The closest connection I have to China is a Hawaiian-print shirt made there that I bought at Wal-Mart. But an article I read about China recently sent a shiver–literally–up my back.
It brought to mind a tough lesson my family and I learned when we got hit, years earlier, by an unexpected “storm.” When the wind settled down my wife and I realized that, though we can’t live by bread alone, saving and financial planning can provide a lot more than just food for thought. They can supply the difference between prosperity and ruin.
As for the story that gave me shivers, it described in detail an election that was held earlier this year in Hong Kong. At stake was the presidential-like post of chief executive. What was really at stake was the extent to which China would influence this election. And that’s exactly what China did.
China’s in the position to sway Hong Kong elections because China now controls the former British province and it’s nearly 7 million residents. Of these seven million only a fraction get to vote. And each one of these gets his orders from Big Brother.
When Britain was in control these seven million people enjoyed living in a democracy. With China in control they now live under communism. They also live in fear, for the same Communist China currently calling the shots in Hong Kong is the same Communist China responsible in 1989 for nearly 3,000 deaths in and around Tiananmen Square.
The man who won the election, Donald Tsang, was China’s hand-picked man, an emblem in many ways of China’s power over the province. Power like this makes Hong Kong people skittish. It reminds them, and the world, of Tiananmen Square. It puts into peril Hong Kong’s domestic security.
Reading about Hong Kong’s ersatz election reminded me of my own “domestic security” ten years ago this July 1st, which is the day Hong Kong officially went from British to Chinese rule. It was a historic day, one destined for history books. It’s in my book, certainly, as the day that a political event–on one side of the globe–sent shock-waves clear around to the other, where the politics of big government in far-away places sent my family and me reeling back home in New Jersey.
My wife had been working as a U.S. sales manager for a Hong Kong-based manufacturer. As the handover approached, China insisted that the switch would be entirely peaceful. But Tiananmen Square was still fresh in people’s minds. What would happen? the world wondered nervously. Tanks in the streets, or business as usual? Not knowing which, the company’s major stockholder quietly cashed in his chips, thus selling the company before the Communists took over.
July 1st came. And in the streets of Hong Kong not a single shot was fired. Not one tank rolled. Not a cloud of tear gas rose anywhere. But one person I know was terminated.
She was summarily fired, via fax machine, by a San Francisco attorney who represented the company here in the United States, a man with a knack for using such a device as effectively as any executioner wields an ax. I like to think that, this way, he could do his dirty work without getting his hands dirty. What made this man’s pink slip particularly hard for me to take, beyond the obvious, is that I am a stay-at-home dad. My wife and I have two school-aged daughters. My wife’s job was our sole source of income.
Lucky for us, I’d been using computer software that helped us track our expenses. And never in my life could I have imagined how important such software could be. For while my wife now spent her days combing through her network, I spent my nights creating graphs and running reports. And the things I discovered knocked me out of my chair. (We spend THIS much onNO!!!)
Everything I learned thanks to this computer program (and there are a handful of such programs available today, all of them performing virtually the same wizardry, all of them making credit card and checking info easy to download from the Internet) can be boiled down to three recommendations. These recommendations have completely changed the way my wife and I approach family finance, and are applicable to any other family that finds itself forced to make due with less. Most important, these recommendations helped us weather the storm, and have prepared us for any other storm that could (who knows?) hit us again from out of the blue.
Recommendation #1: Cut The Fat. The night I got knocked out of my chair I discovered, to my shock and great irritation, that in the one year prior to my wife’s getting fired, she and I paid in ATM fees $122.00. Now, why in the world would I put up with such extortion for the privilege of accessing our own money?
That’s easy – convenience. We put up with this solely because the ATM’s we used are located near the bagel store, the coffee shop and everywhere else we happen to be when we’re in the mood for money. But $122.00, say my trusty charts and graphs, was for us at the time roughly five tanks of gas. One-hundred twenty-two dollars could buy pizza every Friday night for three entire months!
The day I discovered the extent of this thievery, we began using ATM’s owned by the bank where we keep our checking account. That way we could avoid access fees and pocket our own $122.00. True, in the grand scheme of things, ATM fees are nickel and dime stuff. But when taken into account with some other cost-cutting, the aggregate savings was well worth it. For example, take my health club. Please.
