Personal Finance

Sunday, September 16, 2012

I’ve been thinking about personal finance lately, and personal finance blogs, and budgets, and spending, and things like that.

I’ve had something of an obsession with a particular personal finance blog for a number of years. The funny thing is that it wasn’t about the advice or the personal finance angle of it at all, it was the human interest element, it was like a little soap opera for me. It felt weirdly voyeuristic, but at the same time it’s not like there was anything sneaky about it, it was posted there for all to see. That’s the funny thing about blogs.

I tried a few times to break myself of the habit but I would always fall back into it. Especially when I would be stuck working on something I didn’t really want to work on. I would have to sit at my computer until the part of my brain that knew I had to start working convinced the part of my brain that didn’t want to work that it was time to start. I couldn’t go do something more productive, because then the part of my brain that didn’t want to work would win — “but you should just do this, the work will still be there tomorrow and you can take care of it then!”

So I would check the blog and then get sucked into the comments. It was like the description in the F. Scott Fitzgerald story, “it had come to be an important punctuation mark in the long sentence of a day on the road.” Eventually I would manage to tear myself away and start my work.

One of the reasons my obsession dragged on for so long was because I read a post on the blogger’s personal site in 2009 or 2010 that talked about his 20th anniversary with his wife and when I read it, it seemed to me that they were not going to stay married for all that much longer. (If you’ve read Malcolm Gladwell’s Blink, you’ll know what I’m talking about — thin slicing and intuition and all of those things that Gladwell discusses in such an interesting way. One of the reasons I found the blog so compelling is because there were a lot of details on it and also on the author’s personal site, and it was interesting to me to read them both and then make guesses about what I thought might happen in the future. Then all I had to do to find out if I was right was to keep reading. Like a little parlor game, Test Your Intuition. Fun!)

So I had to keep checking to see if I was right, to see if they split up. And they did, in November of last year, which meant that in theory I could stop reading. But it hasn’t been so easy.

[Reading voyeuristic blogs] meant a lot to her sometimes. She worked very hard and it had some ability to rest and relax her psychologically.

But I’ve been making progress lately and I think I might be done.

Of course now I’ve started looking for something else to read when I’m supposed to be working but am not quite ready to work yet and a number of people in the comments section of previous blog obsession blog named Mr. Money Mustache as the PF blog they now follow.

I checked it out and despite the fact that I am generally in agreement with everything he says and he is quite a good writer and seems like an interesting person and fine upstanding citizen, I am not a fan. Why do I want to read about a person who is completely satisfied with his life and spends every post talking about all the great things he does, and that you should be doing too if you want your life to be as great as his? Where’s the drama in that?

I had been talking with a friend recently about personal finance blogs and she expressed frustration with the fact that they all seem to be written by and for people who make a lot of money. Their suggestions are all along the lines of “drink fewer lattes” and “cut back on trips” and “eat out less.” She’s like okay I don’t drink lattes at all and I don’t take trips and I don’t eat out and I don’t have any money. This is not helpful.

I was talking to her about Mr. Money Mustache. I said I wasn’t a fan. I said I feel like it’s written for people who make $50,000+ but could live just as well on $25,000. She was like that’s what I’m talking about! What do you do if you make less than $25,000 to start with? Where are the blogs for those people?

And I don’t have an answer for that. Does anyone know of any useful personal finance blogs for people at the low end of the income scale?

I told her she should skip the blogs and read The Tightwad Gazette. Though it’s quite old at this point, I know that a lot of the tips are not necessarily going to be relevant, but it seems like the general concepts and the overall strategies — which is what I thought was most valuable about the book — still would be useful.

It also occurred to me that she should read How to Cook a Wolf, because it’s so much better than any blog out there and it really gets to the heart of things, when the wolf is at the door.

The other thing I would say is that maybe there aren’t any blogs out there with answers because there aren’t easy answers. Though at the same time, what you need to do is very basic — you need to figure out exactly how much you make and exactly how much you spend. If you spend more than you make, you need to either spend less or make more.

This is not rocket science.

But obviously, the hard part is not in identifying the problem but in executing a solution.

Telling people to get a job where they make more money is perfectly sound advice, but it’s easier said than done. Sometimes it takes a while to find a different job, or to find a second job, or to get a raise. These things do not happen overnight.

If you’ve cut discretionary expenses to the bone and still don’t have enough, you need to make more difficult changes.

