Help us decide our future financial paths: A guest post

#2 is on a two-week honeymoon in Italy so we’ve solicited guest posts from readers and will be running them along with random kitten pictures and hopefully(!) food pics from Italy.

Anandar is kicking us off with a money Monday question about long-term financial planing.  Help her think through her options!


Anandar writes:

For the first time in a loooong time, we have what feel like real choices in our financial life, and so I took the opportunity to write up a guest post in hoping of thinking things through (and getting feedback if you feel like commenting!).  My spouse and I are both professionals around age 40.  In our 20s, we were in grad school and/or making peanuts.  In our 30s, we were still (!) in grad school, and generally felt urgent about working to pay off the school loans/get established in our careers while paying daycare bills/afford a downpayment in our crazy-high cost-of-living area.  Now, we own a house, just paid off law school loans, our youngest is starting public kindergarten, and we generally feel less strapped.

Additional background:  We both have the sort of jobs (teacher and legal aid lawyer) that are meaningful but also very time consuming and stressful for conscientious types.   We live in a very high cost of living area, and while our fixed expenses are lower than many people of similar age and socioeconomic status—we are debt free except for an affordable mortgage, with no expensive habits–the whole working-parent-modern-life thing leaves us susceptible to throwing money at problems and “treating” ourselves in ways that we suspect we wouldn’t if we worked less.  While I wouldn’t say we live in Paradise, it is definitely a place where spending a lot of money can be fun, interesting and/or delicious.  We’re not interested in easing our finances by moving to a cheaper area, because we don’t want to reboot our community from scratch.  Our savings are on track for retirement at a typical age (we’re steady savers when working but also spend many years in grad school, including a spare PhD, not contributing to IRAs or 401(k)s).  Our savings for kids’ college are relatively modest, but we are taking a “we’ll cross that bridge when we come to it” and “you can borrow for college but not retirement” approach (our privileged kids’ grandparents have also started 529 plans).

Here are our four options for the future, ranked from least to most expensive, and I’d love to hear readers’ thoughts on how you’d evaluate them:

1)      Save up for a sabbatical year of living in another country with kids (the teacher could do this easily; the lawyer would probably have to quit current job).  This is on our “bucket list” of things to do with our children before they old enough to prefer international adventures sans parents.

2)     Save up for major house renovations to make our small home more liveable long term, including separate rooms for each child; a second bathroom; a real guest bedroom for visiting grandparents (who may in the far future want to live with us, so heck, let’s call it an in-law unit); a deck for eating al fresco.

3)    Same as #2, except borrow the money in order to enjoy the benefits of renovation much sooner, while locking ourselves in to higher fixed monthly expenses due to debt.

4)    Save like crazy in order to achieve financial independence (FI) before standard retirement ages.  Neither of us has any desire to stop working entirely, but working on a very part-time or volunteer basis would allow for more flexibility and creativity in our professional and personal lives.  Once we hit FI, we could dramatically increase our charitable donations, which we would really like to do.  I am not sure exactly how long this would take, because I am not sure how frugal we can really be and still preserve our equilibrium.

I can already hear you all saying:  since all of these options cost money, and you seem not to know what you want, why not just save as much as you can and decide later!  And for goodness sakes, these options aren’t all mutually exclusive—if you were financially independent, you could drag the kids on an international sabbatical every year!

There are a several reasons why I’d prefer to have a plan.  First, we are thinker-aheaders (if one were taking a deficit approach, we’d have anxiety issues).  Second, there are practical differences in how we would be spending our scarce free time today depending on which option is our top priority for the future (language learning! home cooking all meals!).  Third, to my mind, these options involve different mentalities with respect to our jobs and our finances, as well as our underlying value sets.  Trying to achieve FI early requires a substantial commitment to frugality.  Saving or borrowing money for home renovations entails a certain amount of doubling down on our paid work, while planning for a sabbatical involves thinking about detaching from our jobs.  And so forth.

So, thoughtful readers, how would you prioritize these options in our circumstances?  What additional questions would you ask yourself? 

October Mortgage Update: Fixing up the house = $$

Last month (September):
Years left: 1.5
P =$1,129.93, I =$84.47, Escrow =$809.48

This month (October):
Years left: 1.4166666666666667
P =$1,134.40, I =$80.00, Escrow =$809.48

One month’s prepayment savings: $0

On top of all the things we needed to do (get things painted) to get things into shape for new tenants, and optional things we didn’t do (replace carpets that are starting to look their age), we also got get hit up with home maintenance things.

