Don’t Get this Broke 1: Having Kids You Can’t Afford

If you are reading this now, and you are still savable, do not get this much in debt! Right now if things are tough, cut back now, and even ask for help if you need it. Don’t get into debt that will compound with interest and keep you from having fun years down the line.

I am all for full disclosure. I have to admit, I am not one of those radical cases who went in deep debt and pulled out of it. I am sure it can be done, and I read inspiring stories of folks who pull out of the deepest worst debt without going bankrupt. I am not one of them, I struggled through squalor, all the while staying out of serious debt. How did I do this? I didn’t get that broke, I learned ahead of time to just not go there.

I have read many personal finance blogs–especially blogs of parents with small children–who have gotten so broke that they have to turn debt reduction into a hobby and give up other hobbies to get out of debt. I read about a mother who everytime she even thinks about spending money, she pay down her credit card instead. She doesn’t go to free activities with her family, but instead stays home and puts the money she would have spent on gas to get to the events into debt reduction. Some of the childed people’s blogs I read are having another child–meanwhile paying down debt obsessively using radical techniques that really limit their free time activities.

One reason, at this stage in my life, I don’t want kids and am unlikely to have them ever is that they are very expensive. I know my family taught me a lot by getting this broke. We were unable to enjoy the nicer things in life because we were a slave to our house in a fancy neighborhood. My parents never went out to eat or on vacations together. Life was just parenting and working for them. Struggling with debt is still a depressing issue at the family home for my parents and my adult brother. Part of why I am not having kids is I don’t want to do that for 18-30 years my life.

It might be a fun hobby for some people to pay down their debt creatively and due to circumstances it might be their only hobby. However, I want my activities to be more pleasurable and intellectually stimulating than that. So my advice, if you are facing hard times now, take the hit now, reduce your lifestyle now. Maybe you will put off having kids, or you won’t have kids. Maybe you will take charity and do unpaid work to build your resume. Maybe you will live in a tiny apartment with a few roommates to keep in the black and out of debt. But your time living cheap won’t be forever if you leverage your options to get ahead, to get out of poverty. Don’t get so broke that you have to live cheap forever.

My first Carnival

I was chosen as an editors pick in dollar frugal’s blog this week. My article Words of Wisdom: Lending and Giving made the Carnival of 20 Something Finances this week!

Thanks Dollar Frugal!

My pick from the carnival for other childfree folks are:
Pearls of Wisdom for Graduates in mighty bargain hunter. Keep in mind the freedom and potential you have as a young person not yet tied down. As a childfree person I am less tied down than some of my childed friends, but I am married and own a house now, it kinda keeps me put. I wish I had been able to put money away when I was younger, or had travelled too.9 surefire stratagies not to retire early by nomad 4 ever is a great article for childfree folks. Take advantage of your freedom and save enough to retire early. Don’t step into these pitfalls that keep you working like a slave!

15 cheap romantic date ideas at financial learn. I am thinking of trying some of these with my husband soon, great dates on the cheap!

should you take financial help from your parents? from money under 30. I had help for a long time from my parents, but it has its disadvantages. Namely it meant they wanted control over what I did with all my finances because they were helping me. When you take money from mom and dad don’t forget that strings are attached. I am happily on my own now. And I look forward to the day when I can help my parents out with cash from time to time to pay them back–no strings attached!

Words of Wisdom Lending and Giving

I had never been in a position to lend money. I was dirt poor at the time and I was actually the one getting handouts some of the time. I worked for this amazing man, a pastor actually, as his office manager. He was lending money to someone, and I asked him, what if that person never pays you back? And he said, “Never lend money you wouldn’t just as happily give away.” You have to be able to afford to give the money away, and you have to be able to not resent it if the person never repays you. I think this goes for families, friends, and life in general. This is a great way to understand forgiveness. You nip resentment in the bud by not expecting, not demanding. Now I don’t think this means you should let people walk all over you. But if you loan money to someone, you should be just as happy to give it to them just to see them get through a bad time or succeed in an endeavor. What a reward, to have helped someone out! The other reason not to lend money if you wouldn’t give it away, is that you put yourself at a huge risk loaning money that you need. If you can’t get by without the money you are lending, you really are not in a position to lend it.

