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Relativity - Minneapolis Cherry Spoonbridge

Financial Relativity (Your Experience is Not Mine)

What is Relativity?

In physics, the basic definition of relativity is that physical phenomena are highly dependent upon the position (motion, etc) of the observer.

I was in Minneapolis recently for work. It was a super windy day with 40-50 mph gusts. It was the worst airplane landing I had ever experienced with the plane violently rocking back and forth and up and down right up until touchdown. The wind made the trunk lid slam into my head as I was putting my luggage in the trunk. I headed to Trader Joe’s to buy my imports. As I was checking out, the lady said: “Isn’t it a lovely day? Every day is a lovely day when you don’t live in Duluth!” Hilarious, right? Except I sort of didn’t get it because I’ve never been to Duluth. I’m assuming this is similar to us (in Anchorage) saying in the middle of winter: “At least it’s not Fairbanks!” (which is probably lost on YOU, dear reader!).

gazingus pin

The Gazingus Pin: Your Spending Weakness

It’s no secret that one of my all-time favorite books is Your Money or Your Life. The book constantly talks about the Gazingus Pin. The Gazingus Pin is the ridiculous thing you continue to spend your money on. The book couldn’t say “clothes” or “movies” because specific items would be too close to home for many readers. As I read that book, I kept thinking “I don’t go to the mall. I’ve stopped going to Target and Target clearance was my Gazingus Pin. I’ve already solved my problem!” Maybe you’re thinking that, too. You’ve stopped getting coffee on the way to work. Congratulations! Unfortunately, the problem with the Gazingus Pin is that it’s not usually the thing that’s easy to cut out. It’s that thing you need that you never realized you buy in quantities too large to be useful.

Financial reflexes

Do You Know Your Financial Reflexes?

A reflex is defined as an “an action that is performed as a response to a stimulus without conscious thought.” When the doctor hits your knee, your leg goes up. You don’t will it to do so. It just does. I was at a friends’ house last month. She had a broken toe. She walked into her kitchen and accidentally kicked a Lego with her broken toe that her kid had left on the floor that she didn’t see. Her reaction: Deep breath, pick up the Lego, and walk away. WHAT?! No cussing. No yelling. No throwing things. She just took a deep breath and moved on. Now, I’m a yeller. My kids know I’m working on it and they are very good about reminding me to calm down. But you know what my reflex is if I were to kick a Lego with a broken toe? YELL AND SCREAM! I don’t consciously think “I’m going to yell about this painful, frustrating experience now” and then yell. It is my automatic response. The stimulus hits and I respond with yelling without conscious thought.

Everyone has reflexes/defaults/automatic responses. These are the things you do without consciously deciding to do so. Unfortunately, some aren’t quite as obvious as yelling in a frustrating experience. A lot of financial reflexes are ones we can’t pinpoint and that often causes problems. Tracking your spending to the penny helps identify these things, but think about different scenarios. I’ll present a few, but there are thousands! Instead of thinking about what you THINK you would do or what you know you SHOULD do in these situations, try to stick with your instincts. Try to identify what your default would be. I’m also not necessarily saying there are right answers to your reactions here. They will be different for everyone based on your priorities.

Broken hose pipe

How to Stop Leaky Spending

Last week, Mr. T turned on the outside hose for the first time this spring. The water trickled out. After some sleuthing, we realized the pipe had burst and as soon as Mr. T turned on the hose, the water started going in the (newly insulated and beautiful) crawlspace! Upon seeing the water all over, my first reaction was “SAVE THE STUFF!” I mean, that insulation was not cheap. And the boxes sitting in the water weren’t going to save themselves! Mr. T looked at me and said: “First we have to stop the leak.” He’s so sensible. That’s why I married him. Obviously. He made an excellent point. The order matters! 

One Change

The Impact of Making Just One Change

A few months before we dove into purging our stuff, Mr. T got new socks. I was reading The Lifechanging Magic of Tidying Up to prepare for the big event. I was just reading the socks section when Mr. T was unpacking his new socks. “This book says you should roll your socks to let them rest.” Probably more to get to me to stop talking about the book, Mr. T dutifully rolled all of his socks. For two months, those perfectly sushi-rolled socks taunted me. They actually seemed happy. Socks. Happy. Crazy? Right? I wanted our whole house to feel that way. Every time I saw his socks, I wanted more! I wanted to dive right in and make it all better.

When Money and Love Don’t Mix

I read a lot about healthcare for my job and one thing that keeps coming up is that we’re terrible at making rational decisions about our loved ones. It’s easy to have a discussion about end-of-life care and how trying everything, no matter how expensive, is ridiculous for someone in her eighties. I don’t want to live or die like that. But when it’s your own mother, the story changes. If you’re the one that has to make the choice about pulling the plug on the breathing tube, everything changes. Understandably!

Inflation, Market Return, and Safe Withdrawal

Today we’re going to take a good look at the three numbers most retirement calculators make you just guess. All three are very arbitrary and are based on future market and economic performance.

Inflation and Market Return

For ease of use, I like to combine inflation and market return. Often, when the market is high, so is inflation. But that’s not always true. So, luckily, some very nice people have combined the two metrics for us in an overview of historic market performance. All charts we discuss below are adjusted for inflation.

Are You a Saver or a Spender? The Why.

I had an interesting conversation with Penny last week. It went something like this:

  • Penny: McKinley is a saver. I’m a spender.
  • Me: What makes McKinley a saver and you a spender?
  • Penny: McKinley just saves all of his money. I buy things. Like my waterproof camera. Well, I guess I’m more of a saver, then a spender.
  • Me: What’s the point of McKinley saving his money? What is he going to do with it?
  • Penny: I don’t know. He just keeps it.
  • Me: Dad and I are savers. But do you know why we save money?
  • Penny: So we can go on vacations and dad doesn’t have to work until he’s old.
  • Me: Right. Money isn’t worth anything if it doesn’t have a purpose.

Why the YMOYL Wall Chart is the Best Retirement Tool

The book, Your Money or Your Life is said to have introduced the term “Financial Independence” and offers a very specific road map for achieving it. I strongly advocate every person read this book. A large part of the program involves creating a chart. Let’s start with how to create your own chart and then talk about why it’s the greatest thing since sliced bread. In Excel,* or on graph paper on the wall (I will argue for doing both momentarily), start tracking in a point-to-point or line graph form the following numbers:

I Found the Hairbands and Saved Money!

Sarah over at The Yachtless wrote a poignant piece that was featured on Rockstar Finance called Small Things about losing hairbands and tracking your spending. This is a response to that awesome blog post.

Hey Sarah, Maggie here.

I’m just writing to tell you I found them! Yes, ALL the hairbands.

This was a pretty big week for me. Mr. T and I cleared out our bathrooms and our kitchen cabinets. Both of these things we figured would take a couple of hours total, but they ended up being a much bigger deal than we anticipated. I was in that bathroom for hours. And, just as you supposed, every dark corner hid at least a couple of hairbands.

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