Are you ready for Dependents?

Dependents by Roland Tamayo
Dependents by Roland Tamayo
For most people, when they think of dependents they think of becoming parents. Usually the typical way to become a parent you have approximately nine months to get yourself as ready as possible to start taking care of a life that is not your own. You can come up with a plan and hope that you're ready but you never really know how ready you are until it happens. Suddenly you come home with a child, there's no instruction manual and even though you thought you knew what you were going to do everything comes out slightly different than expected. Not necessarily in a bad way, but your "plan" didn't unfold exactly like you thought, learning the best way to care for your new child might not even be the same as a previous one. And that's just day to day stuff that I'm talking about I haven't even mentioned how to prepare financially for a baby? Dee over at Color-Me-Frugal just recently became a parent and she has some good tips on how to prepare for a new child. But how ever much you prepare, get ready to be thrown off your game. In the words of a great philosopher:

"Everyone has a plan until they get punched in the face." - Mike Tyson (on how opponents prepare to fight him) tweet this

Okay, okay... So maybe Mike Tyson isn't a philosopher but there's some truth in those words. Sometimes life punches you in the face. Are you ready for it? I'm not trying to compare having children to being punched in the face (even though I think I just did) but sometimes life can throw you a curveball that you weren't expecting.

For the most part, couples tend to plan for children, sometimes they plan out years in advance. But one thing that most people don't really plan for is adult dependents. According to many resources online such as Charles Schwab, Fidelity and Bankrate, the Baby Boomer generation is ill prepared for their impending retirement needs. Many have not saved enough and they won't be able to work for forever.

So what would you do if you found out that one of your parents didn't have enough money for retirement and was too old to work?

Would you be ready for an adult dependent?

In many cultures it's not uncommon to have multiple generations all living under the same roof. In some areas of the world this might even be more of the standard, where the "sandwich generation" provides for both the older and younger generation at the same time.

With the cost of retirement homes averaging about $50k per year (though this varies depending on location) it's no surprise that the sandwich generation exists! Who can afford to pay for that just to have a roof over their heads?

What if it wasn't just financial assistance? What if your parent needed physical care?

When I was growing up there was a period of time that really stuck out to me. It was the last few years of my grandmothers life, she started to get to a point where she needed more help with every day things. Luckily most of my family lives pretty close to each other so my mom and her sisters took turns going over to her house to help with dinner, groceries, or whatever else needed to be done. But over time there were a few sudden changes that happened rather quickly, the first was when the extra care switched to constant care. The switch from 3 or 4 hours every day to needing to be there 24/7 was a stressful change in everyone's lives. How much help she needed became progressively more and more over a few year span.

The second sudden change was much harder on everyone; my grandmother started showing some signs of dementia. She would get confused and had a hard time communicating, but through the whole thing my mom and her sisters kept her where she was the most comfortable, right in her own house. I really think that keeping her someplace familiar was better for her overall; if she was not in her own house then I'm sure her confusion would have been much worse. It was a very difficult time, but my family choose to make the time to take care of her by themselves.

At the time this happened I was in high school and while I knew it was a lot of extra work for everyone. I never really gave it a whole lot of thought, there were just nights when I knew my Mom wouldn't be home so I had to take care of myself for dinner or whatever else I might need.

I knew what my Mom was helping with but I never really thought about "actually" doing it. It's not whether I could do it or not, it was more of a question of would I be willing to take on these responsibilities for an unknown amount of time. Would I be able to help my parents bathe, be around to help them stand up, sit down and move around the house. Help them make all of their meals, be there in case they needed something in the middle of the night. And throughout the whole time see them slowly deteriorate.

Not until recently had I really thought about the kind of commitment that really was. I don't think I would ever want to leave my parents in someone else's care, I would want them as comfortable as I could make them and I know that would be with family, not strangers. But how would I know if I would be ready to take in an adult dependent? They would probably need more help and more complicated care than babies.

Be stable enough to be flexible

I don't know if anyone can truly say they would be "ready" for something like that because you don't know if it will ever really happen. Right now my own personal goal is to be financially stable enough to be flexible for any situation, no matter what it is. But as for being mentally prepared for taking in an adult dependent, I can't say anyone would know if they are ready. While this isn't something that you can easily plan for, you can try to be as ready as possible. Because sometimes, life will punch you in the face, so it's best to be ready just in case.

Be Weird

Sharon Needles
Sharon Needles by Austin Young
In the spirit of Halloween I thought that I would write about one of my favorite drag queens and season 4 winner of RuPaul's Drag Race, Sharon Needles. There are a lot of styles of drag out there, from glam queens, fishy queens, club queens, campy queens and many other styles. But Sharon always seemed to stand out ahead of the crowd, which is a huge task considering it was a drag queen competition, so over the top is basically par for the course. Her quick wit and consistent attitude to never allow other people to dictate who she was made her one of my favorites early on. Well... That and dressing up like a zombie on the first runway challenge.

