So today for a class I was reading a chapter on the history of behaviorism. Behaviorism, a largely rejected area of study, still has a strong impact on our ideas of education, parenting, and social policy. I would like to focus on the role of behaviorism in financial planning. The federal government encourages us to buy a home so they use negative reinforcement (removal of tax burden). They use the same method for retirement. With children we often use positive reinforcement (allowance) to encourage chores.

This goes against the findings of cognitive psychology that intrinsic motivation is reduced by reinforcement. One study included in our text was about children playing with markers. The group of children who were promised a sticker if they drew a picture, later drew pictures less often when there was no reward. If we assume that children naturally do not like to be messy, we should not promise positive reinforcement for cleaning. With adults, we see this in open source communities. Once programmers are offered money to build a product they become listless and refuse to work on the project.

I have a strong interest in the psychology of finances and especially how we teach children about money. I have been struck lately that we tech children first how to spend money and then later how to save and earn money. The first lessons a child learns about money in our school system is how to recognize various forms of cash and coin and how to make change and convert between these amounts. Early word problems are about purchasing items and getting change back, not as selling items to someone and giving them change. Much, much later, children learn about interest and the difference between monthly payments and paying up front. I'm hoping this quarter to explore the psychology of economics education.

So I received my first pack of free stuff yesterday. P&G sent me a single us of tide. I will split it between two washers. and a sample of head & shoulders shampoo and conditioner. I'm thinking I will pack these for the trips I'm taking for work.

Speaking of, tonight I head out to spend the night with my family and give a presentation at a conference tomorrow. I'm a little nervous. One thing that irks me about all conferences in academia is that instead of paying me, I have to pay them for my admissions. I pay them for the privelage of presenting my work. I will be published in a book, and I will not see any money. The expectation is that grants (mostly from the government) will pay our salary and pay for my travel costs. I think its a really silly system.

I helped friends move out of their apartment yesterday. They live in the building across from our apartment. They didn't know they were moving until 2 weeks ago and with a newborn baby they didn't have time to sell anything or make their way through the food in their fridge. They only had a single rented truck for they 3 day trip ahead of them, and they knew they couldn't fit all of their possessions.

So from all of this I ended up taking home tons of food and a bit of furniture. I brought home 5 bags full of food including soup can, 3 cans of non-stick spray, jelly, frozen vegetables, sauces, and so much more. I also got a small side table that I put into my entryway. I'm going to paint it sometime soon as it's all scratched. I got a box of action figures which I will gift to my nephew. I also got a hamburger cage for the grill. I'm totally excited about all my new things. I don't have to go shopping anytime soon.

Just as a Follow Up to my earlier post:

Yesterday I went to Kohl's. I bought a wonderful blouse for my presentation. Between the clearance price and my 15% off coupon, the shirt was only $12.57. I love that store. The clothes are adorable and normal.

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Just watched Jamie Oliver's Food Revolution. I thought the show was really great. I know that the school lunches are really awful around here. My husband started packing his lunch after 1-2 days of school lunches. They are so inexpensive though! His meals cost $2.50 and most of the students get them free/reduced.

My grandma grew up in West Virginia and after the depression, she used her Home Economics degree to teach women how to clean clothes and cook "healthy" meals. Of course even with this most of her recipes are pretty heavy. My mother is always amazed that we cook from scratch, but most of my recipes are just easier that way.

So during tax time I am acutely aware of the fact that the entire income we receive is courtesy of taxpayers like you. So I feel that during this time where many of you are bemoaning the chunk of your paychecks that it might be helpful to know that the money is used for a good cause. So here it goes.

My money is payed for by a federal grant. Our research is evaluating a piece of software that shows stunning results in helping K-5 students learn math. I am payed to add to the research context of our work, perform cognitive tests on the students, and report on these results to my fellow researchers. Our hope is to determine if this software helps some students more than others and make sure the software doesn't hurt any students. The company who distributes the software is non-profit and the program costs schools very little. Teachers and principals constantly thank us for the program.

My husband is a teacher at an inner city school. He teaches political action to minority students through classroom projects which focus on the steps needed to participate in the political process. He coaches an academic team for which he gets payed $2500 total for 6 months of after school and extra weekends. His students are now qualifying for top universities. We are very proud of them.

