Green Minded Wallet

I’ll be spending this week and next week with my family and will be returning back home on August 12th (I headed out last Friday morning).  I don’t know how much posting I’ll do; today I slept for almost 11 hours!  It’s becoming very clear to me that some R&R was definitely needed and I’m trulying enjoying seeing my family.  Over these two weeks I’ll have a chance to see all six living generations in my family, which is not something that many people can boast.  Have fun, read the archives, I’ll be back in a week or so.

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I was reading the monthly newsletter from my local utility company (don’t laugh) and there was an article about phantom energy, which is generated from appliances when they are plugged in, but not being used. Anyway, they estimated that this extra energy cost about 13 additional dollars per year, and thus it was worth saving the energy (and money). For some reason I assumed, given how much it’s talked about, the cost to be a lot higher. I have to say, $13 doesn’t sound like a lot to me. Honestly, I can think of a lot of easier ways to save a mere dollar and change per month. From a conservationist standpoint reducing phantom energy is appealing; but for the average Joe who might be enticed from the money saving aspect, I think that there are a lot of easier ways to save a buck or two a month, that would be less inconvenient. While I think that all of that phantom energy multiplied by US households over a number of years would certainly make an impact, I don’t think that the trade-off would appeal to many people. I also think that there are so many other ways that people waste energy in the home (often for convenience or comfort) that would really make a bigger impact and for some might require the same amount of lifestyle adjustment as remembering to unplug or switch off all their electronic devices at night. It’s hard to say.

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I was in a store today where I almost bought a computer.  Well while I was standing around waiting for more information on the computer that I inquired about, two of the other sales associates were talking about the computers they sold.  One of the young men felt that all of the lower end computers were “junk”, because the products were behind the forefront of the market.  He couldn’t imagine why anyone would buy a single core, when quad cores were rumored to be coming out in the fall.  The explanation which I provided, that perhaps people were simply buying as much machine as they needed seemed to almost upset him.  The other sales associates seemed to agree with me, as he murmured something about basic needs and budgets, but didn’t seem to want to press the issue.  While that encountered made me decide that I didn’t particularly care to give my hard-earned money to a store whose employee would openly complain about a product in front of customers and argue with them no less, I also thought how sad it was that this young man was already indoctrinated with one of the worst parts of the consumer culture: I must have the best.

One of the problems with the “I must have the best” mentality is that it is frankly really expensive.  Furthermore, if you must have the best of everything, even things for which you won’t necessarily have the time and skill to use the advantages of higher-end features (if they truly exist), then you’ve essentially wasted a lot of money.  For example, it doesn’t really make any sense for me to buy $100 bike shorts if the $60 pair fit better. Yes, the more expensive shorts may have more features, but given my current biking ability many of these so-called features are likely to be lost on me.  If and when my skill and comfort level requires the higher end shorts in the future, then I would consider buying them.  But I see no reason to spend additional money on features that I am not going to use.  Somehow our culture has successfully convinced people that they “need” all of these features when somehow they were managing fine without them.  Why would I need a duo or quad core computer when I am currently happy working on a laptop which has a traditional processor and 256 MB of ram?  Why do I need DuraAce components on my road bike, when I still have trouble with my clipless pedals?  Why do I need an iPod, when I’m not a loyal Apple fan and I don’t listen to that much music?

I’m not against buying things, but I take issue with mindless consumerism.  One of the biggest problems I think that people have is that they let other people dictate what their needs are.  If you’ve never driven off-road, and don’t have a desire to drive off-road, then why do you need a truck or an SUV?  Wouldn’t it make more sense to buy a sedan (or minivan) and save yourself thousands of dollars?  I think part of the reason why we have such a hard time living within our means is that we have to upgrade everything.  We have an economy best on consumerism which is fed in part by convincing us that the amount we spend on consumer goods is somehow tied to our worth.  An idea that though ludicrous, has no doubt been successful.  If not, why would people use slogans like “Because You’re Worth It”?

So what can be done? Before I make a big purchase, and even before a lot of little ones, I try to make a list of the features that I actually need, and get a realistic sense of what my resulting price range is.  Sometimes it takes a few iterations to make the two match up.  I check reviews online and ask friends and family about their experiences with different products: useful and useless features, durability, etc. That way I can purchase the product that best suits my needs, and not those of the retailer (which are likely to be the most expensive).  So one day perhaps when I find all the components that I require in a machine, at a price that I am willing to pay, I will purchase a new laptop.  But I’m not just going to double or triple my computer budget because others (where they be sales associates or colleagues) have bought into the hype; I simply have better things to do with my money.

