http://www.destroydebt.com/blogs/jeanlorie.html Life After Debt www.destroydebt.com Wed, 19 Dec 2007 11:43:51 GMT webmaster@destroydebt.com webmaster@destroydebt.com http://www.destroydebt.com/blogs/jeanlorie/95-retirement-reality-check.html http://www.destroydebt.com/blogs/jeanlorie/95-retirement-reality-check.html Wed, 19 Dec 2007 11:43:51 GMT When my husband and I sat down with a retirement planner a few weeks ago, we nearly fell off our chairs when he told us how much we needed to have saved. According to his figures, the amount we should be putting away for retirement is more than we both make in a year.  Only later, after we...
Needless to say, we didn't sign up for any of this retirement planner's services, which is a good thing, because we also learned he makes his income from commissions.  Since most of his suggested retirement investments were tied to some sort of insurance product, it seemed to be a shady deal all around.  The good thing about this experience is that it motivated us to take a good look at our projected retirement circumstances, and fortunately, we found out we're in a lot better shape than we’d thought. 

The truth is, we will need much less in retirement savings than even many reputable sources would have us believe.  Our home is nearly paid off now, so by the time we enter retirement, we will not have a mortgage.  We will also not have any other form of debt, including car loans.  In addition to retirement savings, we have money in other accounts to cover the cost of replacing vehicles, making home repairs, and covering unexpected expenses.  For us, paying off debt has been an excellent retirement strategy. 

It is unlikely that our hobbies will change much by the time we retire, and the things we currently enjoy most during our free time cost very little.  I love to garden, my husband is a fisherman, we both like to take walks and go biking, and I also enjoy reading and knitting.  We'd much rather get together with family and friends at home than at a club or restaurant, and although we enjoy traveling, we’re quite happy with budget accommodations.   We also prefer eating at home most of the time, shopping in second hand stores, and reusing and recycling rather than buying something new.

Although our need for medical care may increase as we get older, it is doubtful that our premiums and co-pays for Medicare will be any higher than what we already pay through my husband's current employer-sponsored health plan.  Plus, I'll still be working as a freelance writer in some capacity as long as my mind is good, so we’ll continue to have an income source other than our retirement funds.

I’m thankful we made time for a retirement reality check.  Without a doubt, we need to keep saving for retirement, but we can stop stressing over whether or not we’re saving enough.  We’re going to be just fine.

 ]]> http://www.destroydebt.com/blogs/jeanlorie/78-the-truth-about-technology.html http://www.destroydebt.com/blogs/jeanlorie/78-the-truth-about-technology.html Sat, 15 Dec 2007 05:47:33 GMT When I was growing up, my parents didn't buy a television until I was eight years old. When they did finally break down and buy one, it was a small black and white set, which received about five channels. Color television was not the only thing missing in my childhood home; we also had no video game...
These days, not providing the latest technology for your family is considered by some to be right up there with child abuse in terms of aberrant behaviors. The trouble is, keeping up with technological advances is expensive, and our salaries rarely keep pace with technology. I would hazard a guess that a majority of consumer debt is directly attributed to purchasing big screen televisions, iPods, laptop computers, and other electronics. Unfortunately, the expense rarely ends with the initial purchase. Get a video game console and you'll likely be lured into buying new games. MP3 players need music downloads, and cell phone bills end up escalating due to add ons such as texting and photo sharing. Not to mention, almost all electronic gadgets have a full range of accessories. For many people, electronics are as addictive as crack cocaine, and their technology habit quickly lands them in the financial gutter.

The truth is, most of us, myself included, simply cannot afford to buy all the toys we want. And for the most part, electronics are toys. We may need basic electronics to make our lives easier and to perform our jobs, but what we need and what we want are two very different things. It took a long time for me to get that through my head. While it was true that I needed a reliable computer for work, I certainly didn't need an expensive model. My work is primarily performed using word processing software, so I needed a basic, simple computer system with no bells and not a single whistle. I also didn't need the fancy cell phone I wanted to buy. Why do I need to spend money on a phone that plays music when I already have radios, stereos, portable cd players, and a wide array of internet radio stations at my fingertips? If I purchased everything I wanted to buy, the plastic would have to come out to pay for it, and that's not going to happen.

