Live Like a Mensch - All Comments

re: The Secret to Living Below Your Means? Lowering Your Standards!

frugal_fun — Tue, 21 May 2013 00:30:08 GMT

Generally the parts are cheaper and I've been told by our mechanic they are less prone to having proprietary repair codes. Domestics (as I understand it) usually publish all the codes, which means you're not forced to the dealership for certain repairs. That saves money as well.

Domestics usually are not as well made as foreign cars, but I've found they are "good enough" for our purposes. Even if I have to replace the parts that I wouldn't on a better made car, the parts themselves are cheaper and I've got more options in who does the repair.

Our personal experiences with cars tend to pan that out. I've gotten quite the sticker shock on the very few occasions we needed to repair our Subaru. It's still running, but the parts are higher cost and we ran into 2 repairs that only a dealership was "allowed" to do.

Our recently deceased Dodge Caravan had more repairs during it's life, but the parts were cheaper and we never had anything that required a run to a dealership.

I've also read that when people donate cars to fix up and give away to the poor, the luxury cars are almost all sold at auction despite generally better build quality. The repairs, when they come, are just way out of budget for someone on a low income.

I'm at a point now where I tend to think part of the initial and ongoing vehicle pricing has with what the market expects lifetime repair costs to be. (The other of course, being higher manufacture costs.) The Honda Odyssey should have far fewer repairs over it's lifetime than the Caravan, but the $10K difference in base basically means (to me) that the repair cost was paid up front.

The appeal of pre-paid repair costs does make sense to me. We're handy, comfortable talking with mechanics, and now live in a pretty pleasant part of the country. (We're also lucky to not really have a commute at the moment.) So car repairs aren't a big deal to us. But if you've got a serious commute or hate talking to mechanics, etc, etc, the peace of mind might be worth it.

Just my thoughts on it -- I really dislike buying cars because they depreciate and there's no clear "winning" buying strategy other than marring J, which has already been done. ;)

re: The Secret to Living Below Your Means? Lowering Your Standards!

haverwench — Sun, 19 May 2013 21:57:57 GMT

"our Caravan gets the best mileage in class and domestic cars are cheaper to repair."

How so? Is it because the parts are cheaper, or because they don't wear out as often? Or is it just easier to find a mechanic who works on them, so you have more choices?

I Googled "are domestic cars cheaper to repair" and found an article on MSN autos (editorial.autos.msn.com/10-cheapest-cars-to-maintain) about the 10 new cars that are cheapest to maintain. It's about evenly split between foreign (mostly Japanese) and domestic models.

re: The Secret to Living Below Your Means? Lowering Your Standards!

haverwench — Sun, 19 May 2013 03:17:36 GMT

Well, let's see. Stuff we cheerfully do without (that most of our peers seem to take for granted):

A dishwasher

Central air conditioning

A second car

A cell phone plan (we have a prepaid phone for emergency use ONLY and never give out the number to anyone)

Paper towels (a rag can wipe up anything a paper towel can, costs nothing, and can be washed and reused)

Professional hair and nail care

Stuff we consider truly necessary that some folks might view as luxuries:

High-speed Internet (I've tried doing my job without it, and it really isn't possible)

A car (there are too many places we can't reach without one)

Lots of insurance coverage

Stuff we recognize as luxuries but consider totally worth it:

Going out to the folk club

Desserts of all kinds

Coincidentally, there is a post on this topic on TipHero: "What "Necessity" Do You Think Is a Waste of Money?"

(www.tiphero.com/tips_8135_)

re: The Secret to Living Below Your Means? Lowering Your Standards!

frugal_fun — Sat, 18 May 2013 02:28:00 GMT

*grin* It's so true. Lowering your standards does help a lot in living below your means.

We have driven cars until the wheels fell off and the body was falling apart. We did just buy new, but instead of a Honda Odyssey, we bought a base Dodge Caravan. We're in the low brow mini-van of our neighborhood. *gasp* :) But without the power "family" do-dads, our Caravan gets the best mileage in class and domestic cars are cheaper to repair. Yes, it will be more prone to repairs as it grows older, but I can buy many repairs with the $10K difference of base price.

In the past I've wanted to put high end material in my home - tile, stone, etc. I've actually laid tile and then lived it with for a while. Here's what I want now: high end sheet vinyl, nice carpet, and laminate. (Hardwood is nice if it comes with an older home.) Tile and stone are cold and grout stinks to clean. It's just funny to me that I'm at a point where I actually prefer the "low end" materials, but there it is. They're just nicer to live with.

Our clothing is also definitely hit or miss. I actually tend to prefer shopping at thrift stores because I know the clothing is durable. Buying new, it seems it's almost impossible to tell.

The kids don't have endless clothes. The baby has 1 pair of shoes, the kids have a pair of sneakers and flip-flops. Sometimes the clothes get a little stained, or if well loved, faded. All good at this house.

What else? We're usually happier with our home cooked meals than with eating out. Our TV is tiny by today's standards and we only have 1. I've considered a smart phone to have my calendar with me. I realized I could buy a *decade's* worth of nice paper planners for 1 low end smart phone. Bonus: I don't care if the baby plays with it.

So yes, our low standards have been surprisingly satisfying and money saving.

re: Your Retirement Questions Answered, Part I

haverwench — Thu, 16 May 2013 11:24:43 GMT

"Appreciation of individual stocks does not require masses of investors - only the broad indexes partly rely on overall market participation as far as I can tell."

