Not the stimulus I envisioned

I find it hard to wrap my head around some of the ginormous numbers coming out of Washington these days. The billions for Iraq and the $700+ billion corporate rescue package of last year were bad enough, but this new "stimulus" package seems to be shaping up to put them to shame. Mr. ToughMoneyLove has a new post about some of the things in the package (he actually looked at it, brave man) and I think I am going to be sick.

When I supported Obama's "Change" campaign I was envisioning something a little different from turning America into a pseudo communist welfare nation.

We the people, individually and collectively as a nation, have the ability to help pull ourselves out of the mess we are in. I was imagining a leader who would inspire us to want to invent new things (intellectual stimulus) especially in the alt energy area; get involved in our communities by putting together citizens' groups to clean up our cities, perform community service, and more (inspirational stimulus), all of which would make us better off and save the gov't money that it would have to spend on these services.

Instead, all I am hearing about is how Washington is going to solve everyone's problems by giving them money instead of letting them learn by their mistakes or working for help. Between the budget shortfalls in the federal government and the California state government, both of which are going to be made up for with higher taxes on ME, I feel like I am caught in a pincer. And by the way, all those nice handouts and mortgage help? So far it looks like I will be ineligible for any because my property value has fallen too far and my loan is too big. Nor will the "Making Work Pay" tax credit help me because my income is too high (only because I live in California where a high income is necessary to live as well as a person almost anywhere else would live with less than half of what I make). Maybe I shouldn't adjust my withholding if my tax rate is going to go up.

Ending on a positive note, because I do like to think positively, I don't have to wait for Obama to lead me to do the things I think people should be doing. I can do it on my own. It just would be nicer to have some leadership and some company in my efforts.

Take a look before it's too late

As I may have mentioned previously, I am a nurse. The place where I work is for me quite ordinary but for the people I take care of it is often the place where a major life changing event takes place. Sometimes I experience something that brings that home for me and really makes me think.

I recently took care of this guy who just had a surgical procedure having to do with his recent cancer diagnosis. He was in awesome shape to start with (and by awesome, I mean awesome for a 30-something although the guy was in his 60s) which definitely will help, as well as the fact that the cancer is a survivable type and was caught pretty early. He was lying in the bed and he said: "I think I want to do some volunteering. This whole thing has made me look at my life and I realized that I've been pretty self-absorbed." If he is lucky this guy will still have time to make use of his reflections and make his life into something he is proud to look back on. Probably he will (I hope so).

This looking back at one's life seems to be something that happens to a lot of people in adverse situations. It generally happens in a financial way to people who have money trouble. When I had a lot of debt I reflected on my financial life: "All that money I spent, did I really do anything good with most of it? Will it do anything to improve my life?" I learned that what I was doing with my money wasn't making me happy and I changed the way I behaved for the better. It is too bad it took big debt to make me look at what I was doing. Now I am pretty good with how I manage my money and when I reflect on it I am generally pleased, but finances are just one aspect of my life.

This man's reflections reminded me that I need to look at the complete picture of my life once in a while. What do I wish I was doing more of? or less? Who do I want to be and what am I doing to get there? How are my relationships with my family, friends, and community? I look at my financial picture regularly but how often do I reflect on my life as a whole? Not very often, and usually only when something bad happens. Then I rediscover regret, when it is too late to change things.

I decided to make a list (I am a girl who loves her lists) of things I think are important in life as they relate to self, personal relationships (family and friends), and community. This could be a very long list but I am only going to include two items per category: one thing I am doing right and one thing I need to work on. These are things that I would be really sad about if I reach the end of my life and realize that I failed to accomplish/maintain.

1. Self

Doing well: Growing as an artist in regards to some of my craft interests, especially embroidery and woodworking.
Needs work: Changing my eating habits to more healthy habits so I don't shorten my life with junk food.

2. Personal Relationships

Doing well: um, actually, nothing. I've really been ignoring people and taking them for granted lately. No wonder I feel bad about some of my behavior.
Needs work: (see above)

3. Community

Doing well: Staying informed by reading newspaper, read neighborhood group postings regularly.
Needs work: I have chosen to aid my community by helping eradicate graffiti. I used to go out and clean tagged utility boxes and street signs and such but I've been wrapped up in my own life and haven't done this for months.

