It Can Happen To You!

A couple of years ago I started putting our financial house in order. I subscribed to a two personal finance blogs (The Simple Dollar, and Man vs. Debt). I read their archives and went to work.

Thank God I did. It forced me to look closely at our expenditures and I was able to cut out a whole lot of wasted money. Now I'm funding our emergency fund as quickly as possible. I'm aiming for 6 months of living expenses in there. Unless something really bad happens, we're going to weather this recession.

My friend Margaret (not her real name) and her husband haven't been so conscientious and now they're in trouble. M. had a well-paying job until she was injured on the job in December of 2008. She hasn't been to work since, and there's serious doubt that she will be able to return to her old profession.

Shortly after they married, her husband quit his full-time job to start his own business. He struggled along and they paid their bills with a good bit left over for a few luxuries. He plays in a band and they were able to spend a good bit of money on drinks with friends and family at his gigs. She also had the money to spend on personal grooming (hair, nails).

But all that changed a few months ago when her worker's compensation claim was closed. To compound matters, during the last year or so her husband's business began to fail and has now all but died.

What's incredible to me is that they didn't make any substantial lifestyle changes when she became unable to work.

They now have no income other than the little bit he earns playing in the band a couple of times a week. They're behind on the mortgage. She just got food stamps yesterday but won't know if they'll get cash assistance or not until her 401(k) is evaluated by the state.

How did this happen? These people had much higher incomes than my husband and I. She has a financial advisor, even. Although she hasn't told me so, from what she has said about her finances I believe they had very little savings other than that 401(k). I can't help but wonder what advice her financial person gave her. Was she advised to save for a rainy day, and didn't? Or have they burned through the savings?

What frightens me is that this could happen to anyone who doesn't have a good emergency fund. I know, because it happened to us - twice. We almost lost our house once because my husband was injured and off work for 3 months. Three months. That's all it took for our financial house to come crashing down.

Ladies and gentlemen, Grandma was right. "Save it for a rainy day" isn't just a quaint homily - it's crucial to survival in today's world. Would you be able to survive if you and/or your significant other lost your jobs or were injured and unable to work?

My Husband + Our Finances = Huh??

I'm worried. I take care of all of our money and everything related to it. Every dime. My husband doesn't even get an allowance and has to call me to see if he can buy breakfast when he's stuck out of town. (He's a truck driver.) He has no clue how to do a budget or balance a checkbook. He doesn't even know exactly where all our money "lives", though he does have some idea of the names of the institutions. Who do we owe? A vague idea. How much? No idea. Our net worth? Totally clueless. He doesn't even know how much his paychecks are until he gets the stub in the mail.

But that's the way he wants it!

It's worrisome because what if something should happen to me? Oh, he could pay the bills because that's all organized. He knows where the book is that has all the websites, login IDs and passwords written in it (I pay everything online). He could figure out how to log in to the sites but he would have a terrible time figuring out how to get to the "pay bill" screens.

I log in to our checking and savings accounts every day, tracking spending and looking for identity theft. He could log in to our primary bank, but I know he wouldn't be able to read that code that our checking account transactions are translated into, like "61910061323 BONNEY LAKE 308023 07/06619100613 $9.15". Because I keep every debit receipt until it clears the bank, I can quickly find the one for $9.15 and verify that it's OK. He wouldn't do that. Identity theft could be a real problem for him.

Hubby might be able to cobble together a budget because I keep a year's worth of weekly budgets in reserve in case there's a dispute over whether something got paid or not. He could look at those and figure it out. But would he stick to it? He doesn't track spending so I'm not sure he even knows how. I foresee lots of overdraft charges.

What worries me the most is that he has no idea how to manage money and refuses to learn. He needs to know how to prioritize and track spending and research investments. He needs to know how to plan for the future. He won't let me teach him, either. Says it's all too complicated. (This from a man with a genius IQ who can remember everything he ever learned about cars, trucks and motorcycles. Seriously!) I've simply quit trying to convince him that this is something he needs to know about.

