Lessons from Literature 4: Washington Square.

I studied this in year 12 Lit, back in the day. How I loved this novel! It’s a short read, beautifully restrained and the quiet anguish of it all is never overblown or melodramatic. In 1949 it was turned into a movie called, “The Heiress’ and they did a terrific job. It’s worth hunting down the movie for a quiet afternoon in.

But what can we learn from the story of a thwarted romance between a fortune-hunter and a plain, dull girl from a wealthy family?

Dr Austen Sloper is a wealthy doctor in New York in the mid 1800’s. He is an intelligent man but has become emotionally crippled after the death in childbirth of his beautiful young wife and the death, a year before, of their bright young son. Unfortunately, his view of his daughter Catherine, now in her twenties, was that she was :

  • “… not ugly… was decidedly not clever; she was not quick with her book, nor, indeed, with anything else. She was not abnormally deficient… Doctor Sloper would have liked to be proud of his daughter, but there was nothing to be proud of in poor Catherine… Her greatest desire was to please him… What she could not know, of course, was that she disappointed him, though on three or four occasions the Doctor had been almost frank about it.

When Catherine meets the dashing and handsome Morris Townsend, who immediately pursues a romantic relationship with her, the doctor views the whole situation with a jaundiced eye:

  •  I am told he lives upon [his sister]… lives with her and does nothing for himself… The position of husband of a weak-minded young woman with a large fortune would suit him to perfection!

The bitter irony of this novel, and one of the reasons that it’s so good, is that the doctor isn’t unreasonable as such. He doesn’t necessarily want his daughter to marry a rich man. He knows she will have money enough for two. What he doesn’t want is for his fortune that he so carefully earned to be given away to a man who only values Catherine for the money she brings. He sees Morris Townsend as the adventurer he is, unlike his naive daughter, and he is unwilling to simply hand over his fortune.

Totally fair enough.

So far I think we can all agree that Dr Sloper is in the right. Not one of us would want a lazy, unemployed, money-hungry son-in-law to walk in and start living in our spare bedroom with a hungry young family at his heels. Dr Sloper has every right to protect his share portfolio, property and superannuation from a guy like Morris.

However, it’s his cold, almost surgical analysis of the situation and the total lack of empathy for his daughter’s distress that takes the ‘personal’ out of personal finance.

  • And as she pronounced her lover’s name Catherine looked at him. What she saw was her father’s still grey eye and his clear-cut, definite smile. She contemplated those objects for a moment, and then she looked back at the fire; it was far warmer.

Catherine was unfortunate not have the internet at her disposal. A quick google of his name or a scroll though his Facebook profile would probably have revealed much that Mr Townsend would rather have remained hidden. As we all know, careful selection of a mate is imperative for a solid financial underpinning of a relationship. Being on the same page is a must.

Unfortunately for her, however, the men proceed to play an almost cat and mouse game with absolutely no regard for her feelings and affections. As time goes on, Catherine develops a much clearer vision of what the two men are like and what she herself values in life.

  • From her point of view the great facts of her career were that Morris Townsend had trifled with her affection, and that her father had broken its spring. Nothing could ever alter these facts; they were always there, like her name, her age, her plain face. Nothing could ever undo the wrong or cure the pain that Morris had inflicted on her, and nothing could ever make her feel towards her father as she felt in her younger years.

In her later years, her father threatens to drastically reduce the money that he will leave her in his will unless she promises him that she will not ever marry Morris Townsend. However, Catherine has gained the wisdom to know that she will have ‘enough,’ (an extremely valuable part of becoming FI), and so she refuses to submit to his bullying and emotional blackmail. When, after he dies, she is advised to contest the will after she is left only 1/5th of her father’s estate, the rest being left to charities, she tranquilly replies that she:

  • “…like[s] it very well.

She, like all of us who are working to attain financial stability, has learned not to be swayed by others’ expectations and has attained a dignity and purpose in life that suits her. She could have been far wealthier, but she chose to remain true to her values instead of selling her soul to ‘The Man’.. in this case her father. She calmly told him that she wouldn’t tell him this, turned her back on his expectations and quietly went her own way, determined to live her life on her terms, just like someone who has amassed their “F U money’ and doesn’t have to put up with an untenable situation.