I don’t ever go there. I don’t have the time. I’m too busy driving our kids to soccer, basketball, softball, swimming, and every other activity ever known to man. So I cancelled my membership – and saved $70.00 a month. That’s $840.00 each year! I’ll save $840.00 next year, and the year after that and the year after that. When I can’t fit into my clothes any more I’ll consider dusting off my old jogging shoes. In the process I’ll save on parking and gas needed to drive back and forth to the gym. This last point–the money we spend driving back and forth–illustrates the extent to which efficiency means dollars. I’m not saying I don’t like my kids’ sports. What bothers me, and what costs, is wasted time.
Enough can’t be said about combining trips. Rather than drive, say, to the grocery store in the morning then basketball practice that afternoon – two trips – I now toss ice in a plastic cooler and the cooler in the trunk of my car. We leave for practice a half-hour early, and pick up a few groceries on the way. Groceries over, we arrive at the gym where our kids score baskets and their dad claps and cheers, happy with the knowledge that the eggs in the trunk aren’t incubators for salmonella.
The only thing better than combining trips is eliminating trips altogether. Why not bring a lunch to the park instead of going to the park then driving around town, wasting gas, looking for a McDonald’s? And why not ride bikes to the park–or church, or a friend’s house, or the train station, or the post office if ever the weather cooperates–instead of always driving? That first summer, eliminating trips, or combining two or more, we saved each month about a quarter tank of gas. Add to this what I used to spend in unnecessary burgers and carbs, and the average savings was worth about $45.00 a month. I’m healthier now than when I belonged to that health club!
Here’s something else I eliminated – $150.00 each year for haircuts. No, I wasn’t growing my old 70′s haircut again. What I did was find my wife’s old pair of scissors and ask her to do the job, which is what she did for extra money back when she was in college. She now cuts my hair practically any time I want, without the hassle of my scheduling an appointment or having to pay for parking.
Granted, maybe some people can’t do without their hair stylist, or imagine life without going to the gym. They can, however, with some honest searching find something else that they don’t need. In my case I easily targeted five specific areas – ATM fees, health club, haircuts, unnecessary driving and fast food – and saved our family $140.00 a month. For people who need to save even more money, or for those who feel $140.00 isn’t worth the trouble, consider this next recommendation.
Recommendation #2: Bigger Is Better. One of the most dramatic features of financial software for people who use it for family finance is the button that creates a pie chart. All the user does is plug in a range of dates, hit the enter key, then buckle his seat belt. The results can be overwhelming – all of our sins, right in our face, in brilliant living color! Nowhere is the expression “one picture’s worth a thousand words” any truer than in this case. Overwhelming? Absolutely. Sobering? Without a doubt. It’s enough to change a man’s behavior.
Change makes a bigger impact when we target bigger slices of our family’s financial pie. In other words, there’s more bang for the buck when focusing on the big ones. Our biggest slice was the one labeled Mortgage, not surprisingly. Making a change to this one slice alone, which accounted for 25 percent of net income, would have made a huge financial impact in our favor.
But we weren’t in the market to refinance because rates at that time weren’t low enough. The fees and points would have cost us thousands, and the savings that result from a lower interest rate would in this case have been a wash. Instead I looked at the second largest slice. It was shaded an irresistible money green – Auto.
One of our two cars was a leased vehicle costing us $485.00 a month. Pretty steep. But these payments were covered by a car allowance provided through the kindness of my wife’s employer. Kindness dried up when the pink slip arrived, and from that day forward we were stuck with the bill. But a light bulb went off inside my head the night I got knocked from my chair. Maybe we should tap our savings, I thought, then buy the car when the lease is paid off. This would eliminate car payments entirely.
The problem with this was obvious. Paying cash for a car with no cash coming in? Besides, this was not what we planned to do with money we had saved. But neither had we planned on my wife’s getting fired. Drastic measures, drastic solutions, I reasoned. So we made the tough choice and, several month later, went out and bought the car. There was a risk to what we did. As soon as we racked up 50,000 miles, we lost the manufacturer’s warranty. But big deal that we lost a warranty. Each month we gained $485.00. That’s $5,820 a year!