At home we have been extremely conservative with our money. I borrowed money subsidized by the government to make sure I could get through my undergrad degree and when I graduate my PhD I hope to immediately pay it off. We are saving for a home, retirement, and a child.

So thanks for the subsidized loans, the grants, the public K-22 education, the roads, the police, the firemen, the the research opportunities, the apartment I live in, and most of all thank you to all Americans for our paychecks. We really appreciate it and we work hard to earn it.

I had a nightmare last night that my parents could not afford to retire. They were selling their home in Southern California and moving to Florida. I was trying to convince them that they would be spending a lot o money traveling between California and Florida for at least three holidays a year.

Whether my dream had any logic to it, I still worry about their ability to retire. My mother recently broke her arm and had problems working while she recovered. I just worry so much because both of our parents are trying so hard to get enough money in the next few years to get near retirement. I just really don't want this for us. I really want to finish our home downpayment fund and up our retirement contributions. Only 1-2 years.

I decided today that I want a nice blouse for my conference presentation next week. I decided I would go to Macy's as we have store credit there from our wedding. I printed out a wonderful little coupon and we were off to Macy's (H decided to keep me company).

And that's way everything went wrong. First we got lost just trying to figure out which floor the Women's clothes were on. Then I literally circled the place twice. I just can't believe what is considered "fashionable" these days! Most of the clothes looked like they were torn apart. The prices were outrageous! $160 for a shirt that was almost see-through! I just started to feel incredibly anxious, hopeless, and about to cry. We turned and left without me trying on a single thing!

I just am thankful that H was there and totally supportive. I don't know if I could have driven home in the state I was in. I'm going to check out Kohl's later this week as I have a coupon there.

Today H and I sat down with our new fancy budget and decided some savings allocations. This money will be directly pulled from our checking into various ING savings accounts (I love the subaccounts!).

Retirement: $300 (for now it's out of gross)

Net Pay: ~$4600

House Downpayment (Due 6/2013): $800
Car (Due 4/2012): $580
Car Insurance (Due Yearly Aug): $400
(This one will decrease next year as I save over 12 months not 4.)
H's Masters (8/10-6/12): $300

So $2080 allocated into some sort of savings!

After all of that, I will balance our budget at the end of the month and transfer out any money not spent on Needs & Wants and any extra money we earn (including H's overtime and my side projects). Basically I always try to keep a $4000 buffer in our checking account and anything above this will go out. 75% of it will go to our top savings goal (right now the house) and 25% will go into what H has deemed our "Frivolous Spending" account. This will pay for vacations, concerts, or any other extravagant thing we want to do.

Future changes to the budget will include:

- Reducing the insurance allocation next year to 12 months of savings, not 4
- Reducing H's Masters allocations once we get his financial aid (I hope!!)
- Reallocate money to save for my deferred undergrad student loans
- Hopefully reallocate money to a baby fund for after H graduates!

I just have to say, this really shows the power of planning far into the future. We can easily save towards all these goals. Even better, I've over-allocated money to these accounts so hopefully we can rollover the leftover Cash to boost other savings goals (like baby!). Snowball Savings!

So I uploaded our new Needs/Wants/Savings budget to Google Docs and H loves it! He has never been able to understand any of my previous budgets, but he loves this one. I've decided to add 2 columns to it for Needs and Wants that I can predict such as bills. We can also use this column to record money going into savings for future Needs/Wants like the yearly Auto Insurance (Need) or H's tuition (Want). He liked that now he can have a clear answer about if we can afford to go out to eat with friends. Yay a budget that leads to less guilt, not more! So for now here are my budgeted amounts:

Income: $4600
Needs: $2300
Billed Needs: $2010.44
Rotating Needs: $289.56
Wants: $920
Billed Wants: $105
Rotating Wants: $815

I know already that we need more for our "rotating needs" including gas, laundry, and groceries. I plan to reduce our rotating wants. I'll also be adding more items to the Billed Wants category. Specifically I need to start saving for H's Masters. We still haven't heard anything from them, but the application period isn't even over. We are both just getting very impatient.

I just redeemed $25 in rewards on our credit card. It's going straight into the Home/Car Downpayment savings account. I didn't get a chance to talk to H about that yet. I'll talk to him about it on Saturday when we drive to see his parents.

I love our rewards credit card. I wish we'd gotten one sooner. In the past six months it has earned us $150. And we pay it off every month in full. I really want to close down our two old credit cards, but they are probably boosting our credit score.

