plonkee money an english-er's thoughts on personal finance

April 27, 2009

it rained inside my house

Filed under: house — plonkee @ 7:46 pm

And, the hidden costs of owning a house have reared their ugly heads.

At the front of my house is a bay window with its own little roof. It rained quite heavily today, and the carpet under the bay is wet, there’s also a reasonable likelihood that part of the ceiling is going to come down (it’s separate to the rest of the ceiling and about a foot lower).

I do have an emergency fund, but what I don’t currently have is time to get it fixed. I’m starting my new job next week, so I’m ridiculously busy this week handing over stuff, and I can’t exactly plan to take any time off next week to organise a whoever to come over – I also have no idea what trade is required to fix this problem.

For now, I guess I’m just going to have to hope it doesn’t rain any further and cause an even bigger problem. I’m not sure what else I can do in the short term.

lessons to learn?

Although you can see that there’s been water damage to that part of the ceiling before, for some reason I think I read in the survey I had done that it was no longer an issue. Still stuff like this is one a fairly long laundry list of things that need to be fixed – this is what happens when you buy a 100 year old house. If it wasn’t this, it would probably be something else. So far, I’ve had a door replaced but I also need to get the ivy removed, replace some windows, insulate the loft further, replace another door, remove two gas fires, fix the damp in the bathroom and replace the bathroom suite. That’s without the list of things that I’d just plain like to do.

Owning a house costs money. More than you’d think.

April 20, 2009

personal finance education is like…

Filed under: education and career — Tags: , — plonkee @ 9:16 pm

I’m thinking that a financial education has lots in common with sex education. Some people think that it should be taught in school, others say that it’s the responsibility of parents to educate and schools should leave it well alone. Some people feel strongly about abstinence in sex education, and some people feel strongly opposed to credit in personal finance education.

Of course there are some differences. One of the best ways of teaching kids about personal finance is to have them watch their parents… Yes, you really can only stretch an analogy so far.

and there’s a point to this?

If we’re taking a strictly outcome based approach, the Netherlands is particularly good on sex education. Rates of teenage pregnancy are some of the lowest in Europe, and teenagers wait for longer before having sex. Now, the Netherlands is pretty liberal, and you might not be comfortable with some of the things that they teach the under 11s about sex, but the really important thing that they do is focus on relationships, values and self-worth with the mechanics being taught but with less emphasis. As a result people (that pay attention and learn in class) are more likely to make decisions that benefit them in the long run.

Really I think we can learn something about personal finance education from this approach. The mechanics of budgeting,  and how credit cards work, and how to balance a cheque book are important, but nowhere near as important as organising your finances are around your goals, and the life that you live. It’s really helpful to understand the rules around RRSPs or ISAs or Roth IRAs, but it’s even more important to understand how risk works, and the sort of risk profile that you have at the moment. Or to work with yourself to get out of debt, rather than embarking on a plan you won’t stick to.

Personal finance education, is a bit like sex education!

April 6, 2009

…and when the luck begins

Filed under: philosophical — plonkee @ 2:26 pm

and when the luck begins, it’s like a wedding,
which is like love, which is like everything.

Alice Oswald

Sometimes I think that for a single person, I find the process of planning a wedding a bit too fascinating. It’s just that they always seem to be like real life, but on a more confined scale with lots and lots of emotional baggage.

If you ever write a post on weddngs that attracts a significant number of comments you will probably hear the following:

  • get an amateur or student to do the photography
  • don’t skimp on photography – the photographs are the only thing that will remain
  • use an iPod for the music
  • don’t skimp on a DJ – the music is what will get people dancing
  • cut back on the guest list
  • save money anywhere but the guest list – it’s more important to celebrate with the people you love
  • ask your friends and family to help with tasks
  • don’t ask your friends and family to help – they want to be guests not working
  • don’t serve alcohol
  • no one admits this, but at least one person is silently thinking an alcohol free wedding is the last thing they’d want (it’s probably me)

It should be clear, that if you listen to everyone you can’t win. Different people have different priorities. Should anyone ask me what I think is important in celebrating a wedding, I’d go for food, drink, clothes (in that order), those are the things that I remember most. Photographs and music are reasonably important to me but I could be as happy with cheap or free as with expensive, and if there were no flowers I wouldn’t care one little bit. And maybe you do only do it once, that doesn’t mean that you want to be paying ofor it for years to come.

Weddings are like everything else. There are a few things that are fundamentally essential- a happy couple, a marriage licence, witnesses / officiant as per legal requirements. Everything else is just for frills. In real life, what couples should do is:

  • work out a budget
  • sort out the essentials
  • work out what wedding features are most important to them
  • put more money/time/effort into the important things
  • cut back on the things they don’t care about

And they should do these things based on their own values, opinions and circumstances, not the word of an internet commentator.

But, as I said, weddings are like everything else. What we should be doing in our normal day to day lives is:

  • set a budget – or at least know our incomes
  • work out what things in life are essential and allocate money for those
  • work out what things are important, and allocate money for those,
  • put any money left over to the less important things.

The things that I think are most important for celebrating a wedding are probably not the things that you think are important (people rarely think that the clothes are more important than the photographer). But that’s ok because when it’s your wedding, you don’t have to do what I want.

Similarly, and fortunately with less stress and emotion, the things that you think are important in your life are probably different to the things that I think are important in mine. Not everyone is going to spend £2250 on a second-hand oboe, when they also need a new bathroom. (Since the shower in my bathroom is amazing, the oboe will actually make me happier.) For some of us, clothes are important and for others it’s eating out at fancy restaurants.

There are some things that we all need – things like food, and shelter, and a healthy savings account – but for most people they actually need only take up a very small proportion of our budgets. I could probably spend less than half the amount I actually do on housing if I hadn’t prioritised having my own house above other things.

Life is a balancing (or juggling) act. There’s never enough money to do absolutely everything. So you may as well prioritise the things that are most important to you, and spend your money, time and effort on those, rather than things that other people tell you that you’ll value.

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