36 Weeks….let’s talk about money

Hey Four!

Today I am going to discuss the important topic of money.  You are coming right as your dad and I are getting our taxes all organized.  Each year during tax time we get a good look at where we are with money.  Since your dad and I are still trying to figure out how to merge our finances, we are still working on the logistics of everything.  Also, since I haven’t been on the court since last fall, I am not bringing in as much as I normally do, so that has really had an impact.

Here is the thing.  Money is a part of life and there is no avoiding it.  Your dad and I don’t make a lot, yet we have a very nice life and feel that we appreciate what we have built.  I know people that make a heck of a lot more and sometimes, even with their abundant wealth, they seem like they still have something missing.  Now, I do admit that I have worried about money for much of my adult life.  There are times when I have had nothing in my account because I was tapped out from my monthly bills.  This “near broke” existence is living a paycheck to paycheck mode that so many people in my generation, and the next one have experienced because life is crazy expensive and the majority of jobs don’t pay a lot.  When I think about this situation I admire how your great grandparents’ generation lived through The Great Depression.  Their ability to endure despite the very worst of economic hardships shaped their financial habits in a way that was very wise.  GGF always said don’t spend money using credit if you can’t pay it off immediately – or more concisely: don’t spend what you don’t have.  Well, that seems obvious, but these days houses, cars, and college are things that very few people can afford outright, so right there you are already using credit.  I have my car payments, $355 a month, which is a pretty good deal for having bought a new car in 2015.  Hopefully this car will last us a while.  Your dad bought his car in 2000 and hasn’t had a car payment in forever – he paid his car off in just 8 months by putting a lot down and paying as much as he could each month…he does not want to pay interest on anything.  He loves his ride and will try to drive it as long as possible.  If we can keep our vehicles working, then we can avoid having car payments most of the time.  Our house payment is pretty hefty.  Your GGF and GGV built their house and never had a payment.  They saved and saved, then did the work themselves.  Their house was great.  Grandpa M was similar.  He designed and built most of his house through savings too.  That was in the early 1970s when inflation was crazy, so the fact that he didn’t have a monthly payment with interest really allowed him to save money for the unforeseen medical issues that hit the family later.  Your dad and I each had homes of our own before we were married.  You dad’s house was a much better purchase than mine.  Mine came with two association fees and crazy bad taxes and high utility charges.  I ended up with a bad deal, and it cost me a lot that I am still dealing with.  But in both of our cases, your dad and I had monthly mortgage payments.  This is something that you will have to do too, unless you decide to put up a yurt in our backyard.  Your dad would probably be ok with that.

So just three generations back, your great grandparents saved for everything.  A lot of people in that generation did something called the envelope system.  They would cash a paycheck and then divide the actual cash up into various envelopes: groceries, clothing, utilities, vacation fund…probably not that last one realistically.  The idea was that when it came time to spend the money, it was physically there.  There was no credit this way.  The whole concept of credit blew up with the Depression, so many people in that generation didn’t trust in it and never would.  GGF would always say, “watch out for those charge plates, they will ruin you.”  That was pretty true for many people in my generation.  Since GGF and her peers knew where each penny was allocated, budgets were tactile and real.  GGF and GGV socked away savings, mostly out of fear that a Depression could hit again, and because through that tough time they learned to live with very little.  They grew food in gardens, they knew how to fix things for themselves, and being frugal was a cultural badge of honor.  Even with their limited income, they saved enough to pay for Grandpa M’s college – which is simply amazing for two people who didn’t have high school diplomas.  Then Grandpa M came along and, with his engineering degree, entered a career that far, far surpassed the earnings of the childhood he knew.  He was not richie-rich, but by contrast, he was very comfortable.  This meant that once Grandma J had me, she became a stay-at-home mom and he became the sole provider for a growing family.  While Grandpa M’s money situation was deeply altered due to Grandma J getting very sick when she was only 30, he still managed to always save.  Now, as he is nearing retirement, he is frantic that he didn’t save enough.  Here is the thing: you can almost never save enough.

A few years back I took a class called Financial Peace University.  There was a chart with the materials that explained how if a young person starts saving at around 20 years old, and keeps up the habit while upping the savings as their income increases, that just on savings alone they could enjoy a comfortable retirement.  I did not adhere to that chart in my 20s and 30s.  Not even close.  Thankfully, for you, your dad is a good saver.  You remember me mentioning how GGF didn’t need a lot of stuff to live?  Well, I was not that way.  I thought I needed stuff.  I bought a lot of stuff.  I was especially guilty of this with my electronics addiction.  I have not been the best at curbing my self-indulgences.  I think I used to do that because I thought that buying things would make me happier, as there were stretches of time when I just wasn’t happy.  The thing is, feeling like I was in better control of money versus a breath away from being broke, would probably feel better than buying a Sony CD walkman…or whatever I thought I needed to be up-to-date with gadgetry.  I had a cell phone in college, which was a big deal back then.  I had a fancy stereo, which is now collecting dust in the living room as it isn’t even set up.  I just had a lot of stuff.  It was not good.  Your dad and I want you to have a happy childhood, but happiness is not stuff.  You will want things…kids do.  But your dad and I are going to really try to get you thinking about saving, sharing, donating, and the value of a dollar.  That is a noble goal, and I really hope that we can do this for you.