True, I may not have a big screen television, and we don't have a GPS unit in our car, but everything we do have is paid for.  That might put me behind in the technology race, but it puts me way ahead in my race towards financial security.  ]]> http://www.destroydebt.com/blogs/jeanlorie/75-the-spending-diet.html http://www.destroydebt.com/blogs/jeanlorie/75-the-spending-diet.html Fri, 14 Dec 2007 12:32:16 GMT My husband and I recently embarked on a diet program. No, we didn’t need to lose weight. We needed to trim some ugly flab that had crept into our financial management plan, and the only way to take care of it was to put ourselves on a strict spending diet. Had you asked about our family’s financi...
Had you asked about our family’s financial habits a few months ago, I would have told you we were quite frugal. My husband and I aren’t ones to spend a lot of time in the stores, and we have simple tastes. Nonetheless, we were spending more than we’d budgeted every month, and something had to give if we wanted to stay out of debt.

Just as with diets involving food, a person can’t go cold turkey when it comes to a spending diet. Bills still need to be paid, food needs be purchased, and the car needs gasoline. What worked best for us was to consider each and every purchase before making it. If it didn’t fall into the “necessary” category, we did without the item.

This has been an eye opening experience. I found myself putting items on the grocery list only to cross them off a moment later when I realized there were many good dinner options already in the freezer. One day I was on my way out the door to buy some greeting cards when I recalled a box full of nice cards on the bedroom shelf. Another day I was tempted to buy our cats a cute new toy but talked myself out of it when I remembered they have plenty of toys; what they need is more attention from me.

A person trying to stick to a budget can fall into temptation just like a person trying to stick to a low-calorie diet. In my case, I’ve found that sale catalogs and store ads are best put in the recycling bin as soon as they come out of the mailbox. I also stay out of the stores unless absolutely necessary. We used to grocery shop every week. Now we only go one to two times a month, and we save a lot of money by not picking up “bargains” that weren’t on our list. Likewise, we pay for our gasoline at the pump so we no longer buy coffees and snacks each time we refuel.

We “weigh in” at the end of every week, talk about what did and didn’t work for us, and consider options for the week ahead. During one of these weigh in sessions, my husband realized that when he and our son ran errands together he was spending an additional $20-40 per trip on impulsive things. Once he became aware of the habit, his spending dropped by 90%. Again, it was a case of little morsels adding up into a lot of extra fat.

We’re doing well in our pursuit of financial fitness. We know we’ll have to remain vigilant and work hard to maintain our new financial physiques, however. Fortunately, we’re both committed to sticking with this program for the long term and look forward to enjoying a healthy financial future together.]]> http://www.destroydebt.com/blogs/jeanlorie/66-letting-your-kids-fall-down.html http://www.destroydebt.com/blogs/jeanlorie/66-letting-your-kids-fall-down.html Fri, 07 Dec 2007 07:29:47 GMT If you have adult children, you know how difficult it is to let them make their own mistakes and bear the consequences of their bad decisions and impulsive actions. Just like you tried to protect them from skinned knees and broken hearts when they were growing up, you want to protect them now f...
My husband and I both learned our financial lessons the hard way. We’ve survived storms of our own making, and we’ve had to work hard to turn things around enough to enjoy the blessings that come with financial security. Our kids are bright, energetic, and well-educated, and we presumed they’d take advantage of the money management skills we taught them throughout the years. Unfortunately, they’ve all gone the route of overspending, carrying more debt than they can afford, and living from paycheck to paycheck. One is facing foreclosure on a home, another is risking his life in Iraq to pay off huge amounts of debt, another is depleting her and her fiancés savings in order to have a dream wedding, and the youngest is living with us and still having a hard time making ends meet. They are making decisions that will impact them negatively for years to come, yet we are powerless to do anything other than sit back and watch. Now we know how our own parents felt when we ignored their pleas to save something from every paycheck and not overspend.