But the more people there are buying it, the more the price goes up. That's simple supply and demand. If you think a stock is a hot stock and you're putting loads of money into it, it's in your interest to persuade everyone else to put loads of money into it as well. (And then sell before they do.)

I'm not arguing with the basic premise that the best way to make a fortune in the market is to be a broker so that you get your cut off the top regardless of whether the stock goes up or down. I'm just saying that someone who actually does believe in a particular stock/bond/fund has no reason to "keep it to himself." (Well, once he's already bought his shares, that is. Up till then he might keep mum to keep the price low. After that, though, he has every reason to spread the news and bump the price up.)

re: Your Retirement Questions Answered, Part I

frugal_fun — Wed, 15 May 2013 23:55:02 GMT

"Why, whatever for? How could it possibly benefit them to have *fewer* people investing in the market? The market only goes up when *more* people invest."

Many financial planners and all the stock brokerages are dependent on people buying mutual funds/stocks for a living. The more stocks/funds you buy/trade, usually the more money they make. Quite often, if you listen to their rational for buying stocks/mutual funds, it's about how much wealthier you'll be in 5/10/20/30 years. However, their paycheck is usually quite disconnected from how the market is doing.

Unfortunately, my line of thinking about that situation goes like this: Why would you be the business of trading/selling stocks if you could make out like a bandit by simply buying it??? (Appreciation of individual stocks does not require masses of investors - only the broad indexes partly rely on overall market participation as far as I can tell.)

Anyway, if the appreciation/dividends were that crazy good and it's such a such a sure thing, wouldn't you just buy as much for yourself as possible and call in sick for the rest of your life? I know I would. And how many people have become very wealthy via shrewd stock purchases alone? I can't think of any really, although I do know people who have lost their shirts. :(

re: Your Retirement Questions Answered, Part I

haverwench — Wed, 15 May 2013 02:58:01 GMT

"Part of the reason why this is a tough question to answer is because the answer depends somewhat on you and your personal investing style and risk tolerance."

Really? I would have said it's an easy question to answer: go with the fund. Do NOT, repeat NOT, try to pick individual stocks. If you think you can pick stocks that will outperform the market, you're wrong. Even if you were a professional financial planner with years of experience, you still wouldn't be able to do it. Choose a fund. Ideally an index fund. Don't try to outperform the market as a whole. That's the way to get burned.

Of course, that's more or less the advice you did give her--but I wouldn't have bothered to qualify it.

@frugal_fun:

"*headshake* The retirement people would have us believe we can invest our way to great wealth/a sure retirement. But if that were really the case, they'd keep their knowledge to themselves instead of offering services that encourage people to save like crazy using their products. :("

Why, whatever for? How could it possibly benefit them to have *fewer* people investing in the market? The market only goes up when *more* people invest.

re: Your Retirement Questions Answered, Part I

bobi — Tue, 14 May 2013 23:37:40 GMT

I agree with frugalfun about the index funds and I would add that if Maggie wants to diversify and buy a few stocks on the side, go with DRIPs...I'm sure you'll have a chapter about them. I've had great success with DRIPs and highly recommend them.

re: Your Retirement Questions Answered, Part I

frugal_fun — Tue, 14 May 2013 22:56:54 GMT

"(I'm still waiting for the tax code to make sense to me, particularly vis-a-vis retirement, but I suspect I'll be waiting a long time for that one.)"

LOL - There are people who do nothing but specialize in the retirement portion of the tax code. I feel sketchy about it and I do taxes. :)

"That's why most investors mitigate their risk by buying into mutual funds. These funds diversify the investment by buying into many different securities (securities is a term that includes stocks, bonds, and derivatives)--and mutual funds include professional management of the investments."

I would only add that if you're going to do mutual funds, skip the professional management (if you can) and go straight to index funds. In all seriousness, most professional managers have extremely poor track records against the indexes. It's possible to blow hundreds/thousands in management fees just to fair worse (sometimes far worse) than the market. The best investment managers work in hedge funds and the 'average' investor has no access to those. Simply choosing an index fund or ETF based on an index eliminates the waste of paying a person to what a computer does better. (This sooo a Dollar Stretcher tip :) ).

"You'll see that on cash equivalents like CDs, T-Bills and money market funds. These will not keep pace with inflation, which means that even though you theoretically can't lose principle with these, you are still losing money in the long run because your principle will be able to buy less and less over the years. Go for stability with money you need to keep liquid, but this is not a real investment strategy. "

This assumes that market is up when you need the money at retirement. It's possible to lose everything in stocks, rather than just lose ground to inflation. The total loss possibility is mitigated substantially by choosing an index fund. However, if you see several years of haircuts in a row (secular bear market) it will take a great deal of growth at the end just to return principle.

The problem is that in order to really grow wealthy, you can't use other people's businesses (ie stocks). Stocks can be a mechanism for protecting wealth in a more substantial way than just CDs/T-Bills, etc. But ultimately, a basket of stocks not going to be able to return more than the underlying economy would. (ie - The GDP)

*headshake* The retirement people would have us believe we can invest our way to great wealth/a sure retirement. But if that were really the case, they'd keep their knowledge to themselves instead of offering services that encourage people to save like crazy using their products. :(

Your Retirement Questions Answered, Part I

Live Like a Mensch — Tue, 14 May 2013 16:50:27 GMT

Photo of the world's coolest retired couple courtesy of Alex Proimos I mentioned several weeks ago