Month: September 2012

Family Finance

September 21, 2012 3:28 pm

In my reading and podcast listening I've come across lots of information about family finance.  Sadly, one of the most common factors cited in divorce cases is arguments about money.  APM's Marketplace radio show often discusses how couples / families handle their finances and there are lots of ways to do it.  Presumably, or hopefully, the end goal of any arrangement is to minimize arguments about money.

A lot of discussions revolve around merging finances when both partners earn an income.  I think some of these methods are bad arrangements that fail at the main goal of minimize disagreements.  For example: each person keeps their own money, but contributes into a joint account for joint expenses.  This just seems like a obvious way to set up a power struggle within the relationship when one person makes a meaningful amount more than the other.  That person has more disposable income than the other.  And in some respects that's "fair," but it makes the marriage seem more like a roommate agreement.

We only have a single income.  Some arrangements for single incomes are equally terrible to the above dual-income arrangement.  I've seen some suggestions where the income earner pays the bills and then gives the non-earner an allowance.  This seems terribly patronizing and unequal.  Both this and the above method cling to the idea that the money belongs to the earner which, in turn, sets up the scenario where the money is more important than the relationship.

We really like the solution we came up with when we got married, which would work just as well for dual-income families:

Mindset

First is the mindset.  I go to work and the paycheck has my name on it; but it's not my money.  It's our money.  It belongs to the family and will be used for the family's needs and wants first.  (I think this is a major stumbling block for a lot of people.)  By letting go of the ownership of the money you let go of the potential of feeling personally attacked when the money is spent on something about which you don't care.

Second is the actual handling of the money.  The paycheck itself is handled via direct deposit as follows:

Retirement Savings

My job offers 401K matching (up to a certain amount) so the first thing is to put enough money into retirement savings to fully utilize the free money being offered in the match.

Savings

Next we slice off as much as we want to put into general savings.  This is where we're accumulating a down-payment for a house.  And this acts as an emergency fund for unexpected large expenses.  Doing this first has a nice advantage which I'll discuss below in "Everything Else."

Personal Luxury

We each have personal checking accounts and we each get a little money each paycheck which is ours and ours alone.  This is the best part of our arrangement.  "Luxury" within the context of our personal versus joint expenses is kind of a fluid concept and open to interpretation.  But it's working well.

For example, when I came home the other day Jess was telling me about the candles she ordered from Yankee Candle.  Since she was buying them with her luxury money I didn't end up thinking "You spent how much money on candles?!"  Likewise, when I wanted to buy an external flash for our camera, I just bought it with my luxury funds.  No need to have a discussion with Jess about whether this was a good use of our money or whether we should do something else with it instead.

If our monthly expenses are running a little high, but one of us really wants to eat take-out then we can do that using luxury money.  If there's a luxury we both want, we can split the cost out of luxury funds.

I really like that when one of us gets excited about buying something, the other can be excited too instead of doing an internal calculation about what it's going to cost.

Being able to spend a little money without worry or guilt is really freeing.  It takes away much of the stress that builds in the tension between general frugality and occasionally just wanting a treat.  We can be frugal with our general spending, but still buy things we want every so often.

The amount of money we give ourselves in this form changes over time.  But it's nice to have the discussion about what amount should be luxury spending only occasionally instead of rehashing it over every purchase.

Everything Else

At this point, everything left over goes into our general fund.  This is the account we use for regular spending: groceries, rent, utilities, gas, car maintenance, student loans, etc.  I like this part too.  Since savings has already been taken care of, whatever is in this account can be spent.  If we want to save more money, we take it off the top and adjust our monthly spending to match the change to this account.

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All together this means there is no "budget."  I hate the idea of a budget.  It's tiring, stressful, and time-consuming.  Instead, we just watch the status of the general fund and try to keep a consistent "burn rate."

This approach works best once you've accumulated a cushion that allows you to absorb fluctuations (things were a bit more structured when we first got married and had absolutely no money and more bills).  Fluctuations in spending are natural and one of the reasons I hate the idea of a budget.  If, this week, we need to buy flour and sugar and there's a sale on cereal (so we stock up) and we also need more chicken then it's going to be a much higher bill than surrounding weeks.  The burn-rate approach with a cushion handles this great--breaking a budget can cause stress and frustration even when you know it will balance out in the long run.

I think it does a really good job of truly minimizing potential arguments about money.  There will still need to be discussions about how money is spent at a macro level (how much do we put in each bucket) and when making large purchases out of the savings account (house, car, appliances, etc.); but on a day-to-day level there really is no reason to disagree.

