Keeping Up With the Smiths

Keeping up with the Joneses is bad.  We know that.  From a financial perspective, we spend a great deal of our time overcoming the green monster called envy in order to keep our lives in some semblance of financial order.  We know the Joneses down the street with their big, fancy new SUV.  We see them going on long family vacations.  And we know the guy that mows their lawn.  But, we also know that there’s a pretty high probability that they still owe a ton of money on that SUV.  That that family vacation likely was financed through a credit card.  Their entire financial life depends on them keeping their well-paying jobs.

Forget the Joneses

I’d like to talk about another family.  The Smiths.  You don’t know them.  We don’t talk about them like we do the Joneses.  Why don’t we?  Because, outwardly, their lives are nothing to be envious of.  They don’t own a big house on a double lot.  They don’t drive a brand new Escalade.  Their family vacations consist of weekend trips to state parks or trips to visit family a couple of counties over.  Outwardly, they may even seem a bit downtrodden.  They may seem (GASP!) a bit poor.

Sometimes they are.  Sometimes, they are truly victims of their circumstance, or their poor financial choices along the way.  But, for every one of those families, there’s at least two that aren’t poor.  They have well paying jobs.  They have money in the bank.  And they occasionally barbeque a steak on the cheap grill they have on their back deck.  It’s those Smiths I’d like to talk about.

It’s the Quiet Ones You Have to Watch Out For

Why don’t we know the Smiths?  Because we live in a society that is enamored of our celebrity.  We hang on every word that that famous athlete, or famous actress says.  We try and model our lives after theirs.  They live a glamorous life, full of flashing photography, red carpets, and any number of endorsement deals.

Keeping up with the Smiths

Who wouldn’t want to be like that?  Short of being famous, we decide that we’ll see how close we can get.  The bank doesn’t turn us down for that big house, big car, or vacation to the same beach that the celebrities hang out on.  Maybe we’ll even get to see one of them!

But, it’s the Smiths we should know.  We should know people who live their lives responsibly within their means.  We should know people who live for more than having our fellow neighbors think about how rich we are, and how rich our lives must be.  We should be the Smiths.  We should be the people who drive the reliable older car without the flashy rims and booming sound system.  We should be the people who live in the smaller house that we try and repair ourselves.

Society may push us towards that Joneses sort of lifestyle.  After all, what would become of some of the companies if we stopped trying to keep up with the Joneses and stopped buying all their luxury goods?  What would the news and tabloids cover if we weren’t constantly buying their rags in order to find out what sort of clothes the princes and princesses of some foreign country were wearing this spring?

Shiny Facades, Crumbling Foundations

All around us, there are Smiths.  We don’t notice them, and we rarely get to know them.  We’re surrounded by the Joneses, and the shiny facades of businesses and economies that are driven by their reckless spending.  But, under those shiny facades is a crumbling foundation.  The economy of the world is on shaky ground.  We saw just how shaky it really was in 2008.  When the housing market crashed, it very nearly brought the entire world economy with it.  Luckily, the economy was strong enough at the time to take a beating.  It wasn’t strong enough to bounce right back.  It’s been a long slog back to where we were.  We aren’t even back there yet.  There are still parts of the world that are hurting economically.

Imagine, for a moment, if we rebuilt that economy, not on the sands of bailouts and extended unemployment benefits, and instead built it on the bedrock of hard work and frugality that got us where we were in the first place.  Imagine if we had seen the folly of our loose spending ways and tightened our belts, stuck to our budgets, and started building an economy that doesn’t shake and quiver at the smallest rise in unemployment, or the slightest miss in an earnings report?

What if, instead of running around willy-nilly chasing the lifestyle of the Joneses, we were calmly working ourselves into the stable economy of the Smiths?  What if we all didn’t have wait for our next paycheck to buy gas because our last paycheck went to our mortgage and car payments?  What if we were able to fill a tank of gas from the cash in our bank account and know that we still had our emergency funds to help us along should a real emergency come along?

We can.  We can bring our spending in line with our earning.  We can sell the fancy car that we don’t need.  We can downsize our house to something that we can afford.  Sure, the dependable used car you buy might not have as much chrome as the fancy one.  It might not have the same heated seats.  And the house you downsize to might not have a walk-in closet, or a jacuzzi bath tub.  I’ll let you in on a little secret.  You don’t need them.  They’re luxuries.  You only think that it’s normal to have those things because the Joneses told you it was.

We should be keeping up with the Smiths.

We can be the Smiths.

Do You Have a Rainy Day Cash Fund?

Everyone should have a rainy day cash fund.  Not an emergency fund.  Although, you should have one of those as well.  No, a rainy day cash fund should be exactly that.  Cash.  Easily accessible, and easily spendable. Ahhh!  Did he just say “easily spendable”?  Yes.  I did.  Why would I say something like that?  Common advice is that you should put your money in an account where it isn’t easily spendable.  Especially your emergency fund.  You don’t want any everyday “emergency” to drain your emergency fund dry.  It’s for real emergencies.  An engine in a car that stops working and needs repairs.  Although, some would argue that’s what a car repair fund is for. Those quasi “emergencies” aren’t what a rainy day cash fund is for either.  Sorry.  I’m sure some of you wanted me to tell you that it was smart to have a little stash of cash that you could hide away for those tools you really, really, “needed”.  But, it’s not for that.

What is a Rainy Day Cash Fund for?