So I set a goal for myself to try out the envelope system this month. I can safely say that it did not work. I totally ignored it and it did not change any of our habits. Today I modified the system to work off of the Needs/Wants/Savings ideas. This might work better. I definitely noticed that by the usual 50/20/30 standards, we are spending too much on needs and not enough on wants. Either that or our groceries can largely count as wants. I decided that I would roll over any over-expenses of Needs into the Wants category because if I'm spending so much on Needs, they probably fall under Wants anyway.

On another note, I can't wait to start going to conferences. I'm attending three conferences this year, and I will be reimbursed for all of them. Sadly I have about $1000 tied up in conferences at the moment and will probably have to wait several weeks after I turn in my receipts to get any money back. This just makes me thankful that I have my finances in order, otherwise I don't know how I would have the money for all of this. I've decided to count the expenses as "Savings" and put the reimbursements into our savings account.

A couple of friends are coming to stay the night tonight as he has recruitment for a PhD program at my school tomorrow. I hope they come here because many of our friends will be moving away in the next couple years. We will cook for them tonight and then maybe go out for food tomorrow.

So one year ago this April, I leased a car after mine died. My old car, my first car, died when the transmission started leaking fluid. Considering that was the newest part on the car, I decided it was time to retire the old girl. We decided to lease a car with that idea that in 3 years I might want more of a "family" car as we looked at having a child. At this point, I'm not really sure what that means.

Anyway, after placing the $15,000 away in a CD, I've been wondering if I shouldn't start putting money away for a car. After the problems we both had with older used cars, I will probably buy a certified pre-owned car from a dealership. Neither H nor I know enough about cars to really vet a privately owned car, and I really hate car repairs. So this means I would need to put away another $15,000 for the car.

My debate is basically, with an end goal of buying a home wherever we want to move, I want to make sure I can afford a bare minimum home. When we approached a couple realtors in our area a month ago, they laughed at our budget (that had more to do with a cost benefit analysis than what we could afford). I don't want that to happen when I graduate.

The question is basically, which will hurt me more? A lower downpayment but no car payment OR a higher down payment and a car payment.

Why is this a choice now? Because if we are putting the money toward a house, in 6 months I will put the money in another CD.

So H and I sat down tonight and worked a lot on our financial plan. Here are the changes:

1) We opened up a 36 month CD to for $15,000 of our house savings fund. This will earn us an additional $1,100 toward our goal.

2) We opened up another ING account. This one will be a Freedom Account to hold our savings toward large expenses such as insurance premiums and H's tuition. Now I don't have to worry about calculating that into my budget as a yearly expense.

3) We will be opening (tomorrow?) a Roth IRA. I feel kind of silly because we just went through a lot of trouble trying to open up a 403(b) through H's work and now we're going to stop funding it. I just realized (thanks to the forums)that with our income at a lifetime low, we would be better off paying the taxes now than when we retire. In addition we're unable to max out the IRA contributions right now as we save up for a house.

So I'm thinking we will use ING's ShareBuilder for the Roth IRA. Anyone got any experience or advice as to a good custodial company?

So a couple weeks ago I was talking to my Husband about when we buy a home trying to pay it off quickly. He was completely confused. He thought that the entire reason you own a home is so that you can borrow the appreciation...well I was floored. I was in such shock that I ended up spluttering about how that was a bad idea before I could finally point out that paying off a house means no housing payment.

I realized where this idea comes from though, our parents. His parents and mine have used their homes to finance business ventures, their children's college educations, and home repairs. They treat their homes like they already own it entirely as soon as they moved in.

This whole thing has me thinking about inheritance and my goal for my future children. I explained to H yesterday that I treat children as a luxury good. This stance means that I must first plan for my needs, such as retirement and housing, before I have a child. I do not want to burden my children with my debts. My greatest hope is to leave my children a payed off home, a leftover IRA, and maybe something more upon my death, not debt. Sadly I fear our parents have not followed the same philosophy. My parents say that they hope one day to leave us their beach house, but that will be impossible considering they just refinanced at the age of 60 so they could afford the payments.

