Everything I Know About Money I Learned in the Second Grade

When I was younger, I loved tagging along with my parents when they went to Costco.  Somehow, the shopping excursion always felt like an “event.”  In no other place would I be given so many free samples of delicious, sodium-laden, heavily-processed foods.   Costco first introduced me to jalapeno poppers, pizza bagels, mozzarella sticks, and other forms of addictive cheesy goodness.      

Costco also introduced me to my own avid consumerism.  In no other place was there such an abundance of new, shiny, exciting stuff.   Big or small, I wanted it all.  I can remember many conversations that went something like this:

 

Me: Wouldn’t it be fun to have a tire swing? Can we buy it?


My Dad: We don’t have any trees in our yard.  Where would we hang a tire swing?

Me: Maybe from the ceiling?  In the family room?

My Dad: That wouldn’t work.   And I don’t think you mom would like it.

My Mom: No, I wouldn’t like it. 

Me: Why not?  It would be fun.

My Dad: It wouldn’t be safe.  And we don’t need it.  If you want to swing, we’ll take you and your brothers to the park.

Me: Okay.  Can we buy a tent?  Wouldn’t it be fun to go camping at the park?

My Dad: Camping isn’t allowed at that park.

My Mom: I don’t like bugs.

Me: Oh.  What about a trampoline?

 

And so it continued.  Me, begging with my parents for one unnecessary item after another and formulating hare-brained justifications for these purchases.   My parents, countering my pleas with common sense and responsible answers that usually involved the word, “No.”  In hindsight, I realize that I must have been quite a handful as a child. 

Soon thereafter, my parents implemented a rule: if I wanted to buy something, it had to be with my own money.  My “own” money was earned by doing chores around the house and given as an allowance.  If I didn’t do the chores (which was not an option), I didn’t get my allowance.  It amounted to $2/week at age seven.  By the time I was 12, my allowance had increased to $5/week.   Many of my peers were given a weekly allowance equal to their age.  I’m uncertain why my parents settled on the lower amount.  Perhaps money was tight in our household, although it didn't often feel that way.  Or perhaps my parents just thought the lower amount was sufficient.  In either case, having such a modest allowance taught me the value of a dollar.  This was especially important since I was showing signs of an acquisitive personality at a young age. 

By giving me a $2/week allowance, my parents forced me to do three things: budget, save, and prioritize.  Even in the early 1990s, you couldn’t buy much with $2.  Therefore I had to decide how I wanted to spend my money, and then save until I had enough stashed in my piggy bank (I think it was actually a Hello Kitty bank, but you get the idea).   I quickly learned that I couldn’t have everything my heart desired, so I would have to choose one or two things that I really wanted. 

I also learned the terrible feeling of being in debt.  Generally, my brothers and I were discouraged from spending if we didn’t have any allowance left.  There were a few exceptions, including times when we wanted to do something with friends or attend a birthday party (we paid for gifts out of our allowance).   If I needed, my mom would let us borrow from the “Bank of Mom.”  It was always interest-free (wouldn’t it be nice if real banks were this way?), but she kept a running tally of how much was owed.  That tally hung on the refrigerator, so that I could never forget.  Having the debt so visibly displayed was enough to guilt me into paying back the loan as soon as possible. 

Twenty years later, I still like stuff.  I’d be lying if I denied it.  But I think that, by giving me an allowance, my parents instilled money management skills at a young enough age that I’m now aware of my tendency to spend, and can limit myself before I get out of hand.    

Did you have an allowance as a child?  If you have children of your own (or plan to), will you give them an allowance?

Newlywed Notes: "I Have to Live Here, Too!"

The scene: Mr. W. has been out of the apartment for most of the day, doing some freelance work.  He returns to find that I’ve decorated our home for Easter.  He likes the decorations, until he spots our kitchen chairs.  I’ve taken sparkly, polka-dotted, pastel ribbon and tied gigantic bows on the backs of each kitchen chair.  Adorable, right? 

He doesn’t seem to think so.  He rolls his eyes and says, “You know, I have to live here, too!”

Whoops.  That's right.  He's a strapping, 28-year-old male and he does live here.  I guess those ribbons do look a little like they belong in Barbie’s dream house. 

