Jana Says

Living life from cover to cover

Author Archive: Jana

When free isn’t

Here in the personal finance world, we love the word free. Except there’s a catch with the word free. Free does not always mean better. Yes, not having to pay is certainly better than having to pay. Absolutely, 100%, every time. But a free item doesn’t always mean it’s a good item. And a not so good item means that you will eventually have to pay.

Here’s an example: When my grandfather passed away 3 1/2 years ago, my grandmother (who does not drive) offered my husband and me my grandfather’s car. Yes, it was a slightly older model that didn’t get a lot of use and baked in the hot South Florida sun but my father and uncle would take care of it on their trips down. We were in the market for a new-to-us car and this price of this one–free–was perfect. My grandma even offered to pay for the autotransport truck! How could this go wrong?

Well, it went very, very wrong. The car was delivered and we took it out for a little test run. It ran OK during the test run; OK enough that my husband felt comfortable driving it on his 45 minute commute. Monday morning, about 20 minutes after he left, I get a frantic phone call that the car died–completely died–on his way to work. He was able to get it off to the shoulder while he waited for a tow truck. For reasons completely unknown to me, he had the car towed to our house where he an our neighbor proceeded to inspect the engine and ultimately conclude that the transmission had died (I believe it was the transmission. In any event, it was some expensive part that goes under the hood and helps make the car run). So, after all of that, we now had an autococoon on our front lawn.

To have it towed to a mechanic to determine if my husband’s and neighbor’s prognosis was correct was going to cost us money. The parts were going to cost us money. We lost time off from work (fortunately, we get paid time off to use at our discretion) that we were trying to save. We couldn’t even get in touch with one of those money-for-junk cars companies to come and take it. We didn’t even care about getting money, we just wanted the car gone. It was just a big mess all around. Eventually we were able to get rid of it; I think the junk company gave us $200, just enough to recoup the towing costs.

You may be wondering why we didn’t opt to fix the car. For starters, we didn’t have access to the cash required to fix it and there was no way we were using credit. Second, the car wasn’t worth as much as the repairs were going to cost. Third, my husband was so pissed off with the thing that he would have been angry every time he drove it (at the time, I drove an SUV and there was no way he was taking an SUV on an 80 mile round trip commute every day. Gas costs would have been crazy). You would not like my husband when he is angry, so we junked  the car. My sanity was better off. And you can’t put a price tag on my sanity.

Fortunately, we were able to get another year and half out of the car we were trying to replace and got a great deal on my husband’s new-to-him car last March. But we still have a car payment because of it. The purpose of accepting my grandfather’s car was to be able to have a newer car that would last long enough for us to save up the cash for a replacement. That plan clearly backfired.

At least now we know for next time–free does not always equal good.

Has free ever backfired on you?

Guest post–Money Talk: Kids Edition

The following is a guest post from my friend Mrs. C who blogs about life, food, running and creating a living legacy at Another Housewife. I’m honored to have her post here as she is my frugal mom idol. What this woman does with 4 kids, a husband and a small budget is amazing.

Trial and Error. That is our method of parenting, including teaching our kids about money. I dream of raising financially savvy kids, who have a healthy, non lustful relationship with money. I want them to be raised in such a way that saving and living within their means is as natural as brushing their teeth or fighting with each other. You know what I mean? The method to accomplish this goal however is a whole other beast.

Our kids are 9, 7, and 4. We are in the midst of a healthy appetite for the wants. To curb their craving of all things made of glitter and sold in an electronics store, we have come up with a game plan to teach our kids how money works, in our home. The following is a list of how we handle money related details with our children:

Money
In our home it is important for us to teach our kids a basic foundation of how all money earned is distributed. We give ten percent as a tithe, put ten percent in savings, and create a spending plan for the rest (fancy talk for budget). We still have veto power over what they purchase with their spending money. I have yet to use that super power because I believe in natural consequences. However, I would veto something like a cell phone.

Allowance
We will be entering the realm of allowance giving this school year. After considering all of the “money experts” differing ideas on how to dish out this source of income to children, we have decided to start with a monthly allowance of ten dollars per kid. I figured since math is really not my thing, it is the easiest way to teach our 10-10-80 method. Also, there will be no strings attached to receiving an allowance. It will be given every month simply because you are a member of the family.

Chores
Our kids have a list of chores they must do without any compensation. For me the idea of paying my child to make his bed or clean up their play room is atrocious. On the other hand we do have a list of chores that we will compensate our children for upon approval, such as washing our car.

NO Advances
This is really hard for my husband and I to enforce without feeling a little emotional guilt. In the end we know it is for the betterment of our children. Instant gratification is a rampant problem in the world today and we want to teach our children the notion of saving and paying cash for items. As much as I want to just pitch in the last ten dollars or want to believe they will wash my car as soon as we get home from the store, the answer is no.