The novel and the movie end on two different images. The novel sees her settling into the parlour and picking up her embroidery after telling Morris he’s dreamin. (That’s a little ‘The Castle’ reference for the Aussies reading this.) The movie has her lighting a lamp and going up the staircase, away from Morris who is banging on the door. Her face gets steadily more resolute and serene as she rises.

Catherine has reached the stage of being a perfectly independent woman, sure of what she wants to do and how she wants to live, knowing that she has the means to live that way. She has attained self-knowledge and a quiet dignity because of this, which means that she will no longer be a plaything to be pushed around. The Man has no hold on her and she is free to do whatever she wishes. Her home is paid for, she has enough investments to live a comfortable life and her needs are few and easily paid for with the resources she has at her disposal.

Sounds like FI, doesn’t it?

 

 

 

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“If the plan is to have no money, you’re doing f***ing awesome at it!”

The title is a quote from this clip. This is so true. Our actions speak louder than our words. I particularly like what he says about following the plan, towards the end of the clip. Plus there’s the wonderful Scottish accent – what is it about UK accents?!? I’m an absolute sucker for them. This made me think of a conversation I had a week or so ago and I’ve been thinking about it ever since.

I have a very dear friend who, along with her husband, lurches from one financial disaster after another as time goes on. I’ve known them for 20 years and in that time they’ve lost jobs with no Emergency Fund behind them; had cars written off with no insurance; a mortgage that after 25 years of payments is still owed exactly as much as they originally borrowed due to frequent equity withdrawals; bills/rates/mortgage repayments being ignored until they get chased by the company concerned and a huge bill being owed to the tax department. They own a small business and have not paid themselves superannuation and so they look to be relying on the age pension to support them when they reach retirement age. Financially, they’re a trainwreck. Personally, they’re fun, lovely people and I love them both dearly.

A week or so ago, after the last financial disaster struck, we had a phone conversation. Her husband was pulled up by the police for a random breath test, (no, he wasn’t drink driving!!), and the police discovered that his car registration was 3 months overdue. Instant confiscation of his car = no way to get to work.

She was livid. Even a week after it happened, she was practically incandescent with rage on the phone to me. Which, on the face of it, I can well understand. Who doesn’t pay their rego? It’s obvious that bad things are going to happen if you ignore your bills. I was really sympathetic… until it suddenly occurred to me… this has been happening to them for over 20 years. Why is he still entrusted with taking care of the bills?

My mind flashed back. Every so often we have this conversation and it’s always the same. Everything appears to be going along ok and then an unpaid bill/mortgage payment/a.t.o payment surfaces and reveals that things are NOT ok. All hell breaks loose, they scramble to find the money to get back on an even keel, then life goes on ok until… etc etc.

When I gently suggested that maybe she should take control of the family finances, she groaned. You could almost hear the eye rolling.

“Yeah, I suppose I should,” she said. “But it’s so boring. I hate that stuff.”

I didn’t say anything else. What would be the point? It really hurts to see them in this loop of financial drama upon financial drama, but it’s not my place to wag the finger at them. They’re adults and they’re not stupid. They know what they should be doing; it’s not rocket science. They’re simply choosing another plan, for whatever reasons. And so far, I guess the plan is working for them, despite what she says.

I hope that when the plan ceases to work, they’ll come and have a chat. I certainly won’t have all the answers, but I’ve picked up a bit about how to get a stranglehold on my finances and wrestle them under my control. Until then, all I can do is lend an ear, love them both and keep my mouth shut.

 

Frugal Friday: Scissors can solve a lot of problems.

Eighteen months ago I bought the dogs a new dog bed. I ordered it online and as you can clearly see, I went a bit overboard with the size. Poppy and Jeff are the only dogs I’ve ever owned who sleep inside, as Poppy barks at the possums and would wake the whole neighborhood up at midnight every night if she had her way. She has a very Machiavellian mindset sometimes; these dogs get away with far more than any other dogs I’ve ever owned.

I wanted a dog bed that I could wash regularly and that would keep them warm and look good. Well, 2 out of 3 isn’t bad, right? The answer to that is that it makes a good Meatloaf song but a terrible situation for a dog bed.

