Well I was gone a week but a LOT to catch up on. Hold on for another long one - breaking into a few topics though.

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ADVERTISING

Egads. I don't sweat the advertising thing that much, because rather than shelter the kids and pretend ads don't exist I think it is better to show the kids the flaws in advertising, and not to believe everything they see. It's an educational experience. Might as well learn now - "Can't believe everything you can see" - and, - "If it's too good to be true!"

So last week out of nowhere BM says he thinks we really need some "Clorox Anti-BActerial wipes." Seriously. I asked him why, and he said something about them being the #1 cleaner, or some kind of catch phrase. He's almost 5. I thought, egads, my 4-year-old is a walking advertisement for Clorox. He asked me something similar the other day about another product (I don't remember).

So yeah, we had a talk about advertisements.

So yesterday he tells dh and I we need a new washer and washing machine. I said I don't think so, since all of our appliances are rather new (& for the longest time we settled for the extremely old/used variety). So BM says, well everyone he knows has a washer with top loading, and even Caillou does (a TV show character). Dh and I giggled. We told him yes we used to have one of those, but that our washer was just so new that few people have the front loading. We tried to explain that this was actually luxury and we already had newer stuff than most of what he has seen (& we'll be happy if they lost 30 years+ like our last washer). But I think it is intensely scary how concerned he is suddenly with what everyone else has. I thought at least that wouldn't start until elementary school!

Well, my parents said no to about everything growing up so I have no qualms about that. The "no"s have started.

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CREDIT

I was amazed to read how many homes were to be had in some areas for under $10k (in this foreclosure mess - retailing for more - but banks were selling to many investors for pennies). I told dh that I understood the mess in areas like this, but I don't understand how people who bought $100k homes got in over their heads. I look at that and think we would have had no mortgage today if we could have bought a decent $100k home in this area. My sister bought a $80k home in NC and has something like a $400 payment even financing her car and many other things against her house. (Granted, she had a nice down payment, but she finances everything too...). Color me jealous. If only I could afford a home like that for $400/month, in this state.

Dh said - "It's credit. People don't buy what they can afford anymore." By golly, that's it!

Actually - it was an article in Reader's Digest. It was mind boggling to me how widespread this credit mess was. I guess I didn't realize how hard it was hitting the less expensive areas in the country, and still not sure I understand why.

Anyway, a question was asked in the forums a while back about how to know when it is okay to splurge on a new car and bigger purchases like that. I think, "easy." The big purchases are easy. We pretty much think in a cash mentality. So if we don't have the cash, we don't buy it. That is pretty much how we have looked at everything, except our home. & I always felt we were okay with a mortgage because of how low interest rates were AND the expensive-ness of the area (cheaper than renting anyway). But if we lived in the mid-west or int he middle of nowhere as my sister does I am pretty sure we would have just paid cash (or taken on a very small mortgage and paid it off quickly). So I can't say I am a huge fan of mortgage debt either, but more it is a function of the region we live in. It beats renting which I guess is the main factor. It did when we first bought anyway. Remains to be seen for the near term. Though still confident for the long-term. & we really value stability anyway. (Renting is NOT stable in this market, that is for sure).

But when it comes to ANYTHING else we don't buy it if we don't have the cash. This applies to education and cars (which few people think of this way). Home repairs, etc. Of course, I am not saying there is never time to finance a car or an education or home improvements. There are always situations where this can make sense. But if it doesn't make sense, we will not do it. & mostly it has never made sense for us.

Likewise, we never really struggle with what we can afford. When I saw that question I thought, that question would not be asked but for all the available credit. Credit seems to blur the line between what you can afford and can't afford. Suddenly with credit you think you can afford way more than you really can. & this is what has created such a housing mess.

& it makes you wonder if you should buy a brand new car when you don't need one.

As for us, we have $2k in the bank for our next car purchase. It would suffice if dh's car imploded tomorrow (we have never carried collission insurance on our near worthless cars). So I would be confident we could replace his car. But obviously we are in no position to go buy a $20k car (obvious to me). Of course, if dh's car imploded, I would consider a car in the $5k range. One that would probably last forever and be a fine car, and we could pay off within a year. Or we would just buy the $2k car until we could afford an upgrade.