While DH was gone on a business trip, I noticed that the mat surrounding the toilet in the guest bathroom was soaked through.  It didn’t smell like cat pee or effluent in any way.  So I removed the mat and waited a day.  The next day the carpet was soaked through.  Upon further examination there is a crack in the tank, so our option of getting the toilets replaced became a necessity for one of the toilets and it wasn’t even the rattier of the two remaining toilets.  That was $600+ for another two wonderful toto toilets plus $80 installation (since we had a bunch of plumbing stuff that needed to get done, we figured we might as well have the plumbers do the installation and not take our time).  Although we love the sani-gloss on the children’s toilet, we didn’t spring extra for the sanigloss on these two because one is the master toilet and the other the guest bedroom toilet, but we did buy an ADA compliant toilet for the guest bathroom.

DH put off having our deck repainted, even though it was rapidly becoming more wood than paint because he wanted to replace a board first and ask his dad for advice on that while he was visiting over Easter.  Well, over Easter his dad said the entire walk-way needed to be replaced and to hire someone to do that.  We tried, but it kept raining, and then when it stopped raining, all of the handymen and companies were booked solid.  So in the end DH had to do it himself while I watched the kids and took care of other moving issues.  He did a great job, even though there were concrete posts involved!  When it came time to paint the deck, DC1 helped which made it go a bit faster than it used to.  So that entire experience ended up being only ~$200 (for wood, paint, cement, and painting paraphernalia) when we had been expecting much more.  We thought we were going to have to pay to dispose of the concrete posts (after several weeks of the city not taking them with our trash), but fortunately they (barely) fit into DH’s trunk and the guy at the concrete disposal place just laughed at what a tiny amount we had brought compared to the industrial waste they normally handle and said no charge.

I suspect the refrigerator is on its last legs, but we didn’t have time to look into replacing that.  I hope it doesn’t die too horribly on our tenants, but if it does, they will get a much nicer refrigerator, since this was the cheapest model available at home depot back when we were grad students.

Oddly, in our rental, DH can’t seem to let go of the homeowners mentality and has been fixing their broken things rather than asking the landlord to say, send in a plumber.  So he’s taken care of a leaky shower and a broken toilet without even mentioning it to the landlord.

What kind of housing maintenance things have you been having to take care of?  What do you call a landlord in for?

In which #1 carries a lot of cash to Las Vegas*

So, we moved for the sabbatical.  And in moving, Citicard somehow did not get my replacement card to me because one of the addresses they had on file didn’t have an apartment number listed.  (The bills came just fine, but the card got sent back to them.)  Nobody told me this, of course.  I contacted Citi once to find out they hadn’t sent out the card, then a second time to find out they’d just sent the card, then a third time to find out they’d just sent out a second card because the first one had been returned but this customer service person had the bright idea to check the address on file and caught the missing apartment number and thus sent out a third card.  Unfortunately when she asked if I needed it immediately I said no because I figured that I could use my other (Bank of America) card on my business trip the next week.

Fortunately for me then, that after a very stressful weekend full of work, I decided I needed an iced coffee to keep me productive on Monday morning.  Fortunately too I decided to try my second credit card even though I still had a day left on my preferred card.  My second card was declined.

DECLINED!  Even though it said it was not supposed to expire for another few months yet.  Fortunately I still had a day left on the first card or I would have had to leave the coffee.

So I called and they said I hadn’t used it in over a year.  I’m like sure, that may be true (I usually make sure to use it for gas every now and then, but it is entirely possible that I let a year slip), but shouldn’t you send me some kind of notice that you’ve closed the account or that you’re about to close it?  Apparently not.  Or maybe that notice, too, was lost during the move.  I asked them to reinstate my card.  They said they couldn’t.  I asked for a manager, they asked me lots of questions about my credit-worthiness and then told me the terms of the card had changed since I got it so I would have to reapply from scratch.  No thank you, I said, I will use a different company.

That evening I poked around the internet for credit card options and decided on a nice Capital One card with 0 annual fees, 0 international fees (wish I’d gotten it before the last two international trips I took since I’ve been paying exchange fees), unlimited 1.5% cashback, and $100 enticement fee should I charge $500 within the next 3 months.  I was, of course, instantly approved and they gave me a 30K line of credit.  Stupid B of A.

So yeah, I don’t even have an ATM card because I never use cash (DH handles such filthy lucre).  Except for this business trip– gotta get food at the airport.  Gotta get a taxi to and from the airport.  It was awful having to watch how much I spent and to be careful with the money and all that stuff I used to do but haven’t had to do in ages.  I love me plastic so much.  (I did take a check-book too, but not everyplace takes checks, and not everyplace that takes checks takes out of state checks.)

