January 28, 2013
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Money Matters – Part Four
I know, I’ve written a LOT about money matters, lately, but I really have been thinking on it a lot, since reading that book. Although to be honest? It went over my head. I got to the chapter on shares and long caps versus short caps and bonds and… I got lost. I’m hoping I can talk Brian into reading it so he can translate, because it’s like high school math – I got there, I was okay, and then it went over my head, and I never recovered. *Sigh!*
But today I want to just do some chatting about saving. There are so many options for saving. But the pros and cons? I don’t know…
First there’s the piggy bank. Kids do this. But then you get more than will fit in the piggy bank, and you have to do something different. Brian’s Grandma did the sock drawer until she started to feel uncomfortable, and she gave the sock to Brian’s parents… and they told Brian’s sister, who told her friends, and so while Brian and I were exchanging vows at the altar, his sister’s friends were breaking into his parent’s house and stealing Grandma’s life savings out of the sock drawer. True story – it really happened during our wedding. Don’t ‘sock it’ away – and if you do, don’t use the sock drawer, for pity’s sake. And DON’T tell anyone what you’re doing. I know they have fake cans of hairspray or furniture polish that are hollow and you can sock away in those, but… I’d be afraid that if we died, someone would chuck the can, not knowing it was a hiding place. It just seems stupid to me to keep cash like that at home.
On the other hand, there’s the savings account. Which makes absolutely no money anymore, is no longer insured by the FDIC (because it’s in the red, and can’t afford to pay out in case of emergency), and actually… doesn’t exist. That’s right – savings accounts are pretend money. You put your ‘money’ in it, but it’s not really in the account – that money is used to fund loans, pay other people… it’s just a number on a screen that is ‘yours’… and in case of a bank failure, your ‘money’ (which isn’t sitting in a box for you, there) is gone. So while I don’t think the sock drawer idea is good, I think LESS of the savings account idea. At least with the sock drawer, you have something tangible in your hand. You don’t have that with a savings account.
Which is my problem with the IRA (retirement) accounts. YES, they make more money. Yes, they compound interest. Yes, you make money that way. But again, it’s not FDIC insured (regardless of what the sticker in the bank window says), it’s not *there*/tangible, and it’s easily seized.
My dad was always into savings bonds. He bought them when I was a kid, and sent them to us in the mail. My parents divorced when I was eight, so he’d give us the savings bonds for birthdays for a while… and let me tell you… those bonds? They barely covered my first grocery bill when I moved out on my own. What. A. Waste. So what do you do for your child?
I had a savings account for Lydia when I first entered momhood. I just put aside money in it, and didn’t bother to look at the statements, because I didn’t want to know what it was doing (out of sight, out of mind, won’t be touched). I just put the statements in the filing cabinet every month. Until we were moving… and I opened the last envelope (planning to throw away the previous ones… why drag all that paper around with us?)… and saw that she was losing $30 a month in fees, because the idiot who set it up didn’t put it as a minor account, and she was below their minimum balance. We lost something like $200 to the fees, and they wouldn’t reverse it, because it had been my responsibility to have caught the error. I. Was. PISSED. And pulled all the money out. But wasn’t about to put it in savings bonds… sure, the money wouldn’t be fee-ed to death, but that’s not useful, either.
George Ure and any survivalist site you go to says to go silver and gold. They rarely depreciate, they are tangible, they are accepted world-wide, they’re more viable than paper cash. So I put the kids’ money (all bonds from the grandparents and what was left of the savings) into silver for the kids. But honestly… I learned a hard lesson, that way, too. I had a lump sum of *OUR* money (Brian’s and mine), and bought gold. Then Brian charged something to a bank card without talking to me, and there wasn’t $$ to cover the purchase – so I had to turn around and exchange the gold that I’d just bought for money to bail him out. It was eight days between my gold purchase, and the gold sale. I’d bought the gold for $XXX and they only gave me a part of that in selling it back. Same guy I’d purchased it from. He wouldn’t give me the same amount back, eight days later. So in order to get money from the gold, I had to take a loss. Hard lesson learned. I haven’t been a fan of the silver/gold thing, since. SurvivalBlog and UrbanSurvival are right – , in a coming economic collapse cash would be devalued, and the value of silver/gold would rise. And you would have something tangible that was worth something. But as a savings option that isn’t MAJORLY long term? Not a good way to go. Besides, where would you keep it? The sock drawer? I don’t think so!
We talked briefly a few days ago about 401Ks and mutual funds. I had shares in the bank when I was working in the 90s, and the shares were sold when the bank switched hands. They rolled my part into mutual funds, which immediately tanked. I got this funky statement in the mail that said, “You owned $2593, and lost $1148 this year… congratulations!” And I said, forget THAT crap… cash it out, I’ll pay the tax, and at least I won’t lose any more of it!! I put what was left into air conditioning for my car (babies+August=hot)… and then promptly smashed/totalled the Explorer. The end of the shares that I didn’t earn, in the first place. But we stayed cool for two summers, so I guess it wasn’t a TOTAL wash. But that was a rotten deal, too. Although we were insured, got the value of the vehicle, put it on the car I have now, and paid it off in 18 months. So actually, in hindsight, that wasn’t the total wash I have been looking at it as, is it?