The biggest expense for most people is housing. Can you reduce your housing costs? Can you get a roommate? Can you move to a cheaper place? Finding somewhere that comes with utilities included can make a huge difference when you’re living on the edge. Otherwise you also need to cut your utility use as much as you can — turn off lights, learn to live with cold water, stop using air conditioning in the summer and bundle up and see how low you can tolerate the thermostat in the winter. Not fun, but a crisis is a crisis, and being less than comfortable will not kill you.

Transportation is also a big expense. And you should actually think about housing and transportation costs together, because often cheaper housing comes with more expensive transportation. So look at those two things combined to get the real cost of living in a particular location.

Of course the biggest expense with transportation is owing a car. If you’re looking for a new job, try to find something that you can get to without driving. If things are really tight, you should think about whether you can get by without a car at all. This is easier in some locations than others but in general, it requires you to (a) live in a community with good public transportation, (b) be really committed to biking, including in the dark and in all kinds of weather, and/or (c) have friends you can bum rides from and/or borrow their car occasionally. Whether this is workable for you depends entirely on where you live (and who your friends are); for many locations it’s a nonstarter. But if you can get rid of your car, you can save a lot of money, and it’s one less thing to worry about.

So housing and transportation are the two biggest things you need to deal with. They are fixed costs that determine what you have available to spend on everything else. If your housing and transportation costs are too high and you are not in a position lower them (you can’t get out of your lease and you can’t sublet, and life would not be worth living if you had to deal with a roommate on a day-to-day basis), then your choice is to find additional sources of income or go rock bottom with discretionary spending — all meals cooked at home spending as little as possible on groceries (less than $25 a week ), no internet, no phone, no air conditioning, no purchases of clothing, and nothing at all spent on entertainment. (As noted, the latte budget had been eliminated in previous rounds of belt-tightening.)

This can be very difficult to sustain unless you see it as a temporary condition, that there is hope that things will be better in the foreseeable future. For instance people in school — grad students or mid-life returning students or people changing careers — are often able to live without very basic things because they know they only need to do this for a short time until they are qualified for a job and will make more money.

People can do all kinds of things for a limited period of time that they would not be able to do forever.

I went through this with my first job, which I took knowing that the economics would be challenging because I had very high fixed expenses relative to my income. I sublet a room in a house that had utilities included and I talked the person I was subletting from into letting me share her phone instead of having to get my own put in (pre-cell phone era), which I totally would not have been able to afford. And I did okay for the most part, though I remember one weekend where I literally could not spend any money, not even for a phone call. I needed the gas in my car to get to work the next week so I couldn’t even drive anywhere. I went to the library on Friday and got books and went home after work and that’s what I did all weekend, I read. And I love reading, but I remember clearly the strangeness of that weekend, when an idea of something to do would pop into my head and then I would realize I couldn’t do it because I couldn’t drive there. It was like being under house arrest or something.

But I wasn’t planning on living like that forever, I knew I would make more money eventually, or I would get a different job, or I would move somewhere cheaper. I was just trying to get through it in the short term until that happened.

So I think the most important thing is your mindset. You need to look at this as a problem you are solving, that this is the first step, and that things will get better. This is not how you have to live for the rest of your life, this is how you have to live right now, until you are making more money or your debt is paid off or you can move to a cheaper place or whatever it is that is causing your finances to be out of whack at the present moment.

And you need to read How to Cook a Wolf and channel M.F.K. Fisher in the kitchen, and stop reading personal finance blogs that annoy you, and that will help. I promise.

8 Responses to “Personal Finance”

  1. mm1970 Says:

    You just channeled Mr. Money Mustache there with your suggestions on biking and housing, by the way.

    He is geared more towards the higher income set, with the early retirement goal. But he has done some analyses on people with lower incomes also, and there are a fair number of lower income people on his site and in his forum who give practical advice.


  2. One of my favorite personal finance blogs is “Living on a Dime” (www.livingonadime.com). It’s a mother-daughter team and the mother actually had to raise a couple of teenagers on $500 per month for a while.

  3. lessisenough Says:

    @mm1970
    I know, that’s the funny thing about MMM — it’s totally in line with my thinking. But I haven’t been able to get past the income part. It just feels like “Let them eat cake” to me. (In the sense of Marie Antoinette having NO IDEA what it meant when she was told the peasants had no bread, she was not able to conceive of the idea that people could have no food available to them.)

    I think it’s probably very useful for high income earners who are trying to figure out alternatives to their lifestyle. And maybe if I checked out the forums I would change my overall opinion. I haven’t actually spent a whole lot of time with it, just enough to try to figure out why it wasn’t resonating with me despite the fact that I completely agree with the advice.