I know I have written about how we will set aside money given to you in an account for you to access when you are older.  We are also working on a college fund for you.  The cost for college has exploded.  I look at what I spent in 92-96 compared to what it costs now.  It costs a fortune!  College also has become a right of passage for most kids.  It is supposed to be a launching pad for intense studying that leads to a successful career.  While it is that, many kids also use it as a time to party and experience social freedom during those years.  That is certainly a part of it too, but given the crazy expensive cost for college, we really hope that you keep that studying while having career goals in mind as your priority.  I know so many situations where kids bombed out of school because they just didn’t take the school part seriously.  What a giant waste of money.  If your dad and I can teach you the value of money and you can keep how much that tuition costs in mind as you go to college, we are good with that.

I have no idea what you will want to study, but there are classes called “general electives” that help to round out your college course work.  Grandpa M begged me to do a financial class of some kind.  I didn’t listen.  I wish I had.  Learning the ins and outs of money would have really helped me.  I went into running an S-corp with no idea what a schedule K was.  There were so many terms related to that experience that I had no clue about.  I had an accountant, so I just trusted him, but wouldn’t it have been better if I had some exposure to that?  I also know nothing about stocks, bonds, and investing.  I was always afraid that doing things like that was a risky gamble.  However, with a little knowledge and some well-educated guidance, maybe I would have been able to build a portfolio like what your dad has now.  I had just convinced myself that financial stuff was something rich people cared about and as long as I balanced my checkbook and had a 401K, I was good.  Wow, I was wrong.

Yes, I have a 401K, I also have a TRS retirement plan from teaching.  I have been better as I have gotten older, but I am still not the well-informed and healthy-habit financially sound individual that your dad is.  Having enough years behind me and my bad money habits of my 20s and 30s I absolutely do not want you to ever be in this spot at 40-something.  I want you to have a respect for all things financial, even if you live in a yurt and weave cat-hair sweaters for your income.  Whatever your career, I want you to be well-educated and even-tempered with your approach to setting up your own financial world.  I think because my dad worked so much and my mom just showed us the “spending” side of their money situation, I got good at the spending without really learning about the earning, saving, and allocating part of it all.  I am not trying to assign blame, but I just was not exposed to good habits at an age when I was learning and establishing habits.  I want to be very aware of not letting that happen to you.  Grandpa M was an only child and didn’t end up spoiled or self-indulgent…so it can be done.

Right now, your dad and I are looking at where this year has taken us.  We spent a lot on medical stuff, setting up a new home, and saw an increase in our utilities as we now have a bigger house.  We are paying much more in taxes too.  We need to get a working budget in place, which is hard as my income fluctuates.  I think the budget will show us that we are pretty tight on funds and that I must find a way to get back to making more money soon.  There is a lot that we need to probably adjust our habits on as well.  So we will see where that all goes as we continue to move into a family of three.  Whoa….I just got the sharpest pain yet…yowzer.  I think it was a nerve, I am fine now, but wow!

Okay, so as you can see I really want you to be in a better place than where I am when you are my age having worked half of your working years with the other half before you still.  Ah, midlife crisis!  On another reflective note, I consider how hard your great grandparents’ generation worked.  Again, working hard was a badge of honor.  While I think it is still the case, there sure is a lot of lifestyle envy for the rich and famous.  I don’t want you to get wrapped up into that the way I did.  I remember watching “Lifestyles of the Rich and Famous” hosted by Robin Leach when I was a kid.  Later, there were all kinds of TV shows that celebrated the super wealthy too.  Sure, having opulent wealth is fantastic and maybe you will achieve that…but more realistically you hopefully establish a lifestyle of “comfortable with smart management”.  I still want that just for ourselves as we constantly work on the management piece.  If you realize that working hard, living modestly, saving wisely, and being in control of your financial life is a measurement of individual success, I couldn’t be more proud of you.  This will require you to demonstrate responsibility and will power that I never did.  If you can keep these goals in mind, maybe you will be free of so much of the material stuff that bogs me down, and the money you save by having healthy spending habits will allow you to go explore the world…which if you take after your dad and me you will want to do.

I think that parents want to give kids a life that is better than what they had.  As a result, this has spiraled into some pretty indulgent, over-the-top childhood experiences.  I think I was part of that and it carried over into my feeling like I could continue to treat myself to a life of unnecessary goodies despite not having an income to support it.  That was a set up for failure.  I want you to have a life that is secure.  If it means tough love and you not having the newest and most of everything, then that will be the case.  I think at the end of a life we need to look at the experiences and quality of relationships we had along the way.  Those are things that we can give you and teach you to value that are not indulgences.

I am watching your Grandpa E and your dad outside.  They are working on the continued saga of drainage problems with the yard.  It is probably 45 degrees out and they are working away together.  Grandpa M and GGV used to work outside together too.  Even though it is work, it is time they are spending together.  When GGV passed away, I remember Grandpa M looking at pictures of the things that they built and worked on together.  He was cherishing those days of just being in one another’s presence.  This is what I miss about my grandparents…having time with them.  I don’t miss the things that I wish they had bought me.  I just miss them.  There is not one material thing that I could wish for that would fill the hole of not having another memory of just hanging out with them.  That isn’t sentimental hormonal gush, it is the truth.  I am thrilled that you have grandparents who will be good about just being present with you.  I think that is a wonderful thing to have for a baby….better than any toy.  You may not realize that as a little one, but when you do get to an age when you can, you will be so grateful for that.

Speaking of money, I need to get myself cleaned up and out the door.  I have to work today and that means getting up out of this chair.  You have been kicking me a little as I have been typing.  I am glad you are active.  Keep on getting ready to make your big debut.  I can’t wait for it!  Our world will change and so much for the better!

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