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I got the idea for this post as I was walking my dog, and then I came back and checked my email. There was an interesting “wanted list” posted to our freecycle group that really exemplified my thoughts. I won’t list all of the items but the poster was someone who was just starting out (again) and was looking for things as basic as beds and pots to more high-end items like a laptop and working digital camera. To me the post was a perfect illustration of misguided expectations; here was someone who needed to ask strangers for a bed to sleep on, and in the same email was making requests for expensive electronic equipment. While I know certain items might make life more interesting or convenient, to expect them to come to us easily is my concern. I think the problem goes beyond need versus want. Personally, I feel that it speaks to the fact that our concept of how to meet basic needs is so out of whack that even if we truly need something, our sense of what it takes to fulfill that need (i.e. our expectation) is quite inflated.

I think in order to save, whether it be financial or environmental resources, we often need to change our expectations. There are a number of different sources that shape our expectations: our society certainly shapes some of them, as well as our closer circle of friends and family. While some things that are expected are often requirements to participate in our modern society (ex. telephones), many are not and I feel that it is worth examining them in order to find areas where we can cut back. For example, your employer (generally) expects that you have a working home phone number; this is an expectation that you probably can’t do much to change. However, you can often get by with just a landline, instead of a cell phone (especially if there are multiple adults in the household). Having cable is perhaps an expectation of your smaller circle, and your friends might often call up and ask what you think of so-and-so’s character on such-and-such show. If you go against the tide and don’t have cable TV, you might not be meeting your friends’ expectations; however you have to ask yourself which is worth more to you, saving your resources or meeting the expectations of others.

Here are some common expectations with sample adjustments:

Instead of expecting to have a house that is 68 degrees in summer and 82 degrees in winter, I expect to keep my house at a level that is safe and tolerable for all occupants. While this might require some adjustments in dress, it certainly doesn’t cause undue hardship and saves both energy and money.

Instead of expecting to take a trip abroad every year, I expect to take vacation time, and do something that is enjoyable and relaxing. Even though I may not go an a lot of exotic trips, I still take the time to rejuvenate myself, and I spend money on other areas that will help me and others more in the long run.

Instead of expecting a new car every three years, you could expect to have a working car. Or better yet, reliable transportation. This would certainly save on monetary costs. If you went further and changed your expectation from being able to drive everywhere to having a safe method of transport, then you could walk or hop on a bike and do the planet a few favors as well.

As you can see, if we simply change some of our expectations, it is still possible to meet basic needs and save financial and environmental resources.

I thought I would list some expectations that my generation has now, that we didn’t have when we were growing up (10 - 15 years ago). I’m sure if I were older I could add even more items to the list.

• Cell phones - The rich kids got their own phone lines, and the rest of us dreamed of having a phone in our room
• iPods/MP3 Players - You were happy to have a CD “Discman” instead of a walkman (tape player)
• Your own computer - I have fond memories of playing Oregon Trail with my sister. Apple IIE anyone?
• High speed internet - I remember when you were happy to get free AOL CD’s in the mail
• Digital cameras - Can you say 110?
• Eating out multiple times during the week - We often ate out after church at the mall. Sit down meal in restaurant = graduation, and then it was an all you can eat buffet.

Can you think of any others?

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One of the cornerstone’s of personal finance is that you should build an emergency fund and only use it for emergencies. However, I’ve had a hard time finding a specific definition of what constitutes an ‘emergency fund worthy’ emergency. I did some digging and found an article at msn money where one of the qualifications for an e-fund is “Only touch the money when you have a true cash crisis that is so unexpected or of such dire proportions that emergency is the only word for it”. One woman said that she would only use her emergency fund for “‘job loss, disability, severe medical issues or death.’” However, she had plenty of other money stashed with separate funds for the house, car, and miscellaneous expenses. However, if someone is just starting out on the road to personal financial freedom/security and presumably doesn’t have other savings’ funds that they can tap first, what kind of guidelines should they use? What if the emergency is caused by negligence or ignorance? What if an emergency leads to a longer-term financial commitment?

Here are some examples of grey-area emergency fund usage (at least to me):

Scenario 1: Let’s say that I break my leg while bike riding. Now I would consider the trip to the hospital, any x-rays, surgery etc. to be an emergency and thus would be paid for from my emergency fund. But what if I find out that I will need ongoing physical therapy (say six months to a year) in order to fully regain the use of my leg. Is the physical therapy still covered under the emergency fund, or should it be budgeted for with other funds?

