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Day: November 11, 2015

An interview with a person who is better with money than I am.

Posted in Uncategorized

So, you guys know that I rarely make sponsored or commercial posts. When I do, it’s usually because I think you can take something away from the post, even if you don’t necessarily purchase or utilize the product. Or, it’s because I can get free sunglasses and put them on my dog. In any case, when I do a sponsored post I’m always up front about whether or not I’ve been compensated for making the post. In this case, I have not. But when Marianne from Personal Capital contacted me about doing a post on female financial role models, I thought “this is something I probably need to address more in my own life, and I’m sure some of my readers are in the same boat.” So that’s why I’m bringing you this commercial-oriented post today.

After reading a CNBC article wherein she learned that only 53% of women have started planning for retirement (in comparison to 65% of men), Marianne was inspired to reach out to bloggers to ask them, “who is your female financial role model?” And when she reached out to me, I realized that I didn’t really have one. All the women I know are in the same boat I am. The boat is leaky, and full of holes through through which debt swamps us, and all our money gets washed overboard. And depending on your generation, socioeconomic status, level of education, and all kinds of other variables, some boats are More leaky than others.

Such is the case with the woman I decided to profile. Because even though she isn’t necessarily doing better than any of the other women I know, I thought she was a pretty good example. This wonderful friend of mine didn’t want to share her real name when talking about money, and I told her that I would refer to her as Cherie. But I lied. I’m going to refer to her as Professor McGonagall, due to the fact that she is a cat lady.

Professor McGonagall  is a single woman who has recently bought her first house with some help from family. She’s an office manager for a small local business, and she keeps a budget religiously. “I keep a little notebook where I track every transaction, so plus or minus. It’s just like keeping the check register that the bank sends you. I just know how much money I have left for groceries and gas and fun things, after all the bills, because all the bills get paid first,” she says.

Even though her budget structure is fairly simple (“I get paid every week. I have a master list of when everything is due every month. Like, my cable is always on a certain day, or my mortgages on a certain day. And every week, I budget out what’s due. Even though I don’t pay my mortgage every week, I deduct a certain amount from my checking account so it’s like I don’t have the money.”), Professor McGonagall stresses that keeping track of her finances is a priority: “If you live paycheck to paycheck, you know that you have to keep a strict weekly or biweekly budget, because otherwise you’re just going to run out of money.”

When I asked Professor McGonagall how she learned to do this, she answered, “By f–––ing up by not doing it in the first place. It just made sense to me.”

This highlights one of the major problems Gen Xers and Millenials are running into: no one bothered to teach us any of this. Even in economics class in high school, we learned precious little about keeping a household budget, balancing a checkbook, or navigating credit card interest. “I really wish I would have known how credit cards work,” McGonagall  says. “Even in college, I didn’t realize how debt worked. I didn’t realize how interest works. I just wish I could have known how credit worked when I was younger.”

Professor McGonagall isn’t a fan of credit cards. “I feel like they are the devil. But unfortunately, in this economy, you have to have a credit history to get anything. When I wanted to buy my house, I didn’t have any credit cards. The first thing the bank told me was, ‘you have to get a credit card.’ I had to spend  small amounts on it to boost my credit, because no credit is worse than bad credit. So basically, because I didn’t have a car payment or anything else I was doing that wasn’t just bills for utilities or cable or rent or something, I didn’t have that. If you are operating without credit cards or loans of any sort you don’t have a credit history.” She says she would absolutely live a debt-free lifestyle, “If that made sense in the world economy, I would do that.”

Even living on a budget for fifteen years isn’t a guarantee that things will always go smoothly. McGonagall reevaluates her budget every single month. “I feel like, and this just happened to me, I was trying to use a sliding budget instead of a budget every week, and it bit me in the a–– to the tune of I don’t have any money left in savings. So I have to reevaluate every month. Usually I plan on a set amount. I’ll budget a hundred dollars for my electric bill, even if it’s not going to be a hundred dollars. But I already planned on how to cover it if it was higher. And then all that money ends up going to something else that I need.”

I asked Professor McGonagall if she’d put away anything for retirement. “Frankly, I can’t afford to save for retirement. I’m basically, at this point, just making enough to cover my bills and my groceries and my gas. Certainly nothing is going to retirement.”

I feel like universally, women make less than men, and I think that the money they do make is expected to go back into the household. I think that a lot of times women saving for retirement takes a backseat.” Since her answer echoes the statistic that so alarmed Marianne, it seems like we may be seeing a bit of a crisis when Gen Xers reach retirement age. They may find themselves working well past the average age of retirement we expected in years past. More positions occupied by workers who should be moving on to retirement spells trouble for the generation entering the workforce.

So, what’s the solution? Saving money for retirement.

While it’s not possible for everyone, it doesn’t hurt to check into the possibilities. Personal Capital has come up with a retirement calculation app to help you do just that. I believe you have to sign up for a free account on the Personal Capital website to use it. I haven’t used the app myself, so I can’t endorse its services, but if you decide to use it, please share your experiences in the comments. And if you have a female financial role model story of your own, you can share it there, too!