Sunday, June 27, 2010

Notes From the Edge of the Abyss, or don't make the same mistakes I did

It’s true that there is deep and horrific poverty in the world. I count my blessings every time I turn on my kitchen faucet and remember that I don’t have to haul water in 10 gallon loads on foot across five miles of gravelly scrub land. It’s also true that there are many people much worse off than me even in my local community. I still have a roof over my head, electricity, gas heating, even internet access and satellite television. My husband has two jobs, and I have two part time jobs, none with benefits or long term security, but we are managing. Just. The truth is that I have avoided looking sternly at my own lousy money management. I’ve refused to admit that I am a stupid spendthrift, short sighted, and did I say stupid with money? So here are some lessons, finally and painfully learnt by me after a lifetime. 1. Save money while you are young. I was so fortunate when I was starting out in theater in my early twenties, to have a great job at Her Majesty’s Theater in Sydney. I don’t think the old place exists any more, but at the time there was a wonderful sense of continuity for me to be working in the very company in which my mother got her start in musical theatre. I had an inexpensive rented home. Prior to that I had been lucky enough to live rent free for a few years in the small house my mother had bought as an investment property before leaving the country to marry. Trouble is, I was a party girl. Without many responsibilities other than work, recently divorced, and feeling free and unfettered for the first time in my life, I was determined to enjoy the night club scene with the other beautiful people from the theater world. Late work hours, foolishness and a steady income made a bad combination. If I had been thinking of the future for a single second I wouldn’t have spent so much of my paycheck on nonsense. I could have ventured out once a month and used the rest of my money to create a nest egg that could have earned interest very happily over thirty years. 2. Learn to cook. Learn to love to cook. I know this sounds like a silly thing, but I have spent most of my adult life avoiding the kitchen. Aside from being the only living person who actually likes my own experimental cooking, I’ve struggled with finding the enjoyment even in the basics. I wish now that I had stayed in home economics in high school, a subject I spurned as lowly status, not being academic enough. Plus I thought I would be able to learn cooking at home. But I never did make any attempt to cook at home. Nor was I invited to be part of domestic tasks, because I was always told that my job was to study. As a result way too much of my money has gone into supporting the restaurant industry. I used to tell myself that I was too busy, but the fact is I just don’t like it. I don’t mind baking, funnily enough, but you can’t live on cupcakes and gingerbread. It’s the chopping, the peeling, the fine prep work, that irks me. It’s the recollection of my grandmother whose entrapment in a miserable marriage for 60 years seemed symbolized by her endless pose at the kitchen sink, staring out the window hand washing her china, and boiling vegetables until the life was sucked out of them. How I love working in the movie business – they feed you every day on a feature film set. Usually at least a continental breakfast, snacks available all day, a catered hot lunch exactly six hours after call time, and if the shoot runs overtime, a second hot meal. Heaven. The perfect job, provided you don’t have a family waiting at home for you to cook for them. There are great convenience foods around the supermarket these days that were rare when I was young. Skillet meals, steam in the package meals, instant rice. They are somewhat more expensive per serving than starting from scratch. Not as expensive as ordering in Thai food. Not nearly as expensive as going out to eat. I used to eat at one particular Vegetarian Thai restaurant around the corner from my theater every night. I was the Technical Director then. I would stay at work until opening, then go and eat my favorite dishes, reading a book while there. After a leisurely meal I would return to the theater for curtain, and to get a report. If there were to be any kind of disaster, they knew where I was, and there never was a disaster in my absence. The irony of it is that my home was just a block further on. I could easily have gone home to eat, and still have been accessible. I could probably have been putting $400 a month into the bank – and this was twenty years ago. So learn to cook and find a way to enjoy it so that you can limit your eating out to special occasions and save your money. It’s amazing how quickly the costs of a ordering in even once a week mount up. 3. Find a rich broker to handle your investments. My husband and I had a bit of money early in our marriage and we invested a good part of it with a brokerage firm. It wasn’t much money in the grand scheme of things, not even enough for a down payment on a house in our high priced city, so I guess we were allocated to one of the junior brokers. We calculated that guy cost us about $100 grand over the course of about three years. Several times we had the same sequence of events. My husband, an avid technophile and online researcher, would find some new and cool hi tech manufacturer going public. These would usually be small companies starting out. He would call the broker and suggest buying up some stock. The broker would always talk him out of it, convincing him it was too risky and that our money was safer in the established high tech stocks where it was at the time. Every time we would watch as our “safe” stock slowly dropped and the new, exciting techno marvel that my husband had found would skyrocket in price, independent of whatever the DOW was doing. What we failed to ask ourselves quickly enough was if our broker was so good at picking stocks, why was he the low man on the totem pole working for an hourly wage and the meager commissions from our tiny sums? My husband was doing a better job of picking stocks than the so-called professional. Finally we needed the cash so we had to sell out at a small loss, so at least our tax consequences were minimal. But it still rankles when we think of “that guy”. 