Kids and Money

One of the hardest parts of parenting for me so far, four years in, is dealing with the fact that my kids will be affected by my flaws. Yes, I have a brutal inner critic. She has only gotten more vocal in motherhood. I’m working on befriending her rather than letting her beat me down. But for the moment I still actively find myself wishing that I could pass on the good traits I possess while directing my kids to better qualified teachers in the areas I could use some work.  Like money. One of the many things I worry about is passing on my less-than-ideal approach to money. I’d like to fix it in myself, not just for me but so I can teach them good habits.

Money and appreciating what we have wallops me this time of year, as I think about Christmas presents and wanting to create a magical experience for my children but not wanting to inundate them with more stuff (they have a lot of stuff). I remember wanting certain toys as a kid and not getting them, feeling disappointed when I got to school after Christmas vacation and instinctively worried or noticed that my presents didn’t measure up. I can only imagine that all the other kids were worrying the same. When I got older I was surprised to discover that Cabbage Patch Kids and Barbies didn’t cost that much money after all. Hey! I can buy a lot of these. Although even still my decision about how much I can afford is not based on a true understanding of what money I have available–it’s based on a long-standing habit of overspending during the holidays, using credit and paying it back.

What do I want my kids to know about money? I’m not even sure but so far the idea that most resonates with me is one I learned at the Lola Retreat in August–about money being a flow of energy and it is up to us to determine how to use that energy to best serve us in terms of meeting our goals and living our best lives. So yeah. I want to learn how to do that and then I want to teach my kids how to do that.

This is a mini-post because I have to think a lot more about this topic. For now, ta da!

 

 

 

Dear Daughter

Dear Daughter,

Your aunts and I challenged ourselves to write about a common money topic this week and we decided on kids and money. This topic feels daunting. Hard to think about what I should teach you about money when I’m pretty sure I haven’t completed my own education. Nonetheless, I know a little so here’s what I hope you will learn about money:

Don’t attach emotion to money. If there is one wish I have for you above all is that you don’t get caught up in the emotional weight money holds for so many of us. I don’t want you to be scared of money. I don’t want you to resent it. I don’t want you to obsess over it. I don’t want it to control you. I want you to see it for what it is – a tool. Money is not your goal, but a tool to get you to your goals.

How exactly you will accomplish this feat of emotionless money, I’m not sure, but I have a suspicion it starts with your dad and me. Even if we haven’t learned how to detach emotion from money, we can model to you what it should look like. We won’t fight about money in front of you. We won’t say we can’t afford something you want if we really mean we don’t think you need it. We will give you the chance to practice saving, spending, investing and giving even if it’s just with $10. We won’t shroud money in mystery. We won’t raise you under the assumption that money is something you are magically supposed to understand once you become an adult without lessons and practice along the way.

Understand the value of money and the trade-offs that exist. Maybe this is too simple? Maybe it’s too complicated? Probably both. But I think it’s important for you to understand how goods and services come to have value. There is no intrinsic value for so many of the things we buy in life. People (the market) place value on goods and you need to decide how that lines up with your own values. You need to understand why some things cost more than other things. Ingredients, scarcity, brand. And you need to understand if you care about those things. Why does mom buy milk from Safeway and not Whole Foods? Yes, it’s cheaper to buy milk at Safeway, but that’s not the only reason. In addition to it being cheaper at Safeway, I also find it tastes the same to me from both stores. I don’t value the premium aspects of milk that Whole Foods sells. I don’t necessarily question the Whole Foods milk price (well maybe I do a little), but I don’t value it enough to pay that premium. Do you see what I mean?

Let’s do a bigger example. Say you could go to a great in-state college or a great out of state college. The in-state college will put you $10,000 in debt and the out of state college will put you $50,000 in debt. Maybe you think the out of state college is better – it’s more elite, it’s further from home. But then if I show you what your monthly debt repayment looks like for each and what that means a) for the type of job you need to land out of college or b) for the constrained lifestyle you might need to live for all of your 20s maybe then you’ll re-assess. Maybe you won’t. But at least you’ll understand the trade-offs that come with determining value.