This is the result of some of my self reflection. I wanted to share my reflections and the story of the man who hopes to have another chance at a better lived life in the hopes that someone who reads this will do the same. We are personal finance bloggers but when you consider what really matters it is people who matter more than money.

New goal

I'm taking the whole weaning myself off of my dining out habits thing in short steps. First I stayed away from fast food, then I stayed away from my favorite restaurant for a week (still no fast food). I took a week off and allowed myself a fast food meal and a couple meals at my favorite restaurant (but that is still a lot less than my prior pattern). I still eat at other restaurants but not as often. Now I am going to spend the next two weeks without fast food or my favorite restaurant. I bought mini cans of my favorite soda so I can have a soda when the urge to go out is really bad. Part of my dining out problem is my addiction to soda; I go to the restaurant because I want soda and end up (of course) eating a whole meal. Eventually my plan is to stop drinking soda as well, but if I did it all at once I'd end up on the floor, twitching. So one small step at a time, building on each prior success.

Small steps and building on past success are what helped me succeed with getting my finances under control and getting out of debt so I am going to try to apply those same principles to my dining out habit.

The reductions in dining out so far have saved me about $60 in the last two weeks. That's enough money to buy lavender plants to plant my parking strip without having to take from another budget. Yipee!

The Frugal Funeral

Recently I wrote a post about canceling my whole life insurance, and one of the selling points of the insurance was about getting money to my family right away so they could pay my "final expenses". That started me thinking about another area to be frugal: my funeral. If I'm going to have a frugal funeral then I don't need to waste a bunch of money paying for glorified funeral insurance.

If you're really frugal then you don't need a fancy funeral and your family should know it. Forearmed with that knowledge they can go the funeral home and fend off the guilt trip about showing their love one last time by buying the Cadillac coffin with all the extras: viewing, programs, flowers, staff to man the doors, etc.

My dad's funeral as an example of the frugal funeral:

My father died just over two years ago, and his funeral only cost a couple thousand. When he died my parents were up to their eyeballs in credit card debt and a pricey funeral would have put my mom over the edge. Fortunately, my father had no interest in fancy things. He grew up really poor and never got past the idea of having a mostly frill-free life (mom was the spender).

Does the choice of funeral home affect cost? I don't know. We just went to the one that advertised in the free church calendars. My mom and I had already been there on an 8th grade class field trip so there was some comfortable familiarity. (Yes, my school went on a field trip to the funeral home. We even got to see the embalming tables.) Knowing my dad didn't care about a fancy display, we were able to go right into the funeral home, choose the inexpensive cremation package, and be done with it.

Aside from the cremation costs, the expenses were minimal. Mr. K and I made the programs and prayer cards ourselves, one of my sisters made a photo collage of my dad's life to display, my other sister bought a fabric covered journal book for guests to sign, and the church was already bedecked with flowers for Christmas which was decoration enough. I baked cakes from scratch and we hosted the wake at home. The pastor of our church knew my dad well and gave a beautiful sermon. I know my dad would have been pleased by what we did, he liked home made stuff and gifts of time rather than money.

Caveat to not saving money for a funeral: The only reason I can see for wanting to have a bunch of money for a funeral is to give to relatives to defray their travel cost. Instead of that, how about getting together while everyone is alive? Isn't that better?

On an environmental note: Not getting embalmed saves money and the environment. Embalming chemicals are pretty nasty, are they the last contribution you want to make to the Earth?

The Frugal Mindset

Part of living a healthier financial lifestyle involves developing a frugal mindset, which goes hand in hand with conservation. If you are frugal, you are already adhereing to two of the three Rs of conservation: Reuse, Reduce and Recycle. With a frugal mindset, there are set pathways in your mind and your thoughts follow them automatically. The idea of the frugal mindset and its link to conservation came to mind after I read a newsletter from the state water district which included tips to reduce water use. One of the tips was to wash only full loads of laundry. The way I think about new sheet and towel purchases is only one example of how a frugal mindset works.