4. Pay your bills the old fashioned way - and use cash for daily expenses. For a long time we were paying our bills via paperless methods. The convenience and simplicity of joining the ubiquitous auto deduct programs would appear to mean that our bills would never be late. Unfortunately these are a lot easier to join than they seem to be to withdraw from, and once a company has your banking information online, they seem to be perfectly willing to continue to submit auto deducts at their convenience rather than ours. With several business accounts at the same bank all cross linked, instead of simplicity it added confusion and some e-bills were missed in the obfuscating stream of emails and spam from the various institutions. Above: Box decorations made from bill envelopes. It seems like a wonderful service to have “overdraft protection” too but beware. You may find yourself paying $34.00 for an iced tea. The banks will hold a series of withdrawals, POS debits and auto deductions until they have a collection, especially over a weekend. Then by policy they will withdraw the largest amount first, hoping to push the account into overdraft status and charge a hefty flat fee, unconnected to the amount of each deduction, for each charge. They will hold deposits and count them after they have accounted for the withdrawals also. You have to actively opt out of this “service” so that the bank will just do what banks used to do in the olden days and refuse to pay if the funds are insufficient. The main point is that it became increasingly difficult for us to really see our spending when it was all in the virtual world. It was entirely too tempting to just assume the bills were correct and skim over them or not even double check when the priority was speed and convenience. I became un-mindful of our expenses, from whence it was a short and comfortable slide into denial. After close to $1000 in these fines we closed our bank account and opened another so that our regular service providers and utilities do not have in their online records. A clean slate so we can wrest control of our outgoing money back to ourselves, and as inconvenient and boring as it may be, I have returned to paying bills individually. 5. Turn Ideas and Dreams into realistic action. For a while there I kept coming up with creative non-fiction book ideas – as the broad genre is called. Every time I had what sounded like a good idea, I’d jot it down and go to the online bookstore to start my research. Sure enough, there would be “my” book recently published. I chose to be encouraged, decided that this was a good thing – clearly my ideas had commercial potential and perhaps my finger was on the pulse of something or other. I just had to come up with an original idea first, something that reflected my personal interests and thoughts, my own aesthetic. Examining my interests and such expertise as I can claim have been the paths to originality. I’ve developed some ideas that should in due course fulfill their potential to be income producing. I don’t expect to become a multimillionaire from writing. I’m not writing the right kind of material for that. But I’d like to make a contribution to our family coffers. Unlike in the past where I would engage in a lot of talk and wishful dreaming, I have created timelines for completing certain tasks and moving these projects forward. They are fluid to a degree – I notice a tendency in myself to set overly ambitious goals with insufficient time allowed for the other necessary tasks of living and parenting – but they are written down and accessible. Tenacity is essential in the pursuit of dreams. Coming up with an invention in the endless playroom of the imagination is fun for a time, but eventually you must build a test of concept device if you want to see your invention in the real world. All the ideas in the world are useless if they are unexpressed. In my life I have attracted dreamers and schemers, people with outlandish ideas and plans, people whose ideas sound grand but are rarely realized or discovered, like my early book ideas, too late. I’ve been one of these myself. Our closets are full of aborted constructions and the leftover materials of failed dreams. Some of these have been fodder for new ideas, like the lavender sachets that I remade into purses to much greater success. We read so much about the entrepreneurial spirit being the way of the future, prosperity being connected to service industries, solution creators, the marketing of knowledge and ideas. It all sounds like a positive spin on dreaming. But dreams are not goals. Goals may spring sprightly or grow ponderously from dreams, but they are not the same thing as the dream. The paths, the stepping stones on the path, the direction of the path – these require more than wishing and desire. These require construction, making a map, pouring concrete, defining boundaries, spotting signposts, a consciousness of detours and debate over the value of such. There has to be action. Years ago I wrote down my five and ten year plans. Looking back – an essential component to realistic goal setting – I can clearly see those goals I reached, the majority, and those that are still simmering. I can see how my idealistic visions did not take into account the preferences or needs of the family I so earnestly wanted as part of my big life plan. Having a child does change everything. The great thing about life plans is that they can be reformed as they develop – and how much simpler it is to change something that is several years in the future than a serious plan for tomorrow. However from this place of distress and failure, I can also assess where I did not meet my goals and aspirations. By failing to maintain even a modicum my attention on these goals they just faded away. It’s not just that these particular projects were shunted to the back burner. They were truly forgotten and switched off. There is a connection between my poor financial situation now and the unintentional discarding of these goals. I can see where and how the community and network and family that I attracted and gathered around me were positive energizing influences. I can see also where some of these same spirits and individuals have increased my complacency and fed into the worst of my character – that part of me that is lazy, afraid, a procrastinator and able to justify anything, the part of me that fails to inspire, uplift, encourage and exalt others. I have written down my professional goals for this year. I have published these goals on my public blog for anyone who cares to see. I have communicated the posting of these goals on my Facebook page, so that even more people may choose to peruse them. I made sure that they were realistic, achievable while still ambitious. I’m still developing my action plans and timelines, but some of that is already out in public. As I said in my blog post, I’ll look darn silly if I reneg now. More soon.