I don't know about you all, but somehow, I always have a little bit of extra beer left in my fridge that I will never drink. Whether its the fruity beers from a seasonal pack, expired beer, or the leftovers of a friend's six-pack, I seem to always have one or two beers I will never drink. Here are two cheap recipes to use up the beer. Anyone know any others?

Beer Bread Rolls
3 cups self-rising flour
2 tablespoons sugar
1 bottle beer (best with darker beers, no sweet beers!)
2-3 tablespoons butter/margerine, melted

In a bowl mix the flour, sugar, and beer.
Grease a muffin tin (12-piece regular) or bread pan.
Put batter into tin/pan. If using a muffin tin, divide the batter evenly. The best way is to use a wooden spoon to scoop it and then the back of a greased metal spoon to get it off.
Cook for 45 minutes at 350 degrees (or until golden brown.

Beer Pancakes
3 cups flour
3 tsp baking powder
1 tsp salt
1 T sugar
2 eggs, separated
1 cup beer (use sweet beer if you have it)
1 1/2 cups milk
1/3 cup butter

Sift together the flour, baking powder, salt, and sugar.
In a separate bowl, beat the egg yolks with a fork. Stir in the beer, milk, and butter. Combine with dry ingredients & beat until smooth.
Beat the remaining egg whites until stiff & fold into batter.
Cook like normal pancakes.

I just signed up to participate in a Health & Sexuality survey. The survey is open to born-women and transgendered men and women. They are offering the chance to win ten $100 visa gift cards for taking the surveys. You can also get one or two $10 gift cards for participating in phone interviews. The survey is IRB approved (approved by an internal ethics committee) and will help with a dissertation. If you want to participate here is the link:

https://www.indiana.edu/~sexstudy/index.html

So yesterday FedEx came buy with the certified letter. H has been riffed again. He says I shouldn't worry as this year he is going to attend more job fairs and they are laying off less people. I hate Union negotiations because every year they cause this stress to our family. I really can't wait until he has enough seniority to be past this point.

On that note, I reassessed our savings goals. I often use the calculators at CalcXML (http://www.calcxml.com/english.htm) and they have a handy one for saving goals where you can increase your contributions every year and calculate your yearly contributions to meet a goal. I did this for all of our ridiculous numbers of goals. I assumed a conservative 2% growth in our income.

With this estimation, right now our extra income will only go toward the Downpayment and the Barebones Retirement goals. Barebones Retirement is for age 75-100 whereas my Goal Retirement is age 65-100.

Does anyone know of a good way to calculate our "snowball" savings using an increasing amount of yearly contribution?

So I earned my first bit of extra money today. After a week of collecting cans, I turned them in for $.60. My husband kept smirking at me afterward, but I reminded him that it didn't cost us anything to collect and return the cans. In fact we got a lovely walk today in the beautiful weather.

I just recommended to a newly unemployed friend that he sign up for surveys. He could use the money, but even more he needs the stimulation and the sense of accomplishment.

I'm going to start a page to track the extra money I bring in.

So this week I began my quest to earn a little bit of extra money. I signed up for 3 survey companies. My husband was skeptical because of the low return on time invested, but I pointed out that I could do them while I watched TV and will maybe earn a couple bucks. Plus I like doing them.

Next I started collecting bottles and cans. Our friends come over every Thursday night for a game of Dungeons and Dragons (yeah we're really nerds) and they used to drink us out of all of our soda. We're talking a 12-pack of soda every Thursday. Now they rotate bringing soda. So between this and our own soda habits, I hope to collect a few cans. There's a recycling machine outside our grocery store that I hope to walk to when we need groceries, which is rarely.

Finally, I signed up for Associated Content. I have had a few friends try to write for this service. I'm still debating how often I'll be able to do this, but it definitely is the best side income.

As a postscript I should also say that I'm trying to learn Java programming. If I can get that down it opens up a lot more job prospects for me for future primary income and current side income. I think I shall focus on this.

So I have stated before that I have a set of goals that I currently cannot even think about saving for. My current financial plan only carries us until the end of my graduation. This means I have a little over 3 years of finances planned. After that everything is a big gray cloud. Why?

- What job will I have? As I've decided that I do not want to be a professor, there are many job opportunities out there. I don't know what I will do after school.

- How much will my job pay?

- Where will we live? How much will housing and cost of living be?

- What will our childcare be like for our future children?

- How will the economy change by the time I graduate?