There was another big slice; not as big as Auto, but big enough to warrant a change – Entertainment. We were in the habit of taking a nice vacation every couple of years to places that had pools and catered to families. Then one day we hit on a truth that says little kids don’t care where they go on vacation, just as long as they stay wet. We had blocked out time for another big vacation the summer my wife got fired, only to drop these plans like a bad habit. But we did book a room at the local Holiday Inn. We got a pennies-on-the-dollar weekend deal that included – what else? – a great big swimming pool. Our kids didn’t care we were in the same zip code. All that mattered, to them at least, was that they could swim all day. All that mattered to my wife and me was that we were paying next to nothing. I estimate that, along with air fare, we saved approximately $2,400. Spread over two years, which is how often we sprang for the big one, that comes to another $100 a month.
Recommendation #3: Noel, No Debt: Debt is the financial equivalent of quick sand. And the most dangerous and wide-spread debt of all is debt that comes from credit cards. It’s the most dangerous, I feel, because it’s so easy to incur. I ought to know. We use plastic for practically everything. Our hunger for purchasing with Master Card is matched only by our desire for frequent flyer points, which Master Card gives us each time we charge. According to CardWeb.com, households with one or more credit cards carry credit card debt totaling at least $8,000. Add interest from the option of minimum-payment only, and the quick sand keeps on rising. In our house we’ve been able to avoid that trap, except sometimes around Christmas. And by the time we’d finish paying for everybody’s fruit cake, we’d pay a couple of hundred more on just the finance charges – insane!
We love Christmas. And retailers loved us. Why? Because the previous year we paid over $1,100.00 on Christmas presents alone. That’s a lot of fruit cake! The worst was that we used catalogs. We could have wallpapered our house with all the catalogs we used, and lived it up on all the shipping, handling and markup fees that catalogers always charge. We did this for the same reason we used those “other” ATM’s – convenience. It was easier than battling crowds. And of course we spent more than we ever intended because when paying with credit the pain is deferred. At least until the bill arrives.
But that Christmas we broke the cycle. Our biggest holiday bill is what we paid to UPS. Why just UPS? What happened to Harry and David and Abercrombie and Fitch?
We made our own presents.
Yes, this might sound folksy if your name is Gates, but we really didn’t have a choice. So starting in early December, my daughters and I bundled up and ventured out into the garage. There we found the hedge clippers and the Radio Flyer wagon, then headed for the evergreen trees lining our back yard. We each took a turn clipping branches from the trees and brought back the branches to my wife, the “hair stylist.” She’d do more magic than Santa’s elves, fashioning the branches around Styrofoam circles that she had spray-painted green. And in no time–voila! Custom-made Christmas wreaths. I made boxes out of recycled cardboard then dropped them off at UPS. Family in Chicago though they were ordered from some fancy up-scale catalog. For them, and everybody else on our list, we paid for only supplies and shipping, which amounted to $120.00. That’s a saving of $980.00. Spread out over a year that’s $87.00 a month. Ho-ho-HO!
Since that time our daughters have assumed a bigger role in making presents, not just for Christmas but for birthdays and other events. For their grandparents they make pictures drawn or painted by themselves, complete with frames I buy at discount stores. I then mail them in boxes I still assemble. Our one daughter enjoys making jewelry with string and beads given to her as a gift. Cousins love these trinkets. My wife wears one around her wrist. It’s a heartwarming reminder of our daughters’ love, and of our better selves improving our family finances.
In the end, thanks solely to the expenses that I’ve listed here, my wife and I trimmed from our budget each month nearly $800.00, or what amounts to a savings of over 30% over what we used to spend. However, our cost-cutting amounted to icing on our cake, because my wife soon landed another job much better than the one that she had lost – right after which I set up an electronic transfer from our checking account to a discount broker, whereby this same $800.00 is swept automatically into a money market fund each month. Because of this, we were able to replenish the savings we spent on our car. We did that in four years, and still sock away that same amount every 30 days.
The beauty here is that, throughout this ordeal, my wife and I were able to maintain our usual percentage of charitable giving. I don’t know how. I just know that there was always enough money for us to share, so that ten years after what seemed like a disaster we stay faithful to the changes we made. Thanks to a little bit of saving and planning, what looked like ruin has brought us closer to achieving prosperity.
Stay-at-home dad Robert I. Craig lives with his wife and their two daughters.