When I buy new things such as towels, sheets, and clothes one of the things I automatically consider is how I will wash them. If the color or material is such that it requires special care then I probably won't buy it (Lucky for me that my employer provides and will launder all my work clothes so I don't have to worry about business attire). I would probably not buy bright red towels unless I had lots of other things in bright red so they could all be washed in one load together. The tile in my bathroom is an unusual color scheme that goes best with black towels but since black is a common color in both my and Mr. K's wardrobe gathering a full load is no problem. Washing full loads saves me money in water and energy bill and also saves resources.

If I didn't have a frugal mindset then my main considerations would be style and enjoyment. I could end up having to wash some items separate from my other things because the fabric requires special handling or the color bleeds. Not only would this cost me money in water, electricity, and wear on my washing machine, it would also cost me in time and energy as I worried about sorting out my special items, keeping them out of the regular loads, then waited for the special loads to wash. If I take all that into account the special items don't seem worth it, do they?

Looking to increase my work hours, keeping my fingers crossed

One way I can improve my finances is by making more money. I work .7FTE (full time equivalent), 8-hour shifts now which means 56 hours in a two week pay period, plus on-call. I want a .9FTE 12-hour shift position because it would be six days working per pay period instead of seven and more hours (thus more money) but I have to wait until everyone with more seniority in my work area who wants a 12-hour position, has one. This seniority rule is part of the union contract and is not flexible. There is one person ahead of me on the list. I just heard that one position for sure, but probably two positions will be opening up very soon. If there are two positions then I will get one. Hooray!! Sixteen extra hours per pay period will be a big boost to the size of my paycheck! I am pleasantly optimistic now and awaiting final word hopefully by the end of the week.

Milestone achieved

My goal for last week was to not eat out at my favorite restaurant during the week. I do it so often I found it had become a compulsion (or addiction, choose your word) and I went even when I wasn't interested in going. I am also avoiding fast food in general. The occasional french fry will eventually be OK, but I was eating meals there several times a week. Yikes!

So far I am doing well on my plan to avoid fast food and I successfully stayed away from my favorite restaurant all during the week last week. The first two days away from my favorite junk were rather hard, then it became a little easier. The weather has been unpleasant lately which makes it easier to stay home. I did eat out a few times, but not as often and not following the compulsion to go to my favorite place. I have more money in my wallet than I usually do at this point between paychecks, let's see if I have any left over by next paycheck. That would be nice.

Just a reminder...

When was the last time you checked your credit report? You can get a free report every 12 months from each of the big three companies. Go to www.annualcreditreport.com to get your report. If you get one report at a time you can check your report three times a year for free.

Checking your credit report is one of those things everyone should do periodically, like checking the air in their tires (you check the air in your tires, right?).

Saver Loves a Spender, Part II: Compromise

When you are partnered up with someone you can't have your way all the time. That's part of what makes a partnership work in a way that is (mostly) acceptable to both of you. Sometimes being committed to a relationship means doing something you wouldn't choose on your own. Haven't we all sacrificed for someone we loved? Recently I made a compromise that goes against my nature, something I would never have done on my own.

Mr. K and I bought a big screen TV.

Not just any big screen, but a 60 inch top of the line plasma (Mr. K is an electronics geek, he always wants the best stuff). Holy cow, very expensive. And so BIG! It feels silly (to me, I think he wishes it were bigger but even 60" is really pushing it).

Flash back to ten years ago when Mr. K persuaded me to buy our old TV, a near top of the line 32 inch CRT (with S-video, and RGB!! -huh?, I said). Holy cow, so very expensive. And so BIG! It felt silly. But then.... I started to like it. Wow, movies look really good on the big screen, and video games are so much better! And now, people come over to our house to play games and watch movies instead of us going out. And they bring us food and wine, sweet!

Sometimes I think that I would end up like one of those bag ladies who dies with millions of dollars if it weren't for Mr. K. If it weren't for him I might let my thrifty impulses escalate until they were pathological and unhealthy. I let myself live a little better because of him.

