The New Depression

I've been telling myself that I needed to blog for several weeks now, but I didn't have something I really wanted to write about. It came to me today:

Part of what makes me me is that about a couple times a year I immerse myself into a new hobby or some facet of the world that I would like to know more about. It can be Arts, Sports, Homemaking, Sports, Education. Anything. This is how I found endurance running, triathlons, a love for all things medical (that started when I was young). Last year it was knitting. It was a slow year. The past several months I've been doing a lot of experimenting in the kitchen (which led to the psuedo-vegetarianism) and the bigger thing is personal finance.


While I believe that the current economic crisis is being fueled by the evil, end-of-the-world media coverage, I think people have been very stupid with their money, including myself. Baby boomers and Generation X'ers alike have stretched themselves thin which huge outrageous houses, cars costing $60k, 2 and 3 kids in private school or colleges. So when DaddyMoneyBags loses his $100-200k job, what happens? They suddenly go into culture shock and lose everything. They don't own their home, the bank does. They don't own their cars, the dealers do (or even worse, they lease!). Most later 30-50 year olds have retirement plans, or I'd like to think so, but most 20somethings do not (including myself, but we'll get to that later).

My new "hobby" is to completely change how I look at how I live, what I eat, what I spend, and my security. In the past couple of months I've read no less than 7 books on saving money, being thrifty and frugal, mortgages (for Kurt), budgeting...I could go on. Ok, so it was probably way more than 7. Lets discuss.

Why do people, myself included, think that just because they can afford a $300, or heaven forbid $6-800, car payment, that they should carry that. That payment over 3, 5, 6 years at 6-8 percent interest is absurd!
Who fell into this way of thinking? Yours truly.

Homes. McMansions. Cookie cutter suburbs. I understand the economy, I understand why homebuilder after homebuilder builds 3000sq ft.+ homes to cater to these families with 2-3 kids, as the parents think they need "space" from each other. Media rooms, living rooms, play rooms...all in the same house! On top of 4 bedrooms. Absurd.
Now the houses I like can cost the same amount as one of these houses. Thats because I prefer living in a more urban area, older homes. Why build new ones, far away from work/play, where you waste more money driving your Lexus for over 2 hours a day in traffic? For the lifestyle I *want* to have, I don't see why Kurt and I would never need more than a small, 3 bedroom home. Us and pups. Bedroom, living room, dining area (probably used as "office" area), guest bedroom and a workout room. Thats still more than we need. More on that later.

The biggest place that people waste money (other than carrying too much debt of all kinds) is in the home. They buy tons of food, especially food that goes bad, and then don't eat it! They stop at McDonald's. Mom doesn't feel like cooking so they go out. Kids don't want 'that' and they go buy more food. People don't plan healthy, cost conservative meals anymore.
I have (had) no shame admitting to spending almost $400 a month on groceries, sometimes probably even more. I was too lazy (or too ignorant) to look at the food I was preparing and how much it costs. I would go to the grocery store down the street that easily costs twice as much as the Commissary. I justify it sometimes by saying the Commissary is too far, however, with better planning this excuse should not work. On top of that, whats a run to Whole Foods? Well, $50-70 later...about once a month, maybe more...unacceptable.

Now, many people, especially my age, have no problem going out every weekend with friends, bars, dinners, another bar, buying drinks....I cannot imagine how much that costs people. Holy cow. 2-5 hours out on a Friday or Saturday night (sometimes both!), drinks at $4-8.50 a pop....it makes my head spin!
Maybe its because I don't make that much money, but that just seems like money down the drain! Why aren't these people having 1 drink, or better, inviting people over to their way-too-expensive apartments, buying a 6 pack for about $6, and playing games? That sounds like my kind of fun.

So what can we, the educated public, do about this? Don't be stupid! The life I want to lead now, when I picture it, is living in a small home, that gets the job done. Safe, secure, in good condition with a decent kitchen (that can be a little on the bigger side, as its my favorite room). This small home, filled with love, is paid for. Off. So what if we qualify for a $400k loan? Whats wrong with $180? Whats wrong with putting as much as you comfortably can towards that loan, twice a month, and paying it off in less than 2 years?

I see us driving 2 paid off cars, that we pay cash for anytime we need a "new" one. New being, about or less than $10k (maybe more as we move up tax brackets and can pay cash for ones that cost more), that is clean and runs well, and gets us from point A to point B. If we need to take a long car trip and aren't 100% sure with about our paid off 8 year old cars? We rent one for a week. No big deal. Renting that new car for a week still costs much less than a car note! What a concept!

What will living like this do for us/me? Build us a huge nest egg to pay cash, or a huge chunk of cash for a custom home (or someone elses custom home that they couldn't afford) in a place we would love to live. Be able to support our parents as they enter into old age if they need it. Have the freedom of no car notes and home notes, with our only debts being school loans which are better to carry than car notes. And hopefully we'll only have those for as short of a time as possible. We'll have the financial security to loan money to our loved ones if they get into trouble (if they were stupid for all the above reasons, nowayJose), medical or the like, we won't have stressful money issues like 99% of the married households. Unless of course, my partner decides that my cheap ways are annoying...

So what can I do? The biggest discretionary expenses I have are my car note and my groceries/shopping. I have started paying an extra $100 a month to my car loan. It will still not be paid off until early 2011. Stupid. Groceries: time for more beans and rice, chili's, quinoa/couscous and veggies, etc. My goal is to see if I can live on $100 a month for groceries by April. It's a lofty goal, but by trying as hard as I can, I still win. I cut my cell phone plan down by $25. It might not seem like much, but by being wasteful with my minutes, my $75 plan was costing me over $160 a month! There is no reason why that should happen. Kurt switching plans was the best thing we could both do.

Now, time to start paying down my unnecessary debts and building savings: car and money I owe Noot which unfortunately will take a me a while. The freedom and satisfaction that I will get will be worth it. Besides, I'm a decent cook, my cheap food doesn't have to be bad.