On the flip side, if I had $30k in the bank and nothing on the horizon (in addition to emergency fund) I would consider buying a new car whether I needed it or not. If it was something I wanted to splurge on, and I had the cash, so be it.

So, no, we don't struggle with the big things. If we want a big thing, we save up for it. We struggle a lot more with the little things I guess (which can add up). But I don't identify with the struggle over bigger purchases, and I think it is primarily because we have a "no-debt" mentality. If we don't have the cash, we save it up. & if it is unrealistic to do so, then we do without.

We were looking at a refi briefly (when rates dropped very low for a very short time) and I had discussed borrowing more with dh. I thought it may be prudent to pull out a few thousand and fund our IRAs this year. I think in some regard I regret paying our mortgage so aggressively in past years. Dh did not feel comfortable with this at all, and I was okay with it. I think it made more financial sense in the long run, and I would only do it with the caveat that we would never borrow against our home again (otherwise it would be a slippery slope - don't like the whole "quick fix" thing). I had enough discomfort of my own to not mind that dh did not go for it.

But, out of curiosity I asked my parent's (my financial role models) if they had ever borrowed against their house for anything. I was actually quite surprised when they told me they had financed a car against their house. I had no idea. When they were about the same age actually. Was just, interesting.

Dh told me his parents financed their pool against their home (in-ground) and he never liked that. I am not sure exactly why (seems reasonable to me) but he said if he wanted a pool, he would pay cash.

Yes, you could conclude that dh is more anti-debt than I!

I think we are both even more debt adverse than our parents ever were.

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Inheritances

Well, the MIL is retiring in a couple of weeks and so she has retirement on the brain. (Though FIL is the main breadwinner and will still work for a while).

Anyway, she had a very odd conversation with dh on Mother's Day. He took her to lunch and I guess she was talking much about her impending retirement. She told dh that they were planning to leave us $500k. That they should not have to touch their principal. She is obviously very optimistic. I have to assume that includes their house, since they are relying on social security and pensions more than anything. (I would imagine their cash savings goal for retirement was more like $500k, based on convos they have had with my parents who have much higher savings goals and less pensions to fall back on).

More like they probably have $500k saved and a house worth $500k - they intend dh and his sister to split that.

For one, I thought this was an extremely odd conversation.

Secondly, I think they are a tad optimistic. But we'll see. For one, his grandma seems to be struggling (we have offered to help her) and his parents give us SO MUCH money. I don't know if that money train will stop now that she is not working. But we have always set it aside with a fear they were a little too generous; a little too concerned about us over them. So, we'll see. We set it aside in case we need to give it back...

We are heirs to some significant real estate, just by nature of where they live and how long ago they bought. But the planning in our finances is a big fat 0. Anything can happen and we certainly hope they live a long, prosperous life, well into our retirement. So there is no counting on their money. I worry more about having to take care of them, honestly.

Likewise, their attitude is just so opposite of my parents. Sometimes I marvel at how frugal dh turned out anyway. His parents have always wanted to take care of him, but somehow along the way taught him to take care of himself.

My parents are opposite. They joke that they will leave us nothing. & that is just dandy with me. I can tell you WE are not in their plans at all. They are just worried about being able to care for themselves, and I have always greatly appreciated that. Has made me very self-sufficient, and I know too many people who are struggling to help their young parents, financially. I'll take my parents any day. If they don't give me a dime, but I won't have to support them financially, I think I will be better off.

But yeah, our parents are totally opposite in that regard... I think it is interesting they both have decided to settle where they live, after many talks of retiring somewhere cheaper. Though my dad talks of moving elsewhere in 10 years. In 10 years doesn't sound so daunting. Kids will be almost grown and we will have more freedom to move too. (We are close to our parents and did not enjoy when they talked of moving sooner). My dad told me the other day they were thinking San Luis Obispo (about my favorite place in the state - OMG) or back to Colorado. I vote SLO. We may have to move there too. (Oh, but so insanely expensive. Though they can certainly afford it with their equity! We can visit often. ).