Serving
I want to teach our kids that one of our most valuable resources is not money but our time. I make a conscious effort to look for ways we can serve as a family. I don’t want to be the mom who says, “There are kids starving in third world countries,” when they gripe about what’s for dinner. I want to be the mom who exposes her children to the injustices of the world and together brainstorms ideas we can do as a family to serve others. It helps to take our mind off of our wants and instead focus on the needs of others.

What works for our family may not work for yours. I have spent several years taking bits and pieces of advice and tweaking it to fit our family dynamic. I wish I could say we have it all figured out but the truth is we make more mistakes than not. That is the genius of the trial and error method.

Guest Post: What a Lamp Taught Me About Personal Finance

In a Daily Money Shot first, I’ve swapped posts with So Over Debt. I’m honored to have a guest post from So Over Debt, who writes about money matters as a single mom getting out of debt, and I’m thrilled to have a guest post over on her site. In fact, her site is one of the ones that prompted me to start blogging (you can either send her either thank you notes or hate mail. I’m sure she’d appreciate it).

About this time two years ago, I made the decision to file for divorce. (Don’t worry – it’s a “Congratulations!” divorce, not an “Oh, I’m so sorry!” divorce.) If I ignore all the emotions and drama involved, I look back to see several months of utter chaos – looking for a place to live, finding a house that needed updating, coming home from work to stay up half the night remodeling, and finally moving in December 2009. Other than a dining room table, I moved with only my clothes and personal items, my son’s clothes, furniture, and personal items, and my dogs.
During the months of remodeling, I developed a strategic decorating plan for my new house. I didn’t want it to look anything like the home I had when I was married, and I wanted it to reflect my style instead of its previous look (little old lady). I spent hours bookmarking specific accessories and pieces of furniture I needed to complete the transformation. I watched HGTV shows on my DVR every weekend and took notes. I ignored my dad’s skepticism when I chose paint colors (for the record, he loves the house now that it’s nearly finished).
I had the hardest time finding table lamps for my living room. I needed to bring more orange into the room, but I didn’t want clown orange – it needed to be subtle and modern. I’m glad I didn’t have to pay a per-search rate for my internet access, because I burned Google up trying to find the perfect lamps.
I finally found exactly what I needed – the Hoopla table lamp from Crate and Barrel. It was the right shade of orange, it was modern, it was awesome! It was also $79 plus tax and shipping, and I needed three of them. At a time in my life when I was using my closet door across two sawhorses for a computer desk, it didn’t make a lot of sense to spend that kind of money on lamps. So I bought a couple of seriously ugly (but cheap!) lamps from Walmart, bookmarked the Hoopla lamp, and gazed at it longingly several times a week.
Time passed and I moved on to other rooms in the house. I still looked at the Hoopla lamp periodically, even squealing a bit when it was discounted to $59. I planned to buy the lamps as soon as I got my Christmas money last year. But then Christmas came and I decided to put all my money in savings. I would just wait for my tax return. But then tax time came and I decided to pay off two credit cards instead. I began blogging about my finances and getting out of debt. I got busy at work. I stopped buying stuff I didn’t need (for the most part).
I forgot all about buying those lamps. The ones I have, while definitely not my favorites, do the job and kind of fade into the background. They definitely don’t make the statement the Hoopla lamps would have made, but they’re good enough. And wouldn’t you know it? When I went searching for a picture of the Hoopla lamp on Crate and Barrel’s website for this post, it isn’t even available anymore. I may buy new lamps at some point, but it’s not a priority in my life right now.
What does this story say about personal finance? A lot of things, actually.
First, this story demonstrates how easy it is to become obsessed with material things. Lamps are such an insignificant part of life, especially if you don’t even have furniture, but I was convinced I needed them to make my home (and my new life) complete. No one pressured me into it; I did it all on my own, sitting at my computer looking around. And I didn’t even realize it was happening. That’s often how it goes – you start looking around for something, and before you know it you’re on a mission. A mission that generally includes a lot of extra things. I try to keep this in mind when I want something – do I really need it, or have I just convinced myself that I need it?
Second, my search for the perfect lamp is a great example of emotional spending. Why was I so intent on planning every detail of my new home, down to the table lamps? Because I was going through one of the most stressful times in my life. Focusing on making my house look amazing gave me a much-needed escape from what was going on in the real world. It gave me a sense of control – I couldn’t make my marriage work, but I could make my house perfect. Realizing this has helped me look out for other examples of emotional spending in my life.
Finally, did you notice how I was better able to resist buying the lamps as time passed? At first it was simply a matter of not having the money, but by the time I could actually afford to buy them, I’d already moved on to something else. This is why so many personal finance bloggers recommend waiting 30 days before making a large purchase – the incredible urge to buy something usually goes away with time. The longer you wait, the more money you can keep in your bank account.
I can’t adequately express how important it was to me at the time to get the perfect lamps for my house. I also can’t put into words how unimportant those lamps are to me now. I’m not saying I wouldn’t buy them if I found them for sale, but I’ve finally learned (two years later) that there are more important things to do, like get the heck out of debt.
Have you ever wanted something so badly you would have traded a limb for it? Did you buy it on impulse, or did you resist? Was it a planned purchase? Tell me about it in the comments!

