Beyond Paycheck to Paycheck

at December 29, 2008 in Balance, Cash Flow and General Financial Planning. 1 Comment

I hope you are enjoying the holidays. Now that we’re in late December, a 2008 recap seems appropriate. Financially speaking, these were my top four financial moves of the last 12 months:

Not buying a house. Although home prices have fallen in our area, prices have only retreated to 2004 levels according to most local reports. Unless you purchased in 2006, this is hardly a major correction. Furthermore, home prices are still expensive by historical measures (e.g., ratio of sales price to rent, affordability based on median income, etc.). As such, I believe (but cannot guarantee) that home prices will continue to fall for the near future. Yet when we do buy, we expect to stick around for a while. Add that to the size of my growing family and we just might purchase before the 2010 expected bottom. Still, not buying a home during 2008 is my top financial move.
Visiting Boston during an ice storm - Like most New Hampshire residents, we lost power for at least two days earlier this month due to an ice storm. No way we were going to ride it out at home when the inside temperatures were expected to (and did) reach the thirties - we have an infant! So we planned on heading to a hotel 20 minutes away. Then my wife and I chatted: Why not make lemonade out of lemons? If we’re forced to use all these hotel points (I travel a lot for work), why not go somewhere fun? So off to Boston we went. Now we have family memories of being tourists in Boston (riding the subway, going to the Aquarium, pressing buttons to go up and down on the elevator) with two little kids instead of hanging out in the confines of a breakfast nook in Dover, NH waiting for the lights to come on back home.
Not selling any investments as a reaction to the financial crisis - Other than a swap of very similar mutual funds for tax purposes two weeks ago, we made no changes to our investments this year. Yes, we got pummeled in the market like everyone else. Yet we’re adding to our stock market investments at this fairly low point in the market. I can afford the risk as a thirty-something, knowing I have decades until retirement. Still, stomaching the downturn without selling impulsively was a top 2008 financial move.
Buying tickets to two Red Sox playoff games - Admittedly this might not have made the list had the Sox been blown out twice instead of rallying, in the bottom of the 9th, to win both playoff games I attended. This financial move serves as a reminder that money is only a tool to bring you things and experiences you desire. Money is not a thing or experience in itself. Some people would scoff at spending $150 (twice) on a ticket to a baseball game. They should. But I underpaid; each ticket was worth far more to me. Since I prioritize my spending (and limit or even eliminate it on things I don’t truly value), I can afford the rare extravagance of a $150 ticket. As a result, I have memories that will last my lifetime. I can see it now: “Yes, grandson, I was at that game when the Red Sox came back from 7-0 with two outs in the seventh . . .”

# # #

What were your best financial moves of 2008?

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When you spend less, you get more value out of life

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at December 24, 2008 in Balance, Cash Flow and Saving Strategies. 0 Comments

We received over a foot of snow last Sunday. This was on top of another foot that had finished falling less than 24 hours previously. Needless to say, it was a day that the entire family (save for my shoveling excursions) stayed inside. It could have been boring.

It wasn’t.

In fact, at the end of the day, my wife and I agreed that we would remember one thing that we had done together far longer than we’d remember the crazy snowstorm or our last dinner out with just the two of us (which has been so long I think I’ve already forgotten it).

You: What did you guys do?

We made a memory, by making dinner together. All of us.

You: Isn’t your youngest kid an infant?

Technically, yes. We made her supervisor and she monitored the situation from her high chair. But my wife, older daughter, and I made dinner, assembly line fashion with calming but festive music playing in the background.

You: iPod sound system?

No, a boombox from 1991 that still works. See, the stereo is meaningless. So was the fact that dinner’s ingredients cost less than $20 and fed us all (thanks to leftovers) for two nights. The memory was from the camaraderie and the genuine closeness of enjoyable family time, not family money.

It was the second time something like that happened in a week.

You: Something like what?

That, by spending less, I was getting far more value.