Another thing survivalists (and Suzy Orman and Larry Burkett and Dave Ramsey) tell you is a wise thing to do with savings is spend it. Pay off your debt with it. Of course, once your debt is paid off, they tell you to save six months worth of income as an emergency stash… but they don’t tell you how to go about that. Anyhow, after all of my misadventures in savings bonds, savings accounts, silver and mutual crap-holes, that’s when we just decided to get out of the hole. It gave me something to do with the extra money. Survivalists say after that you stash stuff – the three B’s: Bullets, Beans and Beer. I don’t drink, don’t use dried beans on a regular basis, and understand that the price of toilet paper may skyrocket, but I don’t know that I want eighty cases in the basement, if you know what I mean… and nothing for retirement.
But how to save after the debt is paid off? How to plan for the future? How to save for retirement? Not such an easy thing to consider. And many of my friends here hit the nail on the head when they said that everything is seizeable. When it comes down to it, I’ve read papers about 401Ks being eyed up by the government. I’ve read about how IRAs and bank accounts pretty much are insolvent.
What do we do? Frankly, I don’t know. But I have learned the hard way about what DOESN’T work, so if this post was worth anything, it was a poster child blog about how things can go badly, and what not to do. LoL!! If you’ve got suggestions, my comment section is open…
Comments (8)
Because of most of the reasons you list in your post, our savings are hidden at home. Not the best place, and it’s not earning any interest there, but at least it’s quick access if we need it. Only Shayne and I know about it, and/or where it is located.
My deal is what is money anyhow? If we have a economic meltdown – who really wants to come repossess your house or come collect their over draft fees?
So seriously – I very much doubt we will be using money in our retirement. (I also doubt in retirement at all but ya know me)
Two other alternate systems are Time Banking ( http://en.wikipedia.org/wiki/Time_Banking )
and Bitcoins ( http://en.wikipedia.org/wiki/Bitcoin )
I am more of a barterer myself. But I think the best investment is to be useful to others. And that is time invested in a skill or knowledge. I have good friends (not next door but around the area) and lots of them have very specialized skills. People ask me why I don’t make soap or quilt or can veggies - because I have different skills and for me it is better to have 10 experts in many areas than 10 folks who can do a lot of stuff half assed.
I have to agree with Ali on this one – we are headed to a Universal currency, and any savings you have won’t be worth much (I hope I’m wrong, but I don’t think I am.). Our “savings” consist of skill-type books, equipment (spinning wheels, looms, knitting needles), and canned goods. Not much, but some – and it’s all tangible. Yes, not much good if we lose the house to natural disaster, but I can’t worry about things not under my control.
Yes, it sucks to not have a financial cushion…..but I don’t like the thought of some faceless bank in control of MY money. So……I save in the short-term for things that will be useful in the long-term. Not a popular way of thinking, but it makes sense to us.
Of course tools that don’t need fuel or electricity are good ideas. I try to consider what people around me might need also. I know many people who think too bad sucka! I am prepared and you can starve! But certainly that is not showing love to others.
One of my favorite stories from Mother Teresa’ life is this one : One night a man came to our house and told me, “There is a family with eight children. They have not eaten for days.”
I took some food with me and went. When I came to that family, I saw the faces of those little children disfigured by hunger. There was no sorrow or sadness in their faces, just the deep pain of hunger. I gave rice to the mother. She divided the rice in two, and went out, carrying half the rice. When she came back, I asked her, “Where did you go?” She gave me this simple answer, “To my neighbors; they are hungry also!” I was not surprised that she gave-poor people are really very generous. I was surprised that she knew they were hungry. As a rule, when we are suffering, we are so focused on ourselves, we have no time for others.
I’ve come to the conclusion that if everything collapsed (and I mean everything) and money was ‘worthless’, so too would gold. Why? Because what would it’s purpose be? People are going to be more interested in things like food, clothing, blankets, shelter, fuel, weapons, ect.
@Cagey - Gold will NOT be useless by any means…
http://www.investopedia.com/financial-edge/1109/9-unusual-uses-for-gold.aspx
I still say if you are fairly stable gold and silver or junk silver are the best bet for savings. Yeah some times it sucks when you have to turn right around and sell it back. But if you can manage and make due and Not use it, it is wonderful!!! Like I said on the other comments. In 1993 I think it was, gold was around $350 an ounce. Ten years later it’s over $1600. I think the next thing to go up like that will be silver simply because the gold to silver ratio is waaaayyy off right now. Maybe gold will drop though. You just don’t know these things. But still it is a sound investment.
And yeah, we have to be creative to keep it stashed secret and keep it safe.
In an economic collapse, an EMP, or something far worse? Sorry but I just was never into the theory that gold is king in those situations. People will be completely desperate for other things. It’s not to say that there aren’t other uses for gold sure — but I’d surely take a supply of things to help you survive over gold any day.