March 09, 2011

Changing My View of Gift Money

Here Piggy, Piggy, Piggy
Yesterday was my birthday and I had a wonderful evening with my family.  (I will post pictures when my husband e-mails them to me.)   In the past few days I received cards from my mom and my in laws that contained some money for me to buy a gift for myself.  My kids had asked me what I wanted and I told my youngest son that I would enjoy a gift certificate from a local grocery store that sells my favorite Kona Blend Hawaiian coffee.  My oldest son and his wife asked me what I wanted and I said that I would enjoy a gift certificate from Amazon as I had a few things on a wish list.  And my dear husband told me that his gift to me was new clothes for our trip to Washington D.C. this summer.  As to what is meant by new clothes, I would like a couple of pairs of capris.

I received $80 in cash and gift certificates and I have $30 set aside in a jar from extra cash I have had in my wallet.   The old me would have gone on line last night and bought a bunch of brand new clothes and paid full price. I would have gone out to buy coffee this morning and spent the Amazon gift certificate plus the cash gift money on a bunch of stuff on my Amazon wish list. 

The new me is waiting for my Kona blend coffee to go on sale so I can get more than I would if buying this at the regular price.  My Amazon gift certificate is being saved along with the cash gift money so that I can put this towards new kitchen chairs.  And I will start checking out the thrift stores and consignment shops at the end of this month for some "new" clothes for our trip to Washington, D.C.

The new me is learning to get a kick out of saving and waiting for a purchase.  This is new for me and since I was a kid, money would definitely burn a hole in my pocket.  I am now a saver.

I was watching Nightline last night and they were interviewing Suze Orman about her new book "The Money Class."  I took notes.  Suze has reversed some of the key points that she used to give to people before the Great Recession.  Suze stated that the old American Dream has died and we are living a new American Dream.  We have been living an illusion, and the illusion has evaporated.  Suze said that it used to be everyone wanted more stuff, and bigger and better stuff.  People were buying one and two houses with no down payments along with purchasing cars, boats and motorcycles.  They were living way beyond their means and in many times to impress others with what they could buy and possess.

Well, that old American Dream is gone and we most now live the new American Dream which means living your life within your means so that you are happier and can sleep at night.

She is now telling people the following:

1.  Nothing is wrong if you are a renter for the rest of your life.  We are living in a new America and a new time. 

2.   Now Suze says that you should wait until 67 or 70 to draw Social Security money.  This is due to lost equity in your home or retirement accounts that lost money.  Your money must last until 85 or 90 years of age.

3.  Live below your means, but within your needs.  You have been driving a car for 3 years and you want to trade it in, but it is a perfectly good car.  Don't trade it in, keep it for 10 years.  If you can afford a 3000 square foot house, she says you should buy 2000 square feet.  Why waste money? Just because you can afford it, doesn't mean you should buy it.

4.  The pleasure of saving equals the pleasure of spending.  Wouldn't it be great if that rush you get when you go out and buy something, you would get the same rush if you saved by putting money in your retirement account?  Get excited about having money in your bank account just as you get excited about having clothes in your closet.

5.  If you're slightly underwater in your house, keep plugging away to pay off the mortgage faster - especially if this is a house you are going to live in for the rest of your life.  You may be underwater, but you love the house and your neighbors.  Don't get tied up in that you're $20,000 underwater, just keep plugging away.

6.  Focus on what will be gained and not lost.  You need to quit going out to eat, quit getting massages and your nails done.  No one needs those things.  Focus on what you do have and the pleasure that you get from being able to pay your bills.

So that's the new advice from Suze Orman. 
Well, a lot of us are smarter than we thought because we already knew this, without having to buy her book.  We've been living this for a few years.  We're so smart.  But, the sad thing is, that as we recover from this bad economy, old habits are starting to take over some people and they are going out and charging up their credit cards.  I heard on the news recently that people are tired of being frugal and feeling deprived so they are starting to "splurge" again. 

I would rather splurge by sipping a good cup of Kona coffee and spend some time reading some of the wonderful blogs on my blog list. 

I will be posting my Tightwad Gazette post later today.  I am now off to help at church with our Wednesday after school program.

1 comment:

Paula said...

Orman is wrong, IMO, about no harm in renting. I still believe what my parents preached about the importance of owning a home free and clear before retiring.

If my husband and I had not accomplished this before he became disabled and had to retire early, I don't know how we would have made it with mortgage or rent on top of our medical and drug expenses.

I believe the problem, as you stated, is the modern trend to owning TOO MUCH house.