Beating Broke

Personal Finance from the Broke Perspective

The Struggle with Enough

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If you’ve read any of the more popular personal finance blogs, books, or attended any of the seminars, one of the more pervasive themes is the idea of enough. Heck, I’ve even written about it before.  Just what is enough, or how much is enough.  They’ll tell you that you need to find your “enough”, and then hold yourself to it.  Instead of using the inflated “enough” that the Joneses next door use, you’ve got to take a good look at your finances and find your own “enough”.  Now, a show of hands, how many of you have actually found what enough means to you, and held to it?

I can’t actually see your hands, so maybe a show of hands wasn’t the right way to measure the tally.  But, I’d bet that only a few of you actually would have put your hands up.  Why?  Because, you struggle with enough.  I do too.  Enough is an arbitrary measurement.  What you think enough is today isn’t necessarily going to be enough tomorrow.  So many factors go into what we believe enough is, and many of them change regularly.

A few years ago, if you’d have asked me what enough was, I would have told you that it was having a good paying job, a nice house with room for my family, and enough leisure time to enjoy the benefits of having those things.  Today, my answer is a bit different.  I quit my job a few months ago, and have had no other income besides what a part-time job and a handful of small sites provides.  We still have my wife’s income, but, compared to what we were making before, it’s a fraction of what it was.  Today, enough has a totally different feel to it.  And, we struggle with it.  Just like I’m betting you do to.

Enough money does © by Michell Zappa

The struggle is rooted deep into our psyches.  Growing up, we’re inundated with commercials touting the latest and greatest toys.  As adults, the only difference is the price of the toys.  Instead of a “Castle Grayskull Playset“, we want to have the newest credit card with all the fancy bonus miles, the new car with the rearview camera, or the house with the dedicated room for a library or mancave.  And that doesn’t even begin to touch the use of money as a security device.

People fear being broke.  A quick reminder that the name of this site is Beating Broke, will tell you that even I am not immune to the fear of being broke.  I’ve got a small secret to let you in on though.  Like “enough”, how you define “broke” makes all the difference in the world.  For some, being broke means making less than $100,000 a year.  If that’s the case, my family is way beyond broke.  Even when I still had my job, we were a full-time income away from making $100,000 a year.

What does broke really mean to you?  To me, broke is a place where you have tons of debt, and your income is the only thing keeping you afloat.  You’re stuck in a job you don’t like, so that you can make money to pay your bills.  The funny thing is, I feel less broke now that I don’t have a full-time job, than I did when I had my job.  Part of that may be straight up delusion, but it’s true.  But, I think a good part of that also comes from changing my definition of enough.  Instead of the good paying job, nice house, and leisure time, my definition of enough is something that feels a little bit more like satisfaction.  I’m satisfied with just barely making enough to pay the bills.  I’m satisfied with finding free or low cost activities that will entertain us.

And yet, we struggle with it.  For the last few weeks, I’ve been struggling with the idea of getting a new full time job.  Partially because the income from this and other sites hasn’t scaled to the degree that I thought it might.  Partially because with the amount that I’m making we teeter on that precipice of being able to adequately pay our bills.  And, partially, because we still struggle with the definition of what enough is.

What is your definition of enough?  How has it changed over the years, and do you feel that your definition of enough is enough?

Do Politics Have Any Place in Personal Finances?

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First, this is a personal finance blog.  As such, I try very hard to not comment too much on politics and keep them out of my articles.  But, should I?  Do politics have a place in personal finance?  Do our financial beliefs have any bearing on who and how we vote?  Should they?

I think the short answer is yes.

Whether we like it or not, politics and politicians play a significant part in how our finances play out.  The laws and regulations that they enact have the ability to cause widespread change in how we earn, spend, and save money.  Some examples:

Hoovervilles: 1932 Do-Nothing EconomicsPolitics Changes How We Earn

Recent legislation has raised the minimum wage so that many of the workers who were making minimum wage are now earning more per hour than they were before.  The legislation, in effect, gave many of those workers a pretty big raise.  Of course, the opposite can be true where many companies, feeling the pinch of having to pay that much more per hour, were forced to reduce hours or the number of workers causing some to make less than before. Temporary reductions in payroll taxes have added dollars to our paychecks.  Proposed changes to Social Security could change that again, and could change the way retirees earn their SS funds back.

Politics Changes How We Spend

The most obvious example of how politics can change how we spend money is taxes.  The tax rates that we pay, both federally and locally, can cause us to spend less on some items.  They can also cause us to spend a bit more when we receive a refund each year.  Another good example is the recent legislation that changed the way interchange fees work and caused many banks to raise fees to compensate.  Instead of compensating, many of us moved our accounts to Credit Unions that weren’t charging the new fees.  State sales taxes can drive sales across borders, especially when a bordering state has no sales tax.  Tax credits and deductions have caused millions to be spent on home improvements, energy efficient appliances, electric and hybrid cars, and even the birth of children.