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Appearances

I think one basic lesson in financial health is to not believe everything you see.

I think we are one of the few people we know who are sending our kids to public school. Of course we are. There are SO MANY wonderful options where we live. I mean, hey, if my only option was the public school we were assigned, that is one thing. But that is not our only option...

I have a friend who has her first child at 17 and has 3 kids now and raises them on a shoestring. I greatly admire her and identify with her more than most people I have met here. (She is just very non-victim type, and is very creative in how she supports her family). Anyway, she knows every public school option in the area, and there are many. So I have learned a lot from her.

But talking to the rest of my friends, the #1 reason they are snubbing their public schools is class sizes. This is very mind boggling to me. They all tell me their class sizes are more like 20 instead of 40. (LOL). I am like, um, okay, you do realize most public schools in the area have class sizes of 20 (major financial incentive for the schools to keep class sizes down). I don't honestly know the #s, but talking to people around here and BM's potential school, I got the impression this was quite common. BM's class sizes are 20 in K-3 and they are 21(!) for 4-5. I think it is for most of the school district though.

Likewise, the second guage of school fitness is AP test scores.

I really get the feeling people are not looking into schools beyond that. (from my comments above they have no concrete facts to base their assumptions on anyway).

If one more person tells me their private school is better because classes sizes are 20? !!

So it is refreshing to talk to my savvy friend and get more insights into the school options available to us.

For now we are lucky we live in such a great neighborhood (lots of educators and politicians and people with time and money) and we have an excellent charter school within walking distance, that we are sending the kids to. Was very hard to get in, but we secured spots with volunteer work early on, and I am very pleased with the school. Frankly, I'd take it over most of the private schools I have seen (very showy; many without a lot of substance).

But it reminds me a conversation we had with dh's aunt and cousin the other day. They had both taught in the "best" school district in the Bay Area - probably the most expensive zip code. The school has the best test scores and so real estate in that school district has become very prime and expensive. They told us that the whole thing was a sham. That under-performing kids were strongly encouraged not to show up for the state tests. So people are paying millions to live in this neighborhood and have the best schools. & people like us are thinking, "BS." I have to tell you, dh and I pretty much never would have paid more to live in a better school district. The consideration was pretty much 0 when we bought this house. It's not that we don't care about our kids' education, and this might sound odd to you. But mostly we can see through all the smoke and mirrors. It never occured to us that where we lived would dictate the quality of our children's education. WE would dictate the quality of our children's education.

I guess along the same lines I always found the idea ridiculous when my middle class friends (all in similar subdivisions) would sit around and brag how great their schools were. I wondered if there was any substantial difference as they all tried to brag their school was better. I mean if someone was from the inner city - I'll give you they would have some schooling disadvantage - and I give you that I have no desire to live in the inner city. But to pay a $100k premium on a house because it is located in a district with 10% higher test scores? Eh. Just always seemed foolish to me. I am sure all the schools were similar (of similar economic stature. Just very middle class/upper middle class. I don't think there are really a lot of bad schools in that category, around here). Though I would it far more interesting if people knew anything about the teachers or curriculum. No one knows anything about these areas.

Anyway, we live in the big city and the charter schools are varied and numerous. Many of them mimic private school philosophies. So yeah, if we lived in the middle of nowhere we would have much less option. But I kind of roll my eyes of the idea of where I living really mattering. Beyond the fact that our kids can walk to school (advantage). But if willing to drive them farther out, the options are endless here.

We did go to a tour of the kids' charter school a while back and they do not have a permanent location (which is a downside). BUT some lady was there and she wrinkled up her nose and asked if we had toured the local public school. She said it had much nicer facilities. Dh and I just looked at each other. YEah, not sending our kids for the nice facilities. Of course we would prefer there was nicer facilities. But the curriculum and teachers are excellent. We can live without all the "show."

But I guess anyway, education is one example. I know too many people who think they have to buy the best (meaning, most expensive) of everything to "make it" or to be happy.

& learning VERY early on that this is not the case sure has saved us a lot of money!