Last week, my wife and I went out to lunch. We met in the middle of the day and had lunch together.

You: I don’t need a definition of “lunch.”

True, for most people, meeting someone for lunch is routine. However, my wife and I both run small businesses so we don’t often have the time. But we decided to make the time last Thursday.

I could tell you that our little lunch rendez vous was so enjoyable because we meet for lunch very often. That would be true. I could say, as I did above, that the reason we don’t meet very often is because we’re both very busy. But the truth is that we don’t go out to lunch not only because of our schedules, but also because eating out is an easily avoidable expense. Therefore, we almost always bring our lunches.

But we had such a nice time. So, I think I’m going to suggest to the Mrs. that we meet for lunch more often.

You: Increasing your spending.

For sure, but not be nearly as much as the value we received from a $10, combined, lunch.

You: That’s really cheap.

True. We also had a coupon so it won’t be that inexpensive each time. But again, it wasn’t the cost we were focused on. It was each other. When you’re focused on spending time, not spending money, you get a lot more value for your dollar.

Extra bonus: you live in balance.

What do you do for top value?

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Traffic and Spending Together on the Ones

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at November 21, 2008 in Cash Flow and Saving Strategies. 0 Comments

After a week in Hawaii and a couple of days in Los Angeles, I am glad to be home in NH, even though the temperature is about 55 degrees colder here.

You: Tired?

Exhausted. Two red-eyes in three days is quite enough. Nonetheless, I have some sleep-deprived observations from my trip to share.

I’ll start with LA.

“Los Angeles,” when translated from Spanish means “The land of heavenly traffic if heaven were one million degrees.” Seriously, the traffic there is simply ridiculous. Many southern Californians realize this, although, I have found, not all. More and more residents simply deny that traffic is as bad as it is and/or simply have gotten so used to it that they don’t realize how much worse it is in southern California than anywhere else.

Partially, that attitude is healthy because there isn’t much one can do about the traffic anyway. But it’s also partially nuts because there are people spending hours a day in their car - and many of them aren’t actually moving - I have observed this. The opening scene from “Office Space” is not pure fiction.

I was in my rental car before 6AM (there’s that red-eye reference again) for the drive from LAX to Santa Monica and I hit heavy traffic. I visit a radio station for an interview 10 miles away and leave at noon for a 1PM meeting - cutting it very close thanks to . . . traffic. I could go on and on about how it took me 10 minutes to make a left turn at 7:30 PM, but I won’t.

You: What’s this got to do with personal finance?

Plenty. I see many people get in the same rut of traffic with their spending. Denial is a powerful force, but so is acceptance. Denial that they are part of the problem and acceptance that they, therefore, must struggle.

For example, one of the people who attended my seminar the first night at the LA ING DIRECT cafe came up to me privately and explained that her income was about 40% of what it was several years ago. In the interim, she had basically depleted her lifetime of savings. She didn’t want to touch her retirement account, but was afraid she might. “What should I do?” she asked.

I knew she knew the answer. But she didn’t want to say it, because knowing and not doing is plain stubborn. No one likes to consider themselves stubborn. Feeling powerless to change the situation, in a way, is perversely more tolerable - we don’t have to look inward. But that is the wrong answer.

“You know the answer,” I told her. You have a firm handle on your finances and you are aware of what you are doing. You can’t live on a $100,000 salary if you are confident you are going to make $40,000 for the next part of your career.

She disclosed she had until very recently two cars in her one-person family.

[Now I am thinking this is part of aforementioned traffic problem, but I don't say this to her.]

The necessity of reducing her spending was hard for her to accept, but short of increasing her income, which she was confident she was unable to do, this is her new reality. People have grown to accept that they must leave early enough to get around the traffic in order make it to work on time, why is it that they won’t accept that they must spend little enough to be able to save? Unless you have a helicopter, you’re not going to get around the traffic. And if you have a helicopter, you’re hopefully got a lot saved already. But even you could be living paycheck to paycheck.

