Tag Archives: responsibility

Spending Season

9 Dec

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letter Tis the season when it feels like there’s money constantly going out the door and relatively little going in. Between end of the year expenses, property taxes and Xmas gifts and all the little unforeseen incidentals, it’s easy to feel a little financially deflated at the end of the year. As my dad used to joke when we were kids, as long as there are checks in the checkbook there’s money in the account, right?

This is a subject that’s been on my mind a lot lately. The debt-load you need to take on to become a dentist is nothing short of crushing, let alone a practice acquisition loan and a mortgage if you’re lucky. Weighed down by all that red ink it’s tough to look past the nose on your own face. Debt-reduction becomes something of a desperate quest and although my accountant assures me that paying off debt is exactly the same as building savings, I am acutely aware that I’m basically in survival mode — which is to say I’m paying off my debt, but my savings account isn’t anything I would call “comfortable”.

I’m just a few days away from turning 41. At best I’ve got another 30 workable years in me… if I’m lucky. My oldest is about to turn 9. That’s the 1/2 way point. The years we have to get her ready for college are just as few as the years we’ve had since she was born, and those years FLEW by.

I have realized that there are things a responsible member of society must do no matter how painful: Pay taxes, take care of your health (re: exercise), and financially plan for the future. That means it’s time to stop living week-to-week like we did in our 20’s and 30’s and start thinking about our 70’s and beyond. It’s time to start thinking about things like 401-k’s.

In short, it’s time to start saving.

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When you’re a moderately successful blogger *snort* sometimes opportunities present themselves to you. Recently I was invited to attend an event put on by ScholarShare, an organization that runs 529 accounts (I know… my eyes glaze over too with talk like that. But I have pledged to make this sort of knowledge part of the new “responsible” me… just like exercise.) 529 accounts are essentially the same thing as 401-k’s, only where 401-k’s are retirement accounts, 529’s are college savings accounts. Essentially, just like with 401-k’s, you invest your money with higher risk for larger gains in the beginning, and then as you get closer to the time when you need the money it gradually moves into lower risk investments. What particularly strikes my fancy is that for three kids that have more toys/junk than they can ever appreciate, during the holiday season family members and friends can contribute to an existing ScholarShare account or create one for a child as a holiday gifting option for as little as $25.

 

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ScholarShare treated a bunch of bloggers to a fancy dinner to talk about 529’s and even offered a little compensation thanks to One2One Network (that was nice of them) if we shared the experience on our blogs. In truth, this is a talk I would have gone to whether or not there were blogger incentives. Saving for college is something I need to get serious about and I wanted to hear what they had to say.
The short story is the people from ScholarShare came off as very genuine and honest. I was wary of walking into a timeshare-pitch sort of evening. There was no salesmanship, nothing pushy, no used-car-salesman vibe at all. In fact, since they partner with TIAA-CREF they are a non-profit, so they don’t pay their bills with transaction fees like other financial planners. All they wanted was to get the word out that 529’s are the best way to plan ahead for college savings, and that they would love to be considered by anyone looking into one.

For my money, they seemed like a legit outfit worthy of consideration.

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That said, I’d like to try something a little different with this post.

For the sake of getting my head around how to financially prepare for my kids’ college, I’d like to start a little conversation in the comments below. How are you preparing for college expenses (or how did you prepare)? Do you think college is even an investment worth making in today’s world? (There’s a good argument to be made that it isn’t). What are your fears about saving for college/retirement? What do you know now that you wish you knew then?

In the comments below share your knowledge. Share your fears. Share your questions. Maybe we can help each other out.

 

-Dork Dad

At What Cost Our Dreams?

4 Mar

letter I’ll be the first person to say I have absolutely nothing to complain about. I’m in the office 3 days a week, I teach at the university one day, and teach in the 1st grade class another. I’ve got three amazing, brilliant, healthy kids, a wife way above my station and a mortgage I can (barely) afford. People in my position are not allowed to complain. What follows is therefore most definitely *NOT* a complaint.

My dream was always the Norman Rockwell life – a beautiful wife, a house with a picket fence in a quiet neighborhood, 2.7 kids, a Labrador, and if at all possible to be able to support that family in a way that allowed for my wife to stay home with the kids if she wanted, and for me to be able to coach little league and video tape ballet recitals. Cheesy? Yes. For everyone? No. But ultimately, as of September when we finally put up the picket fence in front of the house, that’s exactly what I’ve got (even if the Labrador lives with my mother-in-law these days).

That’s it. Done. Living the dream.

But when you finish the checklist, what then? Dude’s still got to dream. Once Mazlow’s basic needs are met, the individual is free to address other less crucial aspects of survival. These, the “less crucial” dreams, are where dreams and reality come colliding into one another like subatomic particles at CERN. Here are a few “less crucial” dreams I’ve got floating around in my head – and the realities of living life that keep getting in the way.

