happening.
It taught me a few lessons though:

  • Pay attention to your bills – I simply threw the bills out because I knew that they weren’t mine, but if I hadn’t, who knows if UPS would have somehow been able to find me and put a blemish on my credit report. It doesn’t seem likely since they didn’t have my SSN, but then again, I would have thought it pretty unlikely that they would open an account without somehow verifying the person opening the account.
  • Be careful of your personal information – Keep your personal information, especially things like account numbers, drivers license numbers, and other key information, safe.
  • Check your credit report – I check my credit report (and my wife’s) every four months, using our three free reports from AnnualCreditReport.com. After this, I have always kept an eye on it to make sure that every single creditor is someone I know. So far, I’ve had no surprises.
  • Check your balances often – Did you know that the longer you wait before notifying a bank or credit card company of fraudulent activity, the more you’re responsible for? I try to check my balances every day or two days on my bank accounts and credit cards.

Any other tips on preventing or dealing with identity theft? Any close calls?

Seven Things I’ve Learned Since Becoming A Dad

It’s been just under two weeks since God blessed us with Baby Beagle, and there have been a lot of changes. Here are just a few of the things that I’ve learned since the arrival of our son.

  • How to change a diaper – I actually never had changed a diaper before. Let me just say that you catch on pretty quickly.
  • You need more diapers than you could have ever planned for – Baby pees and poops more than I think we had ever thought possible. I actually went out on my first ‘diaper run’ late last week as we were running low on his size.
  • Hours seem to simply disappear out of the day – I think that once a baby comes, the laws of time change and there are only 21-22 hours per day for parents. It’s the only way that I can explain how every single day since the arrival has seemed to end much more quickly than they did in the past.
  • Don’t plan on getting things done with any sort of efficiency – My wife will love this one. See, before the baby came I had this list of things that I wanted to get done in the week following coming home from the hospital. A lot of different projects for the house, the cars, and my blog were on the list. I figured that the baby needs attention but since it sleeps 20+ hours per day, there will still be plenty of time to get things done, right? Wrong. Somehow there is always something to do, whether it be laundry, dishes, changing towels, planning for bath time, whatever. I got a few things done from my list, but probably 25% of what I had hoped. Still, the week off was amazing and time that I’ll cherish for the rest of my life.
  • Sleep schedules change – Gone are the days of sleeping through the night, at least for a while. Feedings and diaper changes are the new order of business. Our son is actually doing very well at sleeping in his crib without fussing, and about going back to sleep once the business is taken care of. Still, I was unprepared for what a drastic change would occur in sleep patterns.
  • Everything changes in an instant – Oh, I knew well in advance that things were going to change once the baby arrived, but nothing could prepare me for how much it does and just like that. Your entire heart opens up, your priorities are completely shifted, and your joy and awe reach heights that you could never have thought possible, all in a heartbeat.
  • Mrs. Beagle is amazing – It’s true that men could never go through the pain of childbirth. My wife is a truly amazing woman for carrying our son, delivering our son, and how she now takes care and loves him in a way that only a mother can.

What a blessing!