How do we get people past denial faster? And is traffic really lighter in LA at 4AM?

"financial education"

What have you changed?

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at November 10, 2008 in Cash Flow and Retirement. 0 Comments

As I flew across the country yesterday, I sat next to a woman who was heading to Tahiti. She explained to me that this was supposed to be a retirement trip, but with the market’s recent slide, she decided to work another six months. Still, she was going to take the trip because much of it was already paid for. Clearly, I don’t know her entire financial situation, but I thought it was a bit odd.

I mean if you really got hurt badly by the correction, then six months of additional pay probably isn’t going to matter, especially after subtracting the costs of what I can imagine to be a rather expensive vacation to Tahiti (nice lady, but she and her husband spent over $30 on airplane liquor by the time we got to South Dakota).

But the brief exchange did get me to thinking, what have you changed, if anything, since the recent worldwide realization of slower growth, a recession and a market crash? All answers are acceptable, including buying less branded groceries, smaller packets of toilet paper, no change at all, even delaying your retirement for six months!

P.S. I am in Hawaii this week delivering several seminars at the ING DIRECT cafe grand opening there. As a result, I may be a little less active on the blog this week.

Aloha and mahalo!

"financial education"

Toilet Paper As an Economic Indicator

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at November 7, 2008 in Cash Flow. 2 Comments

I just finished reading At the Supermarket Checkout, Frugality Trumps Brand Loyalty. Fascinating excerpt:

Shoppers are even buying toilet paper differently. “When they get to the end of the month, and they’re out of paycheck, they may buy a smaller-count pack,” Mr. Falk said. “You’re seeing that shift in consumer behavior during a pay-period cycle more than we maybe have in the past.”

I think this point shows us two things:

The economy really is in the toilet. (Yes, there’s an intended pun there.)

When you’re living paycheck to paycheck, you can be forced to make additional decisions that are ultimately not in your best long-term financial interest.

I say this because the shelf life of toilet paper approaches infinity. Unlike the strawberries I bought just three days ago, toilet paper never goes bad unexpectedly. And, unless there are some serious medical issues, you are pretty much eventually going to use all the toilet paper you purchase.

Since, when you buy toilet paper in bulk, you pay less per roll, it’s better to buy large quantities of toilet paper.

Yet when you get to the store and you don’t have the $3.99 for the 24-pack only have $0.99 for the 4-pack, you pay more per roll. You can’t wait until tomorrow for payday to get the more cost-effective 24-pack. You’ve got to go today.

Far better to make a conscious effort to reduce spending as appropriate then spending less in the short-term knowing all the while that in the long-term it will cost more. Yet another advantage of living Beyond Paycheck to Paycheck.

Now, if you’ll excuse me, I have to go to the bathroom.

# # #

How have you shopped differently? Feel free to talk about non-bathroom related products.

"financial education"

Do you believe in change?

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at November 5, 2008 in Cash Flow. 8 Comments

This won’t be political.

You: Really?

Nope. This remains an apolitical blog.

You: But what’s with the title then, especially the morning after the election?

It’s to get your attention. Now, to today’s topic: Change. What do you do with yours? I’ll admit, I am terrible at managing my change. I have a huge cup (now two cups) full of change at home. I never seem to remember to put change in my pocket when leaving for the day, so when I spend cash and something costs $2.08, I walk home with 92 more cents to put into the overflowing cup.

So I’m wondering, do you have that problem? How many people are sitting out there with a ton of change? Could you give a rough estimate of your change? And what are your plans for your change? State your gender too, because I have a theory I’d like to test out that I’ll share in a future comment. This is an easy blog posting to participate in.

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Pay less for the same

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at October 27, 2008 in Cash Flow and Saving Strategies. 2 Comments

I visited my brother over the weekend. He gave me another example of how to live fiscally responsibly without being cheap.

You: Why is “living fiscally responsibly, not cheaply” such an obsession for you?