The stupid thing is far too big to fit into a normal washing machine which means it has to be washed in a laundrette. My local laundrette around the corner doesn’t have a machine big enough, so I have to take it to the next suburb and pay $14 in coins to cram it into the biggest washing machine they’ve got and get it cleaned that way. A couple of times I tried to wash it in the bath at home but it was too heavy to lift out of the water without having on of the boys there to help me and it takes 3 days to dry.

Who has $14 in coins hanging around? I put everything I buy on my credit card so the cash I carry around is minimal. It was a PIA to scrounge together coins – the best place I found was to swap coins for notes in the staff room where they sell the chocolate bars, but I’d always end up buying chocolate as well and my waistline was getting pudgier.

I persevered for 18 months but it was starting to smell awfully ‘doggy’. Something had to change. I had paid around $250 for this dog bed. It was meant to last them for YEARS. Given this, I was reluctant to just throw it out and buy something else.

So I lost my patience with it and chopped it in half. It’s a shame because it was beautifully made, it took me about half an hour to cut through all the layers, but finally it was done. Probably would have been quicker if the dogs didn’t try to help by sitting on it all the time, gazing up at me. It reminded me of this meme:

Then came the ultimate reward for my endeavours –

I can’t tell you how happy this makes me. I’ve kept the minky part of the bed for them to sleep on and I’m sure they’ll be fine. I was really pleased that I used what I had instead of simply going to K-Mart or somewhere and buying a new bed for them. It makes a $250 mistake slightly less annoying.

Anyway, if Scout gets cold she can always use the tiny version I bought for the cat before she died. Waste not, want not!

Lessons from Literature 3: The Neapolitan Novels: The Story of a New Name.

The Neapolitan novels by Elena Ferrante are a series of 4 novels following the friendship between two girls in 1960’s – 70’s Naples. I’ve just finished the second novel and this passage stood out to me. This is when Elena visits Lila, her friend who married a wealthy (to them) shopkeeper when she was 16.

  • Maybe the wealth we wanted as children is this, I thought: not strongboxes full of diamonds and gold coins but a bathtub, to immerse yourself in every day, to eat bread, salami, prosciutto, to have a lot of space even in the bathroom, to have a telephone, a pantry and icebox full of food, a photograph in a silver frame on the sideboard that shows you in your wedding dress – to have this entire house, with the kitchen, the bedroom, the dining room, the two balconies, and the little room where I am studying, and where, even though Lila hasn’t said so, soon, when it comes, a baby will sleep.

Keep your expenses manageable and take pleasure in the small, everyday ‘luxuries’ and appreciate them. Sounds very ‘Mustachian’ to me!

Learning how to tell a luxury from a necessity.

One of the things we read all the time in the FI/RE space is that one of the most important ways to turbocharge our path to financial independence is to learn how to distinguish a want from a need. I was about 13 when I learned this lesson, in a way that I’ll never forget.

Mum and Dad, my brother, sister and I lived in a comfortable middle-class suburb in Melbourne. We were by no means wealthy, but my parents earned enough that we had all of the necessities of life and quite a few comforts as well.

When I was about 12 or 13 I discovered an English magazine for teens called ‘Pink’. I absolutely loved it. God knows why – I was looking at covers for it while thinking about writing this post and it looks AWFUL. Everything that a feminist would despise. But at the time they were certainly pitching to the right audience. Every week I’d take my money up to the local newsagent and get my ‘fix’, bring it home, read it and add it to the pile of previous issues. It was a staple part of my regular routine and I didn’t ever imagine that routine changing.

Then one day Dad lost his job.

Mum and Dad were a bit upset about it, but in my sublimely selfish teenage way I didn’t let the news cause a blip on my radar, until the day Mum came out into the backyard where I was playing with the dog and said that she wanted to have a talk to me.

She explained that with Dad being the main breadwinner and with them not knowing when he was going to be employed again, they’d decided to make some cutbacks in expenses. So I wouldn’t be going on the year 8 school camp. I was a little upset about that, but I figured that it was only for 3 days and they’d pass quickly. They were pausing my sister’s dance classes and doing a few other things that I don’t remember about now. But then she dropped the bombshell – the one you already guessed was going to be dropped.

Yep. No more ‘Pink’ magazine until Dad found another job.