When I compared the $’s of my “less crucial” dreams to the $’s of the interfering realities, some conspicuous coincidences seemed to pop up. I don’t know if the universe is trying to tell me something or what. I’ll let you decide.

Dream #1:

New mountain bike. Mine is from 1998 and when I take it out it gets me comments from other mountain bikers like “Wow. That’s retro.” Or, “I haven’t seen one like that in a long time.” It still works well enough. I don’t *need* a new bike. That’s why it’s a dream.

Cost: $1,900 out the door

Reality #1:

We need a new water heater in the house. There’s no telling how hot the shower water is going to be in the morning from day to day, and if it is hot it’s a safe bet it won’t last much longer than 15 minutes. If you’re the 2nd person to take a shower in the morning, good luck.

Cost for a new water heater: $1,900

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Dream #2:

Vacation to Hawaii. It’s been too damn long. I need it so bad I can taste it. What I really need is two weeks, but I’ll take one if I can get it.

Cost for airfare and hotel to Waikiki for family of 5: $4,300

(Bonus Cost for production lost from me missing 3 days at work: $15-20,000)

Reality #2:

We’ve still got a balance on our home credit card after our last vacation. It would make things a little easier at home if we didn’t have to deal with that.

Cost to pay off the home credit card: $4,275

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Dream #3:

Porsche Carrera. Don’t think I’ve given up on this one. I find the *perfect* one on Craigslist, or Cars.com every 3 or 4 months. Manual transmission, convertible (of course), perfect colors inside and out. It’s usually somewhere around a 2003 model with mileage anywhere from 35-85,000.

Cost: $30,000 +/-

Reality #3:

Thankfully we aren’t underwater on our house, but the housing bust was brutal on our equity. Mortgage rates have plummeted recently, but in order to refinance to a friendlier rate (on a jumbo-loan… welcome to California) we need to have a better loan-to-value ratio. Guess how much of our old loan we’d have to pay off in order to qualify for a re-fi.

Cost to refinance our mortgage to a way better rate: $30,000

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Dream #4:

The home theater system. Now mind you, I’m not talking about the ULTIMATE home theater of my wildest fantasies. For that we’d need a full-on addition to the house. No, I’m talking about a home theater that UnDorkMommy might possibly be able to live with in the living room. I’m talking about a top-tier, high-def projector, a 100+ inch projection screen that retracts into an recess in the ceiling, and the 7.1 channel Bose/TXH surround sound system to go with it.

Cost for parts and installation: +/- $12,000

Reality #4:

The house needs new windows. We’ve got the same single-paned glass windows that were installed when the house was built in 1974. The house is an icebox in the winter and an oven in the summer. Both sliding glass doors to the backyard have broken their mountings and are now grinding metal-on-metal on their tracks. It takes a team of horses to open and close them. We recently had an appraisal for new windows throughout the house. Guess what the tab was going to be.

Cost for new windows for the house: +/- $12,000

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Dream #5

Teaching at the dental school. I teach there because I love it, not for the $. In fact my 1-day-a-week gig there is essentially a volunteer position (technically it pays, but only enough for gas, lunch and parking in San Francisco). It keeps me current and the interaction with the students keep me stimulated and excited about what I do. When I committed to the school my office wasn’t busy enough to fill another full 10-hour day. We are now. So essentially every day I’m teaching I’m losing out on the potential production I could have been doing in the office.

Cost of teaching instead of working: 36 days/year @ $6,000 lost office production factoring in 65% overhead at the office: $75,600

Reality #5

Episode VI can’t live in the closet forever. His brother and sister both have their own bedrooms. We could certainly double them up if we need to, but it would be nice if they could all have their own rooms, and it would be nice if UnDorkMommy and I could have our own modern master bedroom. We actually had plans drawn up and investigated what it would cost to put the addition onto the house. Guess what the estimate was.

Cost to add a new master bedroom/bath onto the house: $70-80,000

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Dream #6

Spaceship charter on Virgin Galactic. An exclusive space flight for me and 5 of my friends. Pioneer status on all 6 seats. 6 seats for the price of 5. I mean seriously, who wouldn’t do this if they had the chance?

Cost: $1,000,000

Reality #6

I graduated from dental school in 2005. The cost of a dental school education has only gone up since then. Students entering dental school for the class of 2016 can expect to graduate with upwards of $400,000 in debt… before they work a single day, before they buy a home or a practice of their own. The value of a moderate general dental practice on the market in California is roughly $600,000. Thankfully my numbers aren’t anywhere near those, and even so I’m nowhere near paying off my student and practice loans.

Cost of a top-tier dental education and a private practice of your own: $400K + $600K = $1,000,000

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In each case the choice is clear, as is the fact that these quandries are purely first-world problems. I’m very happy with my life as it is, but still… dude’s gotta dream.

Tell me about some of the “less crucial” dreams you would indulge in if you didn’t have to be a responsible adult/parent.

-Dork Dad

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