While obsession seems like a strong word, the concept is critical because it is sustainable.

You: You mean from an environmental perspective?

No. A successful saving strategy is one in which the individual stays with it. In talking with thousands of regular people throughout the country every year, I’ve concluded that saving strategies are only sustainable (and thereby effective) if there is either little pain or no pain associated with the actual implementation of the strategy.

An easy-to-remember example is adjusting your cell phone plan to the right package instead of paying for a ton of minutes and features you don’t use (or, in the other extreme, ensuring you don’t pay any expensive overages). You still get to use your phone in the exact same way as you do now, yet at a lower price than you may currently be paying. Note: your cell phone company isn’t going to call to tell you that there’s an easy way to lower your monthly bill. You’ve got to do the work, but once you invest 10 or 15 minutes of time, the savings you get reoccur every month. Cell phone bill reductions are an example of sustainable savings because the pain - measured as the time and what you have to give up - is nominal and non-existent respectively.

My brother’s example was for XM radio.

You: That’s a luxury.

I happen to agree, but millions of others don’t feel that way.

You: Paying for radio? C’mon!

I’m not going to defend it, as I don’t have it myself. However, I’ll ask you to consider the fact that you, in all likelihood, have at least basic cable for your TV. Technically, you could have free TV through antennae (at least for a few more months) but you choose to pay for it.

You: Okay but –

I know, I’m not there yet either. But here’s the point. My brother became convinced he wanted XM radio after one of those free trials.

You: That’s why the companies do free trials.

I know. But rather than just pay the stated rate when he decided he wanted to continue with XM, he did some research online and found that there just might be a lower rate plan available if he said the magic phrase.

You: Bosco?

No. Not Ovaltine either. But my brother said the magic phrase to the right person and, presto, he’s now paying a lot less than the rate most frequently advertised. Same satellite radio, yet a different and lower price. Given that he wants XM, he’s being fiscally responsible. The exercise cost him just a few minutes of time and yet the monthly savings are forever.

You: Still, it’s satellite radio, a luxury.

For you and I: yes. For others, no. But I bet you could think of other examples of things or services that you want or need that others may be paying different amounts than you are. Care to give an example? Be as specific or general as you wish.

"financial education"

Personal finance and your spouse

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at October 22, 2008 in Cash Flow. 2 Comments

Is your spouse good for your marriage?

You: What?

Is your spouse good for your marriage?

You: I heard you the first time. I’m just not sure what you mean. I don’t think I’d technically be married without my spouse.

True enough. What about financially, is your spouse good for your marriage?

You: Is this about a dowry?

No, it’s about how your life partner’s financial habits can impact your marital satisfaction.

You: Now this is sounding like an article from a magazine displayed at the supermarket checkout article!

Ouch. But it got your attention, didn’t it?

You: Maybe. Or perhaps it was the headline about Bradalina. I’m not really sure.

I’ll take it either way. A relatively recent article in the New York Times, The Key to Wedded Bliss? Money Matters, discusses the importance of having a spouse with a similar financial disposition. Here’s my favorite paragraph of the article:

Today, while most of us marry for romantic reasons, marriage at its core is still a financial union. So much of what we want — or don’t want — out of life boils down to dollars and cents, whether it’s how hard we choose to work, how much we consume or how much we save. For some people, it’s working 80-hour weeks to finance a third home and country club membership; for others, it means cutting back on office hours to spend more time with the family.”

I love that paragraph so much because it captures the element of choice. Much of the financial writing these days implicitly tells us how to deal with what’s been handed to us as opposed to mapping out a plan to achieve what we want. Within a marital setting though, achieving our dreams can typically only work if both spouses want the same things. Imagine one spouse cutting back to spend time with the family while the other is working like crazy to make that beach house a reality.

You: I don’t have to imagine - that sounds just like my buddy and his wife.

Indeed, such stories are everywhere and can make your lives (both financial and marital) more challenging.

