Do You Have Renter's Insurance?

Based on recent events in my apartment building, I've made the decision to get renter's insurance. I did some investigating today, including talking to my trusty insurance agent, and it's only going to cost $11 per month. Virginia has notoriously low insurance rates, so I'm sure that this is unusually inexpensive. For me, I think renter's insurance is totally worth it, but what about you? I'm sure the homeowners out there have insurance, but what did you do when you were a renter?

Do you have renter's insurance? Whether you do or not, I'd like it if you could explain why - I'm curious, because I never considered getting it until now....what's your rationale?

Letter to My Package Thief

Dear Person Who is Stealing My Packages,

Hello, this is the person whose packages you have been stealing from outside my apartment. You know the one: I always have the nice, handmade, seasonally-appropriate wreath on my door. Your illegal antics started last Christmas with the radar detector I bought for T. I gave you the benefit of the doubt and blamed UPS. I even called UPS and gave them a piece of my mind. But then another package disappeared, this time it had season 2 of Mad Men in it. And then another, with my sister's birthday gift in it. So I contacted the postal service and told them not to leave packages at my door anymore. They were very accommodating, so I placed an order. This time for my mom's birthday gift, and a Christmas gift for my new nephew. And when the postal service messed up and left the package at my door, you preyed on me again. So now I have to call Amazon. Again. And tell them that my package was stolen. Again. By you.

We all know that stealing is dishonest and deceitful and just plain...shitty. But I'm not only missing T's radar detector, and Mad Men, and a couple of books, and a coffee press. When you took those things from me you also took my sense of security. Because you're stealing from right outside my door. Basically from my home, from the place that I go to feel safe, to escape from the big, bad world. Now I know that the people who make the big, bad world the big, bad world are right outside my door. So thanks a lot. You have the stuff that I bought, and you also have me looking over my shoulder and double checking that my door is locked. Oh, and by the way, I'm getting renter's insurance now, because I'm scared that someday you might actually break in to my apartment. I probably should have had it anyway, but if there weren't people like you in the world, no one would have to be spending an extra $25-30 per month that they could otherwise have been saving or spending on stuff they actually want. I hope you're happy, and enjoying the coffee that you're now able to make with your new coffee press. That I paid for.

Sincerely,

TeacHer

The Financial Crisis Has Hit Home

Up until now, the effects of our bad economy had been happening to strangers. As a teacher in the DC area (where most people are employed in secure, government jobs), the economic crisis, while constantly in the news, always seemed far away. Anonymous. Happening to lots of others, but not me or anyone I know. Until now.

My aunt was laid off a few weeks ago from her job as an auditor for a pharmaceutical company. I found out about it a while ago, but I didn't get a chance to talk to my cousin (her daughter) until yesterday, and it was then that I really got a sense of how dire my aunt's situation is. My aunt is about 55, with no emergency savings and only about $20,000 in retirement, so clearly she hasn't been a very good financial planner. However, she happens to live in a New England state where the housing crisis has been especially....catostrophic. She's severely underwater on her home, and can't afford to sell it. So now she's unemployed, without any savings, and about to lose her home. She hasn't made a mortgage payment in almost 2 months.

Her plan is to let the bank take her house and move back into my grandparents' house in another New England state (she lived there with my cousin as a single mother for most of her adult life). My cousin is helping as much as she can, but she's a new homeowner with a new baby, and she's also trying to find a job in her new field. Thankfully, her husband is the primary breadwinner, so her financial situation, while not fantastic, is stable. Basically, she's helping my aunt with resume writing, networking, etc., but can't offer financial support. And this makes her feel terrible. It's just a really bad situation, all-around.

I don't want to paint my aunt as a victim. Clearly, if she had had emergency savings she could have sold her house for what it's worth now, paid the difference to the bank, moved away and started over. Now, she has a black mark on her credit and won't be able to buy again anytime soon. But at 55, financing a house is probably not a great idea. Not that she'll be able to retire anytime soon, but carrying a mortgage into retirement is something to be avoided....but I digress. The point is, she could have been much better prepared, financially. As a single woman, I really wish that she would have been more educated about money, and careful with her earnings.

That being said, at 55, if she hadn't been laid off, she could have done a lot to improve her finances before retirement if she had had a wake-up call of some kind. The economy really made her already bad situation much worse. The only positive is that she made an example in my family of Who Not to Become (financially speaking). Maybe none of us will make her same mistakes because we've all witnessed the devastation being financially unfit can cause. Maybe.

This is causing a lot of stress in my family. My cousin has always been like a sister to me, and she's feeling so much guilt. This aunt is my mom's closest sister, so she's very stressed, too. I'm just sad for everyone involved, and scared straight about my own finances.

Blah. Happy holidays, huh?

I Hate Being Average

Whatever "average" is, I've always tried to be better. In fact, I've pretty much spent my whole life trying to go above and beyond what "normal" people are doing. I fully admit that this overachiever mentality has not always served me well. Actually, I think it's psychologically unhealthy to try to be the best at everything. It's an unreasonable demand to contend with, but it's the natural frame of reference from which I operate that I constantly have to be "talking myself down" from. So imagine my shock (and total horror) when I found out that last year, I was below average when it comes to savings.