And yes, I already had the money set aside for a big purchase. For three years he's been trying to talk me into a bigger TV so I was ready. I am willing to compromise and buy an unnecessary luxury item, but don't think I'm willing to go into debt to do it!

Opportunities are passing me by...

...as I sit on the bottom of a sea of financial potential in my underwater home.

It's hard to write off buying a house in 2007 as a mistake. I like my house (picture at right), I love having a garden, and I was tired of being a renter. That said, it is a struggle to watch my house's value continue to sink and not feel a bit despondent. It is a struggle to see interest rates drop and know that I can't take advantage because I am underwater with my loan. I know there are advantages to be had in this crisis for those who are prepared to take advantage. Sometimes something happens that drives it all home.

Yesterday I was looking online at homes for sale near where I live and one came up that caught my eye. This cute 1920s bungalow with a studio cottage in the back, on a really nice street was for sale near my neighborhood for only $400,000. Where I live that is crazy low, houses on that street were selling for $600-800K+ two years ago. I started dreaming of owning that house and fixing it up cute. Mr. K and I could have the 2 bedroom main house, Mr. K could have his office and I could have my dining room back. Our roommate could rent the studio instead of our 2nd bedroom. I'd only have to share the bathroom with Mr. K. Or, we could rent out both places, which would rent for enough to cover the mortgage and taxes, while staying in our current place.

I mentioned the idea to Mr. K and he was actually excited so we did a drive by of the house. We really liked it, and we often don't agree when it comes to houses. It would be so awesome to take advantage of the down market and get a rental property. Then, reality set in. Mr. K could afford the payments but has credit debt and no liquid savings. I could afford a 10% down payment but it would wipe out all my savings except half my emergency fund. Today the property was listed inactive in the MLS so it is probably sale pending after only a week on the market. We missed the boat.

On the bright side...

We both have good, stable jobs and I can pay the mortgage I have. If I raided every savings I have I could live almost a year without a job, longer if I sold my car. Financially, we're OK.

Thinking about that house was what motivated me to finally get off my duff and cancel that stupid whole life insurance. Mr. K was also motivated to do the same (we both fell prey to USPA&IRA at the same time), and he stopped payments to the stupid front load mutual fund USPA put him in, although he didn't cash out his current shares as they are almost at their lowest point ever (I cashed out a few years ago). Mr. K will now have about $400 extra per month and he plans to pay down his debt so he will have the financial freedom to take advantage of the next opportunity. We are more financially in sync at this moment than ever before, and it's great.

I was feeling really bummed until he said to me "Don't worry, there will be other opportunities and they will be just as good. Something else will come along." It will, and I should think about how I want to get ready for it.

Whole life insurance? I was a sucker once... (Financial Housekeeping, Part II)

I have some embarrasing things to admit, but I was young and there are lessons in them.

When I was in my 20s, newly graduated from college and a brand new 2LT (second lieutenant) in the Army, part of the orientation to the military was a seminar on investing. Sounds great, right? The presenter just happened to work for an investment and life insurance. Everything they said made so much sense. Their motto was "Pay yourself first". Front load mutual funds just got all the annoying fees out of the way up front, clearing the way to fee-free future investments. Whole life insurance "builds cash value", etc. (Are you choking yet?) The fact that they were allowed in a military orientation gave the impression of an official endorsement. I bought it, hook, line, and sinker.

*hanging my head in shame at the memory*

Did that mutual fund do as well as (almost) promised? Heh, heh, of course not, especially after paying all those front load fees. I liquidated that a few years ago, right around the time that the company, USPA & IRA, had a class action suit filed against it. The life insurance was only $90/month and I didn't have contact information to get rid of it and I was lazy so I let it be, foolishly.

Now, finally, I am freeing myself from the last of that bad investment. Why do I need a bunch of life insurance anyway? I have no children to care for and a BF who has a good job and can support himself without me. My mother inherited a huge pile of money from her parents (a story for another time) and has a pension and lifetime medical insurance, and her house is paid for; she doesn't need money from me. I have life insurance through my employer, how much more do I really need? My "final expenses" would be a couple thousand bucks for the funeral and BF has enough available in the joint account for that. For my situation life insurance is hooey. As for the "building cash value", I can borrow against the policy about half of what I contributed so far in premiums, at a rate of 8%. Heck, if I wanted to pay that much interest I would charge it on a creditcard.

