The Writers Coin

After I wrote my last post on happiness vs. money, I thought a lot about how we let certain money rules get in the way of living our lives. Granted, “rules” like don’t spend more than 30% of your gross income on housing and save 10% of your paycheck are there to save us from ourselves.

But still—sometimes we have to live our lives regardless of what the money situation is. I’m not saying the being financially irresponsible is OK—but I am saying that money isn’t the end all, be all when it comes to living your life.

Let’s say you are a 38-year-old woman and you finally meet someone you love and want to marry. You’ve always wanted children and now that you’re married you decide it’s time to do it before you get any older and things can get more complicated. But what if you don’t have the right amount of money? What if you look at your budget and you realize that, as of right now, you probably don’t have enough money to continue saving the way you’re saving, contributing to retirement, and living your current lifestyle? Your ratios would be all out of whack with a baby on the way!

What then? Do you wait until you line up all your money ratios the way the experts recommend? Do you consciously delay the plans you have for your life because you’d be breaking some money rule someone created a long time ago?

No. You have the freakin’ baby because you’re 38 and you don’t want to be an old mom. Because you want to increase the odds that you’ll have a healthy baby with as few complications as possible. You have the baby because everyone that’s ever had a baby always worries about the money and everyone that looks back on the early days of having had a child always seem to include “we were so happy but we didn’t have any money.”

I cringe to say this but: you’ll figure out the money part later. In this scenario I’m assuming a few things: you’re already somewhat financially responsible and you realize what you’re doing. You should have a plan to make sure you’re prepared for this massive change (you will have 9+ months, after all) in your life.

Before people start jumping down my throat saying that this is the thinking that caused people to take out mortgages they couldn’t afford, let me just say that yes—you’re right. But you know what? That’s life.

You can’t let “money rules” dictate how and when you do things. Especially something like having a child, which is so dependent on time factors.

OK, let the bashing begin. Am I wrong or am I onto something?

Just finished Lewis’ latest book, The Big Short, and I had to get something down before I lose the buzz the book left me with.

• Michael Lewis’ book is the most informative, detailed, clear, and entertaining account of the subprime-mortgage disaster that brought the economy to its knees. If you’ve read When Genius Failed or any other book that attempts to explain advanced financial instruments—then you know it’s very hard to balance detail and information without boring the reader. It can be done, but it’s not easy. And Lewis does an amazing job of it here. There are parts where you’ll second guess if you’re following the details on how these CDOs and other things were created and what they mean. That’s OK: that’s part of the deal—not even the big-bank CEOs could tell you how it all worked.
• You and I are screwed. When things like this are happening, there is nothing we can do. Unless you happened to be reading prospectuses of companies like New Century and AHM (which I did, actually, and still didn’t see any of this coming) five  years ago and you also happened to be very smart and ballsy, there was nothing you could do. A select group of very intelligent, very brave people made bets that made them very rich. But the rest of us were simply along for the ride. We paid for the mess in our retirement accounts, any shares of stock we own, and we’ll be paying for it for decades to come. And if it happened all over again tomorrow, there’s nothing we could do about it.
• Steve Eisman is one cool cat. He is quite the personality, and during the time leading up to the final collapse, he was vocal about what he saw happening and the people who were responsible for it. Hats off to him for not shying away from pointing fingers at the people who deserved a good finger wagging. For more on him, check out an old Lewis piece—most of it wound up in the book.
• Is Wall Street really evil and greedy? Sure, but that’s their job in a capitalist market. The problem here wasn’t Wall Street per se, it was the ratings agencies—they were bought by the big firms making all the money and no one said a word. It’s also shocking to read how nobody at S&P or Moody’s ever stood up to say, “Wait a minute, this isn’t right.” One or two well-placed whistle blowers would’ve prevented this whole catastrophe from happening…but that’s why you need people that are incredibly smart, brave, and not interested in getting rich above all else.

Go read the book, it will be the book that everyone will reference when talking about the historic collapse of 2008.

By now we should all know that money can’t buy happiness. Happiness studies around the world have proven it and if you personally know any “rich” people, you know they don’t have it any easier than you or I do when it comes to being happy.

But talk is cheap. It’s easy to repeat the phrase over and over in our heads and accept its truth: “Yeah yeah, I know. Money can’t buy happiness—I get it.”

Then reality hits, and when we’re confronted with a decision between doing something for a “pure” reason or picking another for the money, we tend to go with the money. Two job offers that seem similar but one offers a higher paycheck, two side businesses that will be equally hard work to get off the ground—more than likely we’ll pick the money.

Why is that? Why do we hear clichés like “money can’t buy happiness” over and over, internalize them, accept them, and then completely ignore them when reality comes calling?

I’ll tell you why: because money does a lot. When life happens and shit hits the fan, money goes a LONG way. It brings you peace of mind, it can relieve stress, and it can make your life a lot smoother. Is that happiness? I don’t know, but I do know that before we tackle happiness we want to just stop feeling bad.

Money can do that.

