Sunday, January 13, 2013

Setting budgets

I keep coming back to money-talk.  One of the triggers for this recent round, is the glasses I got last December.  When I get some good photos, I'll post them.

Sometimes I think my earliest memories are about my parents arguing over their finances.  Two posts ago, I wrote about needs and wants, and linked to a CNN Money article, "I'm first generation white-collar," where the writer talks about changing habits to start saving 20% in her 401k.

While I am all for paying down debt, living within one's means, and building up savings... I think the highest I set my 401k to was 12%.  Even at that, I very much felt as though my lifestyle was falling behind.  Now, that was in the 2000s, where I heard an awful lot about "leveraging"... and at least I was educated enough to avoid THAT, a second mortgage or a home equity loan.

The scholarly article I posted, though, has me re-thinking my own attitudes.  See, I once stayed in a hotel, that had an in-mirror TV screen in the bathroom.  I look at that, and think WHY?  I want to laugh, it seems so ridiculous.

It's hard, sometimes, trying to do the "right" thing by my finances, by the environment, by the interconnected web of human existence, all at once. 

The thing about poverty, is that it's like starting off life in a hole.  So much of my career to date feels like it's been a matter of filling in that hole.  Paying off student loans, paying off auto loans, paying off the bit of credit card debt that I left school with (I finally accepted a credit card offer in my final senior year).  Finding the right house, finding the right furniture, the right clothing...  It's hard to build any sort of career (membership fees, professional lunches, getting to the point one could even consider hosting a dinner party) starting from behind.

But what I was getting to is, how does one choose the "right" amount to save for retirement, for emergencies, etc.?  Every dollar saved / invested also has an opportunity cost, things one is not buying.  We were able to move up to reliable cars, but I wouldn't call them fancy.  I have bought clothing, but I'm still trying to keep up with basics, not purchase the latest fashion of the season.  Landscaping my yard happens in stages, a few plants and/or a few hours of work at a time.

If I didn't write about the advantage of growing up military... that about the time I got my driver's license, I also started receiving USAA literature (addressed to ME, not to my parents) on financial education.  

Between that and my employer... I look at my investment portfolio, my assets vs. debts, and I feel blessed to be in such a good position.

My car isn't fancy, my furniture doesn't match, I blogged earlier about whether I really needed a new coat... but the underlying structure is actually pretty good.

There can be such a thing as too much investing / saving for retirement.  When I started out, my retirement fund *was* my "emergency" fund.  That was automatically invested, and then I paid the bills.  After that, I didn't feel like there was a lot left for major repairs or upgrades to the house.

And that's where I fear our country is going with defense spending.  Yes, saving for retirement is important.  Yes, having a strong military is important.  But, having money locked up in an account that I can't access for twenty years... is not very useful when, for example, the roof needs replacement, the garage needs re-bricked, and/or the foundation is cracked.

There's a biblical parable, about building a house on sand vs. building it on solid ground.

In my amateur, bystander's opinion, the United States has been eating away at our own foundations for quite some time.  Infrastructure.  Highways and ports (both sea and air).  An educated and relatively healthy populace. Utilities like power, water, and now internet service. Health and human services like hospitals, ambulances, fire and police departments.  These are the foundations of a modern industrial society.

Absolutely, we need a military to protect that.  But we cannot spend so much on our defensive perimeter, that we allow the interior to collapse.  We cannot spend so much focusing on the walls & roof, that we ignore the foundation that they depend upon.