Tuesday, January 26, 2016

Thoughts on finances

So I guess this is where my inner tax-accounting-business geek comes out.  I can never seem to bypass those "I paid off my mortgage" type articles, but they need to be written about personal experiences.  The generic ones are just too . . . generic.  I enjoy reading how others have paid off their mortgages but there's something that always bothered me when I read these and I couldn't quite put my finger on it until a few weeks ago.

I've found myself trying to get into travel blogs but most of them read like instant magazine clips.  Too generic.  And I have no desire to backpack, sleep in a hostel or live off a small budget in Southeast Asia.  I do find it fascinating when travel bloggers discuss how they saved up funds and then quit their jobs in order to travel full time.  (Something I could never do.)  Now, most of these people are also full time bloggers.  I was reading one such blog post last week.  The blogger happened to be in her mid-twenties, single and childless at the time she was saving money in order to travel full time.  Some of the commenters noted "yeah, try doing this with two kids" or "but it was easy for you because you didn't have to pay rent" and so on and so forth.

What I've come to realize is that it's all relative.  Reading exactly how Joe Smith budgeted his paycheck in order to pay down his mortgage may be inspiring but no one is going to be in the same exact scenario.  Same goes for those saving in order to travel full time.  (Again, how does one travel full time?)  It's all relative.  What's interesting too is the thought (assumption, maybe) that disposal income means that you are really good with your finances.  Disposal income could just mean that your income is greater than your expenses.  Is one with expenses less than income necessarily smart with finances?  Possibly.  But that doesn't mean that those with little to no disposal income aren't smart with finances.  Sometimes it just works out that way.  Living (rent, mortgage, property taxes, property insurance, health insurance, dental insurance, car insurance) is expensive.  

My two greatest long term financial concerns right now are the girls' college tuition and my retirement savings.  I used to have very specific thoughts on college expenses but now I realize (in my middle age maturity) that it really is a parenting decision and not everyone is going to view it in the same manner.  Rich and I, despite having two very opposite college experiences, wholeheartedly agree on how we would like to handle this as parents.  As for retirement, I do still have thoughts on that.  Going back to the travel blogger who outlined her expenses - there was nothing allocated in her budget for retirement savings.  And I get it, I made the same mistake in my twenties but I think (hopefully) that I've somewhat made up for it.  It would be interesting to read how full time bloggers are saving for retirement (if it all.)  I, personally, really want to retire one day and not look back.  And I don't want to be 60 when that happens.


Carly A. Heitlinger said...

I'm not sure if I've ever commented or not, but I've been following along for about a year or so.

Felt compelled to comment today though. I'm actually a full time blogger and this is something I think about ALL the time. Ironically, I started my blog because I was failing my accounting class (long story) my freshman year... and needed a creative outlet. It turned into a legit job a couple of years later and after working for a year post-graduation, I quit to blog full time. (It was a lifestyle choice more so than a financial one– I loved my job but was making twice my salary blogging.... but was exhausted from working essentially two full time jobs.)

I've done a pretty good job saving money in the standard way (spend a lot less than I make)... and one of my goals this year is to be more financially savvy. Dipping my toes into the water with investing. Setting up a more sophisticated retirement fund. Utilizing credit cards cash back rewards– that's been a huge and awesome realization. (Literally pays for all the boring everyday personal and office expenses!)

I also realize that my expenses right now are pretty luxurious as I don't have children and I don't have any student debt. That does make me a LOT more aware of why saving is so important though too! I only work with a small percentage of my income in my checking accounts, which aligns with my budget and the rest of the money (savings) I pretend like it doesn't even exist.

I'm not sure this is the norm as far as full time bloggers go– I have plenty of friends who blog full time but are actually financially supported by parents/spouses, have tens of thousands of dollars in credit card debt while they hope to "make it big," or are living literally paycheck to paycheck........ but it's also worth noting plenty of my friends who aren't full time bloggers are in the same boat.