If I’m going to have a baby and I have to decide between starting a baseball blog and starting a web-analytics blog, then by God I’m going to start the Analytics blog. Why? Because that’s a potential business. Baseball is something I’m passionate about and can speak on for hours on end. I’m knowledgeable and confident. But that space is so crowded and I just don’t see the potential business side to it.

I don’t see the money.

Yes, I’m passionate about baseball. Would I enjoy starting a baseball blog? No doubt about it. Would it be fun and would I be happy? I’m pretty sure I would be. But what would I have after all those hours of hard work? I know what it takes to run a blog at full steam and it’s a LOT of work. What would I have to show for all my work a couple of years from now?

Probably an abandoned blog and some nostalgic memories of the site I imagined I wanted to start. Why? Because I probably wouldn’t have the time to do it anymore—I’d be off trying to make some more money somewhere else to pay for diapers and college funds and all that other stuff. I’d be stressed out about how to deal with it all and money would make me feel tons better.

As for the Analytics blog: it’s a topic I’m well versed in but could learn a LOT more about. I’ve been playing baseball for 22 years (!) but have been analyzing data for barely four. There is room for growth, it’s a challenge, and there’s money there.

I know I’m not special. Everyone has gone through this before. How many times have you heard this one:

When we were young and we first had you, we had no money!

And these people seem nostalgic about it, like those were the good ol’ days! And that does make me feel better—if millions of people have done it, I can do it. But that’s looking back. Looking ahead at the unknown is not easy. It’s scary.

And in the face of the unknown, when we’re scared and don’t know what to do, money helps. It doesn’t solve all your problems or make you happy, but it helps. Money doesn’t buy happiness, but it buys help.

Image by renaissancechambara

This is part III of a series on buying our first home. Part I was about us getting started, Part II was about the beginning of our search, and today starts off with a place M and I could see ourselves living in…finally.

So there we were: standing in the midst of a three-bedroom condo on the top floor of a building in the exact neighborhood we wanted to live in. This was more than we thought we would ever get—but was it too good to be true?

Well, it was a little expensive but there was some good news: the previous owner had been relocated to another state and as part of the relocation package, the employer had purchased the home. That meant they had it on their books and, unlike a typical buyer or investor, wasn’t interested in getting as much money as possible. They just wanted it off their books quick, and that meant the price was very flexible.

So we went home, looked at the pictures, crunched more numbers, and asked ourselves: can we afford this place? Do we really, really want it?

There were some drawbacks: no place was perfect. At least that’s what our broker and every first-time homebuyer show out there had taught us. The floors were creaky and old, the master bedroom’s view was of a brick wall and another building next to it, and there was only one bathroom.

We thought about it for a day, my parents actually went to check it out with us and a few other places and gave this one the thumbs up, and after a few days we knew the answer: we weren’t comfortable spending what it would take to buy this place.

Our broker spoke to the listing agent “frankly” and figured out what it would take to snatch it: we didn’t want to go that high. So that was that: we were back to square one.

And we didn’t notice it right away, but our broker started to look at us with a new squint in his eye: Are these guys ever going buy something?

A month later and some 15 places later, we thought we had our answer: YES!

That’s when we saw this place. It was the first time that the sacred word of homebuying came into play: offer. The square footage was incredible, the finishes were brand new (and we could still pick some of them), the parking was included in the price our broker could get us (he knew the developer), and the location was pretty good.

I told M that it would be a HUGE mistake if we didn’t take this place. The price per square foot was insanely low because of the top floor area. It was almost like buying a house (or the closest thing to it in our price range).

But as we all know, all places have issues. This was had a few things going against it: the kitchen was in a weird kind of floorplan in a hallway space and it only had one bathroom (the top floor could have another one built into it but it wouldn’t be code…a no-no). And on top of that, we couldn’t see exactly what the kitchen would look like because it wasn’t finished yet.

This one wasn’t about the money…it was about the kitchen.

After telling our broker how much we loved this place, he could tell how close we were to buying it. He told us he could get us a sweet deal with the developer but we had to act quickly if we really wanted it. This was it. But time passed and we talked ourselves out of it. The kitchen was weird, it had one bathroom, and the initial excitement faded. I was a little depressed because after that I figured if that place couldn’t get us pumped up enough to make an offer, nothing would.

Afterwards, our broker basically told us that we were being too picky and that if we were serious about buying we’d have to step up. As in buy something already.

This was when our fallout began.

After that happened we basically split with our broker and decided to take some time off. It had been almost two years of looking and we were emotionally spent. Sure, rates were at record lows and prices had been falling the whole time (the so-called “perfect” time to buy), but we were down and out on the whole thing. As the winter of 2009 approached, we decided to take a break.

Little did we know how quickly everything would happen once we stopped trying so hard.

This post was included in the Carnival of Money Stories over at Suburban Dollar. It’s got a cool bracket theme to it so check it out. It was also an editor’s pick at Len Penzo’s Best of the Best in Money and Personal Finance Carnival.