Money Obedience

A while ago we wrote about getting rid of clutter in our home office (”Lower Debt and De-Cluttering My Office”), which also serves as our library. (Yes, we each own a lot of books, so together we really do have a home library.)

At that time, we said that we found that the process of cleaning up our office was kind of like de-cluttering our finances, especially eliminating debt. In cleaning up our finances, for example, we consolidate our accounts (like consolidating stacks of papers), pay off debts (get rid of paper we don’t need), put some of our expenses on autopilot and automatically add to our savings accounts (cleaning up mess and putting in place a process for putting things away as we get them). The problem with doing all this work is that it is so very easy to fall back into old habits. That is, we once again accumulate piles and stacks of papers or we run up credit card debt again, just to later have to go back to do another major clean-up.

But recently, I took a look at our office and noticed that it is still pretty neat! I wondered how that happened! Do you know that I could not think of one single thing that kept the office pretty neat? Maybe it’s as simple as not being able to stack as much stuff anymore, because in the cleaning process we also got rid of some furniture that somehow always begged to be cluttered with papers. But maybe it’s also the case that we now go through our papers more often so that they simply do not pile up as easily. Then again, maybe it is just pure coincidence – and maybe it’s just a matter of (a very short?) time before the office is cluttered again. But for the time being I revel in the fact that we have kept the office pretty clean for a few months now.

The clean office also reminded me of the post we wrote a while ago. There’s no question that it is a good idea to de-clutter one’s life, one’s office, one’s finances, etc. But that is only part of the battle. It is just as important to keep things in the “de-cluttered state,” to not accumulate crap again. This is much easier to do with finances than it is with more intangible things like the mess in the office or in the kitchen, because much of our finances can be put on autopilot, but rooms in a home can’t be put on autopilot to clean themselves! Like I said earlier, once a personal finance autopilot is set you are all done, and you simply don’t need to touch whatever you set on autopilot again, or at least not until you have some major life changes that require you to make changes to the autopilot settings. If only more things in life could go on autopilot, right?

Unless we’re independently wealthy, or somehow doing very well even in these hard times, we’re probably on a family budget. That is, we’re trying to control our spending well enough that it doesn’t overtake our income. That process is a struggle. Sometimes I struggle with having to budget at all. Maybe it never happens to you, but every now and then I get sick and tired of having to be careful with money, worn out with being wary of overspending, and battered from budgeting.

I had a big moment of that this week as I’m working on decorating my boys’ rooms. I’ve written here a few times about my desire to do this room redux on a shoestring. Well, this week I went off the deep end of that pool we know as IKEA. I dove in, thinking about all the possibilities of making the boys’ rooms colorful little zoos or princely palaces, and I think I lost myself, or at least my mind.

I am lucky. I’m one of those people who can use a credit card wisely. I bought almost everything I wanted, charged it all on the credit card, but I will take back most of that stuff within the coming week. I don’t know where hubby got his statistics from, but I think he once told me that the majority of people who bring items home from the store (without trying them on, for example) don’t bother to take those items back if they are not quite what they wanted (or, for example, if they don’t properly fit). Whooboy, if that was me, we’d be out a pretty penny this week! After I got things home, and started moving the furniture into the rooms, I realized pretty quickly that not everything was going to fit, or look the way I expected it to. Most of my plans were realistic, but failed at the execution stage.

I wouldn’t recommend it for everyone, but this was a really great exercise in blowing off some consumerist steam. Now that I have my frugal wits about me, and my receipts, I can remedy that situation pretty easily.

Am I the only one, or does the buying bug hit any of you? What do you do about it? And how readily do you bounce back once bitten?

This fall, we’re launching anew our web application that helps you organize and make decisions about your personal finances. It will have a whole new look and a whole new name: Money Obedience! It will include a free budget planner and many other personal finance tools that create reports in plain English.

Why? We decided that we needed to get the word out that there’s a site that can serve a lot of unmet needs. Also, we thought that the relationship that many of us have to our money is like that of a much-loved but unruly dog. How many of you have known a dog to inappropriately jump on a person, or pull on the leash, or do much worse, making the dog just a bit out of control and the owner harried and suffering for it? And how many of you know that with just a bit of obedience training, dogs can really be like (wo)man’s best friend?

We all agree, I’m sure, that one can’t live without money in the good old US of A. Since money has to be our constant companion, we may as well make money our best friend. Making money a friendly companion, something we control instead of having it control us, is really our goal. And we believe that everyone can use tips on how to get his or her money to do what he or she wants it to. And we may as well learn the tips and tricks not just to handling it, but handling it well, so we can have a peaceful financial life.

So, we thought, why not market the service as a money obedience school? Just like with an obedience school, you sign up to learn new money tricks at your convenience. You get advice on your particular situation – whether you’re starting from scratch with a small money puppy, or you’re teaching a big old money dog a new trick, or trying to tame a huge and unruly money beast you’ll afraid might bite if you look too closely. Our school can do this because as you share with us your information we give you our opinion tailored to your unique situations, your specific questions and needs – all in plain English. You set up financial goals based on what you want your money to do for you and exactly how you want it to enhance your personal and family life. Perhaps your money behaved once upon a time, but is not doing what you want now – you can always seek pointers or brush-ups to find out what in your financial life could be tweaked to get you the results you want. The analogy works, don’t you think?

That’s our plan. We’re taking the first step by renaming our blog a little ahead of time so that you, our readers, won’t be caught unawares. Watch for the new site to launch in the next few weeks. And, of course, if you like what you see, please tell your friends!

A few weeks ago, my husband wrote about how adjusting our spending affects our retirement planning, and I wanted to say a few things about that. He explained that he took a look at our retirement accounts and noticed that we’re falling behind, but not by very much, and he also explained that he wasn’t that worried about it. I thought I’d explain a little more about why this isn’t so worrisome to me either.

He’s right – we did lose some of our investments in the recession. (And who didn’t?) But we cut back on our expenses, too. When we looked at our retirement accounts recently we realized that we are falling very slightly behind plan these days, but not to a worrisome extent. The reasons for this shortfall are quite obvious to me. For one, we lost a little bit of money with our investments, but that is part of the deal when you put money into anything other than federal government guaranteed things – at least for some periods of time. The other reason is also quite simple. Our household income has dropped a bit which makes it a little more difficult for us to put money away. But that is not necessarily all bad for our retirement plan. Let me explain why that might be the case.

It did take us a little while to downshift in spending but we did it. This did positively affect our retirement plan in two ways. One reason is that we’ve already figured out how to spend less on our daily household maintenance. Assuming we keep that up, we can also take down our projected expenses during retirement in equal measure. That means that we do not need to save quite as much as we needed to save before we figured this out. And that means that even if we have to digest the decline of our assets, our retirement plan is in better shape than we might otherwise think.

There’s a second reason why lowering expenses now will positively affect our retirement planning. If we adjust our daily spending downward now, we may have enough left in the budget that we won’t have to cut the allotment that we put away for retirement beyond what might hurt us in the long run. (We were putting away more than we needed to – we only ceased contributing to a supplemental retirement fund when we cut back. We still put away enough for matching funds. If your employer matches the funds you put away, the minimum you should put away is the maximum amount the employer would match, otherwise it’s like not accepting free money!)

I’m really glad that hubby keeps on top of these things like our retirement plans – he’s the one that really monitors our long-term accounts. But I’m glad that what I do to lessen household spending makes such a difference in both our short-term and long-term financial health.