But last week I started reading this book, Moneyball. There’s a reason people use baseball metaphors—they’re effective. I think I’ve learned more about investment and the stock market by reading Moneyball than in a hundred (okay, a couple) of articles I’ve read on the subject in magazines.  Granted the magazines I read mostly cover things other than the world of finance, because magazines about the world of finance…snore. Oh, sorry, I fell asleep just talking about it.

And now, I’ll get to the point. The general manager of the Oakland A’s, Billy Beane, along with a specialized and unusual staff, transformed the way good baseball is accomplished. They saw intricacies and truths about the game of baseball that amount, quite literally, to baseball theory. They figured out, as the lowest-budget club in the entire sport—seriously, they couldn’t afford the Yankee’s top three players, never mind a team of 25—how to make small investments that would yield major dividends. Instead of going for the glitz, glam and flash of a power hitter like A-Rod, they hired players who were young and untested (but whose college stats fit the bill) or washed up, “defective” or atypical players who had big numbers where it mattered: on-base percentages and walks, most prominently.

If you’re not a baseball fan, or only a casual one, my little summary up there might not have made a lot of headway for you. But what I’ve distilled from the book is this: If you do the legwork, you can find solid investments that cost little but will do a lot for you in the end.

A car is not one of those investments. A car is A-Rod: expensive, and sure to depreciate in value with time and use. An unsexy mutual fund, however, is one of those investments. A mutual fund is basically a low-risk way of investing your money; for all intents and purposes, it’s a high-interest-yielding savings account. Will a mutual fund help me get rich quick? Not likely. But it’ll take what I have and work it into something more valuable without the risk of getting burned.

Any other recommendations for low-risk, high-return investments?

We sat down together and did my least favorite way to spend time in the whole wide world: math. There’s nothing more boring than math, except maybe watching somebody else do math. Which is what our budget meetings are like, since I can’t be trusted with things like division or subtraction. What can I say? I’m an optimist.

But I have to admit, the results are always a relief. Not that we frequently uncover springs of income or trust funds or inheritances. There’s just peace of mind having paid your bills on paper before you pay them for real. For one thing, paying them on paper helps you make sure that you actually can pay them.

The thing about our budget is, we don’t view it as a straight jacket. Things can change as necessary. What it is, is a guideline. A way of knowing every dollar that comes in and goes out without having to wonder where it all went. Anyway, living within our means shouldn’t be viewed as a restriction. More like common sense.

Math was never my strong suit. Creating a spreadsheet is my second least favorite thing to do in the world, after major surgery. So the actual nuts and bolts part I leave up to Noah. We talk about every financial decision, we discuss how much money should go into each category, but he’s the one mapping it all out on paper.

Of course, now that we have a revised budget, it’s become evident that we’re only going to be able to eat on Mondays, Wednesdays and Fridays.

I’m going to take this moment to stand on my soapbox. Noah and I have a modest home, no car payment, no credit card, just your standard bills—we don’t even have cable! We’re on my parents’ cell phone family plan!—but still, making ends meet requires the skill and discipline of a contortionist. We pay out hundreds of dollars every month for healthcare, but we can barely afford the mounting copay and price of prescriptions. We own our truck free and clear, but push it to the limit because we can barely afford the maintenance and gas. I honestly don’t know how other people make it.

Oh wait. They don’t. And that’s why people have a hard time selling the houses the can no longer afford, paying the creditors who shouldn’t have loaned them the money in the first place, and going into hoc for an education that’s necessary to get a job that pays more than minimum wage.

Something’s broken in this country’s economy. In our credit-saturated, buy now–pay never system. All I can do is stick to the budget and hope for the best.

Are you saving for your kids college, and do you also find these numbers to be scary?  Chime in and let me know!

I waxed nostalgic yesterday, remembering the time when school was the most important thing in my life, because that’s all I did. I was a full-time student. Now, the start of school sneaks up on me. I remember, “Oh, I should probably make sure I have a notebook and pen,” while I’m folding Buzz and Woody underpants or refilling a juice cup for the 900th time that day.

One of the major things that’s been different this time is the money aspect. I took three years off between undergrad and grad school, which meant I had three years of paying on student loans, loans that were a vague and distant idea when I was an undergraduate. This time, I’m paying as I go (because I can, because it’s less expensive), but that makes life harder in some ways. Now I have to consider the fact that we need a new refrigerator when I’m choosing how many classes to take. Appliances weren’t a concern when I was 18.

In other words, I can really identify with this Best of Craigslist posting (warning: foul language!).

While I agree that they are critical to financial stability and success, I am not sure that I support Governor Arnold Schwarzenegger’s latest move.  He decided to hold the proposed budget ransom until select fiscal changes have been made within California.  see LA Times article here: http://www.latimes.com/news/local/la-me-arnold-budget-20100823,0,7466490.story

In order for a budget to be successful, it needs complete buy-in from the people using it.  That means that the entire household (children, spouse, partner, parents, roommate, etc) need to agree on the budget or it will fail.  Please speak to the other members of your house and create a plan that everyone agrees to stick to.  Arnold is used to blowing things up, terminating people, and generally kicking some physical butt on film, but this strong arm tactic is doomed to fail if applied in your home.

The Good News:  Auto loans are up 25%, payments on a bigger % of debt are current, and the total amount of credit account inquiries has gone up for the first time in 3 years.  These are all signs of an increase in demand.  Credit Card accounts are being closed faster than they are being opened, and this can be seen as a good thing (consumers are getting smarter) or a bad thing if you believe this will impact credit levels.

Why is all of this happening?  I believe that people are past the pain point of holding cash in fear of losing their jobs and the need for a few new things such as a car, work clothes, school items, updating appliances, etc.  Yet, they are not opening new cards in an effort to get a one time price break or deal at a retailer.  Hopefully these purchases fall within your financial plan, and are budgeted for.  If they are, congrats on sticking to your plan and stimulating the economy at the same time.

I’ve refinished furniture before. In fact, I painted Noah’s old boyhood dressers a fresh blue and put on new hardware for Ethan’s room:

Image by Fierce Beagle via Flickr

But this project, it’s forcing me to access patience and muscles I never knew I had.

My parents are having a brand-new bedroom suite delivered this weekend, and I very happily inherited their old bedroom furniture. The aforementioned oak four-poster bed that I’ve coveted since they bought it when I was thirteen, and two solid maple end-tables and a dresser they inherited from  my grandparents. My grandmother told me she bought the set with her very first paycheck from Hughes, way back in the 50s.

Today I finished the bed, which is now a distressed white (I haven’t been calling it names or anything; I used fine-grit sandpaper to rough up some of the edges to keep it from looking too precious, as white furniture can be). When I pick up the end tables and dresser this week, I’ll be lightly sanding and refinishing them in a dark, almost ebony, oak.

By the time this project is over,  I’ll be ripped, or I’ll be Gumby. It could go either way at this point.

As you can see, just about nothing in my life is settled at the moment. We’re just waiting, indefinitely.

In the past, this would have driven me nuts. Okay, it’s driving me nuts now, but in the past I would have already lost my patience completely. That’s one thing that living on a budget has taught me: to wait. We can’t just go out and buy things the way we used to. Everything from a new DVD to a student loan bill is carefully orchestrated, and nearly all our purchases are made after a lot of deliberation, some saving, and waiting.

Patience is definitely a virtue. One that has to be learned.