Anyone that knows me in real life knows that I'm not normal. I'm a weird guy who likes to be weird because it's fun. I think that being normal is boring, and that's probably part of the reason that Halloween is my favorite holiday, because you get to be as weird as you want and the weirder you are the more people seem to like it.

I think most people that strive for early financial independence are not your typical people. Something in us is wired differently, we don't understand why people want to work from 9 to 5 to 65. If you ask anyone they will agree with you that reaching financial independence early is something that they want in life, but many people don't do anything about it. Many people don't even start saving for a regular aged retirement because they just don't know where to start. I think the biggest reason that people don't strive for early financial independence is because most just follow what they think is normal. Even I didn't realize that early financial independence could come decades earlier until about 5 years ago. Sure I thought you could retire early by cutting off 6 or 7 years, but 20 years? I thought the idea was ludacris, that is, until I read about other people that did it. Suddenly being that weird guy that saved half of his income seemed like a great idea. Why spend 90% of your paycheck when you don't need 40% of the crap that you're buying.

Don't do things simply because that's what normal people do, think about things and decide if you want/need to do them. Sometimes it's hard to see beyond the choices we already make because we've never questioned why they were normal. For me I don't think that saving more than I spend is a bad choice, sure I could be living a more lavish lifestyle if I wanted... But I don't think that would make me any happier. That's my weirdness, and I'm not giving it up.

And I leave you with Sharon Needles response to the question, what it would mean to be crowned the next drag superstar:
"Being the holder of that crown would show that you don’t have to fit a certain mold to make it in any industry, or in any desire that you want. And for any gay kid out there, or just weird kid that gets picked on, just know: when in doubt, freak ‘em out; do whatever the fuck you wanna do. And if anyone ever boos you off stage, that is simply applause from ghosts.” - Sharon Needles

Happy Halloween!

How to prepare for financial changes

Incarnation (#100) By Mark Ryden
We don't always get to prepare for major financial changes, things like a job loss or an unexpected medical expense can really throw us off of our game. In these situations it's best to have an emergency fund to fall back on. But occasionally in life we have changes that we can prepare for. Sometimes that might be moving to a new house, having children, quitting a job to go back to school, or perhaps my favorite one to dream about - retirement.

So how do we prepare for an event like this. How do we know that we are making a responsible decision?

Unlocking Financial Independence

When I first exited college I knew that summer/winter/spring breaks as I knew them would never be the same. I could no longer come home for the holidays and party with my high school friends like we had no jobs because... Well, we were going to have to get jobs, and at that point vacations would become a precious commodity. I knew that I had one last free shot at travelling where how long I was gone for would not matter. At that point I didn't really have a job history that mattered, saying that I had worked at a grocery store or at temp agencies simply didn't matter.

Going into the software industry I knew that while I may be able to take a month off between projects (once I had saved up vacation time) was possible, but the likelihood of being able to take off for 3 months and being able to return to a job was a lot less likely.

So I did what any recent college grad would do, I got the first crappy job that I could so that I could earn some money, but I planned to quit it after 2 months. Then I would travel for a while before I had to get a real job.

Practice and Discipline

September by Eric Joyner
September by Eric Joyner
Personal finance is hard and there's really no shortcuts to it. If you want to get good at anything; an instrument, a sport, writing, math or anything else, it takes practice and discipline. The same thing applies to personal finance, the more you work at it, the better you will be at it. And just like anything else in life, some people are naturally better than others at it but this shouldn't discourage you because you can get better at finances.

It's like weight loss, changing your fixed expenses is like having surgery. The changes to your finances are immediate and permanent if you move to a smaller house or closer to work, or even if you sell a car. But changing your discretionary spending is like losing a pound a week, it takes time and hard work, but with practice and discipline you will get there.