Sometimes it’s OK to splurge

Today was payday in my house. Actually, it was one of the 2 “extra” paychecks we get each fiscal year. No bills get paid out of these paychecks. We use 24 out of our 26 paychecks, plus the majority of our second income, to pay bills and pay off debt. We’ve decided, together, that for these 2 “extra” paychecks, we let ourselves have a little breathing room. For these paychecks, we spend the money on the absolute necessities like gas, food, savings, and daycare but also use it to give ourselves a little bonus.

For instance, we each get a small allowance out of every paycheck ($20 every 2 weeks). From our extra paychecks, we bump that up to $100. We will usually treat ourselves to a nice dinner. We may each buy one special item and then we kind of let the rest sit. But this summer’s extra paycheck bonus is filled with all kinds of good stuff:

  • $300 for our vacation (accommodations are free and food is separate. This is just for activities)
  • $100 to take our daughter to see the Laurie Berkner Band (of the children’s performers, she is probably the most tolerable)
  • around $300 for my plane ticket to the Financial Blogger conference
  • $150 for my husband’s yearly fishing trip

I will also be using some money to buy this:



It’s nice to have some extra income every once and awhile to spend on fun stuff rather than bills and debt. While we do a pretty good job budgeting money for smaller ticket fun stuff items, buying the bigger things guilt free is a good feeling.

Do you ever use extra income to splurge? What do you like to buy?

Town for sale? I’m buying!

You may have seen this listing: Scenic, South Dakota

That’s right. The whole town is for sale. For just under $800K. That’s less than the cost of a lot of houses. It’s less than the cost of paying Derek Jeter for a year. Heck, it’s less than the amount inherited from cousin Bertha! But is the town worth it? Would you buy it?

In a dream world, I would. Who wouldn’t want to own her own town? Just the thought of owning my own town makes me giddy with anticipation for what I would do with it. Bear with me for a few minutes as I indulge my imagination (and bottomless wallet).

Priority #1: Hire a good contractor to do the work. I have a neighbor/friend who not only is a contractor but his partner is an architect. I’m pretty sure I’d get a good rate, and I’ve seen his work first hand, so he’s at the top of my list to do the work.

Priority #2: Now that I’ve got the contractor and architect in place, it’s time to start attracting businesses. Since the town is only 46 acres, I’m not looking for big box stores. I want mom and pop shops. I want a small, independent book store. I want an ice cream shop. I want a hardware store a la Teen Wolf (the good, Michael J. Fox version, not the crappy MTV show). I want a diner that also serves vegetarian fare, grocery store, a clothing store and a gas station (fortunately, the bones for a grocery store and gas station are already there). There will also be a coffee/gourmet hot chocolate shop that boasts free wireless Internet; sort of like a Starbucks but again, a mom and pop shop. And I want to restore the local saloon and dancehall.

Priority #3: The restoration of the saloon and the dancehall. I think this could be the centerpiece of the town. Not just as a bar, but as a place for entertainment for the whole town. We’re talking concerts, movies, speakers, book fairs, pictures with Santa and the Easter bunny, charity events…pretty much one central place to hold these events.

Priority #4: Hire a great advertising/public relations firm for a huge advertising campaign. Since the town is on the way to Badlands National Park and Pine Ridge Indian Reservation, it’s sure to draw some attention with the right marketing strategy. The fact that town was owned by a rodeo legend (from what I’ve read) can definitely be a key element in this strategy. Sort of like what Lightening McQueen did for Radiator Springs.

Priority #5: Get the town on the public transportation line. Make it easier for people to get there from other locations. This is how the town will maintain an influx of visitors beyond those who are passing through on the way to other locations. Also, there will be free parking for those who chose to drive.

Priority #6: Hire a competent, qualified town manager. The town will collapse without proper management. Once it’s up and running, I want someone to oversee the day-to-day affairs of the town, work with the shop owners, visitors, public officials and anyone else involved with the town. Other hires, most likely on a part-time basis: a web designer for the town’s website, a blogger to keep the website flush with fresh information, and one law enforcement officer. Maybe two. I want to at least give the illusion of order.

Priority #7: Rename the town Janatown. This one is still up for debate.

So that would be my strategy should I purchase Scenic, SD. What would you do?