According to this article, Americans saved an average of $940 in 2008. Yikes. That's not even $100 per month. And according to what I've read elsewhere, the savings rate in 2008 was actually up from the previous few years (I remember reading when I was in college - maybe 2005? - that the average savings rate was negative!). I, on the other hand, saved...well, about $50 last year. OUCH! To be fair, last year I was really focused on paying off my personal loan, so saving wasn't really a priority. But still! Ugg! Below average!!! (If you have a chance, you should read the whole article - it compares the recession of the early 1980s to today.)

This year, I've done a lot better. Excluding my Roth IRA, I've had a net savings of $1500 this year. So I'm above average for 2008's numbers and way above my own previous savings rate. Which is good. But I'm hoping for a waaay better 2010.

What about you? How much did you save in 2008 compared to 2009?

Expert Financial Advice I Won't Be Taking Anytime Soon

As we all know, there are a lot of financial experts out there. Of course, there are CPAs and financial professionals, then there are the financial "personalities" like Suze Orman and Dave Ramsey. I actually really like both Suze and Dave, (I always talk about famous people like we're on a first-name basis, my friends tease me about it :) and I think the vast majority of their advice is really solid. In fact, as far as I'm concerned, all of the advice they give is really solid. But sometimes hearing their recommendations is like hearing advice from your parents - you know they may be right, but you also know that you're not going to do whatever they're advocating. So this is the expert financial advice I never plan on following:

"Never Lend Money to Friends or Family Members"

I probably wouldn't lend money to a friend, unless it was an amount that I felt comfortable with possibly never getting back. But if one of my family members needed money and I had it, I would lend it. I can't think of any family member that I wouldn't trust to eventually pay me back. And I also can't think of a family member that would ask me for money if they didn't really, really need it. Sorry Suze, but I'm not with you on this one.

"Never Finance A Car"

Suze has never specifically stated that she doesn't like car loans (to my knowledge), but Dave is against them. I don't really see what the big deal is. Of course I would put money down and go for a 3-4 year term, but to me, with cars, reliability is key. I'd rather finance a newer, safer, more reliable car than pay cash for a clunker I'd always have to worry about. And I'd rather be saving for a house than a car, so saving up to pay cash for a car just really isn't in my plans. As long as the interest rate and monthly payment are reasonable, I just don't see what the problem is with financing a car.

"Use Only Cash"

Again, Suze seems kind of ambivalent about credit cards - she hate credit card debt, though - but Dave believes that cash is king. Again, I disagree. Using credit cards responsibly can offer you really great benefits like cash back and frequent flier miles, as well as fraud protections not offered by cash or debit cards. If you have a real problem with paying off your cards every month, then of course abstaining altogether is probably best. But I think that telling people to never use credit cards - ever - is a little unreasonable and ignores the very real rewards they offer.

Anyone want to disagree? Or add to the list?

Yeah for My E-Fund!

My emergency fund now proudly stands at $1000! On the one hand, I'm really happy. On the other hand, I feel like it should be a lot higher by now. I had some large expenses that cut into my progress (vet visit, contacts, personal property tax - I think I forgot to update about that, but it turned out to be $150, not $33) and I moved $500 out of it to start a car maintenance fund. But hopefully it will be sharply on the rise from here.

I think $1000 is an important psychological milestone for people trying to improve their finances. Assuming you don't get laid off, $1000 could cover quite a lot of unexpected expenses, like a bill you forgot about or a dead car battery or an emergency trip out of town. That being said, I would like to have significantly more in the bank in case of a bigger emergency. That's why I think that my #1 financial goal for 2010 will be to build up my emergency reserves.

I'm also not exactly sure of what I think my goal should be for that fund. Right now, I'm thinking $6000 because that's a little over 3 months of living expenses. I know that most financial experts recommend more than that these days, but my job situation is a little bit different because I'm now a tenured teacher. But in the PF community it looks like most of us aim for about $10,000. I'm going to keep my goal at $6000 for now, but I'd like some feedback. Is $6000 too little?

Other than that, I'm looking forward to a good weekend. My college roommate S is coming to visit today, and we're going to a creperie and wine bar this afternoon. I'm also going to clean my apartment and work on my book and just relax. Enjoy the weekend everyone!

If the Cash Fairy Paid a Visit..

If the cash fairy paid a visit, and you had to spend the money she left - no saving allowed! - what would you buy? Right now, I'd buy:

1. This pair of vintage-style, black Dior sunglasses. I. Love. Them.

2. Every season of The Office. I just got into this show it's so hysterical.

3. A plane ticket to go see my sister in Miami. She's my favorite girl in the world, and I haven't seen her new place yet.

4. Tons and tons of classroom supplies. Like, enough for a few years. If you have kids or school-age relatives and their teachers request basic supplies (pens, pencils, tape, tissues, etc.) please donate. It's unreal how much money I shell out every year on this stuff.

5. A subscription to The Economist. Newsweek has been a real let-down recently and it makes me miss The Economist (I used to get it in college).

6. Yoga classes. I need to unwind and improve my posture, and yoga would help both of those.

Where is she already?! :)