It’s a good thing my husband and I started dating before he lived in his fraternity house in college. Otherwise, our relationship probably wouldn’t have lasted past the first time I saw the place. Because, had he brought me to his fraternity house, here’s what I would have been treated to:

Upon first glance, the house wasn’t too bad.From the outside, anyway. It was a two story house, with a fairly decent sized backyard and garage. The lawn was usually mowed (typically when a pledge needed something to do), trash was picked up (provided there had been no parties or midnight barbecues), and the 1800 cars parked in the driveway were done so in an orderly fashion. But then the doors opened. And a whole new situation began.

When you walked through the side door (because the front door was usually locked. Not sure why), you had the choice to go upstairs or continue around the hallway to the downstairs (I should clarify here that the house was split into 2 apartments so that 8 people could live there; 4 in each apartment). Depending on which path you choose, you were greeted by two different situations. Both disgusting, both unappealing. For argument’s sake, you chose the downstairs because you had been told by a little birdie that upstairs contained not only the “love room” (I’ll let you figure out for yourself what that means) but a TV that ran stolen porn 18 or so out of 24 hours a day (the remaining hours were consumed by video games).

But you find out that downstairs, while less like a brothel, is more like a shameful excuse for a house. Hovel is probably a more appropriate description. My shack at sleepaway camp was better constructed than this house. First of all, the addition that was built onto the house was breaking away from the foundation. Too many people on the floor would have made it collapse. So that was a fun party game. Second, if you wanted to know if it was night or day, you didn’t need a window. All you had to do was look at the bathroom floor because there was a crack so big that you could clearly view the outside world. Which was very helpful when you woke up and wanted to know exactly for how long you slept. Then there was the window that was painted open. Yup. You read that right. The window was painted open. Great handiwork, gentlemen.

Awesome stuff, right? Totally the house you picture yourself having a nice evening in. However, that’s not even the best part.

Because we still need to discuss the cleanliness issue. I can understand that 8 guys living in one house, a fraternity house no less, equals one giant, disgusting mess. But these guys took it to a new level. Moldy food was in abundance, dog shit was all over the basement for awhile (one guy had his dog living in the house and was too lazy to walk him, so off to the basement is was. Which was supernice because that’s where the laundry facilities could be found. When they worked. And didn’t flood the basement), and there was such a funk in that house that I’m pretty sure it’s still stuck in my nose. And don’t you dare walk around that house without shoes on because there’s no telling what you might step on and tetanus shots hurt. My husband had so many illnesses in the first year he lived in that house (because one year wasn’t enough, he lived there for 3 more years), that I’m convinced that’s the reason he doesn’t get sick now. That house made his immune system badass. Or no other illnesses are a challenge. Either one.

Fortunately, to compensate for the porn, filthiness, and shoddy construction, presents were often hidden around the house. If you found them, you were so lucky and the envy of all. Because who wouldn’t envy presents like the jar of peanut butter in the freezer that had the imprint of a boob in it. Or the metal pot being cooked in the microwave. Or the crowd of people smoking weed in the loft of the garage. Or the 6 day old beer that I’m pretty sure one guy drank for $1.  Or the homeless, drug addicted friend of one of the brothers camping out on the couch. Or the guy…well, I can’t even discuss that one without throwing up.

It was eventful to say the least and the living expenses were affordable (particularly the rent, which was made even more affordable by the fact that the chapter subsidized part of the housing costs), but really, at what cost? Illness, unwelcome guests at all hours of the night, and the ability to see the outdoors without a window?

Fabulous.

And all of this is the reason I hate the advice “live like a college student”. Because who the fuck wants to live like this?

Being tired is not uncommon for me. I have terrible issues with sleeping. Not so much in that I don’t like to do it, but more that it doesn’t like me. I can’t turn my brain off at night, my bed is uncomfortable, and there are way too many bodies sharing my bed (let me clarify for all of my dirty minded readers. Yes, Joe, I’m looking at you. My dogs sleep in bed with my husband and me). Also, my room gets way too hot, I get thirsty, and a vicious cycle starts. And the common thread in that cycle is that I don’t sleep.

Now, one of the advantages to not sleeping is having an excuse to take a nap in the middle of the day. Another advantage is ramping up my productivity at 2AM when everyone else is asleep.  And yet a third advantage is being able to watch Roseanne because it’s only on in the middle of the night. However, although I enjoy all of these aspects to my delightful inability to sleep, the negatives far outweigh the positives. So much, in fact, that I’ve assembled a list of the 5 worst financial things that happen as a result of my chronic insomnia:

1. I buy shit I don’t need. Today, while buying cat food and paper towels (I know how to party), I bought travel sized nail polish remover. I have no idea why I need that. I don’t travel that frequently. I may also be prone to buying unnecessary stuff for others as well. Particularly those I love the most.
2. I hate to cook. Or I forget to buy important ingredients and then I get pissed and decide I’m not cooking that day.  So we go out to eat. Usually somewhere unhealthy but delicious. And totally not factored into the budget.
3. I fall down. And I get hurt. At the gym the other day, I fell of a step riser and messed up my ankle. This almost cost me a co-pay and a trip to the doctor. But I hate the doctor (or, more specifically, my doctor) so ice and ibuprofen seem to work for the time being. Let’s not even discuss the fall down the stairs a few months ago.
4. I forget to pay bills. Although most of my bills are automated, there are still a few that I pay manually. I *might* occasionally pay some late, which doesn’t necessarily incur a late fee but it does cause a headache when the bank won’t stop calling because the mortgage was 3 days late even though 3 days late is included in the grace period.
5. I rely on my vices. I don’t have many vices. I don’t smoke, I’m pretty good about finding free or inexpensive options for books, movies, activities, etc and all that jazz that PF bloggers normally brag about. But I do have vices like soda, green tea and music. When I’m tired I’m powerless against them. Resistance is futile. Mainly because they keep me awake.

I’m sure there are more ways that my insomnia costs me money but I’m too tired to remember what they are.

Readers, what are some of the financial side effects that happen when you’re tired? 

This is the second post in the Investing Basics series, written by Jennifer from To My Girlfriends. I’m thrilled to have her writing this series and I hope you enjoy it as much as I do. Make sure to check out Part 1. 

I briefly touched on mutual funds in my last post, but let me put it in layman’s terms.  A mutual fund is a professionally managed portfolio of different equities, such as stocks, bonds and cash, designed to give a small investor the opportunity to invest in those equities with a small amount of cash.  The mutual fund manager takes the money you give him and decides the best way to allocate those funds.  If you are in a bond fund, then the majority of your dollars will be allocated to bonds.  If you are in a large cap mutual fund, then the majority of your dollars will be allocated to large cap stocks ie. McDonald’s, Kimberly Clark, Caterpillar, etc.  (We will discuss “large cap” at a later time.)  Also, remember the manager will not be fully invested, they will keep some money aside in cash for various reasons…sometimes because they sold off a position and just haven’t re-invested the cash elsewhere yet.

When I was recommending mutual funds to former clients some of them would get so confused that an IRA they were invested in was actually a mutual fund just dressed up into a retirement vehicle.  Are you confused by that too?  Well, let’s see if we can remedy that.

*Note, for you more advanced people I do know there are retirement vehicles that aren’t mutual funds, but for my purposes I am sticking with this view.

You can purchase a “regular” mutual fund.  There are tax implications with a “regular” mutual fund.  When the funds you invested gain in value, which is the goal hopefully, then you will pay taxes on that gain when you remove the dollars from the fund.  Also, you will receive a 1099-DIV from your brokerage firm if your mutual fund invested in any companies that paid out a dividend that year.  You probably didn’t receive a check for the dividend payout because you probably checked the box “reinvest dividends.”  It is a very common practice unless you need the dividend income to live on.  It’s also a great way to increase your portfolio value.

Now here is the confusing part, I think.  Your “regular” mutual fund is great for some medium-term goals, but if you have long-term goals, as most of do, your advisor has probably suggested an IRA.  That is an Individual Retirement Account.  The money you put into that account is intended to stay there until you are 59 ½ .  The IRS will penalize you if you remove it prior to that age, unless you qualify for one of their exceptions.  There are 2 types of IRAs, the Traditional and the Roth.

The Traditional IRA lets you deduct your contribution off your taxes which means this type of IRA is “tax-deferred.”  Since you didn’t pay taxes on your contribution you will pay them later along with paying taxes on all the earnings on said money.

A Roth IRA, on the other hand, is not deducted off your tax return.  All the money you put into the IRA and all it earns are tax-free.  The penalty applies to both the Traditional and the Roth if you take the money out prior to age 59 ½.

If you happen to be lucky to work for a company that offers a 401(k), good for you and even better if they “match.”   A 401(k) is another retirement investment vehicle.  You contribute to your company’s plan.  The dollars you put in are considered a salary reduction.  In other words, you don’t pay taxes on that part of your salary.  This is another tax-deferred plan.

The last retirement vehicle to discuss is the 403(b). I inadvertently called it a 503(b) in my last post.  I’m sorry about that.  Acronyms and numbers trip me up too.  A 403(b) is structured very similarly to a 401(k) but it is offered to certain employees of public  schools, tax-exempt organizations and ministers. (http://www.investopedia.com/terms/1/403bplan.asp#axzz261f0XQxU)

All of the plans have benefits and you can have more than one of them at a time.  They do have different contribution limitations though.  If you exceed the limits, you will be penalized so consult your advisor or www.irs.gov or shoot me a note and I can discuss this with you.

There are even retirement plans for the self-employed, but the above 4 cover most of the population and their options.

To summarize, 3 of the plans I discussed are tax-deferred because you get to deduct the contributions from either your salary or your taxes and 1 of the plans is tax-free because you don’t deduct the contributions.

 

One thing to remember, an IRA is either yours or your spouses’ (if that fits).  Even if you don’t have gainful employment outside the home, but your spouse does, you are eligible to contribute to one.

 

Since I’m at FinCon12 this week, please enjoy this post from another blog of mine that didn’t last very long. 

I am painfully jealous of people who can go to Target with a list and only purchase what’s on that list. Because I? Cannot.

