Sunday Conversation#9 – The Money Talks Edition?

Welcome to Sunday Conversation #9! If you would like to participate in next week’s Sunday Conversation, simply ask your question in the comments section of today’s post and I will respond next Sunday. Remember, any subject is on the table (but keep it family-friendly).  All four questions this week related to money conversations, or making money.  Let’s have a look at what’s on reader’s minds.

Foxie asked an interesting question, “I ended up hanging out with some friends on the fourth, and one of the wives in the group mentioned lasik surgery. She continued on to say that she can only get it after her baby is born, her husband comes back from an upcoming deployment, and they get a handle on their credit cards. When she mentioned credit cards, I couldn’t really believe it. I suppose I just have been affected by the money taboo, but it was really unexpected to hear and made me feel rather awkward. (Not to mention I was just meeting most of these people for the first time, and somewhat admiring the house they had. That I knew there was a mortgage for, which I definitely wasn’t jealous of.)

My question, then, is this: Has anyone ever said something about their financial situation that just made you uncomfortable? I was rather shocked that she would so openly admit to having trouble with credit cards, but I suppose that’s the norm in America today, huh?

It is sad when mentioning that you are buried in credit card debt barely gets a reaction from company these days.  I suppose we have all been desensitized to huge debt loads because unfortunately it has become the norm. Think about how many times we read about people in blogs or news segments who are graduating school with $90,000 in student loan debt, or $50,000 on credit cards.  Twenty years ago people would be shocked.  Not today.

I’ve heard things mentioned by people at parties or in casual settings that have made me shake my head, and I’ve developed an ear for it as a blogger because it often turns into a story (with the names changes to protect the innocent!).  Just the other day I was writing at a local cafe and two girls were talking about a guy they both apparently liked.  For nearly ten minutes (it seemed) they went on and on about how much his car cost.  As if being able to go down to a car lot and sign up for a 60 month loan made you a financial catch.  Sad.

Hadias asks the following blogging question:  “What advice can you give regarding making money through blogging? What are some of the main ways that a person could earn money through their blog?”

There are a variety of ways to make money blogging.  Some are more successful than others, but just about all of them require one main ingredient–traffic.  Without traffic it is difficult to generate enough page views for ads to be profitable, either on a per-impression or per-click basis.  My best advice would be to build a strong readership, and traffic numbers, before getting too involved with trying to earn big money via blogging.  I made the mistake of trying to monetize Frugal Dad before it was ready, and by putting the “cart before the horse” I almost became discouraged and gave up, just before things really began to take off.  I’m far from the expert on this subject, but I know a great resource that I’ve used since day one.  Problogger.  I highly recommend signing up at his blog and reading through the hundreds of archived posts, all on the subject of building a better blog, monetization, etc.  Darren really has created a phenomenal resource for bloggers.

Tiffanie asks, “With Christmas approaching (ok…so it’s 5 1/2 months away, haha) and my husband and I on a VERY strict budget with very little to spend…how would you approach buying gifts for immediate family members (9 in all…4 parents, 2 young siblings (4 and 10), 3 siblings 19 years old) without appearing cheap? Is it worth it to take some of what we would send to credit cards in order to buy gifts? I don’t think we’ll be able to afford more than $25 per person! (and 6 of the 9 also have birthdays in December!…) This is the first year we’ve been so strapped for cash (I lost my job) and I’m not sure how to approach this! Any advice would be appreciated.”

There are a couple different approaches to take here.  I’ll describe things we’ve done in the past and you can decide which works best for your situation.  When I married my wife I entered a big family.  At the time my wife had eight cousins she was very close to, three grandparents still living, a mother and stepfather, and four aunts and uncles.  Needless to say, Christmas was a budget concern.  The first year I wanted to make a good impression, so we gave each cousin a little money and bought gifts for all the adults.  This was an expensive approach.

A few years later we recommended all the adults draw names, so each adult would only have to buy one present and then we could all pick up something small for each child.  It didn’t go over very well, but I still think this was a good compromise.  As the kids got older we continued to try to give a little money to each of them, but cut out gifts for the extended adults (and grown kids, 18+).

Finally, I’m sorry to hear of your job loss.  Unless your situation improves greatly between now and Christmas, I think any reasonable family member who knows your situation would understand you not buying them a gift.  There are many things you could do inexpensively in lieu of buying a gift.  Consider writing a family newsletter detailing the events of the past year for you and your husband (and any kids).  Or, perhaps you could put together a family recipe book to give to the adults and grown kids with records of favorite family recipes.  Family pictures in an inexpensive frame are also well-received gifts.

I guess the bottom line is this, you don’t have to spend a ton of money in the name of not appearing cheap.  You know your family’s situation better than anyone, and if you can’t afford to give gifts this year, then that’s just the way it will have to be.  You have to do what’s right for your household.  It might hurt someone’s feelings, but they will probably be over it by New Year’s!

Castocreations asked, “My MIL wants to buy a car. She plans to pay cash but she’s also on a very fixed, limited budget as she is retired with no retirement plan.

And she wants to pay cash for a NEW car!!! I have tried to talk her out of it, and think I’m making headway, but she continues to resist. She’s afraid of a “junker” and seems thrilled with the idea of a brand new car. *sigh*

I KNOW it’s a bad idea and we’re trying really hard to make sure she does the right thing. What are some concrete arguments and reassurances we can give her?”

This is a tough one.  Besides the challenge of trying to convince an “in-law” of anything, curing someone of new car fever is an uphill battle.  I would try to reason that gently used, late model cars are great buys because someone else has taken the majority of the hit on depreciation.  Remind her that a new car is “used” as soon as she drives it off the car lot.

New cars many times (not always) come with higher insurance premiums, which could add to her monthly expenses, something she can’t afford on a fixed income.  Tag fees and taxes could also increase her expenses more than a used car.  Also emphasize the opportunity cost of buying a more expensive new car versus a used car.  Let’s just say the difference is $10,000.  How much would that $10,000 earn if left untouched?  How much more security would she have with an extra $10,000 in savings, not tied up in a car?  And of course if the used car required any repairs she could use some of that $10,000 and still be way ahead.

Thanks to everyone for their questions, and the lively discussion we had on last week’s post.  Remember, if you have a question you’d like me to address next week, just leave it in the comments section.  Have a great week!