Blunt Money

I mentioned previously that I’d booked an appointment at a school for my next haircut & color, so thought I’d update on the results.

It turned out GREAT.

I’m extremely happy with it. The whole experience was interesting. The place was packed, and the stylists were crammed in there like sardines. That actually made it a very entertaining couple of hours, because there was always something to look at. I felt like I was at some high-end salon where people just beat down the doors to get in.

It also turns out that if you request a color, you are given one of the more experienced stylists — a stylist who is just about ready to graduate from the 10 month program, in fact. She did my hair exactly the way I wanted it: exact color, exact cut. It was also reassuring to look around the school and see that all the stylists had fabulous hair (because of course, they practice on each other too). That’s sure a switch from most hair places.

I will definitely be going back. The best part is that I can now get my hair done slightly more often (say maybe every 9 or 10 weeks) and STILL pay a lot less than I was paying before. Look better, pay less, while getting exactly what I want. What a deal.

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We’ll be having a lazy Fourth today. Our big plans are…going to a movie. That’s it. Yay! I’m looking forward to spending this weekend relaxing with zero commitments.

As you may know, my blog is a member of the newly-minted Personal Finance Network. From time to time I’ll be sharing some of my favorite posts from network members (and other sites). So if you’re looking for some reading material this weekend, consider these posts:

Squawkfox shows us how to match your skills to employer requirements. Always a good thing to know, but especially useful in this economy. Every little advantage helps with job-hunting.

Clever Dude gets a grumpy look in exchange for an $850 check. Not what I would have expected!

Mr. Cheap at Quest for Four Pillars wonders how long you could go without a paycheck. It’s an alternative way of thinking about net worth that takes your spending into account. Hmm, how many years could I go?

Destroy Debt hosted the Carnival of Debt Reduction. The post that stood out for me from that carnival was Not the Jet Set’s story about how they are still debt free. (See? Debt free can be permanent!).

MoneyNing reminds us to use a little patience to avoid spending money unnecessarily. This is such good advice. A little patience can save you thousands, especially over time.

Canadian Capitalist points out that passive investing lets you have a life. I hadn’t heard the difference between active and passive investing explained before, so this topic was of interest to me. Besides, having a life is important.

Finally, Consciously Frugal doesn’t want all that free stuff!. That makes sense to me; I don’t want it either!

When my son was a little boy, I would regularly bring him to the grocery store with me. And as any parent knows, as soon as kids can point and talk, they want you to buy them things when you’re at the store.

This is normal human behavior: see stuff, want it, try to get it. But of course no parent can buy everything; and even if you could, it wouldn’t be a good idea. Sometimes getting stuff (even as adults) isn’t in our best interests. Stuff may cost too much, it may be unhealthy, we may want to use our money for other things, we may not have the room or the means to care for the things, we may just be feeling a fleeting desire that we’ll forget all about in 5 minutes, etc.

So I saw these trips to the grocery store as teaching moments. I wanted to teach my son about money, stuff, and how you really can get the things that you want most. I also wanted to preserve my sanity on the shopping trips. So I decided to tell him yes to everything he said he wanted, with one condition: he had to pick just one thing.

When we got to the grocery store, I’d tell him “You can buy one thing. You can get whatever you want, but just one thing.” He’d ask me if he could get pop tarts and I’d reply with sure. Gatorade? Sure. Ice cream? Gogurt? Gum? Candy? Yes, yes, yes, yes, if that’s your one thing. You decide. It’s up to you.

When he was really little, his one thing would change with practically every aisle. He was constantly putting stuff back and getting something different instead — sometimes even right up to the checkout line. But as he grew older he became more sure of what he really wanted. It appeared to get easier for him to decide. He could cut through the things that only looked good at the moment for what he wanted most.

Maybe this is an extreme way of thinking about things, because of course we can have more than one thing in our lives. But it’s a good way to think about the power of choice. Every choice we make (and even the choice NOT to choose) affects our life. The choices add up. If we focus them on what we want MOST (whether it’s retirement savings, to get out of debt, or a trip to Antarctica) we’ll be much more likely to get them. We can’t have everything, but we can have the things that mean the most.

June was the best month ever as far as meeting my goals goes. I finally, FINALLY achieved my goal of spending $2000 or less in a month. My total expenses for the month were $1,861.97, and that includes $350 in medical-related expenses, plus clothes, a haircut, and eating out. Now I just need to figure out what was different about June, aside from it truly being an unusual month because I spent less than normal. Income was up too, which was a plus. I hope that both of these things continue in future months.

Net worth wise, things were good too. Assets were up, despite the stock market grumbles. My liabilities were down, because I put less on my AMEX and we finally started paying toward principal again on the house.

Here are the stats for June:

Assets: Up $1561.49
Liabilities: Down $829.94
Change in net worth over previous month: Up $2391.43

Tread pointed out something that’s going on over at Millionaire Mommy Next Door. MMND said:

“For the next 30 days, I’ll open my mind to receive increasingly more money. On day one, I’ll decide how I’d like to spend $100. On day two, I’ll double that amount to $200. Day three, double again and I’ll have $400. And so on, doubling every day for the next 30 days. I’ll list how I’d like to spend every penny, with no repeating of items during my month-long spending spree.”

I decided to do a modified version of this exercise because, well, I’m both behind already and impatient. I decided to do the listing of things all at once, and then think about them each day instead.