So, yay latte factor (even though I rarely indulge), otherwise I would have been stuck at the airport in Vegas with no way to get to the hotel (after skipping lunch because my card was declined on the plane).  Or worse, starving in front of the hotel with an angry cab driver, praying that he’ll somehow be able to take DH’s credit card over the phone.

Share your credit card (or cardless) experiences, grumpy nation!

*City may have been changed to protect identity.

Linkius Loveius

This week, one of us was sick and the other was busy.  Aren’t our lives fascinating???

This person is maliciously crazy in the head.

Lil Bub gives excellent advice.

Once again, Andrew Ti comes correct (esp. in naming Asshole of the Month)

I kind of want a new Visa (don’t love my current card)

This is fascinating.

Matt Damon: Jerk.

A handy chart for comparing babies.

Help renowned author Cat Valente design an award.

Working at a big corporation.

A day in the life of a dad working at Google.

If anybody wants to crowdsource a fund to send this to me in shades of dark purple and maybe some teal… drool…

Reminder:  Shoot us an email at grumpyrumblings at gmail if you want to do a guest post the first two weeks of October.

pretty doggie:

Should parents help out kids equally?

Occasionally one of us will flip to the Mr. Money Moustache Forum and poke around while procrastinating.  This thread on whether or not parents should help kids out equally was really thought provoking.

DH’s mom is excruciatingly fair when it comes to doling out presents.  This means that our kids get a TON of stuff from his parents even though we don’t really need it because DH’s siblings are in much worse financial shape than we are (and also live close to DH’s parents so they can see what the kids need).  It was especially bad the year DH’s then-unemployed brother and SAHM wife were living in his parents’ basement.  We don’t really have a choice in the matter, and, since they focus on the kids, we don’t really feel like it’s our place to suggest they cut back (or put the money towards a 529 etc.).  It is, after all, their money, and they’re giving it to the kids, not to us.

My father is much more like Jacob from ERE than like Mr. Money Moustache in terms of spending, infrequent cold showers and all.  That means over the years my parents’ small nest-egg has grown enormously.   I don’t know how much, but I do know my father is concerned about avoiding inheritance taxes and wants to give up to the gift limit every year.

With the exception of when DC1’s school was about to go under (and he donated a considerable sum to it on our behalf), I have told him no.  I do not want their money.  I want them to SPEND it, or failing that, give it to charity.  I want them to move some place nice after my mom stops working and just enjoy life, even if it costs more to live there than it does in my small college town home town in the Midwest.  They’ve taken me up on the giving to charity bit and have set up a number of local scholarships for graduating high schoolers to go to college or for the library to reward customer service or to keep the paper version of the stock books he loves to spend hours going through to do value added investing.  (He says he needs to consolidate everything to index funds, but he keeps not doing it.  If he ever dies, the estate is going to be a nightmare to unravel.)

My sister, on the other hand, does not mind accepting their money.  So she does.  Neither of us needs the money.  It just gets put away and saved (or rather, it stays in whatever complicated 1980s mutual fund or single stock it was originally invested in because having to deal with selling it is a pain in the rear, which may be part of the reason I’d rather they just give the money to charity(!)).

It doesn’t bother me.  It’s their money.  (Though to be honest, a little bit of me worries about the extreme cost of assisted living expenses and wonders if it might be a wise idea to accept that money and put it in a “for parents’ assisted living expenses” account in case they’ve underestimated their health costs in old age.  I know there’s Medicaid for nursing homes after the money runs out, but I also know that $ buys higher quality care.  They don’t have long-term care insurance and my father is too old to get a policy.)

In terms of fairness for college– they paid for both of us, room, board and supplies.  My sister’s college cost substantially more than mine did, but a portion of that is that I got a lot more need-based financial aid because they were wealthier when my sister went to school than when I did.  Should she be penalized or I be rewarded for the stock market doing well or my mom taking on a temporary administrative position?  (They did give my sister more spending money than they gave me– I had to work for my spending money, but that probably didn’t add up to much and she did take on a heavier class-load and more hard-core extra-curriculars than I did.)

We used the same ancient Oldsmobile to learn to drive on.  Then my parents gave me a no-frills (as in 2-door, manual, no a/c) new Hyundai Accent as a college graduation present that my sister drove the two years (and seriously dented) because I couldn’t afford to pay for car insurance while in graduate school.  They gave her her own no frills new Accent when she went away to college, but she also went to school in driving distance of home whereas I went half a country away.  She paid for her own new car post-graduation (one with a/c!), the same  year we moved to our real jobs and bought our own new cars for ourselves.