Does anyone have any suggestions on how I can pull this ostrich's head out of the sand? Should I even try?

My Two Personal Finance Gurus

Mary Hunt

When I became disabled in 2001 I was in debt up to my eyeballs. I thought I was going to have to file bankruptcy because I had no clue what to do. I had already filed bankruptcy once in my life and it really, really messed up my credit. I did NOT want to have to do it again.

So I started researching on the web. There weren't quite as many personal finance gurus out there then as there are now but there were lots of them. I think I went through them all until I found my savior, Mary Hunt. Her book The Complete Cheapskate gave me step-by-step directions on how to get out of debt and stay out. It's not available at Mary's site anymore but you can still find it at Amazon.com.

Mary has revised her guide over the years. It's now titled Debt-Proof Living and can be purchased through her bookstore at her website, aptly named Debt-Proof Living.

I haven't purchased the new book; the old one has stood me in good stead. Even though my husband and I have been living hand-to-mouth since 2001, we're now almost debt-free and we actually have savings in the bank. To keep motivated and to learn all sorts of new tips & tricks for living frugally I subscribe to Mary's newsletter.

Mary's website has some free access pages, but most of it is reserved for paid subscribers. I haven't subscribed so I can't comment on what's there - you'll have to visit and see for yourself.

In summary, Mary was a godsend to us. She continues to provide us with simple, concrete things we can do to save money on living expenses. She gives good financial advice for people who are at the low end of the income scale by answering readers' questions in her newsletter. She also publishes lots of reader submissions and her own tips for living frugally. Here's one of my favorites: make your own laundry detergent. It's quick, easy and best of all, it's waaay cheaper than buying commercial detergents that are mostly water anyway. Why don't you visit Mary's site and see if you can find her recipe?

Trent Hamm

I found Trent last year. I read one article and I was hooked. He writes a blog called The Simple Dollar which focuses on frugal living and personal finance, and he writes more broadly than Mary does. Trent writes about subjects like personal finance, motivation, organization and time management (among many others). He's always publishing reviews about books pertinent to his topics, too. Like Mary, he answers readers' questions but unlike Mary he has responded to me personally a couple of times! Every single one of his articles has been thought-provoking in some way; most are helpful in very discrete ways. And often there's a lively discussion of his articles via the comments.

The Simple Dollar's website is great. It's easy to navigate and you can find links to the important stuff on every single page, including the archives. (When I first found Trent I spent hours reading through the archives, that's how fascinating I found his writing to be.)

Trent's advice is most frequently geared towards changing attitudes and behaviors. He writes a lot about how we got ourselves into debt and what we need to change within ourselves to get out. But he's a hands-on guy too - there are lots of discrete, how-to tips and tricks in his writings, like his article on Ten Great Ways to Make Powerful Visual Reminders of Your Personal Finance and Other Goals. I subscribe to Trent's newsletter; he writes at least once a day and I usually read him first thing in the morning. I also follow Trent on Twitter (trenttsd); he's always tossing out interesting quotes and links to interesting stuff.

I'm sorry to say that I haven't read Trent's book, 365 Ways to Live Cheap, but I plan on buying it in the next month or so. He also offers some very low-cost ($2) ebooks such as 31 Days to Fix Your Finances, "... about figuring out what you want out of life and reorganizing your finances so that you can have it". He also offers a wonderful FREE ebook titled Everything You Ever Really Needed To Know About Personal Finance on One Page. It's a terrific introduction to the basic concepts of managing your money and I highly recommend it.

Here are a couple of my [current] favorite articles from Trent: Trimming the Fat: Forty Ways to Reduce Your Monthly Required Spending (notice the word "required" in there), and Is Suze Right? Do Emergency Funds Now Trump Debt Repayment?

Trent also offers a step-by-step-with-pictures guide to making your own laundry detergent, but I prefer Mary's recipe. (Sorry, Trent.) Why don't you go check out The Simple Dollar? I'm betting you'll be very, very glad you did.