Lending is a way of sharing and breeding goodwill. A childfree person might be asked to lend more often than his/her childed friends because she might have more money to spare. Make strong boundaries so that you don’t feel walked all over. If you will feel badly about how money is spent, resent lending or giving, or if you feel a lender borrower relationship would hurt your friendship, either address your own prejudices so that you can accept giving the money, or set down boundaries and say “no”. If you want to help your friend, but don’t want to lend money, you might help them find the money. I know some religious organizations help out poor people. Applying for welfare and food stamps can be difficult. Picking up food from a food bank can be hard when you don’t have a car. Getting a new job can be hard when you don’t own a nice outfit or have paper or a printer to make your resume. You might be able to offer help or take advantage of your networks to help your friend find help. These sorts of services are intended to help people get on their feet. And people should not hesitate to use them to become a success story. There is a tendency out there to believe there are only services available for families with children. While there are more services for families with children, there are food stamps, food baskets, and job finding help for childfree folks too.

I have found there are ways to help friends without lending or giving money. Finding ways to save money together is a great way to help out a friend. And you don’t build that sense of one friend owing the other. You both helped each other out, it is completely mutual. In my big chunk series I mention finding roommates and carpooling, both are ways you can help a friend and help yourself. Several times I have helped friends who could no longer afford their living situation by moving them in and charging them less in rent. That room was wasted space in my house that is now making me a little bit of money, and they are grateful for the reduction in their rent. Most recently, we moved a friend in who was paying $350 a month he could no longer afford and we charge him $200 a month.

I seriously believe in helping my friends, but I don’t want to put myself in a situation where I am suffering terribly for the money or resources I gave or lent out and be desperate for a payback. That sort of situation keeps people from getting on their feet. Get on your feet first have a little extra and then you can afford to start helping out others. It is a great feeling to be able to pay forward the help I received when I was down to a new set of people trying to get on their feet. When they get on their feet chances are they will help someone too.

Big Chunk 2-Downsizing Your Lease

As I covered in a previous post, the childfree can often downsize their housing more easily than the childed. Moving can be traumatizing for children, and kids tend to want their own rooms. However, a childfree person can lose the home-office or sewing room if they need or want to save some money by squishing into a smaller place.

I forgot to mention the other day when I wrote Big Chunk 1, that renters can often negotiate with their apartment complex managers for converting their lease to a smaller apartment in the same complex. Several of my friends have done this. The moved from three bedrooms to one or two bedroom apartments within the same complex, and the managers did not make them pay a penalty. However, their cleaning deposit was raided in both cases. If you can repay a cleaning deposit, but really need to save the extra bucks, you aren’t really trapped in your lease, if the managers will agree to move you down a size in their building.

When I up-sized into a house, I still had a fairly long lease on my apartment. It would have cost an $1800 penalty to end the lease! I had to be creative, and so I sublet my apartment. Now when you sublet you are still completely responsible for the apartment, and so you have to really trust the person you are subletting to. I sublet to a friend to help her get on her feet. She signed on as a roommate on the lease and I stayed on the lease with her until it was time to re-up the lease, then she did so on her own, we took ourselves off as roommates. For a while she paid me the rent and I paid the company. I sweetened the deal by giving her reduced rent the first few months.

Big Chunk: Reducing Housing Expenses

When it comes to reducing your monthly budget, few things make as big of a difference as reducing housing expenses. Childfree folks have incredible flexibility when it comes to this. If we are currently renting, our only limitations are in some cases leases and pets. If you own your home, your freedom to downsize could take longer, but a childfree person or partnership can downsize with more ease than a childed family. I am going to list some of my favorite options of making a big chunk change in your budget and downsizing your housing:

For renters:

If you have gradually found yourself in nicer and nicer apartments and homes, and you have filled up the space successfully with furniture, dishes, art, and a huge bed, the idea of downsizing can be scary. However, really you are only limited in downsizing by your pets and your lease.

If you have a large dog and live in a house with a yard: your options for downsizing are to find a smaller house with a yard, or to take a roommate on to share the house with you. Maybe you should find a roommate that also has a dog.

If you have small pets or no pets, you can downsize to a smaller house or even a smaller apartment to free up possibly several hundred dollars a month. If you have big stuff, a big bed, furniture, you can store it for more cheaply than the difference in rent, or you can get rid of it. If your parents have a garage you might share the savings you are making by paying them the going storage rate to store your stuff instead of letting the money leave the family.

