Wednesday, April 27, 2016

Financial Advice I Wish I'd Learned Sooner...And Things I Did Right, After All

More thought-provoking posts in Blogland lately, including this piece (a bit too general, but helpful) and this piece (much more specific), both from Apartment Therapy.

What advice on finances has helped you...and what do you wish you'd learned years ago? 

For me, it's:

*Save at least 10%, give away at least 10% -- then live on the rest. My parents mentioned this my first day at the hardware store, back when I was 15. Except for a few lean years, when we weren't able to save 10% (we did give away 10%, though), we've followed this pattern through three-plus decades of married life. That 10% doesn't seem like much while you're setting it aside, but it does add up.
    As for the giving part -- you're fortunate. Really. You can make do without that bit of money. Others need it more. Just think what we could accomplish in livable conditions and education for the world, if everyone (celebrities included) kicked in a mere 10%!

*Always have more than one source of income...even if some are intermittent. Multiple flows of income, it's called; if one job isn't happening at present, the others still pay the rent.
     I've been following this advice for the past few decades -- but really wish I'd learned it sooner than that.

*Only work for free if YOU decide to.  I've been a writer all my life, but gave much of my writing away, thinking that would give me an 'in' for paying jobs the next time. I made the same mistake when I started teaching and lecturing about quilting.
     It didn't.
     If you believe in the cause and want to donate your services, then go ahead -- but make sure that group understands that you are offering this. Not them.
    Same goes for discounts.

*Educate yourself.  Study, study, study. Learn everything you can about your chosen subjects, both online (thank God for the Internet) and via print. Take every class and lecture you can afford. This not only makes you better-informed about your work, it gives you confidence to speak up and offer your opinion, even if that differs from what others are saying.
     That makes you an 'authority' -- and even more valuable.

*Don't dismiss others' wisdom until you check it out for yourself.  It was far too easy to dismiss my parents as uneducated hicks when I grew up in a small Michigan town. My dad was fond of describing himself as a "dumb Hollander" -- partly because he hated to have people noticing him. But he was a voracious reader, and able to fix anything, we joked, with chewing gum, wire and tape. (Partly because he had to, growing up out on the South Dakota plains, with no hardware store in sight.)
     What I learned over the years: my parents' quiet wisdom on frugal living, honesty and integrity was quite rare, compared to other, 'smarter' sources.
     But they were right.

*Don't make a big deal about the B-word... but do keep track of your expenses.  The Brick and I have never had a budget -- there, I said it. We've never used envelopes or snowballs or other budgetary tricks, primarily because we know basically what we need to cover expenses every month, but what's needed for the next month. That includes extra for certain bills -- February and June for property tax, for example.
     I wish we could have this deducted automatically every month, like we do for insurance -- one of the smartest things we ever did, and it doesn't cost extra in fees. (Our company is Liberty Mutual, but I'm sure others offer this.) It's a lot easier than coming up with that lump sum every six months.

     If we keep careful track of expenses, I know when I need to cut back on groceries, or we won't be going out to eat as much. Or we need to pick up a few extra jobs here and there to balance costs out.

*Don't pay full price, particularly for extras like vacations or entertainment. If you're willing to start early, you can often find the same hotel room or trip for less. I just booked a plane ticket to visit the Mama: Chicago and back for $78 total. (Thank you, Frontier!) On the flip side, there was the year we paid full price for an Alaska cruise. Because the family clan decided to go, and didn't tell us until a month before. What made it even more irritating: we'd just come back from a much-longer Caribbean cruise that cost us roughly a third of the Alaska trip -- because there was no time to plan.  Grrrrrr.
     Begin now: at the very least, you'll know how much to allocate -- and you'll be able to start enjoying the trip vicariously.

     One final tip:  See if you can pay large expenses a little at a time. Paypal Credit is perfect for this; a number of companies also offer plans that give you 6-12 months to finish payment -- and no interest or fees, provided you make the monthly payments. The Brick turned me on to this easy way to fit travel -- or laptops, or construction materials -- into our plans. (I wish we'd done it back in the early years!)
     But -- Don't commit if you can't do it. The interest fees are crushing if you miss a single payment.

*Expert opinions may not be best for you.  When the Brick's mom died, we used the inheritance to pay off our house -- at a time when conventional pundits were shouting that we should put that money into stocks, instead. The market tanked soon afterward. If we had, we would have lost at least a third of it -- and still be paying on the mortgage.
    If you follow what everyone does, you'll also be affected by the combined results of their actions. Every time we've lost money in investments, it's been an item promoted as a 'sure thing' that would be lost if we didn't take advantage of it Right Now.  Sure...
    Better to save your money, research and wait. Listen to the experts, but remember: it's your money. You make the decision -- not them. Don't rush into anything you don't understand. (Yes, I learned this the hard way.)
    Warren Buffett said once:
   "Be fearful when others are greedy, and greedy when others are fearful."

Three last bits of advice -- basic, but they work.

*Never spend more than you earn. (Or, as someone I knew once said, "If ya ain't got it, don't spend it." I think it was my dad.)  

*When you do spend, enjoy it. If you're doing your job, everything's covered...stop worrying and relax.
    This has been one of the hardest lessons for me to learn.

*It's just money. Not life, not the people you care about. What's more important?

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