The most challenging part for me was the “no repeating of items”. I like to repeat items! But not doing so forced me to think about other possibilities. I had the hardest time deciding on what to do with the mid-range amounts ($6 million to $838 million). The lower end amounts followed my pre-existing plans (for the most part) and the higher amounts were easy to think of things that I could help with.

Overall, I enjoyed the idea that each coming day I would have even more money to spend. I’d done a similar exercise before (what would I do if I knew I would receive $40,000,000 every single year) but that made it too easy to avoid the specifics. This was more interesting.

Here is my list:

$100 - groceries
$200 - new clothes & shoes for my son
$400 - massages for the three of us + a really big tip
$800 - the next 8 stocks on my list
$1600 - visit pyramids in Mexico with my husband
$3200 - some kind of flat screen TV thingy for my husband (but still no reception :P), with an entertainment center to make it & the other electronics look uncluttered & nice
$6400 - media server (so that we can get rid of our CDs)
$12,800 - treasury bonds & tax liens
$25,600 - trip for all three of us to Antarctica
$51,200 - college fund for son
$102,400 - pay off house with money to spare
$204,800 - trip wandering around with world for a year (at most)
$409,600 - to retirement funds (accompanied by us retiring)
$819,200 - to family, via them winning a mysterious “prize”
$1,638,400 - property + a small house somewhere more sustainable (probably in Pennsylvania)
$3,276,800 - vacation home in Kauai
$6,553,600 - dramatically exceed savings goal #1
$13,107,200 - for male birth control research
$26,214,400 - to Big Brothers, Big Sisters
$52,428,800 - to state-funded animal shelters
$104,857,600 - for diabetes research
$209,715,200 - to Peace Corps
$419,430,400 - directly to individual residents who are still struggling in New Orleans
$838,860,800 - for kidney cancer research
$1,677,721,600 - to Hospice of the Valley
$3,355,443,200 - to a non-profit called Aliamos
$6,710,886,400 - to endow scholarships for students who are struggling to pay for college even though their parents make over the limits for financial aid
$13,421,772,800 - to pay off 1/8 a percent of the U.S. national debt
$26,843,545,600 - to develop alternative, renewable energy sources
$53,687,091,200 - lobbying to eliminating lobbying from the U.S. political process (yes, irony abounds)

If you’ve listened to the Dave Ramsey show for any length of time, you’ll hear him say that he doesn’t invest in single stocks. Instead, he invests in “good growth mutual funds and paid-for real estate”. His reasoning is that single stocks are too risky.

I wonder though, is that true? If you’re talking about putting all of your money into ONE single stock, I totally agree. Of course it’s too risky to put all of your eggs in one basket. That’s like putting it on a roulette wheel. Even putting it all on a few different stocks would be extremely risky.

On the other hand, what IS a “good growth mutual fund”, exactly? It’s a fund that invests in securities. (Usually stocks, bonds, and money market accounts.) Which means…you’re in a variety of single stocks. Plus bonds and money market accounts.

How is that any different from investing in a large number of diversified stocks, bonds, and money market accounts yourself? I don’t think the danger is so much the dreaded “single stocks” as it is in not being fully diversified or choosing stocks without doing thorough research.

Of course a mutual fund manager likely has significantly more experience in investing than most individual investors, which can greatly reduce risk as well. Finally, mutual funds are able to invest extremely large amounts of money, since they are pooling the resources of many individual investors. This gives them opportunities that individual investors may not have. So mutual funds probably ARE less risky than single stocks for the majority of people. (Although it depends on the mutual fund, too.)

But simply to blindly label the whole category of “single stocks” as “too risky” is over simplifying things. I have a problem with that because when people hear a mantra over and over again, they begin to believe it without questioning. One thing I always want to do in investing (and the rest of life!) is question. Questioning leads to understanding, which leads to more informed decisions.

My gardening experiment went better than I expected, but not nearly as well as I had hoped. Here’s what happened:

I started out by planting two Roma tomato plants, one potato (which I didn’t even think to cut up), probably a dozen carrot seeds, some corn seeds, and peas.

The peas were the first to go. Only one of them even sprouted, and the sun took care of it. Likewise, only a couple of the carrots sprouted, and they also died. I replanted them and a couple more came up. One of those is still growing, so we’ll see.

The potato took off and turned into a beautiful plant, but then one day I came out and it had gone from beautiful plant to a completely wilted pile laying flat on the ground. I have NO idea what happened with that. Any ideas?

The corn seemed to do well, except that it only got about 2 feet high. Still, the plants had ears growing on them and everything, so I remained hopeful until recently. I picked one of the ears, which you can see here:

Obviously I picked it too late, but that’s because I’d never seen such a tiny ear of corn before. I didn’t imagine it could possibly be done growing. Oh well. By now the majority of the corn plants have turned brown. There are still a couple that are growing, so I may still get something from them.

And then we come to the tomatoes. One plant died without even flowering. The other plant flowered and began to have tomatoes on it. But…most of them had what (I think) may be blossom end rot:

There are still a few tomatoes on that plant that look completely healthy, so maybe we will yet get a few. I hope so anyway.

Now as dismal as this might sound (with no yield, as of yet, and lots of money spent) I’m only somewhat disappointed. I’ve learned quite a bit about what I need to learn, and what I need to do and not do next time. Plus many of my plants DID grow. And I kept them alive for months! That’s a minor miracle in and of itself ;)

I also enjoyed visiting the garden every day and doing my best to take care of the plants. I’ll have to check with the extension office to be sure, but I think we have two growing seasons here, so it won’t be terribly long before I can try again.