For homeowners:

As a homeowner you likely have a garage and maybe an extra room or two. If you are like me you are not using your space as efficiently as possible and you could make room for a roommate. I spent a day getting rid of most of the boxes of random jank in my garage. I was shocked at the junk we had kept. When I was making room for our roommate, I sacrificed my art studio, or so I thought. I realized we never ever use our kitchen nook. It is just wasted space. I actually moved my art room into that space and I can still use everything but my giant easel, that did end up in the garage. We freed up an entire room for a roommate by rearranging two areas in our home, I bet most people have a dining room or nook that doesn’t really get use they can empty their office into to make room for a roommate.

Being honest up front with your roommate about how annoying you are is key too. I am one of the few people I know who’s ex roommates still like me. I am not less annoying than everyone else. But before they move in I tell them: “I am a slob, I will try to change, but don’t count on it, I do a lot for the household but it is not in cleaning. I get moody once in a while, but I will apologize if I take it out on you.” That usually covers things. It is really important since I cannot clean so much that the roommates understand what I do contribute, I am a good listener, I always make sure we have enough food and money. I am financially creative. I am fun to hang out with. These things add up to help my flaws be less glaring.

Selling your house

If you are in an area where the housing market is doing okay, or you have owned your house long enough that you can sell it for a lower price and still pay off your mortgage, selling your house to move into a smaller one or renting your house out so you can move into a smaller place and enjoy rent income are downsizing options. A house can tie a childfree person down. Some of the benefits of being childfree are the ease of picking up and moving for great opportunities without having to affect anyone else, or only your partners. If selling or renting your house out is an possibility for you, do your research and see if it is worth it. I looked into the options for my house and it really is not a good time to make that move.

There numerous pros and cons to owning versus renting, and you have to take your personal situation into account. Owning a home can be an investment: money you put into a house, if you sit on it long enough can build you income. However, sitting on it long enough is the key phrase here. You have to be able to afford the payments through a variety of situations in your life, and your investment should not be holding you back from bigger investments, like a better job, graduate school, your health.

If you live in a city like mine, renting is significantly cheaper than owning. For example, the difference my income tax credits make just covers my homeowners taxes. In a year or two I won’t be paying enough interest to even qualify for the credit as far as I can tell. If renting a 2 bedroom town home is $200-300 cheaper a month than a mortgage on a 2 bedroom duplex, then all the advice about investment goes down the drain. That 200-300 a month can go directly into an investments with much higher returns on it than the real estate market offers.

Don’t take the standard advice made for families at face value. As a childfree person or partnership your situation is clearly different and you have weigh the pros and cons of owning and renting based on your set of circumstances.

Downsides to Downsizing

Downsizing might be uncomfortable at first. And some options are not possible for all people. For example my friend and her husband have extra rooms in their house they could rent, however she is of an orthodox faith where she must cover her head in front of men beside her family. That narrows down her possibilities for a roommate, or at least it would make life at home much less comfortable, she would have to cover her head all the time if she had a male roommate. However, she could put out there that she specifically wants a female roommate.

Moving into a smaller or cheaper apartment is hard and getting a roommate when you haven’t had one is hard. You have to get rid of a lot of your stuff that takes up space, you have to put up with different living arrangements. However, if your stuff is keeping you from having good personal finances, maybe you really do need to let it go. Your happiness isn’t really based on your stuff, no matter how much our commercialized society tries to convince us it will.

Roommates might be noisy or annoying. I don’t like moving in with someone I don’t already know pretty well. They don’t have to be your best friend, but knowing and accepting their habits is key. Keeping open communication and renegotiating terms when new things come up will help things go smoothly. The worst thing I have seen happen to friends that became roommates, is that they stop being friends for some reason. The roommate never spends time at home because they consider their home to be a place to crash not a place to hang out. If that happens try to go out with your roommate too. Fights over living arrangements get to your friendship. Stop the cycle early and renegotiate. Your friendship meant enough to you that you helped each other by living together, it is worth saving. And if things aren’t working out, help your friend move out, help him/her find a new place and stay in contact, throw them a good bye party or a room warming party at their new place.

A smaller place might be less pleasant to hang out in all the time. I find that big windows can make the difference. I can’t stand living in a cave, I have done so and it drove me nuts. Having a small place with enough light can help a lot. Especially if you are like nearly everyone in the world and darkness depresses you a little bit.