Know what things cost. When I was a kid I was really bad at The Price is Right. I would guess a box of cereal was $10. A new car $3000. I never won any of the games. And that’s because I had no idea what anything cost because I didn’t ever buy anything. But you know what? When I was in college I was still was really bad at The Price is Right. I bought groceries and paid rent, but I didn’t really pay attention to prices. I didn’t do any research. I didn’t compare anything. I just took prices at face value.

And you might think “Big deal? So you can’t guess your bill at Safeway – how out of hand could it get?” But if we play that out it starts to creep into all sorts of facets of life. How much should I pay your babysitter? How much should I pay for a couch? How much should a house cost? Not knowing what things cost puts you at a disadvantage. You’re at the whim of others determining what you value (see above).

Ask me why I do what I do. I’m a flawed person. I make a lot of mistakes. But I don’t want my flaws (money and otherwise) to be absorbed by you without questioning. Internalized as your own future flaws. If you don’t understand why I’m doing something I’m doing with money – ask me. Chances are I’m acting out of decades of habit. Unconscious routine. And chances are if it doesn’t make sense to you it might not really make sense to me. I’ll value your perspective to keep me honest.

You’re only 18 months old. I don’t know when and how to do this, but I’m happy to have written my intentions.

 

The Last Thing, The Biggest Thing

My life has been absolutely falling apart and I want to put my hands over my eyes and shake my head shouting “No! No! No!” It all feels way too hard and I just want to be through the pain and out on the other side, looking back at all that I’ve learned. But here I am, continuing to slog through because I’m still in the unraveling, still in the lessons. Boo.

My health is not good and my doctors have given me orders to change how I live my life. I need to put my health first for the first time in a four decade life, three decades of which have been characterized by illness that has been as ignored as possible. I know what I need to do: do regular yoga, eat healthfully, rest, be outside. I’d like to start seeing a functional medicine doctor. But the money. . .

Part of putting my health first at this point means leaving my full-time job and finding ways to relax. This freaks me out largely because so much of my identity is wrapped up in my self as a working person, and in this job in particular. And the money. . .

My marriage is ending. Seven years of knowing one another, five years married, four years parenting more kids than we can handle. I am raw and gutted, full of doubt and fear and loneliness. Worried I’m walking away from something that is good because I want something better when maybe nothing better exists. Worried about how it will affect my kids. Worried about how we will co-parent as the separation starts to sink in. And the money. . .

I feel like I should be in a mental institution. No, really. Depression, anxiety, panic. There is what is falling apart in my life. And there is the fact that the three things above do not mention what is going on in the world and how I feel called to help in at least one of the many pockets (like my own backyard) where people are desperate because of racism and poverty and sexism and politics. My body feels slammed daily by the news or the comments on the news I see on Facebook. My mind constantly races and I try to stop the spinning to take a deep breath and figure out how to keep it moving. When all the messages I’m receiving are shouting it won’t keep moving like this anymore girl. It’s time to build a new train and some new tracks.

The last thing I want to focus on is money and how to manage it. The biggest worry I have is money. So interesting.

The Lola Retreat, which we all plan to write about sometime soon, was the origin story for this blog. And the place where I was surprised to find myself asking “Could my way to alignment with my true self, my true values, be through learning how to save and spend my money?”

It can’t be. Can it?

Debt payoff report: September & October 2017

Woops, forgot to post in September, so this is a combined report. September and October definitely weren’t as thrilling as August since we didn’t have a big chunk of money to throw down, but it felt good to keep moving forward with extra payments. I started my side hustle which is both fun and a direct line of income going straight to debt. My husband and I have started to eye what steady state extra payments should look like going forward and I think we can definitely out do what we did in September and October.

But anyway, here we are:

  • Starting balance: $154,470
  • Regular September & October monthly payments: $3,818
  • September & October extra payments: $990
  • New balance: $150,363 

Really looking forward to crossing the $150k mark by the end of this month! It’s also worth noting that when we re-financed our loans 2 years ago our starting balance was $200k, so hitting a $50k milestone is pretty great. It feels daunting that we have 75% more to go, but also encouraging that we have momentum and motivation on our side now. Onward!