After Mr. W. and I were married, he moved into MY apartment.  It’s a lovely little space.  At 650 square feet, it isn’t large.  But what it lacks in space and storage, it more than makes up for in charm.  A benefit to old (ie, cheap) apartments is that they often have a lot of character.  The kitchen has a built in china cabinet.  The hardwood floors are edged in mahogany inlay.  Each room has a 10-foot ceiling.  It didn’t take me long to incorporate little touches to make it feel more like home.  By the time we were married, I had lived in the apartment for just over a year.  I definitely perceived the two-bedroom, 1-bath unit as being “mine.”     

Although we hadn’t lived together before the wedding, Mr. W. and I were quite familiar with each other’s habits and preferences.  I knew, for instance, that he tends to accumulate dirty cups -- but never dishes-- on his desk.   He is meticulous about rolling the toothpaste tube after each squeeze.   He prefers to wear shoes while inside.  He sleeps with about six dozen pillows.  In other words, I knew his daily routine.    After seven years of dating, I think this level of familiarity is inevitable. 

In turn, he knew that I have a much lower tolerance for clutter than he does.  He also knew that I don’t really care what the toothpaste tube looks like, so long as there is toothpaste inside.  I would wear slippers all the time if they weren’t so ugly.  I sleep with just two pillows, though I’ve always loved the decorative pillows that are NOT to be used for sleeping.    

All in all, I would say that the transition to living together has been fairly smooth.   Mr. W. contains his clutter to the spare bedroom so that I can simply close the door if it starts to bother me.  And I’ve stopped teasing him for his “pillow nest.” 

Every once in a while, though, we still discover little things that annoy each other.   For instance, if Mr. W. is sleeping and I turn on a light in the bedroom (even the really, really dim light all the way in the corner), he becomes quite grouchy.  You’d think I tried to rouse a hibernating bear.  Likewise, I start to seethe if I see dirty clothes strewn on the floor (hello, the hamper is right there!).   Once we’ve discovered each other’s irritants, we try not to repeat them. 

But, I can still do a better job remembering that the apartment is no longer mine alone.  Given that I am a Type-A control freak, relinquishing control over “my home” has not been easy for me.  But it’s also his home, and I need to allow him equal input when it comes to organizing, maintaining, and decorating the apartment.  Marriage is a partnership and our home needs to reflect that.   

By the way, he resigned himself to the sparkly chair-bows for one week.  They’ll be removed on Sunday night, as soon as we finish our Easter celebration.   

 

If you live with a spouse or significant other, what was the largest adjustment when you first started sharing spaces?

 

Topics in Personal Finance: Why We Still Have a Car Loan

Mr. W. and I currently have a car loan with a $10,000 balance.  I know that most personal finance gurus would advise paying down that loan ASAP to avoid interest charges.  We could pay off the loan in its entirety, but we've decided not to do so.  Here are some background details that explain our decision: 

In August of 2012, we bought Mr. W.'s used Honda Civic.  At $16,000 and less than 20,000 miles, it was a great deal.  When we bought the car, our wedding was just six weeks away.  We hadn't planned to buy a car until after the wedding, but Mr. W. was in an accident that made his previous car un-drivable (no one was injured, thank goodness).  We tried to share a car for a few weeks, but this doubled his already-too-long commute.  Mr. W. clearly needed a new car. 

Other than assorted wedding-related deposits, the car was our first major joint expense.  We had the funds to pay cash for the car, our wedding, and our honeymoon.  However, we decided to put 20% down on the car and finance the rest.  Between the wedding and honeymoon, 2012 was shaping up to be a very expensive year.  Now we were buying a car, as well.   

Before buying the Civic, Mr. W. and I agreed that we should maintain a certain level of savings.  We just didn't feel comfortable draining our savings completely.  Marriage would bring a lot of firsts for us: first time we lived together, first time we combined our finances, first time we had to share closet space and a bathroom.  On top of all those changes, we didn't want to stretch ourselves too thin financially. 

At the time, $12,000 seemed like a reasonable amount of cash to have on hand.  We ensured that after making the down payment on the car and paying for all wedding/honeymoon expenses, we would still have $12,000.  Since getting married, we've increased our savings goal to $25,000.  This amount would cover our fixed living expenses for approximately one year. 

Why did we determine to save a year's worth of expenses?  Why not just six or nine months?  Mr. W. and I both work in relatively specific industries.  If either -- or both -- of us were to lose our jobs, it could take some time before we found another position.  Given the uncertain job market, we decided to prioritize increasing our nest egg rather than paying down our car loan ASAP.  We make the monthly payments, but we're not trying to pay off the car until we've built our nest egg.  To us, the peace of mind is worth the 4.6% interest rate.

How do you feel about car loans?  Unwise, or a necessary evil?