I was devastated. I cried. Mum said, “This is incredible. I thought you’d be more upset about missing the camp!” On my side, I couldn’t believe that they’d stop paying for something that only cost a couple of dollars a week. How was I going to keep up with the serial stories? There were HEAPS of them. What about the gossip columns and agony aunt pages? How was I going to keep up with the fashions and who and where and what the rock stars were doing? Remember, this was long before the internet. I was truly going to be stranded.

I thought they were so unreasonable. If there was an emoji for a 13-year-old girl having a tantrum I’d put it here. I begged and pleaded. But Mum and Dad wouldn’t be budged. They were tightening the reins on the family finances while we were in this tight spot and that was that.

So my life was ruined.

Six weeks after that, Dad found another, better job. Mum came to me on his first payday with a couple of dollars in her hand.

“Darling, you can go to the newsagent and start the subscription up again.” She was so happy to be able to make me happy.

I remember so clearly looking at the money, then thinking about the magazine. Was it worth getting it again? Yeah sure, at first I’d missed it dreadfully, but as the weeks went on I lost track of the serial stories – I knew that if I bought the latest edition I’d have no idea of what had gone on in the meantime. The pop groups? They were mainly British and most of them weren’t really big out here anyway. The fashion was 6 months ahead of us anyway and I didn’t even wear makeup yet. I couldn’t believe what I knew was going to come out of my mouth.

“Thanks, Mum, but I don’t want it anymore. I’m not missing it so you might as well save the money.”

It was a revelation to me that something that I once prized so highly took only a few short weeks to fade into insignificance. Mum and Dad were right to cut back when times were tough. Very few things are truly necessary, while most other things, though being nice to have, can easily be sacrificed if need be.  I learned a few very important lessons from giving up that silly magazine that stood me in very good stead when I was bringing up my boys on a shoestring budget and I had to cut deep.

They say that the things you learn in childhood stay with you, both good and bad. One of the best things my parents did for us was to demonstrate their absolute determination to not live beyond their means. It would have been so difficult, if not humiliating, to take pleasures away from their children and see their distress. But they kept the bigger picture in view and made their decisions for the overall financial stability of the family.

“Monkey see; monkey do.” It’s true; kids observe everything their parents do. I was lucky that mine showed me a valuable lesson, with the sting from the loss of the magazine probably flagging that memory so I’d never forget it.

 

 

Lessons from Literature 2: Sense and Sensibility

Ahhh, Jane Austen. What an amazing writer. One of the best days of my 2015 trip to Europe was when I went to her house in Chawton, which is now the Jane Austen Museum. It’s SO much better than the more famous one in Bath, as this place has so many of Jane’s own things. I blogged about it here.

‘Sense and Sensibility’ is the quintessential “A Man is not a Financial Plan” guidebook. None of the story would have happened if the second Mrs Dashwood had had her wits about her. In her youth, well before the novel begins, she married a widower, Mr Henry Dashwood, who already had a son from his previous marriage. Under the laws of his estate, the vast majority of the land, house and money legally have to go to the first son when Mr Dashwood dies. She will be left with virtually nothing.

Now, the second Mrs Dashwood has no visible means of supporting herself. She has no real education, no career path and no income of her own. But she blithely marries Mr Dashwood anyway because YOLO ain’t love grand,  spawns 3 daughters and then is perturbed to realise once she’s a widow that her husband, although he had years to get his financial affairs in order in order to provide for his daughters, had instead spent his money on a lavish lifestyle, keeping up with the Joneses and keeping a large stable full of expensive, Ferrari-like horses. Serenely expecting her stepson to do the right thing and cough up some of the money he inherited, she’s dismayed to discover that he has no such intention.

Consequently, she can’t financially support her daughters, (all of whom are equally untrained to forge a career path) and it’s only through the generosity of a distant cousin who offers them a cottage in the boondocks to live in that she’s even able to put a roof over her daughters’ heads.

She didn’t even have an emergency fund in place, let alone a share portfolio or a tidy sum tucked away in index funds. Talk about immediate gratification-type thinking coming back to bite you!