I’ve decided it’s a fact of life that most kids are going to make some wrong financial turns regardless of their parents best efforts to guide them along the right path. As moms and dads of people who are now grownups, we can fret over it, or we can accept it as inevitable and look forward to the day when they’ve learned the lessons for themselves and are enjoying stability. I hope I live long enough to see that day!]]> http://www.destroydebt.com/blogs/jeanlorie/63-avoiding-the-family-lending-trap.html http://www.destroydebt.com/blogs/jeanlorie/63-avoiding-the-family-lending-trap.html Thu, 06 Dec 2007 07:39:42 GMT The other day, I calculated that if my husband and I had agreed to all the requests we’ve received over the years to cosign loans for family or lend them money, we’d have over $100,000 in family-related debt. I love my family, but realizing how far under we’d be if we hadn’t turned down their r...
It’s hard not to give in when a family member needs or wants something. We want them to be happy, plus we want them to love us. Unfortunately, most of us are barely able to keep our own financial boats afloat, let alone continually bail family members out of trouble.

My husband and I know better than to loan money to family, but a couple of weeks ago we compromised our principles. Our adult son needed car repairs and was short on cash due to his recent purchase of the car. We fronted him a few hundred dollars for auto parts, and since he lives with us expense-free, has a good job, and has few other expenses, we presumed he’d pay us back out of his next paycheck. When his next payday arrived, we received a harsh reminder that family members are typically not in a hurry to pay back what they owe. Although you were the good guy when you lent the money, you quickly become the bad guy if you ask for what is rightfully yours. This was a good refresher for us, and it’s a lesson I hope we will not need to relearn in the future.

There are a few acceptable reasons to loan money to a family member such as if they are normally responsible with their money but run into hard times due to a serious illness or accident, but those situations are few and far between. In the vast majority of cases, it is a bad practice for several reasons:

Experts recommend against it. If respected members of the financial industry repeatedly warn against doing business with my family, who am I to argue?

It can ruin a relationship. When someone owes me money and doesn’t pay me back, I think less of them -- especially when I see them buying toys and luxuries rather than paying me back.

It's too big of a financial gamble.  If the person hasn’t saved money on their own or can’t get a loan from a bank, clearly they have financial management issues and are not a good risk. If I want to gamble, I may as well go to Vegas.

It can wreck your credit.  I’ve spent a lot of time building up my credit, and if I cosign a loan for a family member who skips payments, all that hard work will be down the drain. Plus, if I need to get a loan myself, I may not qualify due to my obligations to the cosigned loan.

Personally, I can’t afford it. I have my own monthly expenses and savings goals. If I lend money and it doesn’t come back, my own forward progress may be halted.

I may never feel completely comfortable denying a family member’s request for financial help, but I’m going to stand firm from now on. I love my family enough to say, “No.“]]> http://www.destroydebt.com/blogs/jeanlorie/53-a-new-tradition.html http://www.destroydebt.com/blogs/jeanlorie/53-a-new-tradition.html Sun, 02 Dec 2007 02:38:28 GMT When you think of Christmas traditions, do thoughts of decorating the tree, baking sugar cookies, and gathering with family fill your mind?  Those are wonderful traditions, and they're all a part of my Christmases past; unfortunately, all of my Christmas traditions were not good ...
This year, I'm starting a new tradition.  From now on, Christmas will be financed with cash only.  I will still give gifts, but they will be gifts given from the heart.  This year's offerings will include homemade strawberry jam, hand knit afghans, and tins of homemade caramel corn.  The tree and house are already decorated with decorations I already had on hand.  As for holiday gatherings, those will be simple too.  Rather than buying ingredients for 10 different kind of cookies, I'll be baking only a couple of varieties.  We'll have buffet style meals, and again, everything will be paid for with cash.

I had expected to feel deprived when I entered this holiday season with the determination to stick to a rather meager budget.  Instead, I feel liberated.  I am enjoying the season more than normal because I have time to enjoy the light displays and concerts because I'm not spending my days and nights pacing the malls trying to find the perfect gifts for everyone.  I'm not stressed because I need to bake nearly every night.  Christmas feels fun again.

Christmas is a time for giving, and I feel like I'm giving myself a tremendous gift this year.  I'm facing my own financial reality, and realizing that what I have to offer is more than enough.  I can have a beautiful, joyous holiday without resorting to using plastic, and I can start the New Year off right rather than having a sense of dread over opening up those January credit card statements.

Here's hoping your own Christmas will be merry, joyous, and plastic-free.]]>