Economic Empathy and the Women’s Convention

This may be a strange place to write these thoughts.

Here, I am supposed to write about how to ensure my own guaranteed comforts, the financial finagling that’ll grow my share most quickly, or most completely. And as I write these words, I realize that’s not entirely incompatible with the dominant thought I took away from the first Women’s Convention of my lifetime, but it’s hard to marry.

The term/theme that echoes and screams for attention and intention is Economic Empathy. I have long felt its absence in the world, but never had a word for it. Didn’t know it was an actual thing. 

Now that I do, the concept is pretty clear: work to understand and actively feel the financial constraints of people in different scenarios. The focus is on haves really considering the experience of have nots – at the ballot box, when shopping or dining, when hiring, etc. Even when it comes at a personal cost. Or especially then?

An example. As I walked through a small marketplace called Social Justice City, among my purchases were 4 artisanal chocolates. They were made in Detroit, and I felt good about supporting a local small business.

Later the same day, I learned that the scholarship recipient we’d selected in an essay contest had flown from CA with $3. Total. For a three day trip away. She was entirely at the mercy of the conference and her hosts to feed her. To get around.

The fear that induced in me was palpable, but I could imagine it.

Could someone who’d never been without? Who’d never had to consider the ‘what next’ plan of not being able to afford general basics?

And how can I best work toward a redistribution of wealth — or wellbeing — while also working to solidify my family’s assurances (if we can ever claim to have them)?

I know a few ways. Shop with stores and eat at restaurants that pay ethical wages; support small businesses; frequent neighborhoods and cities whose local economies could use a boost. And does paying my housekeeper extra before she takes her kids to Disneyland count? Or would all that money (to her, at the struggling boutique, etc.) be better spent affecting policy? Or in the hands of a nonprofit?

Maybe my goal should be to tighten all spending – most of what I do, if I am honest – that is done with neither intention nor empathy. Or, frankly, with an eye on the investments that’ll secure my future.

This shit is hard. Any thoughts?

Broke vs. Poor and Paying it Forward

So many times in my young, broke life, someone else’s generosity changed the game.

Whether it was a trip or simply a meal out with a friend’s family, or an indulgent meal paid for by an aunt or uncle while I was in college — even the expensive wine and cheeses or celebratory meals my first boss hosted, which I now realize were write-offs that should have been salary! — put a little steel in my spine. It polished my step.

The moments, big and small, exposed me to finer things or let me relax and enjoy in a way that was so hard on my own dime. The warmth to my soul, even now, brought by the gaze and gesture of someone else’s giving, provided a few lessons that I hope never leave me on this money journey.

First. Being broke is barely related to being poor.

No matter how many overdraft charges or late payments I had in my thriftless 20s, I never doubted I’d have enough to eat. I feared making rent, but knew I would never be homeless or put in a compromising position to find a place to stay. And throughout my life I was exposed to riches: amazing arts at the hand of the public programming in SF, home ownership, books on shelves, transit that let me get around, food from every corner of the Earth. Each of these, and especially all of these taken together, make for a very different path. One that points up and has continually boosted me along the way.

The other is the profound gift of extending access.

Access can be to experience or introductions or places or food that sits beyond the reach of another person. Now, as a person of means, I think about that in all kinds of ways. In how and where I spend – on the products of artisans? In small businesses? With women or minority owned establishments?

Sometimes, though not as often as I can. And sometimes (often?) beyond what I need.

But when I consider how much of our culture trains our gaze up – to more and more security, to growing and preserving wealth, to expanding and even exploding expenses – I want to keep track of how high up the pyramid I sit. That even when I felt broke and out of control, I started near its peak and have only climbed. Part of my definition of value is to pay it forward and spread it out.

My goal now is to increase consciousness, so I am not simply spending frivolously or as a quick serotonin hit, but with thought and intention toward these values, and toward more traditional goals.

Mine. Yours. Ours?