They paid for my wedding (~3K, though 1K of that was alcohol my father insisted on providing)– it was either that or there was not going to be a wedding because DH and I had no money just out of college.  My sister doesn’t have a boyfriend, and when/if she does get married it will likely be much fancier than mine was.  I do not know what my parents will do if she does settle down.  And I won’t mind whatever happens.

I suspect though, it might bother me if they hadn’t offered both of us the same deal.  We’ve both been offered stock transfers (though after I said no the second time, they stopped offering).  We were both told that college would be paid for us– not that we’d get the same amount of money, but that we could each go to whatever college we wanted (the reward my mother negotiated with my father for her to go along with his frugality-to-the-extreme ways).  We both got new cars, even the same type, though at different times in our lives.  So the offers seem fair, and we’ve been allowed to react to them in ways that seem fair.  That choice means that if there’s any favoritism going on, it isn’t going on through money channels.  And that seems like a good thing.

I suspect DH and I would not mind if his parents showered a little less on us, but in this case we are so much better off than his entire family that it really feels like the money should be flowing in the other direction.  And maybe it will, some day.  Until then, we accept their generosity and save the money we would have spent on clothing and toys.  We’re pretty sure his parents can afford what they’re doing, but at the cost of working longer than they might otherwise have.  Still, while I wouldn’t say they enjoy working, they do get value out of work, so perhaps that’s not such a bad thing.  If it turns out they miscalculated, we will have savings to spare.

What are your thoughts on financial assistance to individual kids when there are multiple children?  If you have siblings, do you think your parents treat(ed) you fairly?  If you have kids, do you have a philosophy for financial assistance?

What was your first car?

My first car was a hand-me-down Oldsmobile Cutlas Sierra from the early 1980s.  It was a boat and I was still driving it when Oldsmobile stopped being not only my father’s Oldsmobile (which the car once was) but a company at all.  It had air conditioning (sort of) and four doors and was an automatic, which are all things my parents usually do not get in cars.  You had to start it just right or the engine would flood and then you’d have to wait for it to unflood before trying again.  I mostly used to to drive my sister to her lessons (which is why my mom agitated for me to finally get my license).  After I went off to college, my sister took charge of it, which is why she also considers it to have been her first car.

This is such an American question  :-)

#2’s was a 4-door Saturn (remember those?) named Oobleck.  She ran a little hot so you had to watch out if you drove home from college and then got stuck in traffic after driving for a few hours.  She was also whatever color they had on hand, which was something dumb like “champagne”.  My father helped me with financing and I paid him back over several years.  I got the car when I was 18 because I was working as a “floater” for a bank– the person who replaced other people when they went on vacation.  Therefore I had to be in weird and far-flung suburban locations that changed daily or weekly.  She was recent enough to have driver’s-side airbag and anti-lock brakes, but I’m old enough that I had to remember not to pump on them manually.  Good ol’ Oobleck lasted until past the point where I was living with my partner, and when she broke down too much to fix, I donated her to charity and had them haul it away.

What was your first car?

Career Change Neepery

When I go to the library to pick up my books that are on hold, I often browse around and come home with a bunch of books that look interesting at the time.  This time I got How to Find Fulfilling Work by Roman Krznaric.  Of course, who can resist an alluring title like that?  Especially when working on a career change!

It’s got an interesting exercise that I hadn’t heard of before.  It’s the “reverse job ad”.  Instead of looking at what a job advertisement wants, you advertise what you have.  So you write a half-page about yourself, but it doesn’t include any previous jobs or qualifications.  You write about your passions, interests, skills, and any dealbreakers.  For example, you might write that you speak Norwegian, love cats, make excellent pie.  Your personality is bubbly but impatient and you hate sports.  You want a job with flexible hours and not in a cubicle.  You are habitually messy, and passionate about reproductive rights.  Or whatever it is.  Don’t specify the job you’re looking for.

Now here’s the interesting part.  You send this “personal job ad” to ten different people who have very diverse jobs and backgrounds and lives.  For example, a police officer, vet tech, organic gardener, banker, cartoonist, bus driver, accountant, teacher, doctor, and a welder.  Ask them to be very specific about what kind of job they think you should have, based on the description.  The book uses the example, don’t say ‘you should work with children.’  Instead say, ‘you should do charity work with street kids in Rio’.

You are likely to get a wide variety of answers, some of which you’ve never thought of before.

#2 is skeptical that following these exact steps would work well anywhere outside of, say, Southern California.  But maybe a more muted and more professional version that’s presented informally (say verbally at a cocktail party, or as a facebook/blog post).

Has anyone done something like this, or would you?  How would you describe yourself?


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