    But regardless, I feel like the lack of drama is what will keep me from going back too much. Even in the comments, it feels like a whole bunch of people who all agree with each other patting themselves on the back for how much smarter they are than the rest of America. Just not so interesting to me.

    @themedicaltranslator
    I will check out Living on a Dime to see if my friend might like it. Thanks for the tip.

  4. Jenny Says:

    I liked MMM at first, but I’m getting bored with it. I think it’s hard to keep things fresh though. How many posts can you have about riding a bike? I agree with you though, I haven’t found blogs where people don’t make a lot of money and are still finding ways to save. I like numbers and examples. If you really are spending $200/month for a family of four for groceries, what exactly are you eating every day? Don’t just say oatmeal and beans and rice. It would be more interesting to see a week’s worth of menus. How many gallons of milk do you go through? That sort of thing.

    Also, If you’ve cut the utility bill by turning off the lights, etc. what exactly were the savings? I did like the Tightwad Gazette for that sort of thing.

    I do like the journal section of Early Retirement Extreme forums. People list their monthly income, expenses and their savings rate. That is interesting to me.

  5. lessisenough Says:

    I also spent some time on Early Retirement Extreme last week, when I was thinking abut this topic. That’s another one that I agree with in theory (these are all outgrowths of Your Money or Your Life, which I am totally on board with) but that one is even more offputting. I am not living in an RV and eating lentils and tuna fish for the rest of my life. Or even for 5 years while I try to save 80% of my income. And he had the added problem of saying that he was able to do this without making very much money, when for two of the years that he was working and saving, his income was close to $70,000. (In one place, he did finally give the number but in another, he gave that as the income of a state trooper — the implication being that this is a typical salary within the reach of anyone in America.) So I guess it’s a fine site for everyone who thinks that $70,000 a year is an average or below-average income. This in a country where the median household income is $50,000. Let them eat cake.

    I’m with you, though. I like the specifics. The problem with doing that all the time is that you open your life up to this weird level of scrutiny. I haven’t checked it in a while, but I was digging 30 Bucks a Week. They live in NYC and eat awesome food. I think they hit blogging fatigue for a while but still were posting last time I checked (though that was a while ago, not sure what’s going on now and too lazy to check right now). There was also a guy in (I think) Sacramento who does funny experiments and blogs about them — he ate every meal with home cooked foods for a month and then ate every meal in a restaurant for a month, then compared the experiences. I liked that, it was interesting. At one point, I linked it in a post here but I can never remember his name or the name of his blog, and I have no idea when I wrote about it so I can’t look it up. I’ll try to see if I can dig it up.

    I was going to eat for a month spending $301 (the number the IRS uses for food for a one-person household) in September and blog the specifics, but then I made an unexpected trip out of town at the start of the month and decided I didn’t want to throw something else into the mix. I’ll start thinking about that again and see if it might be feasible. My eating has been completely erratic for a while (due primarily to erratic scheduling) but I was thinking if I was focusing on it for some reason — and had 3x as much money as I normally spend — I might be able to get back on track.


  6. I also like the Tightwad Gazette for giving more details.

    And 30 bucks a week just posted a recipe yesterday, but they haven’t been doing their regular thing in awhile. I really enjoyed that blog.

    I guess I could try to pick up where they left off. Hubby and I are trying to lose weight…me the 50 lbs I gained while pregnant, him some sympathy weight. So I am actually planning nearly every meal a week in advance and only shop for those items. We spend more than thirty bucks though!

  7. lessisenough Says:

    I think posting a lot of details can be easier than some other kinds of blogging, you just have to be willing to sacrifice a certain amount of privacy. But it can be good for a willpower boost, knowing that people will be following you and seeing if you do what you said you were going to do (well, either extra willpower or lying, depending on how things go).

    The Tightwad Gazette really was the best, she definitely went the extra mile to include everything and also to talk to experts for more information if there was a question about anything. Then she would include all of the infomation for you to make your own judgments. Definitely a bit of a lost art these days, people just look things up on the internet and give you a Wikipedia link.


  8. I haven’t ever read a personal finance blog, but I loved The Tightwad Gazette. I think I told you that my favorite PF book is “How to Live Rich When You’re Not.” All the prices are wonky, as it was written years and years ago, but her advice, which I LOVED was to pick ONE LUXURY without which life would feel like a miserable scrabbling pinching existence and with which you feel like you are living large. Give yourself THAT luxury and scrimp like hell on everything else.


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