Long story short, I just "found" an extra $90 a month in my budget! Bit by bit, I am working to improve my financial picture. What to do with the money? $90/month would keep my vacation fund in good condition, maybe I should take the money I was saving for death and invest it in living.

Decision about my windfall

As you may have read in a previous post, I am getting an unexpectedly large tax refund. I think I have decided what to do with it:

Nothing.

For now, anyway.

I still may end up using the money to pay down my second mortgage but I think I want the extra flexibility that cash gives me while I ponder possibilities. I'd like to see how much money I can find in my regular budget to accomplish my 2009 Mortgage Paydown Challenge (see sidebar at right). That's good enough for now.

Oatmeal in a rice cooker, oatmeal to the rescue of my finances

This post at 444Express started me thinking about oatmeal. 444's post is about instant oatmeal but this is about regular oatmeal. I've been attracted to the idea of eating oatmeal but for years I just couldn't do it. I kept buying oatmeal but only ever used it to make cookies.

Regular oatmeal is supposed to be better for you because it is less processed and doesn't have the chemical and sugary additives of instant oatmeal. It doesn't have a lot of calories and has lots of fiber. For 150 calories you get 4g fiber and 5g protein but only 3g fat and 1g sugar. That's the same calories as a soda, and much more filling. Regular oatmeal is also cheaper than instant and has less packaging.

I never made oatmeal because I hated cooking it in a pan, having to watch it and stir it. I do not want to spend that kind of time on breakfast if I have to go to work. Actually, I don't want to spend time cooking oatmeal any day because I think it tastes like paste, I just eat it sometimes because it is good for me.

A couple of months ago I discovered that it is possible to cook oatmeal in a rice cooker. Eureka! With the rice cooker I can put the oats in the cooker the night before, then add water and start it up. The oatmeal cooks in the time it takes me to shower. Or, I can make a big batch ahead of time, divide it up into my little Pyrex glass bowls, put it in the fridge and reheat as needed. What I usually end up doing is taking the oatmeal to work and eating it on my first break.

I have heard of soaking oats overnight before cooking them, if that is possible then I could put the oats and water in the cooker the night before, then plug in and press "start" in the morning. For cleanup I fill the cooker with water and soak it during the day and wash it when I get home. Easy!

How does all this relate to personal finance? If I eat food from home then I am cheaply fed. If I am not hungry then I am less likely to eat lunch in the expensive work cafeteria or go out to eat on my way home. Average cafeteria meal: about $5-8. Average dinner out: about $12. Sometimes I do both!! Saving myself $20 even two days a week adds up to over $1600/year. Yikes! Healthy and money-saving!

Breaking up with my favorite restaurant

Wish me luck, I am staying away from my favorite restaurant for this week. I'd like to be able to choose to go there occasionally instead of going regularly out of habit. I'd liked to be not so hooked on restaurant food and drinking soda. From a financial perspective, I'd like to spend less money on food. I bought myself some soda for home so I don't fail because I feel deprived (I usually only drink soda in restaurants).

Three weeks ago I decided to break my fast food habit. Since then I've only had fast food once (and it wasn't as good as I remembered) and I think I can go three more weeks.

I am taking gradual steps to change my food life the same as I did for my financial life. It helps to have a goal! My financial goal was to get out of debt, my food associated goal is to not be overweight at my sister's wedding this fall.

Have any bad habits you decided to break? How did that work out?

Financial Housekeeping

I am a list-making person. Lists not only help me keep track of things I want to do, just making them helps me organize my thoughts and priorities.

Here is my to do list for this week:

1. Take my vacation and clothing cash stash and deposit it in the bank. (DONE)
2. Open ING savings for vacation and clothes funds. (DONE 2/11, only I didn't go with ING)
3. Send $1000 of my tax refund to my first mortgage principal. (DONE)
4. Monthly checkbook balancing. (DONE 2/9)
5. Change my W-2 withholding so I don't get such a huge refund next year. (DONE 2/10)
6. Increase my 403(b) contributions so I can max it out.
7. Start a tracking worksheet for credit card purchases.

