I just read a great post about why education costs are rising quicker than inflation and should be. Mark Warschauer is a leading researcher on laptop programs in schools. His findings usually show that computers don't matter, good teaching matters. I found the article fairly convincing.

http://papyrusnews.com/2010/12/03/why-education-costs-rise-and-why-we-can-afford-them/

So DH and I have been a bit overwhelmed lately with the idea of "investing". We both have this urge to get into the investing game an buy a couple stocks. We were getting all itchy about this up until Thanksgiving weekend, at which point I realized that we were both being a bit silly. This is not the time in our lives to be investing. We are still very, very busy saving for a our many short term goals (house, car, kids, student loans), and we really shouldn't be thinking about investing. Now by investing, I don't mean retirement. That I see as another savings goal. We need to save $5000 a year to fill up one of the Roth's. Investing is setting money aside to generate supplemental income while we are still working.

So we had to lower our goals. My uncle wrote a book a couple years ago and he talked about how we need to avoid being overwhelmed or underwhelmed. We need to be whelmed just right for optimal motivation. This might involve increasing our productivity, but just as often this involves lowering our expectations to something more reasonable.

So here we go. We are going to try to lower our expectations and focus on our savings goals. We will try to be whelmed just right.

So I'm almost finished with my holiday shopping! **dances** And I was able to utilize my ever-improving frugal skills to do it for ridiculously little! **dances more** Here is what I've got:

- Gifts for Parents: Each gets a wedding photo album from Shutterfly. I got both for free and only paid shipping.
- Gifts for niece & nephew: Purchased off Amazon.com using swagbucks gift cards and free shipping from Amazon Student.
- Gift for DH's cousin: Purchased from ULTA during a sale using a coupon and got a free bag (which will probably become part of another gift).
- Gift for DH's brother: Amazon.com gift card part of which will be from at least 1 more swagbucks code.
- 2 White Elephant Exchange gifts: Picked up 2 $5 Starbucks gift cards by doing surveys.

Gifts to still get:
- Family Christmas gift exchange: Probably use the gift bag and some free samples to create a bath gift set. Need to find out details of exchange.
- Family Secret Santa: Probably use amazon.com swagbucks. Need to find out details of exchange.

And that's it. DH and I never do gifts for each other, so that covers the holidays.

Lowering my future expenses is one step to bring myself closer to financial independence. Lower expenses means less need in net worth and greater savings from income. Here are some things in my life that I can spend money on to lower future expenses:

- Pay cash for a car
- Pay off debt
- Purchase a house
- Pay off house debt
- Buy an older/safer car for lower insurance
- Buy and grow herbs in my window (those of you lucky enough to have backyards/patios can plant vegetables/fruit)

Those are all that I've thought of right now. Any other ideas?

I started logging our net worth each month. I use our cash and stock investments minus our debt to decide our net worth. I don't count our checking account since this amount fluctuates too often. I don't want to include non-liquid assets in my calculations. I'm also tracking our "multiplier" = net worth / yearly expenses.

This is forcing me to face the fact that most of the money I am currently saving will just be spent within the next 3-5 years on buying a car and buying a home. This is sort of depressing, but I have adjusted my goals accordingly. I'm hoping that by the end of 2015 I will have saved 1x our yearly expenses over our debt.

Thoughts:
- When we go on vacation, our net worth will drop because the vacation account is included.
- When we buy a car with cash, our net worth will drop by the cost of the car.
- When we buy a home, our net worth will drop by the total cost of the home = down payment + loan amount.
- When we pay off debt, our net worth will rise.
- When we put money into retirement, our net worth will rise, though there will be volatility.

Actions:
- Try to buy a less expensive car.
- After buying a car, put the extra money away into a low risk mutual fund and redirect the lease payment into this account. Possibly exclude this from net worth calculations to simplify.
- Pay off debt quickly. Saving to pay off subsidized student loan debt is a good way to increase net worth.
- Reducing expenses increases the multiplier two-fold: decreasing the denominator and increasing the numerator.