The Minimalist Game

Nightstand light with marbles powered by a 9 volt battery
I just finished hauling out another days worth of stuff from my house, another load of things that I had been holding onto for quite some time for one reason or another but I didn't really need. It all just seemed to be clutter and junk in my life that I wasn't going to use but I had a hard time getting rid of. Last month I decided to play the Minimalist Game, for those of you that don't know the game I will explain the rules once again:

The Minimalist Game
Find a friend or family member. Someone who’s willing to get rid of some of their excess stuff. This month, each of you must get rid of one thing on the first day of the month. On the second, two things. Three items on the third. So forth, and so on. Anything can go! Clothes, furniture, electronics, tools, decorations, etc. Donate, sell, or trash. Whatever you do, each material possession must be out of your house—and out of your life—by midnight each day.
It’s an easy game at first. However, it starts getting challenging by week two, when you’re both jettisoning more than a dozen items each day. Whoever can keep it going the longest wins. You both win if you can make it all month. Bonus points if you play with more than two people.
via the minimalists
Like it says in the description, it's easy at first, until it gets really challenging during the second week. I think it was somewhere around day 8 where I started thinking, oh shit, all the easy stuff is gone, I'm going to have to fall back on what I was "saving" for the end (old clothes), and I'm barely just beginning. The funny thing is, each time I got to a point where I didn't know what I was going to get rid of next I looked around and really thought about it and I could always find stuff I didn't really need. Sometimes the hard part was just figuring out how to get rid of it. If there was a decent monetary value to the item that's when it got tricky. I typically strayed away from those items since selling things on craigslist takes more time and one at a time was not going to get me far with my daily goals.

I had a hard time throwing out the art supplies that I intended to make something with. So for this challenge, I counted the items that I used as things that were purged from my house even though they did not completely disappear. As seen in the picture above, I made a nightstand light made out of a cigar box and marbles, the box is filled with a hard resin coating so the marbles and the light inside cannot move. It is all powered by a 9 volt battery that is hooked to a switch that I fixed to the side of the box. Technically the marbles did not leave my house, but the bottles that were holding the unused resin were thrown out after so that counted as a purged item. When I started that project (years ago) I didn't know exactly what I would fill the box with, just that I wanted a light and a resin coating. I think the motivation of throwing out (and wasting) my supplies was the trick I needed to finally putting it all together.

I still have a couple of items that I am counting as purged even though they are still technically in my house. I have a fish tank along with fish supplies that is awaiting a donation pickup.

What Did I Learn?

Ignore socially responsible investing, focus on responsible consumption

Dilbert By Scott Adams
By Scott Adams
It may have been said before but the first time I heard it was in an article by Scott Adams (the creator of Dilbert), “Invest in companies you hate.” of course in his article he also states not to take investment advise from a cartoonist, so you may want to take it all with a grain of salt. But his many points about betting on the bad guys really backs up why many of those companies are good at making money and therefore good investments.

I guess one of the first questions that may come to peoples minds is, what is socially responsible investing? Sometimes it's called ethical investing, others call it following your personal morals. I guess the simplest definition that I can think of, is investing in companies that hold values of importance of the investor. Some of the most common ways people approach socially responsible investing is to not purchase stocks from companies that produce or make money off of war, cigarettes, alcohol, GMO foods, or things that could be bad for the environment. There are many other socially responsible ideas, but those are usually the most common ones that come up.

Financial Flexibility

Rebirth by Hannah Yata
I was at work, and it was just one of those days where everything that could go wrong did go wrong. The not so uncommon occurrence of my coworkers not knowing how to properly do their jobs meant I had to step in and fix their problems for them. It was a long day, and I couldn't wait to be done with it.... And then suddenly I was. I woke up, realizing that it was all just a dream, but then the nightmare began because I  had to get ready to actually go into work for the day.

Right then I knew I needed a vacation. It has been about 2 years since I've taken a "real" vacation. I've had some smaller few day trips but they weren't really trips about escaping for a while and really unwinding. That dream happened a few weeks ago and immediately after I started thinking about vacation, it took me a little time to decide where and when I wanted to go but today I booked my flight and on November 27th I will be flying to Japan for 24 days to truly recharge for a while.

This is one of the main reasons that I save a large portion of my income, so that I have financial flexibility.

Overestimation Versus Underestimation

Kelly McKernan - Illusory
Illusory by Kelly McKernan
I was recently reading about long term goals and some other peoples planned journeys to financial independence over at Frankly Frugal Finance and Big Guy Money. They had some fairly detailed analysis of what their long term goals were, going out 15 to 25 years even. While I have gotten out the spreadsheet from time to time and plugged in numbers and calculated out 10 years or so I've never really put much weight into it.

Every year for the past 4 years I've put down a financial goal for myself. I get the balances of all of my accounts, tack on a percentage rate of how much I think it will grow, add in how much money I expect to add to that account myself, and then tack on a smaller percentage rate of how much my new money will grow throughout the year. Each year I seem to get more and more detailed with this because each year I find that my estimates are significantly off. Every year, including this one I have beat that initial goal. But I shouldn't get ahead of myself yet, the market could tank before the year ends and I have a significant vacation coming up that will not be cheap, either way, unless something major happens my financial goals for the year look like they have already been achieved.