# # #

Did you find your financial soulmate when you found your true love? Or is it more of an “opposite’s attract” phenomenon when it comes to money issues? Do tell!

"financial education"

National Payroll Week: Featured Interview with Robert Wagner

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at September 8, 2008 in Benefits, Cash Flow and General Financial Planning. 0 Comments

The American Payroll Association founded National Payroll Week in 1996.

You: There’s a week for everything. What about National Paid-Off Week?

Looking forward to that one, eh?

You: Who isn’t?

Easy: those who are already living Beyond Paycheck to Paycheck. To that end, I had the opportunity to chat with Robert Wagner, Direct of Communication for the American Payroll Association about the importance of our paychecks.

You: The importance of our paychecks? That would seem kind of obvious. Hello? Paychecks are how we get paid.

Thanks, but I went for something deeper:

Beyond Paycheck to Paycheck: A big part of National Payroll Week is emphasizing better ways for employees to manage their paychecks. Can you give me an example?

Robert Wagner: I’ll give you three.

Beyond Paycheck to Paycheck: Even better.

Robert Wagner: The first opportunity for many people is to adjust their W-4 to ensure they have proper withholding. By doing so, they may be able to get an instant raise. Otherwise, those who are getting large income tax refunds are giving the government interest-free loans. For those who receive a refund of more than $1,000 a year, we suggest that they adjust their W4 to give themselves a raise the very next payday. You can adjust their W4 at anytime, you don’t have to wait for annual enrollment.

[Beyond Paycheck to Paycheck note: You can visit our Can I change my tax withholdings into retirement plan contributions? calculator which helps you with the withholding allowance calculation and may assist you in increasing your retirement contributions in the most pain free manner imaginable.]

Robert Wagner: The second way to manage your paycheck is to take advantage of pre-tax programs like your flexible spending account (FSA). Using the dependent care FSA is a compelling case if you have dependent care expenses, which could include child care (even summer camp if you go to work while the children are at camp) or even expenses related to caring for elderly parents (if you claim them as dependents.) Not only could you save up to 35% of the cost (depending on your tax bracket), but participating in an FSA might also bring down your total taxable income into a different, lower, tax bracket.

If your company has such a program, you can sign up for a FSA through payroll or HR. At most companies, open enrollment is November and December.

Beyond Paycheck to Paycheck: What’s behind door number three?

Robert Wagner: The third key is to take advantage of any retirement savings accounts offered to you. You have to take advantage of your match. Every dollar you don’t contribute that would be matched is like throwing money away. Einstein said “compound interest is man’s greatest invention.”

Beyond Paycheck to Paycheck: What do you recommend to the average paycheck-to-paycheck worker who doesn’t have these programs? You’ve indicated that many of these programs can be offered at little or no cost to the employer, so how does one get this to be something that their small business owner/employer cares enough to do something about?

Robert Wagner: Emphasize that it costs very little, a truly negligible amount to run these kind of programs. Plus, it will help their employees to save money on very important expenses. Many people can’t not do child care if they want to work. Child care expenses have increased faster than inflation and employees need help dealing with it. Providing a child-care flexible spending account is a way to offer an effective raise to their employees without it actually costing the employer any more money.

Plus, employers know they need to be competitive in order to attract and retain the best employees. Our survey results show about 60% of employers are no offering such programs.

Beyond Paycheck to Paycheck: What do you think about the communication of these benefits from employers to employees?

Robert Wagner: We find the best way to communicate is for the employer to tell the employees how much they could save by giving examples. In New Jersey, where I live, may people spend between $3,000 and $5,000 per year on child care, meaning they you can save $2,000 per year by simply signing up for the flexible spending program. When an employer points out how much an employee can save, then the employees will stand up, take notice, and begin participating.

Beyond Paycheck to Paycheck: Of course, people are still concerned about the possibility of over-estimating their expenses and, therefore, the risk of forfeiting some of their money.