So I had a realization over the past few days about saving which many people probably already know, but which is a new thing for me. I realized that the only number that matters is the percent of my income that I save into permanent assets. The total amount saved doesn't really matter since it has no relation to how much I spend.

This means I have to count some of my savings (for a car, house, trip, etc) as actually spending (just debtless spending). If these items counted as "savings" then the ultimate goal would be to avoid debt, but my ultimate goal is to build wealth.

So to buy a $15K car every 10 years, that would be about $1.5K a year in savings (in the avoid debt model). Or that could be $37.5K in assets (in the wealth building model) which would create approximately $1.5K a year.

This change in mindset was inspired by www.earlyretirementextreme.com. The guy is a bit crazy, but his ideas are both onerous and liberating.

So my husband and I have been struggling for the past 3 years to find a time to go to San Francisco to see the city and visit his Aunt and Uncle. He decided (for my sake) that we had to go before the end of next summer. The problem was, I couldn't find a good time. Work, holidays, school, etc just got in the way. Finally we realized the only time we could go was next month!

So we called his Aunt and Uncle and we are staying with them and taking 2 days in San Fran and 2 days in Napa. So exciting! The only problem is, we don't have the money saved up yet. We decided screw it! We are going to borrow from one of our other savings plans or tighten the budget for that month, but if we don't go now, we will never go. Plus, it's not like we will be going into debt for the trip, just reallocating savings.

I just wanted to update on our status. Currently we have $27,625 in defered subsidized student loan debt. $8,500 of that debt is DH's student loans and will be forgiven by the state over the next 5 years. The rest are my student looans due 6 months after I graduate. We currently have around $1500 set aside for this. It is on my savings plan.

I am currently putting around $650 away for a down payment and another $650 away to buy a car. October will be my first contribution to my Roth IRA at $416.67 per month. These comprise my savings budget.

Outside of the savings budget is more money. We have $50 a month going to my husbands 403(b) off budget. $200 of our Needs funds an Annual Bills account. We are adding a $200 item to Wants to boost our efund before we begin trying to conceive.

So there will be a lot of saving going on. I have figured that if we increase our savings by 2% a year from our base amount of $1680 per month, we should meet our current goals. Thankfully we are already beating our yearly goal for 2010.

So today we have a friend moving in with us temporarily until his university housing begins. Often when friends move I think about how the stress of moving is often easily controlled with a bit of planning and an emergency fund.

I have seen several people move and here are some things I have learned:

- Take care of acquiring new housing months before your move out date.
- Always plan to talk to your new landlord/housing office in person before you move in. Especially in college town, housing is on a cycle.
- Sell as much as you can! Especially if you may have to store those things and even more so in the years between college and "settling down". If you own Ikea, sell it and buy used at your new home.
- Moving is expensive. Even if you are just buying pizza for your friends.
- Moving takes a long time. Even if you have a ton of friends.
- Lists are your friends. List where everything is packed, especially if you are storing, using multiple cars, or hiring a moving company.
- You have more stuff than you think.

So after getting married last August I quickly began to change my name. I figured I was done with most of it, but when I went to open my Roth IRA I found out I was very wrong. Somehow I forgot to tell my HR Rep that I had changed my name. I told the school as a student, but not as an employee. Friggin disconnected systems.

I was hoping to open my Roth IRA with the same company that my university's retirement plan is through. If I open my Roth IRA right now it will be forced under my maiden name and then I will have to change my name with the company. So now I have to delay opening my Roth IRA.

Thankfully we didn't change DH's with holdings yet. The plan is to go from $300 a month into his 403(b) to $50 to the 403(b) and $250 to the Roth IRA. We will increase contributions once we have a good downpayment and also when DH's paycheck goes up every year. I know we should be putting more than 5% into retirement, but part of my retirement plan is paying off our eventual house and a large down payment is a necessity.

I found this through Free Stuff Times. Basically like a Math Blaster trivia game for finance. Has really good animation of a soccer game, and you can choose Easy, Medium, or Hard questions and the quicker you answer the better your players do in the game.

http://www.financialsoccer.com

It doesn't really follow sound learning principles for multimedia learning, but it's an engaging trivia game with some quality questions about finances.

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.