My husband and I are back in the Midwest this week to visit my family and to attend our five year business school reunion. Five years. There are so many things that have happened in my life over the past five years that I’m thrilled about – namely an incredible husband, a great career and a beautiful daughter. I live in a breathtaking part of the country, I married into an awesome family that I get to live near and I have my health.

But damn, I did not think I would be $150K in debt 5 years out of business school.

When we graduated I had about $40K in student loans to pay back and my husband (then boyfriend) had – gosh I don’t know – north of $200K I think (he got two masters degrees)? Anyhow, once we each started working we dutifully began our respective monthly payments and planned to each be done in 10 years. It didn’t really cross either of our minds to accelerate our payments (um and we went to business school – eeks. Embarrassing).

What was killing us though was the interest rate. Student loans coming out in 2012 were at horrible rates – ranging from 6% to 8%. We each re-financed and got better rates a year later and thought we were good. We probably would have continued on that way paying tens of thousands of dollars in interest over 10 years, just accepting that as our fate. But then my husband found an even better student loan consolidation where the fixed rate on a 10 year loan would be 2.75%. The catch – we would have to consolidate our loans together to qualify and the loan would be through a private bank.

My first thought was hell yes to 2.75% fixed! But then it sunk in that I was tying myself to significantly more debt and that by moving to a private loan we would no longer have the security of government loans that let you take hardship periods of time if you end up unexpectedly unemployed. I was nervous, but we both knew the savings on interest was absolutely the right thing to do (phew, some business school education setting in). So in the fall of 2015 we consolidated and re-started the clock on our 10 year loans once again.

I’d love to say that at that moment I nobly decided to split our loan payments with my husband 50/50 because of love! Commitment! A shared future! But I’d be lying. We pro-rated our payments relative to each of our debt because that felt “fair” at the time. But a couple of months later my husband unexpectedly got laid off and started at a new job that paid a lot less. Like – a LOT less. We both knew the job had great potential – a sales job with uncapped commission – but it would take time to build up his client base. We began lumping all our expenses together and just each contributed as much as we could. I think we probably split everything 50/50 generally, but there were likely months that I paid more than half.

And it wasn’t until we went through this experience that it dawned on me that we had to stop thinking about debt and income as mine vs. his. We had taken vows a year earlier in front of friends and family to join our lives – what’s mine is yours, what’s yours is mine. We had shared dreams for our future – why exactly did I think I didn’t have to share in the work to get to those dreams? And so when my husband’s income stabilized, we just kept moving forward with money in one pot and left the pro-rating in the past. It felt great to save so much on interest with our consolidated loans and we definitely felt more like a team financially by the time we welcomed our daughter into the world.

Yet this was STILL not when it occurred to us to pay off our loans faster. We were sittin’ pretty on stable incomes, a great interest rate on our student loans – and hey, we don’t have that ‘bad’ credit card debt, so we’re good, right? Everyone takes at least 10 years to pay back student loans…right…?

Fast forward to this past August to me attending the Lola Retreat with my two sisters-in-law. I was inspired to attend because Mrs. Frugalwoods was speaking and I had been a long-time fan. I also loved the idea of women getting together to talk finance. I thought it would be energizing, inspiring and I would learn some practical saving and investing skills. But what I hadn’t anticipated was meeting a bunch of regular-hey-they-are-just-like-me women talking about achieving financial independence in their 30s. Paying off massive grad school debt in a mere 3 years. Retiring early and living off investments. Talking about their “FI Number.” Say what? You mean that stuff isn’t just for the people who blog about it? What do you mean you paid off your student loans EARLY? Suffice to say I left inspired, but I also left with a fire under my ass and a bit sheepish. We weren’t doing enough.

And THAT is how we got to where we are now. Shared debt. Shared income. Shared goals. Shared vision. We aren’t a finely tuned machine yet, but we are much more motivated than we have been before. I’m impatient and want it all done now, but my husband keeps me in check reminding me it’s still a massive task ahead of us. But we don’t have to be complacent or just accept our student loan fate as “that’s just the way it is.” Let’s hope at our 10 year reunion we’ve got a different debt story to tell.