Listen to this passage, which describes Mrs Dashwood’s attitude when they move to their new rental:

  • “As to the house itself, to be sure,” said she, “it is too small for our family, but we will make ourselves tolerably comfortable for the present, as it is too late in the year for improvements. Perhaps in the spring, if I have plenty of money, and I daresay I shall, we may think about building. These parlours are both too small for such parties of our friends as I hope to see often collected here; and I have some thoughts of throwing the passage into one of them with perhaps a part of the other, and so leave the remainder of that other for an entrance; this, with a new drawing room which could easily be added, and a bedchamber and garret above, will make it into a very snug cottage. I could wish the stairs were handsome. But one must not expect everything, though I suppose it would be no difficult matter to widen them. “

She has clearly been watching too many home improvement shows. I’m surprised that a granite bench top and ensuites for all the bedchambers weren’t on the list as well. However, Austen is onto it. Look at what she says in the very next paragraph:

  • In the mean time, till all these alterations could be made from the savings of an income of five hundred a year by a woman who never saved in her life, they were wise enough to be contented with the house as it was…

By the end of the novel, Mrs Dashwood resigns herself to staying in the inadequately-sized cottage and her daughters are well-looked after. Phew! It all worked out well in the end but Mrs Dashwood had to go through a steep learning curve to be able to learn how to live within her means. Of course, once Elinor and Marianne were off her hands she only had Margaret to feed and house. I can tell you from experience that feeding one child is FAR cheaper than feeding 3 of them in their 20’s. They eat like horses. Mrs Dashwood’s grocery bills would have been through the roof before the girls moved out.

All of the trauma and heartache the girls go through in this novel could have been avoided if Mr and Mrs Dashwood had followed these few simple rules:

  1. Pay yourself first – take at least 10% of your income and tuck it away into investments.
  2. Don’t go into debt.
  3. Spend less than you earn.
  4. Have some splurge money, but don’t go crazy.
  5. Invest all that’s left.
  6. Don’t believe handsome young men who flirt with your daughters are always eligible husband material.

Austen isn’t usually thought of as a personal finance writer, but I believe she has many observations that still hold true today. Perhaps she should be looked on as the first FI writer?

 

 

Frugal Friday: Early Bird train travel.

It seems like travel hacking is splashing itself all over the internet lately – Americans flying first class all over the world for about $11.50, all due to the amazing reward points they can get on their credit cards.

This isn’t going to be a post about that.

This is about how I’ve tweaked my morning routine to take advantage of the scheme called Early Bird train travel that operates here in Melbourne. 

Two years ago I was living a kilometre away from work in the house I’d owned for 20 years. Classes start at 8:50am, so I’d leave home at 8:36, drive through the back streets, park in Hall street, walk briskly to my desk, scoop up the books I’d left in a pile the day before for my first two classes, grab my keys and I’d be walking in the classroom door at 8:50 every day without fail. I did this for 12 years and I had it down to a fine art. People in my staffroom knew it was time to grab their books and go to class when they heard me say, “Good morning!” as I came through the door.

Then I moved 21kms away from work. I experimented with driving into work and taking the train. The train is a 5-minute walk from my house, with a 10-minute walk at the other end to school. Both modes of transport took just under an hour each way, so the only real benefit was the comfort of the car vs the extra steps on my fitbit with the train. So I started driving in. Call me lazy – I don’t care.

Then late last year, this happened.

ARGH!!! Why?!? Of course, there was no note on the windscreen. It cost me just over $300 to get fixed.

Suddenly train travel was looking far more affordable.

So in the September school holidays, I got the car fixed, charged up my Myki for the train and discovered an interesting titbit of information about something called the Early Bird. If you begin and end your train journey before 7:15am on a weekday, you don’t get charged for the trip. They’ve obviously brought it in to try and reduce congestion on the morning peak travel times. Hmmmm……….. Maybe I could be a civic-minded citizen AND slash my transport bill in half at the same time?

This meant that I had to do some Maths. I steeled myself to the task. If I got up an hour earlier each morning I could travel to and from work for only $2.80/day, instead of $5.60. On the face of it, it wasn’t much of a saving. But if you multiply that over a week… $14 instead of $28… or over a 10-week term… $140 instead of $280…. the numbers become more interesting.

I decided to give it a go. I also decided to track it on a chart, so that I wouldn’t lose sight of the money I was saving. I knew that if I was staying late for some reason, or I needed to go somewhere after school, I could always drive in. But why not take advantage of an offer for free transport?

So on day 1, term 4 I got up very early and made my way to the station.