Conclusion:

However despite the initial discomfort the extra money in your pocket can mean a lot towards your happiness, if you don’t just let it disappear. It is so easy to let extra money just become money you waste away. Be sure to direct it towards savings, paying off debt, or increasing your quality of life in noticeable ways. There are valid ways to spend your extra money that increase your quality of life. I am going out on a limb here because most personal finance articles are so focused on savings and debt reduction. However, you might be freeing up the extra money for health care, reliable transportation, to take a cooler but lower paying job. Is it worth having a huge living space that keeps you from being healthy, affording basics you need, or being a slave to a job you hate? Yet the conventional wisdom does apply, if you have health care, covered your basics, have reliable transport and you like what you do for a living, downsizing is a great way to have a few hundred extra to apply to financial matters.

Link Love

Right now I only read a few blogs about being childfree and personal finance, since I am writing on the subject I plan to expand that list.

Here are some articles I read this week that seemed helpful and relevant

Two from the Simple Dollar

http://www.thesimpledollar.com/2008/06/11/sixteen-ways-to-go-out-on-the-town-on-the-cheap/ this one relates well to the Night Life series I am writing

http://www.thesimpledollar.com/2008/06/09/reader-mailbag-14/ This one answered a question I posed about life insurance for childfree couples.

One from Childfree Corner

http://childfreecorner.blogspot.com/2008/06/sex-factor.html How much sex do childfree couples have versus childed couples? Hey I only have to worry about my cat interrupting me and my dh during those intimate moments, what does the trepidation of a little one or worse a middle schooler walking in on you do to your love life? Frankly, I don’t want to find out for myself.

On Britgirl

http://thebritgirl.com/2008/06/09/40-questions-the-childfree-get-asked-all-the-time/ Wow, I get asked a lot of those questions, all the time! It will come out of nowhere, really. I was mentoring a child the other day, and the person asked if I had kids yet, and I said no, I am not going to have kids. And she said, but you like children!? I said, yes, I like children. I felt stunned that liking children means I have to have some. Wow, I also like elephants, should I go buy one? No, they take up a lot of space, eat a lot of food, and cost a lot of money. It just isn’t practical.

Most Childfree blogs I know of don’t update much. So this Link Love Feature will likely be every other week for now.

Mastermind

Personal Finance Blogging and lifestyle blogging for that matter is a great way of setting up a Mastermind group somewhat informally. Mastermind groups were first described by Napoleon Hill in his book “Think And Grow Rich”.

The concept is to create a group that guides and motivates the members to improve. The group itself takes on a mind of its own from the contributions of its members. They all are bettered for their interaction.

The idea behind personal finance blogging is to encourage others, but even more you make yourself accountable to your readers. You know everytime you post that your friends and readers will be there with you on your journey to financial freedom and wealth.

A group like this is a risk. You could fail in front of everyone, or even just disappear and make them think you gave up. However, if you put your heart into it could be the best thing that ever happened to you. I am hoping it is the latter for me.

I put out there where I am with my debts, savings, and retirement and I plan to have this community created here on ChildFreeLife blog to encourage me to continue, to get ahead and build wealth and even more importantly a legacy.

Will you readers help be my Mastermind group?

Frugal Nightlife Part 1 – For Pleasure

After work, I haven’t many responsibilities except for those I want to take on for myself. I can do what I want with my time. And I want to spend it wisely either really enjoying myself or investing in myself for a better future. This article will be about pleasurable evening activities, I will address investment activities in another article in the series.

Many nightlife activities are expensive and bad for your health. Smokey clubs and drinking in bars are expensive and not conducive to health and well being. Breathing in that smoke can give any allergic or asthmatic an attack and drinking more than moderately can lead to a barrage of health disorders, think of your liver! Sitting at World of Warcraft or watching television for hours every night can contribute to obesity. However, if you are creative and open your horizons there are many frugal activities for your evenings.

Barbecue

This summer, barbecues aren’t only for weekends. Invite a few friends over and fry up some garden burgers, zucchini, sis-kabobs, and some chicken sausages (or if you don’t mind the calories, some hot dogs, ribs and hamburgers). Even just a few people standing outside on your porch and gabbing can attract neighbors and hilarious conversation. Last month we had some outstandingly good weather for May and my husband and I had a few other childfree friends and neighbors over and told dirty jokes. I don’t have to worry about making some of these plans at the drop of a hat and neither do my friends. So night life can be free-flowing.