Robert Wagner: Forfeiture is a consideration. You have to estimate pretty carefully. But child care costs are pretty similar year to year. A few years ago, the government extended the date by which you have to file and spend all your money to March 15. An employer would have to have changed its plan to make that an allowable deadline for its employees to make the extended deadline effective (or employees might otherwise lose those funds.) In my family, if we haven’t spent all the medical money by the end of November, we’ll buy contact lenses for the next year, aspirin, band-aids, the everyday items, even a new pair of glasses so that nothing is actually wasted.

Also, employers can take any money left in the plan and distribute it to the plan members.

Beyond Paycheck to Paycheck: Really?

Robert Wagner: Yes.

Beyond Paycheck to Paycheck: How do they decide who gets what?

Robert Wagner: An employer has three options:

They can split it evenly between all of that year’s FSA plan participants
They can split it evenly between all of the following year’s FSA plan participants
They can spend the money on the employer’s administrative costs for maintaining the FSA. This provides another incentive for employers, and can make such plans virtually free for an employer.

Beyond Paycheck to Paycheck: Thanks, Robert. This was great.

Robert Wagner: Thank you.

# # #

To me, this kind of thing is a good reminder to take advantage of the benefits your employer is already providing you (or you’re being kind of dumb.) In tough economic times like these, many of the raises out there aren’t as good as what we feel we’ve earned. Bummer. But be careful to ensure that you get the maximum from what your total compensation package already provides. Too many people focus exclusively on gross salary and don’t spend the time necessary to ensure that they get the most from their benefits. And it’s maximizing your total compensation that helps you to create wealth for your long-term financial future.

You: And that’s the reason I’m here.

Me too.

Let me know what else you think.

"financial education"

Five ways to be (or not to be) fiscally responsible

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at August 27, 2008 in Balance, Cash Flow and Saving Strategies. 2 Comments

While it’s important to be fiscally responsible, it’s also critical to not be cheap. Life is too short to feel like you’re constantly depriving yourself. Instead, live in balance. By following the top 10 saving strategies, you won’t need to budget for everyday expenses (Strategy # 10) and you can spend with comfort on the items you truly enjoy (Strategy # 8). As I approach my 250th post on this blog, I thought it was an appropriate time to share 10 examples of how I, personally, am fiscally responsible without being cheap.

This list is a little different from most top 10 lists in that it’s really two top-five lists: The top 5 ways I am fiscally responsible (and perhaps, to others cheap) and the top five ways I am cheap (and to others, perhaps, completely reckless with my spending). You can be the judge.

To me, it’s all about balance.

Top Five Ways I’m Fiscally Responsible

1. I reuse sandwich bags.

We recycle practically everything possible in this house, including sandwich bags. Sure, it’s mostly for the envionment, but we spend a lot less on sandwich bags (not to mention freezer bags and printer paper) than we otherwise would.

2. We have just one car.

My wife and I now have more kids (two) and, therefore, car seats (also two) than cars (one). While this wouldn’t work for everyone, it could for many people who currently think otherwise. Do I have to rent a car every so often to make it work? Indeed. Does the occasional rental car expense come close to the cost of owning a second car? No way. We have no payment, no insurance, no maintenance, and no gas on a second car.

3. The car we do have has been around a while.

The one car we do own, a Saturn, is 7 years old. That’s as old as our first car was before it died. So in 14 years we’ve had just two cars. Leasing can make sense if you’re going to acquire a new car every three years, but if you can allow yourself to keep a car longer, a funny thing happens: you’ll have extended periods of time where you have a car but don’t have a car payment. When that occurs, you can easily and automatically begin to save more. A lot more.

4. We genuinely enjoy cheap thrills.

There are many weekend days when we spend virtually no money. Just this past weekend, we went to the public pool (a huge thrill for my girls) and brought a picnic lunch. Cost: $2 total admission plus some small amount for the groceries. Later on in the weekend, we went to the beach and took a zillion pictures of the girls. It was sunset and the results (and the emotions) were spectacular. Total cost: $0, although I’ll confess it will be 12-cents or so a picture to print them later. Spending time with friends (their homes or ours) is another minimal cost and usually winds up being among the highlights of any weekend.

