On becoming a nag. . . . .

I had my hair cut today, at one of those cheap places where you never see the same stylist twice. It's always sort of a crapshoot: "Will my bangs be too short? Will the layers be short enough? Look at all that hair on the floor! I swear I asked for just an inch off the bottom!" Quite the adventure! I've still not been home to 'style' it the way I like it, so while I have a good feeling about this $15 haircut, the jury's still out.

Anyway, as I was chatting with the young stylist, she mentioned that she had just recently opened a savings account, with which she is going to save up for a trip to Europe next year. Excited, I immediately started asking questions: "What kind of savings account? Were there fees? Is she saving automatically?" Then I realized that I was asking very personal questions of a relative stranger, and shut my trap. I truly wanted to ask her about how she is saving for retirement, which probably hasn't even entered her mind at this point, but I successfully reined in my curiosity. Based on some other comments she made, however, I gathered that saving money is not her strong point.

I've been trying, for two years, to convince a young (28) coworker to open a tax deferred investment account in addition to the pension that we'll receive as state employees (assuming we make it to retirement age). He's been dragging his feet, and will probably continue to do so, regardless of my nagging (or maybe because of my nagging. . .) I use the words 'compound interest' and 'millionaire' many times in my little talks with him, to no avail. I simply can't understand his reluctance. Then, yesterday, I read this article concerning young Americans and their reluctance to save for retirement.

The survey results presented in the article indicated that young Americans (defined as those in their "20's and 30's") often cash out their 401(k) accounts each time they change employers, rather than letting the accounts roll over and continue growing! And most people will change jobs at least 6 times during their lifetime (I think I've almost hit that milestone). I actually have a friend who did this recently---she and her husband were moving across the country, and she took money out of her retirement account to use as savings while she looked for a job----as far as I know, it never went back into her fund.

Although I am in no way a financial expert, and my own financial history is less than stellar, I consider the money I put into my 403(b) to be sacrosanct, not to be touched unless there is a dire emergency. This is because I understand that I've waited a long time to begin saving, and I need all the compound interest benefit I can get so that I can someday retire. I only wish I'd figured all of this out when I was in my mid-20's before racking up thousands (and thousands) of dollars of credit card debt!

Frugal clutter. . . . .

Yesterday, in honor of Labor Day, I started hoisting boxes from the upper reaches of the garage, with the goal of finding items I could easily part with at my yard sale next Saturday. When I first began thinking about having a tag sale several weeks ago, I was afraid that I wouldn't have enough 'stuff' to sell. There's nothing worse than a yard sale with only a few items, and I just couldn't picture what exactly---beyond a few obvious kitchen gadgets and some furniture---I could sell.

The garage, however, turned out to be a veritable goldmine! There were more than a few boxes that had never been unpacked. I hadn't unpacked them when I moved to Portland over two years ago, and lived in an apartment. I hadn't unpacked them when I moved into the house I live in now. I realized that if I've been able to live without these things for this long, I could easily 'let go' and sell them. Now one wall of my office is lined with boxes and bags of price-tagged STUFF that I don't need now, and probably never really 'needed'. It feels GREAT! And I still have two more boxes to open and investigate. . . . .

Another benefit of this Labor Day 'purge' is that I went through piles of paperwork going back years and years. I filled my entire recycling can with shredded documents! My particular form of clutter-disease is made up almost entirely of paper (mostly mail) and clothing. Mail and other documents are stacked and stacked day after day, until guests are imminent, and then the stacks are hidden in drawers and boxes. Rarely are they looked at again (I once found an eight-month-old check for $1,200 in one of these stacks)! I'm getting much better at taking care of mail at the moment it enters my house, but again, it felt phenomenal to rid myself of these lurking stacks once and for all!

It was a bit like a geological survey; for example, I found old check registers ranging from five to eight years ago. It was incredibly interesting to see what sorts of things I was spending my money on, so long ago. The number of checks I wrote to credit card companies astounds me, and it's clear from the amounts that I was simply paying the minimums. Here's an example of just one round of credit card bill-paying:

• The Gap: $15
• MBNA: $55
• Macys: $21
• Wells Fargo: $35
• Gottschalk's: $24
• Victoria's Secret: $20
• Mervyn's: $35

I couldn't believe how many department store cards I had! And I was paying over 20% interest on those cards, no doubt!

So, my Labor Day was both laborious and educational. I learned that I've created and maintained much better habits, and that I'm not a prisoner of my stuff---I really can (and will, this Saturday) get rid of the things that take up space in my life.

My housing slump. . . .

I've been considering lately whether it's a good idea to hold onto my house (which is further away from downtown Portland than I want to be) or whether I should sell it and move on. With that in mind, I asked a local realtor to come out to my house last weekend to take a look and give me her advice.

Although I won't receive the formal market evaluation until next week, the realtor seemed optimistic----more optimistic than I am, for sure! I know part of that is the fact that the realtor is a businesswoman---she needs to list houses in order to sell them, in order to make a commission and ultimately feed her family. So of course she's going to tell me that my price requirements are reasonable (I simply want to pay off what I owe, not make a profit) and that my house "shows well" compared to the competition. Actually, I do know how to make a house look attractive and cozy, so that last part isn't so far from the truth.

Yesterday, I sat and worked out the one thing I've been avoiding: If I sell my house and end up renting, how much more will I pay in taxes, without my mortgage interest and real estate tax deduction? Turns out, my taxes will double (disclaimer: I'm not a tax expert, nor am I particularly great at math, but generally I try to be more conservative when I'm inputting numbers that will lead to a tax estimate).

At first, I blanched at the thought of paying more taxes. Then I considered that, with my relatively low salary, I really don't pay THAT much in taxes anyway, compared to people like my brother and his wife. Then I wondered how I could offset those taxes. Well, I could increase my contributions to my 403(b) plan. I had been putting between 10-12% of my salary into my 403(b); in April, I cut that to 1% until my debt is paid off. Without a mortgage to pay, I could put a whopping 25% or more into my 403(b)---with money left over for travel and other fun pursuits---and reduce my tax bill quite a bit. Not as much as my mortgage interest would, but the savings would be substantial, AND I'd be investing in my retirement at the same time. By the way, I use an incredibly useful tool called Paycheck City, with which you can play around with your withholdings and view your net pay under all sorts of different scenarios.

So the inner dialogue continues. I'll revisit this next week, once I've received the formal market evaluation. My parents are coming for a visit the week after next, and I'm sure I'll bounce some of these ideas off them as well (they're not known for financial 'astuteness', but it's always nice to hear a second opinion).

Have a lovely, relaxing, Labor Day weekend, everyone!!