Saving

You may have wondered why there was silence on the blog for most of the past week.   It was because I was able to kidnap my bride away from our two beautiful children and do something we have never done before – go on a cruise through the beautiful Caribbean!

As we boarded the 991-foot long Caribbean Princess bound out of San Juan, Puerto Rico for St. Thomas, Tortola, Antigua, Barbados, and St. Lucia, I was overwhelmed at how blessed I really am!   I can not believe that I am so blessed that I am able to take such a tremendous vacation – and to do it without debt.

I just want to share a picture (click on the picture to get a better view) and a few things that I love about taking “paid-for-in-advance” vacations.

Top 5 Reasons I love taking “paid-for-in-advance” vacations:

1. No debt follows me home
2. Able to totally enjoy the trip – knowing we saved for it!
3. Total relaxation knowing that we funded a dream – and lived the dream!
4. Able to negotiate a better deal because we had to plan early to save for this trip!
5. My bride is happy!

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My first paying job was working for my father when I was about 10 years old.   He was a homebuilder and part-time hobby farmer, and I worked a variety of jobs.

One of my favorite jobs was assisting with the framing of a new home.   It was incredible to see the skeleton of a home go up so quickly, and the fresh-cut pine lumber smelled incredible.   You could see so much progress.   Near the top of the list of my least favorite jobs was chopping weeds out of the soybean fields in the heat of summer.   Regardless of the task, it was worth it because I was paid money.   I was paid upon completion of a specific task or at the end of each week.   My twin brother and I managed to save enough money to purchase a Pentax K-1000 35 mm camera (which indicates that I am getting old) and a Honda C70 Passport motorcycle.

When I began work in my first engineering position, my employer paid me every two weeks.   Since I was busy spending all the money, it meant that I usually experienced a feast-famine cycle each month.   The first paycheck of each month immediately disappeared to pay all of my debt obligations, while the second paycheck presented the opportunity for some fun spending.

In December 2002, I accepted a position with a new employer.   This new employer paid on an entirely different pay schedule – monthly.   Not weekly, not biweekly or bimonthly.     Monthly. My immediate reaction was negative.   Was I ever wrong.   Monthly paychecks provided us the opportunity to pay our monthly bills all at one time.   It also made it much easier to plan our spending with a monthly budget.

WARNING: I am an engineer, and this means that I do ascend into nerd-like behavior at times.   This is one of those times.   I believe that my money management was absolutely affected by the frequency of my paychecks, and it has caused me to wonder if the same is true for most people.

For instance, what if you were able to be paid yearly? On Jan. 1, you would receive all your pay for the year.   Would it cause you to manage your money any differently than you do today?

I believe that it would.   I believe that more people would take the opportunity to immediately fund their savings for retirement, college, and other known upcoming expenses – like Christmas, vacations, car replacement and property taxes.   It would also require individuals to become excellent planners.   Knowing that this money would be needed to fund all expenses for the rest of the year would make a budget absolutely imperative.

Of course, I believe a budget is imperative regardless of pay frequency.

What about you?   Would you be more likely to save more if you were paid differently?

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I am a HUGE fan of savings accounts.   I am an even HUGER (I made up that word) fan of savings accounts with money in them!

Here are some proven strategies for piling up HUGE CHUNKS of money in your savings account:

• Save the “magic month” paycheck If you are paid weekly, you normally receive four paychecks a month, but there are four months each year where you receive FIVE paychecks.   Budget and live your life on four paychecks per month and you will be able to save the extra paycheck every three months!     Paid bi-weekly?   Budget and live your life on two paychecks per month, and you will be able to save the extra paycheck during those two magic months each year that you get three paychecks.
• Save the TAX REFUND As a spender, I know that the word “fun” is right in the middle of the word refund.     However, maybe the right thing for you to do this year is SAVE your tax refund.
• Automatically send 10% of paycheck to savings If the money makes it home in the paycheck, it is at risk of special magic disappearing acts – even for the most conservative of people.   Set it and forget it.   You won’t regret it.
• Save the BONUS Don’t spend it – just this once.   Put it into savings.   It is amazing how great it feels to be able to say, “NO!”, to yourself and put your BONUS into the savings account.   It gives you the feeling that you truly are in control of your money!
• Sell something The old RC airplane in the garage just needs to go.   So do the bikes that you don’t ride.   So does the boat you use once per year – it’s cheaper to rent one when you need it.   Put the money into savings.   You will end up with an cleaner and neater garage and attic and a plump savings account!

How have YOU saved money BIG-TIME?

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I heard on this evening’s news that a local factory in South Carolina is having to reduce the hours of its employees because of the volcano eruption in Iceland.   This means reduced pay.   I hope that the employees have saved money to cover this work slowdown.

This is why it is SO IMPORTANT to save money for emergencies.   You never know when the emergency will happen.

Have you saved up money to prepare for a volcano eruption (or any other emergency that can happen)?

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