Credit card purchases are the rabbit hole of my finances. I pay the balance off every month, but I am often surprised by how much it is. What am I buying, besides gas? How did it get to over $400? I really don't like the tedious process of looking at my spending that closely but if I want to find more money to save then I have to do this.

Stupid tips to get a refi

I recently read this asinine article on MSN (byline Bankrate.com). The headline on the MSN main page, "How to refinance when bank says 'no'", caught my eye. The actual article was titled: Want to refinance but can't? 3 tips.

I thought, "Could there really be a way to get a refi on an underwater mortgage? I have to check this out!"

Um, not so much...

Here are the three tips:

Tip Number One:
Problem: Inadequate or negative equity (oo oo, that's me! *breathless* What can I do?)
Solution: Reduce principal (but how, by magic?)

The article advises: "A lump sum can be applied from a savings or retirement account, sale of another asset, income tax refund or bonus." (No s#!t, why didn't I think of that? *slaps forehead* Hey, Bankrate, if I'd had an extra $200,000 lying around don't you think I would have used the money to pay off my second mortgage!?) NOTE: $200,000 is what I'd need to get to 80% LTV in the current market.

Tip Number Two:
Problem: Inadequate income or excessive debt (not me, but a problem for a lot of people)
Solution: Earn more, pay off debt
The article advises: The most obvious solution to a troublesome DTI (debt to income ratio) is to earn more income through a better-paying job, pay raise or second job. (In these troubled economic times, with rising unemployment, I'll just step out and get a better job. I should be a CEO, I'll start applying on Monday.)

Tip Number Three:
Problem: Credit score is too low
Solution: Pay bills on time (That works? I never knew!)

If those tips are new to anybody it is no wonder they are in trouble. Sorry for the rant, but I am tired of all the lowest common denominator type news stories. How about some useful tips and information? There's much better information in the PF blogs than in the news.

Makin' due not buyin' new, and starting out right

Just because I am frugal doesn't mean I don't like to look nice or have nice things. Of course I do! Every so often I try to do some upkeep on me and my stuff so I feel good about myself and my lifestyle. This list isn't all-inclusive, it is just stuff I have done recently or plan to do soon.

1. Polish my shoes. My favorite shoes are a nice pair of Danskos that cost over $100 but have classic style, a little bit of a heel, and have lasted for years. The occasional polish keeps them looking near new. Many times people throw things away that are serviceable but look shabby.

2. Clean out my car. My car is only a couple of years old but if I take care of it'll look new for longer. Even my old 1983 Corolla looked spiffy when it was all clean and polished. I kept it longer than I otherwise might have because it still looked nice.

3. Home spa. Do maintenance on you! I feel better about myself when I feel like I look good, and when I feel good I make better decisions. It is a pleasure to pay someone to do facial, hair and nails but it is expensive! In between major hair service I can keep my color fresh on my own (I use the same products because I have access to the wholesale professional supply stores).

4. Polish metal. The sink fixtures, towel racks and chrome stove top all look their best with the occasional polish. Every once in a while I like to bring out the Brasso.

5. Clean the windows. The world looks a bit dingy when viewed through a year's worth (or longer) of dust and water spots on the windows.

6. Launder carefully. I line dry my more fragile items so they last longer. Eventually I plan to get a clothesline in the back yard so I can line dry most of my stuff then just fluff in the dryer. Also, when I put sheets and towels away I put the freshly washed items on the bottom of the stack so that everything gets rotated. This keeps any one towel or sheet getting faded and worn while the rest of the set looks new (especially important for dark colors). When they are all worn out I'll buy all new together.