My Target intentions really are pure. I diligently plan out what I need and bring roughly what I think I’m going to spend on those items (I even have the Target app on my iPhone. It does me no good). I walk in, calmly grab a wagon and walk towards the aisles that house what I came to buy.

I think that getting a wagon is probably my first mistake. I tend to see a wagon and think, “Wow! I’ve got plenty of room in there for my purchases!” I’m ecstatic that I even have room upfront for my purse and whatever toys the child felt were necessary to bring with us (because no shopping trip to Target is complete without 75 Barbies, 49 stuffed animals and a crayon. Yup, one crayon).  But seeing as how I clearly hate empty space (and my budget, apparently), I feel the need to fill up the wagon.

I get lured in by the shiny new beauty products that I don’t need (oh, wall of sample sizes. How you test my willpower) and the towels that I have no room for and the toys that my daughter will try to steal so I pay for them because I don’t need a 5 year old criminal. I take them from their lonely spots on the shelves and add them to the party in my wagon. I lather, rinse, repeat throughout the store until I’m too tired to shop anymore. Then, as I push my now overloaded wagon sadly around the rest of the store, winding my way to the registers, I remind myself that I forgot to get what I actually needed. So off I go for another spin. And the cycle repeats. And then I hang my head in shame as I hand my debit card over to the cashier, while the cash in my wallet mocks my lack of willpower.

It’s a shame really because I know that it is possible to walk into Target, get only what I need to survive (or clean myself or feed my cat or whatever), pay and walk out. I know it’s possible because I’ve seen people do it! And they fascinate me with their discipline and fiscal responsibility. I want them to have their own show on TLC; the antithesis of Extreme Couponing. It’ll be called Extreme Target Shopping and the extreme part is not saving money by buying 9700000 bottles of mustard for a quarter but buying only one because that’s what’s on the list.

I’d totally watch that show.

I’ve talked before about how, when I first started taking Zumba classes, I had to get over my embarrassment and trepidation of starting by realizing that I just didn’t care what other people thought. I also mentioned that, when you’re paying off debt, it’s imperative to have that same thought process. And I also talked about how we need not pay attention to what all of the other, more coordinated and experienced people think of us and how they probably admire us just for stepping into the room.

I still believe that.

But I also believe that prejudices about exercise, and money, work in reverse. For all of the people we think are out there judging, commenting, and developing their own versions of our backstories, we (and by “we” I really mean “me”) are doing the same. See if this situation doesn’t sound familiar:

After mustering up enough nerve, and finally finding the right clothes that do not accentuate every single bit of fat on your body, you walk into an exercise class. You take your necessary place in the back corner, far away from the prying eyes of the well-toned, clearly coordinated women wearing what you only would wear in the privacy of your own home (as long as no one else was there and it was laundry day, meaning all of your comfortable, loose fitting clothes were dirty) and the even more well-toned and ferociously energetic instructor. As you self-consciously look around at the rest of the class, waiting for your 60 minutes of much needed torture to begin, you start to think about how all those women (and men, too) are so fit and can probably never imagine what you’re going through. The failed diet attempts, the agony of clothes shopping, the self-berating that comes after you have both wine and dessert; these people could never possibly understand that.

Or could they?

Upon further research, particularly when you’re looking for Zumba classes near say, I don’t know, a conference, you learn that the most enthusiastic, high-impact, energetic instructor you have ever had recently lost 100 pounds. Then you learn that your favorite instructor dropped 8 pants sizes. And your other favorite instructor has lost close to 80 pounds. Then you find out that, among those skinny moms who look like there’s no way they just had a baby, more than one of them have also lost a substantial amount of weight.

Then you feel like an asshole for judging them so harshly in the first place.

Those of us who’ve battled debt often do the same thing to people who look like they’re financially comfortable. We see them with their new clothes, taking vacations, and generally enjoying life while we sit in on our old furniture, watching another movie from the library, eating leftovers and we can’t help but hate them. We can’t help but imagine the most horrible things: they’re worse off than we are but are putting on a good show; they’re so lucky to have no debt; I wonder who paid for them to do that. However, what we don’t see is that in some of those cases, they’ve come into money under terrible circumstances like the death of both parents. What we don’t see are the struggles that some of them went through to make it through college debt free or to pay off tens of thousands of dollars of debt. What we fail to remember is that yes, some people are lucky to be born with a great bank account and helpful family members (or a great metabolism) but many of them did not.

They put in the time, work, and effort required to manage their money and pay off their debt. They learned, whether at an early age or later in life, how to live on a budget and not spend more than they make. They took the initiative to control their impulses or, if you’re some of the people I know, find a career that they not only enjoy but is incredibly lucrative and put in the long hours studying and working to become excellent in those fields. The bottom line is that the people we view as successful and better off than us have, most likely, been right where we are now.

So it’s time to put away the hate (okay, fine, most of the hate) for those people. Start using them as inspiration to achieve your goals. Talk to them. Learn what they did to get to where they are. Ask if they’d be willing to help you in your journey. I think you’d be surprised at the response.

And, if they say “no” or something really mean or inappropriate, I give you permission to create the most awful story about them ever and then share it on Twitter.