Rainy Day Cash FundIt’s still for real emergencies.  Just not the kind that your emergency fund is for. Consider.  A major power outage happens.  You really, really, need a tank of propane to light up to heat your house until the power comes back on.  You get to the gas station, or wherever you buy the propane from, except they don’t have any power either.  Their credit card reader isn’t going to take your debit card.  In fact, they’re writing down transactions and calculating change with a calculator.  Without power, it’s a cash only transaction.  If you don’t have any cash, you’re headed back to your cold house without any propane to heat the house with. Taken to an even farther extreme (a Prepper extreme, you might say) you could find yourself in a situation where regional or national economies fail entirely.  Of course, having cash in that regional or national currency probably isn’t going to do you much good.  That’s why you hear all the stories about preppers stockpiling gold and silver.  They believe that in a situation of economic collapse, everyone will revert back to gold and silver for bartering with each other.  In the show, Revolution, which is about the total loss of the power grid and the destabilization that follows, you’ll often see people paying each other in diamonds. I’m not saying that you’ve got to have a couple of coffee cans full of gold coins out under the tree in the backyard.  For most of the situations you’ll find yourself in, a little of ol’ greenback will do you just fine.

How Much Cash in a Rainy Day Cash Fund?

Thousands.  Then, please send me a note with your address, and the exact location where the cash is stored. I’m only kidding.  Much like anything else, your rainy day cash fund is a bit variable.  It will depend on what you can afford to just put away in cash.  Although, for most, the rainy day cash fund is well within budgetary limits.  Really, what we’re talking about is having enough cash available that you can afford a tank of gas, or a loaf of bread should you be unable to use a debit card. In almost every case, something like $100 should be plenty.

Where to Put the Rainy Day Cash Fund?

The short answer is, wherever you want.  Just make sure that it’s reasonably secure, and easily accessible.  Buried in a can in the back yard is probably not the best idea.  Your wallet isn’t a very good idea either.  If you’re creative enough, you can find plenty of places to hide that small stash in your house.  If you’re not so creative, there are plenty of pre-devised ways to stealthily hide your money.  Here’s a few easy ones:

  • Tape the bills lightly (you don’t want to rip them taking them off) to the back of a framed picture in your house.  Most people won’t look there, and you’ve only got to take the picture off the wall to reach them.  Just don’t forget they’re there if you decide you don’t want the picture anymore.
  • Under your mattress.  Yes, really.  It’s an old joke, but it’s also a convenient place that’s easily reachable and that most people aren’t going to casually look in if they’re being nosy.
  • In a book.  Pick your favorite book, and your favorite page and place the bills in the books there.  Again, easily reachable, and less likely to be found.  Just make sure that if you ever decide that you don’t need that book around, that you take the money out first.
  • In the freezer.  This is another old one.  Throw the bills into an envelope and place it at the back of the freezer.  Easy enough to get to if you really, really need it, but not so easy that guests (welcome or not) will easily find it.
  • Behind the furnace.  Put the bills in an envelope, along with a decently strong kitchen magnet.  Attach the envelope to the back of your furnace or any metal surfaced appliance so long as they won’t be exposed to flame or extreme heat.  Easily accessible, but who’s gonna go poking around your furnace (or the back of your fridge) looking for loot?

That’s just a few ideas.  What it really boils down to is putting a little cash away for a rainy day when you need it, and placing it somewhere where it won’t easily be found by prying eyes. What do you think?  Should you have a little rainy day cash fund?  How much would you put in it?  Where are some other good places to put the cash?

Composting; You’re Doing it Wrong

Each and every year, for the last several years, I’ve said that I plan on finding a space for a compost heap and create one.  Several years ago, I went so far as to take all of the grass trimmings and garden trimmings and dump them into a pile in the back yard.  And that’s where they sat, untended, and somewhat forgotten.  I’m still hoping that this year is going to be the year that I get off my duff and actually create the compost pile that creates actual compost.

Every year, we end up buying several bags of garden dirt for our container garden, and it would be really nice to be able to just walk into the back yard, and load up the wheelbarrow with fresh dirt from the compost pile and add that to the dirt we already have before planting our garden.  A few days ago, I spotted this TED talk, which threw my idea of compost for a little loop.  You’ll have to watch it for the full rundown, but basically, the speaker is saying that we’re doing compost wrong.

How should we be doing compost?

Mike McGrath, the speaker, suggests that the commonly held belief that you just grab all the clippings, leaves, junk mail, and kitchen scraps is wrong.  According to him, those things don’t really compost all that well because they don’t break down very easily.  Instead, he suggests that your compost pile should consist of mainly the leaves from the trees when they are shed in the fall.  All the rest, your kitchen scraps and paper bits, he suggests would be better off in a vermi-composter, or worm farm.

Compost WrongIf it’s Not Broken, Why Fix It?

The method of throwing pretty much everything into a compost bin or tumbler is a pretty old method.  It’s the way that people have been doing it, and suggesting you do it, for years.  It obviously works to some degree, or it wouldn’t have reached that point.  The first few times it failed, people would have decided it wasn’t a very good way to dispose of refuse and would have moved on to something that worked better.  In short, it doesn’t appear to be broken, so why should we go and fix it, as Mr. McGrath suggests?

I think it’s about efficiency.  If you want to take your refuse (lawn trimmings, leaves, kitchen scraps, etc) and break it down into usable compost (a.k.a. super-dirt), doing so as efficiently as possible make some sense.  Of course, most people usually choose one or the other method (everything in a pile, or vermi-composting) so I haven’t been able to find any good examples of someone doing both.  I don’t think that McGrath would have any opposition to a person adding worms directly to a compost pile.  It’s probably not as efficient as having an actual vermi-composting setup where you can harvest the castings and throw them in with the leaves.

How do you Compost?

Here’s the place in this post where you get to help out the readers of Beating Broke.  Do you compost?  How do you compost?  What do you think of separating the leaves and the kitchen scraps into two systems? Too much work?  Ideal?