Live Action Role-Playing Games

You may not know what these are, but if you like watching horror or adventure movies, imagine spending a night in one! In cities all over North America and Britain you can play in a Live Action Roleplaying Game for a very low price. My husband and I play for between 2-3 dollars each for 4 hours of entertainment. I get dressed up as a character, write up a sheet of things my character can do to affect the world around her strategy wise, and I plan a personality for her. Then I go into a grange hall or similar space and interact with others who have done the same thing. You can try this out at home with a Mystery Dinner, but you can take it onto a bigger level with LARPing. You don’t have to be a great actor, just be willing to have an imagination is enough. There are games where you can play heroes, vampires, werewolves, and even fairies. You connect with other people and are creative at the same time. Its a game and with some time put into it you feel like you are in an epic movie or video game rather than passively sitting and watching it happen.

Card and Table Games

If you like Cribbage or Bridge or even Poker, a game where you bet tokens not money can be a stimulating and fun way to spend an evening with others. Playing games of any sort is a great way to interact with others. My friends and I get together and play strategy games together and have hours of fun and entertainment.

A bit of a warning though, collectible card games are not very frugal, there are always new editions being released and you can sink thousands of dollars into collecting pieces of cardboard with pictures on them to make the perfect deck, that later a new release of the game will make extinct. If games like Magic the Gathering are your thing, and you want to be Frugal, consider playing for fun instead of to collect. If you just make yourself a deck or two by buying the cards you want individually instead of buying packs and packs of cards in the hopes you will find the right card, you could save a lot of money. You can likely make yourself a few great decks for 20-50 dollars a piece buying the cards individually versus sinking hundreds or more seeking the cards in the grab bag. My friends and family have literally bags and bags and boxes of these cards, of which maybe two hundred of the little cards get used and thousands sit on the sides gathering dust and representing the wasted money.

Try picking up the humble set of playing cards and see if you can have fun with the hundreds of games that can be played with them. I got my deck of cards for a dollar. My favorite card game is Spit.

Multiplayer Videogames

When my husband has three friends over and they play a multi-player video game, they have so much fun! I think usually they need one to two copies of the game and a couple TVs. We have two TVs and usually his friends even bring theirs over. I think for the amount they spend on these games the hours of fun they have is worth it. They have learned for the one player games to each buy different games and trade them around as to save money. But on the really good multi-player games they get together hook up their consoles and have tons of fun shooting each other on screen. Some games they bought forever ago are still fun for them to play, like Halo.

The Park

I short walk in the park in the evening with a friend or partner can be so much fun. You can see so many animals and the smells of the flowers and other plants is very refreshing. You can make this exercise or you can just walk slowly and enjoy. I have heard some people talk about bird watching, I rabbit and snake watch. I get a lot of joy out of sighting a cute bunny hopping around or seeing a snake sunning herself in the last rays of the sunset. Consider really being in nature and looking at whats around you. This is usually free, most parks have free entrance. Some gardens cost a small fee to visit, but usually have an affordable membership if you like to visit often.

What do you do that is frugal and fun for your child free night life?

My next article in this series will address serious things you can do with your time to invest in yourself–your health, career, income, and intelligence.

Tell All Tuesday

This is a feature I see weekly in <a href=”http://www.paidtwice.com”>I’ve paid twice for this already</a>. In which the author goes over her current financial state and what she is doing to change it. This is my first edition of this feature so I am going to go over all my debts. I do have some debt, not a lot of credit card debt, but because of some choices I made when I my husband (then boyfriend) and I bought a house, we have a home loan that is near as bad as a credit card. I put myself through college, I worked several part time jobs, I applied for grants, I won a few scholarships, and I covered a lot of it in student loans. I have maintained a small credit card debt of less than $2000 for about 8 years. I have recently nearly paid it off, thanks in part to the economic stimulus payment. I left a small amount on it so I could pay it off. Last time I paid a card off all at once, the card company never reported I paid it off and it sat on my record for years. My husband was laid off 3 months ago, so the slowness of these payments is really reflecting this.

Debts:

$26 citibank credit card at 18.99%. I paid $21 on this yesterday, one dollar more than the minimum payment because paying more than the minimum payment increases my FICO credit rating.

$32,500.00 (approximate check when I get home) home loan at %8.99 paid minimum

$131,000.00 (approximate check when I get home) home loan at %6.65 paid minimum

$30,000 (approximate) deferred student loan %2.8 not paying on it because I am in school.

That is my debt, we also have a savings account for planned expenses, which we are ahead on, it will be good until September by the end of the month. However right now, no emergency fund or any retirement. I hope to change that very soon.

I am not so good at this adding everything up thing. I commit to doing better at this.