Patriotism versus Nationalism

September 11, 2012 1:51 pm

This topic has been on my ever-growing list of blog ideas for a while and given the date and the election season it seems like a good time to write this post.

I think a core difference between patriotism and nationalism is whether or not you view the world as a zero-sum game.  I've grown concerned over the nationalistic push that seems to be growing in the United State partly because of the view that the United States can only succeed at the expense of other nations (and at a personal level, individuals can only succeed at the expense of other individuals).

The zero-sum viewpoint isn't useless and it comes from a very primal instinct.  When resources are scarce then a zero-sum model is fairly accurate. But, comparatively and for most intents and purposes, we, in the United States specifically (and, generally speaking, the world at large), don't live in a world with scarce resources.  The zero-sum model is not accurate and we need to get past this simplistic method of thinking.

But let's go back to the beginning.

Patriotism and nationalism both, simply speaking, are a love of or pride in one's country.  Some sources list the two as synonyms.  But I'd like to make a distinction between the two.  Perhaps by saying "nationalism" I've made a poor word choice and maybe "jingoism" more accurately captures my distinction.  But, for the purposes of this post, I'm going to define nationalism as "a love of or pride in one's country, blind to faults, intolerant of criticism, and believing the success of other countries diminishes your own."

I will define patriotism as "a love of or pride in one's country, recognizing faults and accepting of criticism, hoping for improvement, and believing countries can simultaneously thrive."

(We can freely replace "country" with whatever group you want (ethnicity, religion, political leaning, etc.) and I think the distinction between the two remains valuable.)

The trouble with nationalism is that anyone espousing it insists that they're preaching patriotism.

I believe patriotism is a good thing.  Though I've been heavily critical of many things our government has done I even consider myself patriotic.  I hope for and want a better future for our country.

However, nationalism is dangerous.  It leads to foolish policies and violent rhetoric.

It leads to wasting time and energy renaming food because you felt slighted by another group (e.g. changing "French Fries" to "Freedom Fries").

It leads to placing cross-hairs over your political opponents in your campaign paraphernalia and saying things like "Don't Retreat, instead-RELOAD!"

It leads to isolated cases of angry people killing innocent people (and here).

And, if not controlled, it eventually leads to war and genocide.  After all, when the world is zero-sum and you "know" your country is the best, the only rational thing to do is to eliminate detractors and competitors.

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From my earlier post about a book by a conservative pundit we get the following paragraph:

Liberals are uncomfortable with the topic of patriotism because their core philosophical impulses are to make America a different country than it is.  This is not an evil impulse, and it can certainly manifest itself in patriotic ways.  More importantly, it can manifest itself in humane and decent ways.  But at the most basic level love is about acceptance.  If you are constantly trying to change the person you claim to love into someone he or she is not, there comes a point when it's reasonable to ask whether you really, truly, deeply love the person for who he or she is.  Barack Obama campaigned promising to "fundamentally transform" America.  We would not think a husband who promises to "fundamentally transform" his wife has a healthy love for her. -- Jonah Goldberg

If, in Goldberg's metaphor, the wife had cancer would it be wrong for the husband to want to "fundamentally transform" her by removing the cancer?  What if she were clinically depressed?  What if she were an alcoholic?  What if she were abusive?  According to Goldberg, wanting to improve faults means you don't love a person and therefore wanting to improve a country is not patriotic.

This is nationalism, not patriotism.  Patriotism should always encourage improvement not acceptance of faults.  But let's try to be lenient here.  Let's suppose we want to change from A to B.  It may or may not be an improvement, we're not sure; we have to try it to find out.  Demanding your spouse should make this arbitrary change is a bit off from most definitions of love.  But a nation isn't an individual.  It is a conglomeration of ideas.  Some will be good ideas and some will be bad ideas.  Does suggesting we change from A to B in hope of improvement actually mean we're not patriotic?

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I think we need to constantly be evaluating our nation and deciding for ourselves whether it is in need of improvement.  When we feel something can be improved we should try to enact that change.  This is patriotism.

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Reading through my post I realized that the negative examples I've highlighted tend to be affiliated with the Republican party.  I feel confident both major political parties participate in this behavior, but it appears many of the most egregious (or at least most easily found) cases are affiliated with the conservative side.  Perhaps they should reconsider some of their rhetoric if they want to present a less extreme position.