Scenario 2: Let’s say you live in a rather rural area and the whole family uses the computer for schoolwork, take-home work, and household maintenance. Two months after your warranty expires, the motherboard gets fried for some unknown reason. Without the computer you’re unable to do work for your job, your kids can’t complete some of their homework assignments. Is this an emergency? If you had a very old computer (like I do) then this would have been an expected expense (and you would be saving accordingly), but if you just came off of a two-year warranty and have had very little problems thus far with your computer, this would be highly unexpected. Do you tap your emergency fund? If not, how do you explain to your boss why you can no longer do work from the house? What do you do about the kids’ schoolwork?

Scenario 3: After towing your car to the mechanic, you find out that your engine is shot because your timing belt broke (this actually happened to a friend of mine). Now while this may seem like an emergency, disaster could have been avoided had you taken your car in to get its oil change and 12-point inspection six weeks ago, since it would have been very clear that your belt was about to break. Do you repair your engine from your emergency fund money (if you’re just starting to build a fund, this could easily wipe it out).

For me, part of what determines when I can tap my emergency fund is: how much of an impact will the ‘emergency’ cause with my livelihood/health as well as how quickly I could pay the money back. Because there is some flexibility in my current budget, if a questionable emergency came up, I don’t think that I would have much of a problem using e-fund money as I could easily come up with the money to replenish the emergency fund in the ensuing months. While there is always the risk that I could have a bigger emergency while the fund is below its normal size, I don’t worry about this too much because I currently have very stable income and there really isn’t anyone depending on me. However, if I had a different job and/or children I might feel differently about the matter.

In the first scenario, I don’t think that there’s much to be done other than to adjust your budget to handle the physical therapy. Since the physical therapy would likely be on a pay-as-you-go plan it seems that finding the money in the budget might not be any more hardship than coming up with a repayment plan for the emergency fund. However, depending on how tight finances are it might make sense to have a split (first take as much as can be squeezed out from the budget and then take the remainder from the e-fund).

In the second and third scenarios, I think that the best protection is to be aware of the limits of your mechanical devices, especially if they are necessary for your employment. While it’s not always possible to predict when something will go wrong, it doesn’t hurt to be prepared for the eventuality that cars and computers often need repair. Coupling knowledge of your system’s potential service needs with a general maintenance fund might help prevent you from even wondering about tapping your emergency fund. Or you could just get a 10k vacation fund that you can tap at will, which I think would be my first choice.

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In the past month or so I’ve been receiving mail catalogs, but they were actually addressed to me (versus the generic ‘current resident’ junk). I realized that somewhere along the way someone must have gotten a hold of my address, but I really hadn’t given much thought to who the culprit was. I’d been collecting the mailings together so that I could call and get off of the stupid lists, but I hadn’t quite done it yet. Well, on Saturday I received yet another piece of mail and it was just the last straw. So I whipped out my cell phone and started calling places to make sure I had my name removed from any and all lists that they might have. Well, as I was making my phone calls, I noticed something interesting. All of my addresses were spelled exactly the same way, which rarely ever happens, since I live in an apartment and there are always all sorts of permutations on the apartment number. Well I quickly picked up a catalog from a company that I had ordered something from this spring. Bingo. The address was exactly the same as all of the unsolicited mail, and a quick call to the customer service line told me that in fact they do “rent” out your information if you order online.

First things first: you’re not renting my information, your selling it. Once I receive stupid junk mail from these retailers I will likely continue to receive stupid junk mail. So since this process is going to go on “forever” (unless I do something about it), that’s selling. They’re not going to stop renting my address after ninety days are they? That’s what I thought. You sell your customers’ information. But my bigger issue is, why would a company that touts itself for environmental awareness, through recycled paper and “green” powered stores, sell information to other companies that are going to spam their customers, especially their members, with tree-hating junk mail. I know that the short answer to that question is money, but that just seems extremely short-sighted. While I know that a lot of people do the “earthy” thing, because they think that it’s hip and trendy, I honestly believe that there are a growing number of people that care about the planet and are concerned about its sustainability. And if those are the people that you are truly targeting, not just the ones who will come and go with passing trends, then perhaps you should consider the message that you send to them when you allow other companies to flood their mailboxes. I don’t know exactly how we can make these companies accountable, but it does seem like something should be done, if only to let them know the concerns of their longstanding members, rather than letting this behavior continue unchecked.

Any thoughts?

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