The Addison Cafe

I was on a walk the other night with my wife and dog when I happened to glance at something moving in the street. I looked a little closer and exclaimed “look honey, a baby chinchilla!” I couldn’t think of a reason why a baby chinchilla would be in the middle of the street by itself, so feeling bad for the little guy I coaxed him near my hand and picked him up.  Thinking that maybe he was some kid’s pet that escaped, I went up to the nearest house and rang the doorbell. A father and his two little kids answered the door and after asking them if they or any neighbors had lost a pet chinchilla he replied “no” and after a short pause, said “Ummm…that’s a rat”.  Ah hehe ha ahhh…. Yeah. So it turns out I picked up a dirty, sickly street rat with a hunchback that resembled (at least in my apparently poor opinion) a baby chinchilla with a hairless tail. Needless to say my wife requested that I “wash my entire upper torso” as soon as we got home.

So what does petting a hunchback street rat have to do with finances you ask? Let me tell you another story and you will understand…

College kids love pizza. Somehow the credit cards gods have figured this out and every year would show up on my old college campus and offer a free pepperoni pizza (a $5 value btw) to anyone who would sign up for a credit card. Did they offer any education or financial tips regarding credit? Nope. They just handed out cheesy pizza while flashing even cheesier grins and inevitably starting the downward spiral of the debt cycle for already-poor and unsuspecting college students. They appeared to care about the students, befriending them with food and laughter, all the while dishing out 18% credit cards. You should have seen the swarm of students willing to sell their very souls for pizza. The sad thing is that “free” offerings like these are often the sparks that start the fires of debt and stress in people’s lives.

So be careful when accepting “free” offers from “nice” people, they’re probably just a dirty rat.

I hate lines. That is why earlier this week I got frustrated when I was in San Francisco and I went to check out the glorious new iPhone. I walked up to the front door of the Mac store but noticed there was a line of 10-15 people leading down the sidewalk. I asked an Apple employee who was standing outside if that line was for the new iPhone. Nope. That line was just to get in the store. He pointed behind me to at least a hundred other people leading the opposite direction and said “that line is for the iPhone”. Two lines. One just to get in the store, the other to pickup the gadget of the decade.

The iPhone is good at a lot of things. Playing music, surfing the web, pretending to slash people with a lightsaber (google “phone saber” and you will see what I mean). It’s also good at taking your money. I will admit that the new price cut to $199 for an iPhone is pretty reasonable, however, AT&T really bleeds you with the monthly costs. For a basic plan with data (internet) it costs 70 bucks a month (that’s just for one person btw; a family plan is a lot more). If you want a more comfortable plan with unlimited weekend minutes it will run you 90 bucks (of course there are taxes and fees so it is actually a little higher than that). An all you can eat iPhone buffet with unlimited everything? $129 per month, vs. the $99 plans offered from other cell phone carriers. 

It comes down to needs vs. wants. We need to communicate with others. We want to pretend we are Luke Skywalker while crankin’ our hip hop from our phone and at the same time surfing YouTube for the latest viral video. 90+ bucks a month is a steep price to pay.

Is it worth it? Could you sacrifice the iPhone and save half of that bill every month? Or do you get one and skip a few meals out but impress all your friends? There we go again…trying to impress the Joneses.

What do you think?

Last week I wrote about blowing money on fast food and feeling good about it. I wanted to follow up and clarify that obviously not everyone is in a position to do that. We all have different incomes, obligations, and circumstances. However, more often than not there is another reason why we don’t have as much money as we would like: The Joneses.

The family down the street, your co-worker, and the person on TV. What do they all have in common? Shiny things…and debt. But we don’t see the debt…just the shiny things. Too much of our money is wasted trying to keep up with the Joneses (whether consciously or unconsciously). A friend of mine was lamenting that he didn’t have a new truck like all the neighbors on his street had. I reminded him that they most likely didn’t own those trucks and even though he drove an older vehicle, he was closer to retirement than they were. (Of course it’s easier said than done…the new iPhone is calling my name…)

Too often we compare ourselves to others; it seems almost impossible not to from time to time. Let’s face it; our culture doesn’t exactly promote contentment. There is a saying: “we spend money we don’t have, to buy things we don’t need, to impress people we don’t like.” How close does that hit home for you? Stop keeping up with the Joneses; you probably don’t like them anyways.

Ever feel guilty from eating fast food? Buying Starbucks? Your morning bagel? (that sounds so good right now…) I have. A lot. But we do it anyways don’t we? Always justifying “well, it’s only a couple bucks”.  Right now you are probably imagining that I am going to turn into your mother and start lecturing you on why you shouldn’t waste your money on fast food. Nothing could be further from the truth. This time I am going to play the little devil on your shoulder, not the angel.

I can’t count the number of times I have been harassed or persecuted by people who point their little finger and accuse me of wasting my money on food. (Know-it-all voice) “did you know that a latte a day for a year = x dollars?” or “did you know if you save your latte money and invest it at x% for x years you will have x dollars?”.  Yes I know. A penny saved is a penny earned. Yadda yadda yadda.

However, I don’t believe you have to save every penny. This is how I stopped feeling the fast food guilt trip (based on the “pay yourself first” principal by David Bach in “The Automatic Millionaire”):

I do first things first. In this order: I pay taxes (no choice on that one), bills, save towards an emergency fund, save towards retirement, and then spend the rest. (note: charity, tithing, and giving are something a lot of people choose to do. Due to the variety of personal preference involved, I left that off my list). Once I know that my responsibilities are taken care of (taxes, bills, savings), I know whatever I have left can basically be spent without thinking twice. Let’s say that after bills and savings you are left with 100 bucks at the end of the month and so you buy 6 McDonalds Happy Meals, 13 mocha frappuccinos with whip, and spend the rest on iTunes. So what? You have peace of mind that you took care of yourself first. Your savings goals are met (keeping in mind you should be setting goals in the first place). No scary “oh no now I can’t pay bills” thoughts going through your head. You are covered.  It is a beautiful thing to enjoy a Big Mac guilt free (except for maybe the calories).

THAT is why I am ok blowing cash on fast food…I pay myself first so I know my future is already taken care of. Do you?

*Note: This is assuming you set healthy savings goals and have self control. Sometimes (like if a car breaks down) it is wise to skip a month of fast food and Starbucks. Use good judgment. More to come on financial hardship next week…