Tuesday, June 11, 2013

Updates and Musings

So we sold our car yesterday, and are (in the words of the Mrs.) "blissfully back to one car".  I hope it serves the new owners as well as it served us (fantastically), but in the brutal logic of "do I need it?" it was time for it to go.  The Mrs. came across a challenge to have nothing that is neither beautiful nor useful.  That's a serious gauntlet, and we are trying to pick it up.  Anybody need a toaster?
In other news, the hauspurchase drags on, waiting on the appraisal to come back.  I did get a good quote from a roofer recommended by a friend from church, so I may not end up on the roof in Phoenix in June.  That would be OK.  We still have a lot to do inside, so we'll not lack for projects.
Also, some dear friends of ours just finished (his) grad school and started a new job (far away :-(  ).  They are not in any wise consumerists, but I got a nice email from him saying more or less "Hey, you pretend to know about money-save.  What should we do?"  (it was much more polite and friendly than that, of course, because he's an awesome dude).  So I cogitated some, and in true James Joyce fashion, spewed out a stream-of-consciousness diatribe about frugality and life and stuff.  Since it belongs within the pale of this blog, here it is (redacted appropriately for privacy).
Hey ---!
I'm not sure how qualified I am to give advice, and I'm not as cocky as Mr. Money Mustache (I think), but here are my two cents:
Every $10 matters.  There is no such thing as "deserving" a purchase.  If you think you need something, wait another two weeks.  If you survived without it, you didn't actually need it.  Then you can decide if you want it enough to spend a little bit of your future on it (a much more effective way to think about spending money than the usual "I have it, so why not enjoy it now?" attitude - I don't think you are very guilty of this, but many are, myself included).  The point of all of this money stuff is not the money, it's the freedom to serve God and your family better; to do things because you enjoy them, the church benefits, or any other good reason; to make breakfast with your kids every morning.  I have no desire to be "rich" in the conventional sense; I like old clothes.  That said, consider the following: things don't make you rich, they make you poor.  Only fake rich people spend money showily, real rich people invest it.  Sell a car and bike/walk/bus to work.  Never spend more than $8k on a vehicle unless you have a special need (~2006 Scion xA=sensible). Houses are not wealth, they are a place to live that you have to maintain.  They should only be considered as a lifestyle choice, and as all such, only purchased when you can comfortably do so.  Invest in Vanguard funds - they are cheap, broadly diversified, and it is extremely likely that stocks will go up over your lifetime (should Christ tarry).  Read the blog at jlcollinsnh.com if you are interested, he actually likes to think about investing (I don't, but if you buy Vanguard Stock Index funds, I don't have to).  Insurance companies make money on average; don't forget that when you are wondering about how much coverage to get.  Check out Samaritan Ministries International for your family health care, that's what [we] are on (I would be with them, too, but the adoption process requires proof of standard insurance for the adopted child).  Also, they took care of [some dear friends during a terminal illness, and the widower] is a huge fan.  Cook good food at home - the internet helps.  If you want beer, make it (I bet there's a brewer at church, or at least a few guys you could go in with to reduce the capital expense).  Craigslist is your friend if you do have to buy something.
College debt is trickier to discuss.  On the one hand, it's debt, and debt is an anchor on your life.  I'm not a financial whiz, so if I were you, I'd just try to get out of debt FAST.  As in, you don't eat out, you don't buy beer, you don't buy anything you don't genuinely need until it's vanquished.  This will also help you and [the little missus] develop effective frugal habits that you can carry with you forever.  On the other hand, your college debt is probably at a really low fixed interest rate (3% maybe? 4%?).  Someone with more financial chutzpah than me ([my finance-MBA brother or another mutual friend who's in real estate] maybe) might choose to invest as much as possible in stocks or other investment vehicles that will likely earn more than your debt costs, netting a positive return of maybe 1% to 3%  (stocks at 5-7% growth less 4% debt cost, you get the idea).  The issue for me would be the risk that the market stinks during my debt paydown period and I lose money on net, however, this is somewhat offset by the fact that buying stocks during a stinky market is absolutely the right timing.  I would lose the gain on the stocks I hadn't bought while I was paying down my debt.  I also wouldn't have the debt anymore, so there's the tradeoff.
That was a bit of a ramble, so I apologize, but I think that's the essence of my thought on how to get out of a hole and stay out.  Dave Ramsey may well be helpful; I've never read him, [my brother]'s a big fan, Money Mustache has a beef with the underlying philosophy of "be really frugal now so you can be rich later".  I tend to think that you should just learn to enjoy having a simple, frugal life, and never be waiting for when you've "arrived" at the place where you can go back to being a big spendy consumer.  Being happily frugal makes it a lot easier to be financially independent at an earlier age (and thus be able to spend your time on what you love, being a good husband, father, churchman, and even [doing your job] - you will hit a point in employed practice where you wish you had more say over what you did and when you did it).  Also, you ALWAYS pay the highest interest debt first; I don't care about snowballs, that just makes sense.  But for my money, you pay all debt like your hair is on fire, so you don't have a chance to get complacent.

Please accept this rant in the spirit of care and camaraderie intended.  Maybe it will be helpful, maybe not, but if you set a good goal (no debt by 201X, be a stay-at-home dad by 45, whatever) it will help keep you looking forward.  Enjoy the process, too; you're caring for your family and glorifying God now, and building a future where you can be even better at caring for your family and glorifying God.
With much brotherly love in Christ,
[Mr. Miner Mustache]

PS- Our goal is mortgage-free in five years, financially independent in ten.  In the meantime, we're saving, working, and making the best of all the awesome things God has given us.  We are NOT holding off on kids, because we think they're such a blessing.  It's not about money, money is just a helpfully indexed and useful tool.

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