5. We drink store-brand soda.

When it comes to soda (or, as my midwestern friends say, “pop”), I don’t care if it’s a Pepsi product, a Coke product, or a store-brand. I refuse to pay more than $0.99 for a 2-liter bottle of soda. I just can’t do it. So, when the store brand ginger ale is 77 cents, I buy that, not the $1.33 7-Up. I wouldn’t call store-brand soda a thrill and it doesn’t make a big dent in the grocery bill, but when you’re buying 45 cent strawberries, you’ve got to do something to balance out.

Now, the flip slide.

Five Ways I’m Not Cheap

1. I spend a lot on experiences that others wouldn’t want to do even if they were paid to do them.

Like paying airfare for a trip to Detroit and the expense of a rental car for the drive to Ann Arbor just to see a 3.5-hr long University of Michigan football game. Since I moved from Michigan in 1996, I’ve done this every year except two (and some years (read: pre-kids) up to five times a season). The cost varies for the weekend, but $500 is a reasonable average - and the only reason it’s not a lot higher is because I can usually crash with friends who still live in the area. The weekend is an absolute thrill so, to me, it’s worth every penny. However, this would be an absolute waste of money for most other people to spend just 48 hours in Ann Arbor - especially, for example, to Penn State fans.

2. I don’t camp.

On vacation, you can save a lot of money by camping instead of staying at a hotel. That’s a non-starter in my family. I’ve gone camping once in my life (with a bunch of b-schoolers in Utah during a week of non-stop rain). I came home and announced that the experience was the most fun I ever had that I never wanted to do again. It costs more to stay in a hotel but, for us, doing so dramatically increases the value and the effectiveness of the “re-charge,” making the additional expense totally worth it.

3. I drink Tropicana orange juice.

Yup, that’s what the guy who wrote Beyond Paycheck to Paycheck drinks nearly every morning. “Liquid gold!” a friend of mine once called it. I realize that the OJ flies in the face of the 77-cent soda decision, but it works for me. I don’t drink coffee (I’m allergic to caffeine) and this is my in-the-home splurge. (But if we’re out at a restaurant for breakfast, it’s water, thank you).

4. Outerwear matters in New Hampshire (and Michigan, Boston, Chicago, and New Jersey).

Although my monthly clothing spending approaches zero, I own one pair of Timberland boots, an L.L. Bean raincoat, and a phenomenal winter coat. None of them were cheap. The boots I purchased before the aforementioned trek to Utah in 1998, the raincoat in 2001, and the winter coat way back in 1996. The boots still make hiking (the ultimate cheap thrill) even more enjoyable and the raincoat has saved me at many a rainy Saturday in Ann Arbor. When I went shopping for the winter coat at Filene’s in Boston, I told the clerk that I walked to work and that I wasn’t into style. Rather, I simply wanted the warmest coat they sold. She showed me the coat. I put it on. Within seconds, I started to sweat the coat was so warm. It cost what it cost. Twelve years later and it still keeps me toasty. Worth every penny, especially when you amortize it over many very cold winters.

5. A diamond really is forever.

I knew that diamonds lacked intrinsic value even before I handed over a sum of money that exceeded the value of my car. But the engagement ring for my wife wasn’t a financial decision. I wasn’t talked up by the jeweler either. I didn’t buy it at TIffany’s, I bought it in Boston’s diamond district. I figured I was only going to purchase a ring once in my life and, more importantly, I knew my girlfriend (soon to be wife of 10 years and mother of my two children) would wear it everyday. Every single day. For the rest of her life. So I splurged. Call me crazy. But I still smile when I see it on her finger. It was (and still is) totally worth it.

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So what do you think? Cheap? Fiscally responsible? Care to share an example of each from your life (or that of someone you know?)