Politics Changes How We Save

Regulations and laws determine the methods of investment for most every investment vehicle publicly available today.  With each new legislative session, new regulations and laws are passed that affect how investments and savings vehicles are able to operate and function.  Any new scandal, like the recent Madoff Ponzi scandal, or the less recent Enron failing, causes a flurry of new regulations and laws that are meant to prevent similar situations from happening, but also result in increased administrative costs that get passed down to the investor.  Tax incentives for certain retirement savings accounts cause added funds to be added to retirement accounts as a tax shelter.

I don’t think that there’s any doubt that politics and the politicians that play them play a huge part in our personal finances.  The laws and regulations that they enact each session make changes to the entire financial field.  Especially in the last few election cycles, there’s been a lot of focus put on the economy as a whole, and how the recent slump has been caused by this politician, or that politician.  There’s lots of blame going around, but in the end, I think it took a concerted effort by a bunch of folks.

As this election cycle heats up with local primary elections this spring and the presidential elections in November, I urge you to take a good look at who your choices are, and inform yourself on their stances on ALL the important areas of your life.  Too often, we look at a politician and judge them based on just one of their platform stances.  “That one is Pro-Choice! I can’t vote for him”.  I think that’s a mistake.  You’re unlikely to find any politician that agrees 100% with all of your views.  Find one that agrees with the most of your viewpoints, and vote for that one.  If you don’t know where they stand, find their campaign website and find out.  Contact them if you have to.  But, educate yourself before you blindly go into the voting booth.  The worst thing you can do is vote based on a gut feeling, or vote blindly without knowing who you are voting for.  Your finances may depend on it!

photo credit: Tony the Misfit

How to Overcome Disappointment When Our Financial Role Models Fail Us

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One of the biggest surprises about the whole Suze Orman “Approved Prepaid” Scam/Fiasco, to me, is that Suze Orman is a person who has been a role model, financially, for many people. She has been dispensing her brand of advice for many years, has multiple best-selling books on the subject, and regularly appears on news and talk shows trying to help people lead better financial lives. So, to have someone of that public stature, essentially attack someone I know and trust, led to some amount of disappointment. Disappointment in how she portrayed herself, and, also, eroded the trust that many had in her and her advice. (I should note that I never really cared for her style or advice, but many do and did.)

So, how do we overcome that level of disappointment when someone we trust to give good advice, and to behave in a professional manner, doesn’t?

  1. First and Foremost, remember that the person is human.  People have bad days.  They have lives outside of the limelight, and sometimes that life can bleed over and cause them to do or say things that are uncharacteristic.
  2. Remember that it’s still just advice.  You should be doing your own research and assessing what is right for you in any situation.  Remember when your mom would ask you “If your friends jumped off a bridge, would you do the same?” Well, the obvious point she was trying to drive home was that you need to be an independent thinker.  Whenever someone recommends a product, service, or action, you have to determine if you should take that advice, or find an alternative.
  3. Express your disappointment.  Many times, people will disappoint us and not even know they’ve done it.  Tell them why they’ve disappointed you.  Do it constructively, don’t be a jerk.  If they truly meant well, they’ll want to know, and they’ll want to find a way to improve.
  4. Move on.  Take what you have into account, and decide if you can continue to trust the person’s advice.  If you can, let it go, and move on.  If you can’t, let it go, and move on.  (See what I did there?)  Holding a grudge, or reacting negatively won’t help you, and it will reflect poorly on you.

People are disappointed with their role models all the time.  People that we hold in high regard do something stupid, and fall from our good graces.  It’s important to take the lessons that are available, improve upon your filter, and move on.

As I mentioned in the previous post, I don’t think that Suze Orman’s card is, necessarily, a bad card.  I think it’s entirely possible that she created the card with the best intentions, and truly believes that it can be a useful tool for those that use it.  I do think that the marketing for the card is far too broad, aimed at people who shouldn’t be using the card at all.  I do think that she (or whomever is running her twitter account) overreacted to the criticism that was being presented by PT and others.  Suze lost a lot of trust with a lot of personal finance writers over the whole fiasco.  Depending on how the fallout from the whole situation lands, she might get some of that back, she might not.  But, it’s those writers, expressing their disappointment, that might save a few people from using the card when they shouldn’t.  It’s those same writers that may cause Suze to change her course, and improve upon the card based on the recommendations they made.

Disappointment is normal.  We feel it all the time.  How we react to it, and handle it, is what makes the difference.