Here are the downsides to doing this:

  1. In order to catch the train that guarantees me to get to my destination a full 10 minutes before the 7:15 deadline, (because of possible train delays) I have to leave the house by 6:20am to walk to the station. This means getting up at 5:30am. OMG.
  2. It tends to be a little nippy first thing in the morning.
  3. I have to be organised with my lunches and breakfasts. It defeats the purpose if I score a free train trip but have to buy my lunch from the canteen because I was too sleepy to get my act together in time to make lunch.
  4. If I’m running late, I have to run for the train. I’m not a fan of rapid movement.
  5. It was a massive adjustment for the people in Staffroom 2. For a couple of weeks, people were getting to their classes late because I was no longer saying, “Good morning!” at 8.45. The habits of 12 years or so are pretty hard to break.
  6. They raised the price of the trip by a massive 14c on Jan 1. This makes the Maths more difficult. Thank goodness there’s a calculator on my laptop.

Here are the pros:

  1. It’s really nice to start each day with a few wins. Getting up as soon as the alarm goes off in what seems like the dead of night? Win. (I cheat a bit here… the dogs sleep in my room so as soon as the alarm goes off Poppy jumps onto my bed with joy, giving massive head butts and cuddles, so it’s impossible to hit the snooze button and go back to sleep.) Leaving the house at 6:20am so I don’t have to run? Win. Touching off with my Myki and seeing ‘Fare deducted: $0.00? Win. Walking to school and seeing nearly 4,000 steps already on my fitbit? Win.
  2. Usually, I’m the only one in the staffroom when I get there, so it’s nice and quiet. I put the kettle on for a cup of coffee, I go to the ladies to put my makeup on, I come back, fire up the laptop and eat breakfast at my desk, browsing on blogs or Facebook. As people drift into work, the place slowly gets louder and livelier. I’ve had my quiet start to the day and I’m now ready for the rest of it.
  3. If I need any photocopying done, there’s no queue. Correction? It’s nice and quiet.
  4. I have to be organised with my lunches and breakfasts. (Yes, I know this was in the cons list, but it’s also a pro.) I’m not hungry at 5 in the morning, so I tend to take a couple of hard-boiled eggs for breakfast and I eat them at breaky time… about 7:30. It’s awful when I don’t have an easy breakfast to grab – the default position is a ‘fast’ morning or day, which is good when I’m slightly pudgy but not so good if I’m starving. My lunches tend to be leftovers from the night before or a Mystery Meal from the freezer.
  5. My car will hold its value for far longer. In a normal week, I’ll only take it out once or twice, as I can pick things up from the Aldi around the corner on the way home; if I need to go to a shopping centre I can get off the train at Southland and then hop back on the train to come home; and I hate wasting time on the weekends so I group shopping visits together… all leading up to low kilometres on the clock and no wear and tear on tyres etc.
  6. My overall transportation costs have plummeted. I was buying a tank of petrol every 2 weeks at $50-$60 a tank. Now, it’s around 6 weeks between refills. (It’d possibly be more, but I’m teaching Evan21 to drive so we’re using fuel on that.) 
  7. The table of running savings. Admittedly, I don’t much like doing the Maths for it, but it’s getting to the stage when it’s really starting to add up. Sometimes a friend from work will offer to drive me home, especially if we’re here working late, so I get double dipping on that day. It’s lovely when they offer, but I certainly don’t go chasing it… that’d be rude.

I know that if I saw $183.26 on the footpath I’d bend down to pick it up! It’s nice to know that it’s still in my bank account, but also kind of creepy when you think that it’s a sizeable chunk of money that I would have had to have spent if this offer from Metro trains wasn’t in place.

This is such a little thing, but I like the idea of seeing little opportunities and taking advantage of those that are do-able in your life. Transportation is a big expense for many families, so being able to get to and from work for under $15 a week is insanely cheap. After all, I geoarbitraged to save money and to get ahead, not to spend it all on train rides and petrol!

Of course, I’ve been doing this as the mornings are light and the weather is fine. Spring and summer are ideal for early morning starts. It’ll be interesting to see if my resolve crumbles as the winter kicks in. I don’t run the heating overnight and my beautiful hardwood floors are chilly the first thing in the morning…

I’ll keep you posted.

#winning