The main reason I'm off is because of stock market returns. The market has been very kind to us in the past 4 years so I never plan for the market to grow by over 20% like it did last year but it's a nice bonus when it does. Since every year I seem to beat my goal, each year I make it more aggressive. But I know that this bull market can't keep going for forever, so one of these years (possibly very soon) the market won't do well and I will fall short. Maybe I'm a pessimist, or perhaps I've been listening to all of the gloom and doom warnings about how the market can't keep going up like this forever, but I'm guessing that next year I won't be so lucky.

But all of this got me thinking about why we might overestimate or underestimate our goals and what that might say about the person making them. In the business sense of things this may be easier to measure which route you should take:

Learn From Others Mistakes

Jinkx Monsoon By Chad Sell
We all make mistakes in life, and it's actually a very healthy thing to do provided that you learn from them. Learning helps our brains stay sharp and keeps our life fuller. Occasionally someone close to you makes a mistake that affects their life so profoundly that it touches yours, you realize that you never want that to happen to you. Sometimes it's a parent or a sibling, and other times it can just be a friend or coworker. Either way, you see their mistake and you make sure that it will never happen to you.

But there's already a lot of good advice that you hear everyday that most people ignore, I know that I did. It's so common and you hear it all the time that for some reason we just tune it out like, "Blah, blah, blah, I've heard that grandpa, of course I wouldn't do that." But we go ahead and do it anyways. We think that the older generations are telling us something so obvious that we of course would never do it ourselves. Here are some common ones that you should avoid, many of these I did myself, learning the hard way instead of from others.

New Game: Live like you're Unemployed

Naughty Boy by Brandi Milne
Near the end of 2009 I was fired from my job. It wasn't anything specific that I did or didn't do, it was just that the recession hit my company pretty hard and they had to downsize by about 35%. I was one of the newer people there at the time so I'm surprised that I lasted as long as I did but in the end. I lost my job.

At the time I received the maximum unemployment benefits allowed which I believe was $400 per week or $1600 per month. Depending on what part of the country you live in that might be more than enough to get by, but in San Francisco, that's not a whole lot. After I paid all of my fixed bills such as mortgage, HOA fees, utilities, internet (I still had to look for a new job so the internet was an absolute must). I was left with about $300 to spare for all of the other stuff.

Keep in mind that I said, all of my "fixed bills" I hadn't counted food for the month yet. For me, $300 is plenty to get by for a month, but if I wanted to do more than eat then things got a little dicey.

It shouldn't take a special day to do something

by Sylvia Ji
Most people know areas of their lives that could use some improvement. It can be diet, finances, work, etc. I don't know about you but even though I know what areas I could improve I tend to get lazy and postpone a lot of these things because why start today what I could do tomorrow?

It's this way of thinking that leads people to need a special occasion to start making the changes in their lives that they want to see. For many people that special occasion is New Years Eve.

But why does it take a special day to start?

Sometimes that "special" day isn't so special, sometimes it's just significant. Some people start to fix their lives when something breaks or goes wrong. Sometimes people are forced to exercise or fix their diet after an event such as a heart attack or other medical emergency. Or they will begin to fix their finances once they realize that they can no longer cover their monthly bills.

Don't wait for an emergency to force you to make a change you already know about!

Right now I see a lot of clutter starting to build up around my house.  Some of it is art supplies that are left over from the last time I was inspired to paint, others are just small knick-knacks that have been given to me over time that I feel bad throwing out since they were a gift. Either way, it's building up to a point where I know that I will have to do something about it soon. Instead of waiting for the day to come when I am forced to clean it up (i.e. my girlfriend making me) I decided that I will take action before I am forced to. I've decided to do this by playing the minimalist game.

The Minimalist Game

Find a friend or family member. Someone who’s willing to get rid of some of their excess stuff. This month, each of you must get rid of one thing on the first day of the month. On the second, two things. Three items on the third. So forth, and so on. Anything can go! Clothes, furniture, electronics, tools, decorations, etc. Donate, sell, or trash. Whatever you do, each material possession must be out of your house—and out of your life—by midnight each day.
It’s an easy game at first. However, it starts getting challenging by week two, when you’re both jettisoning more than a dozen items each day. Whoever can keep it going the longest wins. You both win if you can make it all month. Bonus points if you play with more than two people.
via the minimalists 

So instead of waiting for a special day to start this game, (the first of the month) I've decided to just start today and try to go for 30 days straight.

In the past when I've decided that I needed a change such as working out more or eating better I just decided one day to start, I feel like if I'm postponing it for a special day then I must not really be dedicated to the change that I am looking for since I'm already looking for excuses not to do it.

Do you wait for special days to start new life improvements? Feel free to join me in the minimalist game, or even better just decide to start a new change that you already know you need to make. Let me know if you do it!