Anyway, turned out to be a longer comment than I anticipated, but I too find personal finances both important and fascinating. Interesting to see where people place their values and how it ends up paying off– or not– over time.

I will say, my parents were extremely vocal with their finance strategies while my sister and I were growing up. We understood why we didn't have a beach house and instead rented for a week (flood insurance in FL, the extra mortgage). We understood why we bought and drove the used cars for 10+ years until they gave out. I understood why my dad paid the mortgage every two weeks instead of every month (they now own their house fully while some of my friends' parents had to take out second mortgages). I swear, it made me more confident with my own finances. And smarter. I imagine you'll have similar conversations with your girls..... and I imagine they'll also inherit the wise wisdom from their mom for when they're young adults living on their own!

Naomi G. said...

Hi, I just found your blog, and I really wish my mom had been able to write about her own experiences with raising triplets! I'm 17 and an identical triplet (3 girls, just like yours). If you ever want to know what it might be like for your own girls as they grow up, I'd be happy to answer any questions. I do have quite a bit of experience with the whole identical triplet thing, after all!

Anonymous said...

I read a lot of personal finance blogs that are all about retiring early. Much of it is about maximizing your earnings and cutting your expenses to the bone so you can save 50-70% of what you make. A lot of those cuts are things many people aren't willing to make (move to a smaller house, get rid of cable, go down to one car, etc). But, I do agree that really watching your spending can allow you to save even more.

As far as travelling full time, most of those bloggers are location independent, meaning whatever work they are doing (because the majority are still working), can be done from wherever. Afford Anything is a great blog for this. She owns rental houses and that is some income, but she also does consulting and can do it from wherever. It's really all about building a web based business.

Sarah said...

Carly - thank you for commenting. It was interesting to hear from your perspective.

Naomi - are you and your sisters close? Are you closer to one sister more than the other?

Erin - very true!

BreezieGirl said...

I would love more blog posts like this one Sarah! :) Granted, I tend to love all of your posts.

Retirement is this big, looming, scary thing for me. I don't have and have never had a retirement fund. Sadly, working in non-profit has been really difficult financially - from working for minimum wage with large student loans just out of college to economic downturn and no matching retirement once I did become full-time. I'm just about to turn 31 and feel so far behind, but still struggle paycheck to paycheck with my low wages in a high-price city. I guess something is better than nothing should be the philosophy, but part of me feels like my "extra" income should go towards rebuilding my savings and paying down my debt now that I have a smidge of extra.

Naomi G. said...

Yes, I would say that we are very close. We pretty much tell each other anything, and since we are all (for the most part) interested in the same activities and have (generally) the same friend group, we end up spending a lot of time together. And I don't really think I'm closer to one sister than the other. I'd say our relationships are pretty equal in that sense.

DaddyBites said...

Sarah, have you read Frugalwoods blog? Very interesting, it's a good mix of technical saving strategies and anecdotal so you don't lose interest. LOL

I have three kids too, all 2 years apart (13, 11 and almost 9), and my husband is a SAHD due to health problems. He will never go back to work. And I don't have a high salary, but gradually getting better.

I always stressed over retirement versus education savings which has not been getting much from us lately. I was stressing on day, and a friend made a good point to me:

Retirement is most important. Reason being education can be gained in other ways than just savings; working part time throughout school, or working full-time and putting off school; there are scholarships, there are options. Whereas if you turn 60 and you've done very little for retirement savings, there are few options. And by taking care of your own retirement FIRST, you are protecting your kids from having to support you. And we'll all probably live a very long time (not sure how I feel about that - living in a bed 24/7 is no life in my opinion), we need the savings.

I never thought about that before she mentioned it, but may help clarify your financial priorities. It has done that for me. I do have school savings for the kids, but our retirement account comes first.


Sarah said...

BreezieGirl - That's a tough situation to be in. I agree though - building savings for now is more important than retirement. Everyone should have a fall back fund. You never know what's going to happen tomorrow.

Kim - that's for the blog tip. I'll check it out.

Naomi - that's good to hear. Sounds like you have all have a great relationship