- WHEN WILL I GRADUATE? I don't even know this yet as I haven't even started my dissertation plan.

Sigh, I hate uncertainty.

I thought I'd list some of the extra benefits offered by my school for those who might be pondering returning or those currently in school:

- Free Gym membership w/ subsidized childcare, personal training, classes, & massages
- Subsidized student housing
- Career Counseling
- Free food & coffee at various events
- Free lectures on various topics including financial planning
- Subsidized physical and mental health care (my old school had subsidized over the counter drugs)
- Free turkeys at Thanksgiving
- Sustainable Transportation benefits
- Subsidized public transportation passes
- Reduced price tickets to movies, attractions, and concerts
- Free concerts and theater productions
- Free campus shuttle to the beach
- Zip Cars and Zip Bikes for cheap rentals
- Free public banquet spaces
- Free Access to libraries around the world

So H and I discussed yet again placing our downpayment money into a Nationwide 2.4% 36 month CD. We have been debating this as ING quickly drops its interest rates on our saving account. There are 2 things holding us back:

1) Needing the money for H's Masters
2) Interest Rates rising enough in the next 3 years.

We decided that we would delay a decision until H hears back from the financial aid office. In the mean time he's filling out scholarship applications.

We received a much belated Wedding Present this week. It was a $100 debit card. A day later, H brought home $100 from his coworkers to buy a gift card for another teacher. We pocketed the cash and used the credit card instead. I find those things to be horribly annoying unless you have a single large purchase to make. In our budget I usually treat cash as spending money as it is usually used on lunches, dinners out with friends, and the farmer's market. We are really frugal with out CC, but not very good with cash. Anyway, this delays my monthly withdrawal of cash from our checking account and hopefully we will only need $100 this month. That would be a great boon...maybe I should just force the issue.

I started using the digital envelope system this week. As this was the first weekend of the month, we will see how we come out on Monday. I think the extra cash is going to be the only thing that saves our budget this month. We went out twice this weekend for dinner. Too many birthdays in March plus Restaurant Week.

So a few months ago our electricity bill jumped up by several dollars. I attributed this to getting a Roomba and a Dyson for our wedding and the start of serious cleaning. Well it seems that in addition to this, the electricity company also accidently overcharged us on our basic rate. We just got $3.59 off this month's bill due to a difference of $0.007 difference per day (or maybe more in previous months). Anyway its nice to have an electricity bill under $20 again.

Right now my savings is wrapped up in getting a downpayment. Once I graduate my financial priorities will shift dramatically with new incomes and expenses. I pledge that after I graduate (these are in order):

- I will quickly pay off my student loans.
- I will reassess my Emergency Fund
- I will fully fund our retirement.
- I will fund 529 plans for my future children
- I will pay off my mortgage debt

See you in 3 years future plans.

As a current graduate student married to a Masters applicant, much of my financial situation right now depends on our financial aid. I'm getting a bit antsy to hear from especially H's financial aid. Are we going to be facing $6000 in loans? Will he get any grants? As a teacher, will he be eligible for loan forgiveness? How does the loan forgiveness program work? I know that we could always take money out of the down payment fund to pay for his education, but I hate to do this. Any increases he gets in pay are going straight into retirement so that money won't help any.

I'm just going to keep hoping they don't close down summer school this year, and he get a summer teaching position. The extra money will help cover his education expenses.

I finally updated our address with Costco. I realized last time we were there that we had never received their coupon mailing. I called them today and found out that we had not updated our address from our move a year and a half ago. Whoops!

So I finally setup a transfer from our checking to our savings account that I've been putting off for months. When I started the PhD program and we settled into "adult life" (snicker) I decided that I would never have less than one months expenses in our checking account. Liberally this is about $4000. For our wedding, we received a ton of cash and after returning half of the gifts we had even more money. This lead to a ballooning of our checking account. Since then we have been even more frugal with our money in anticipation of the many large savings goals we have set for the next several years.

For some reason through all of this, I could not bring myself to transfer the money out of our 0% interest checking account into our savings. I could not get over that it was such a large transfer, that we will need the money in August for H's tuition, and who knows what else.

On Sunday I took the plunge and set a transfer order to move the rest of the balance into our savings account. I am ready to have only $4000 in our checking again. This will keep us honest about how much we are saving each month and will keep us earning interest. It took me 4 months, but that mental block was overcome.