7. Start with quality. We've made hundreds of smoothies over the years. In the beginning I bought a cheap blender. Then I bought a slightly better blender but it still couldn't crush ice like the restaurant blenders. We didn't like our homemade smoothies as much as the store bought ones because they weren't as smooth, and we were spending a bunch of money buying multiple inexpensive blenders and store smoothies. Finally we decided to buy the expensive restaurant quality blender and we now make smoothies we like as well as or better than the store and the blender is going strong after nine years. The cheap blenders lasted less than one. I also replaced my cheap sander with a nice sander. If you start with quality in the beginning you can save in the long run over multiple replacements for cheap items. I may never need to buy another blender or sander as long as I live.

Being a Saver who loves a Spender

Thanks for the comments to my last post about what to do with the big tax refund I inadvertently set myself up for. I have a couple weeks to think before I get the Fed money and who knows when I'll see money from the broke state of California. I may decide to just hold on to the Fed money until California pays me and think about it.

Dog Ate My Finances had this interesting post about merging money with a significant other. Funny she should post about that as I was drafting a post about a related topic: How to cope when one of you is a saver and the other is a spender?

I don't have a definitive answer to that; it's a thorny problem that has no doubt doomed many a relationship. The solutions will vary between couples but no matter what they should be grounded in each person having respect for the other. We all came to our current financial habits through life experiences that have shaped us and are tied to emotions. Getting to the bottom of our reasons for why we spend/save the way we do may help us to understand each other and find common ground where we can meet. It is easy for the saver to feel like she has the moral high ground but nobody likes to be condescended to by the self-righteous. On the other hand, a caring partner does not let her S.O. ride his financial horse off a cliff.

Here is my situation: I used to have a spending problem; I accumulated lots of consumer debt in addition to my student loans. When I finally decided to break free of my debt I went at it with a vengeance, working a second job and holding off on major purchases and elaborate vacations. Now I live below my means and am saving for the things I want: comfortable retirement, my next car, a vacation, a new wardrobe, etc. I put most of my extra money towards savings and paying off my mortgage early.

Mr. K isn't much of a saver except for his 401(k). We have a joint account for paying utilities and common bills but otherwise keep our money separate. He has a checking account only, no savings. He would like to eventually buy some property and build us a house but he can't afford it because he doesn't have enough money set aside. I would like to encourage him to open a savings account and stash some money away so that when he spends the money in his checking it won't be everything he has. I don't want to run his life but I think he'll be sad eventually when he realizes that he wasted a lot of life and money on things that aren't important in the long run and has less to show for it than he hoped. I know I felt bad about all the time, money and energy I wasted on buying and paying for junk instead of doing things with my life that I feel proud of; I don't want him to go through that.

If I had my way, Mr. K would be on a strict budget, putting money in savings, paying off debt, and no more spending. He would plan for major purchases in advance and not make any until he is debt free. There is no way this is going to happen. Besides, I don't think I would even want to control him like that. I would like him to take the tiny step of opening a savings. I think that when he sees it start to grow he will want to save more and he won't spend as much. Then someday he'll have the money so we can get his dream land in the mountains.

What to do with a windfall?

Last year when I did my 2007 taxes I received a refund but I made mortgage payments for a partial year only. I wasn't sure about how 2008 would work out because it was going to be my first year of making payments for a whole year so I was conservative with my withholding. I didn't take into account how much my interest payments would reduce my income, putting me into an entirely different tax bracket. I was thinking I'd get about a thousand dollars back.

Um, oops...

My combined fed/state refund is going to be about TWELVE THOUSAND DOLLARS! (Cash from Fed, I.O.U. from State)

Holy cow! What am I going to do with all that money?!

First of all, I need to change my withholding. I am not maxed out on my 403(b) so I am going to increase my contribution at the same time. I will still be a bit conservative with my withholding; I know the argument about giving the government a free loan by overpaying, but I always use my refund to pay down debt in a big chunk and it makes me feel happy. It's one of those emotion-based financial decisions, but one I can live with.

Second of all, what to do with the money? As much as a new steam washer/dryer are calling my name I already have a serviceable set and I don't really need them. Here's the tentative plan: $10,000 on the second mortgage, $1000 to the first mortgage, and $1000 undecided. My original goal for the year was $10,000 paid to principal of my second mortgage, now I can double that amount this year. Whoopee!!