More than two years ago I posted Your Problem Isn’t Starbucks, emphasizing the importance of Saving Strategy # 5: Major on the major, minor on the minor.  Working with Ode Magazine, I created a video further illustrating the importance of the strategy. I think you’ll find it simultaneously liberating and motivational.  Am I right?

I’m quickly approaching the completion my second book: The Savings Solution.  While the book is almost all new content, I am revising some of my favorite and relevant blog posts and including them as sidebars.  One such sidebar follows. Although adapted from a post I wrote back in December, 2007 it is as relevant to my life today as it was then.

I welcome any and all thoughts!

Before I had children, I traveled to Ann Arbor, Michigan several times a year to attend University of Michigan football games . Unfortunately, the quantity of my Michigan visits plummeted when I became a father.[1]

Nonetheless, my wife and very young daughter did manage a visit to Michigan in 2006. And, yes, our visit was timed around a certain football game. But this story isn’t about football.

You: What’s it about?

The zoo.

You: The zoo?

The day after the football game, we caught up with some old friends at the Detroit Zoo.

You: You have friends who live at the zoo?

No, we met at the zoo.

You: So you were living at the zoo when you met?

No—no one was living at the zoo.

You: Then how did you meet at the zoo?

We didn’t meet at the zoo. We met in college.

You: But you said you met at the zoo.

We agreed to meet at the zoo, but the zoo is not where we met–originally.

You: Why didn’t you just say so?

I have no idea. My head hurts.

Anyway, we walked with our friends around the zoo with our respective young children in tow. Together, we enjoyed the weather, animals, and conversation. It was a wonderful afternoon. Suddenly, my friend commented, “Michael, you can always tell whoe the non-members of the zoo are.”

“How so?” I asked, quite curiously.

“By their stress level,” he replied. “They’re trying to see every exhibit before the zoo closes or their kids melt down. Non-members fly all the way from the zebras to the koala bears. They may slow down to see the giraffes along the way, but don’t think they the time to actually stop. Non-members are trying to get their money’s worth as quickly as possible.”

He’s right–I had been there.

You: Because you once lived at the zoo?

No!

You: Just kidding.

While joining a museum or zoo far from home will seldom make financial sense, joining local organizations can have enormous benefits–monetary and otherwise.

An example is my local children’s museum. Admission is $6.00 per person. Like most children’s museums, they also charge for kids. As such, when my wife and I took our oldest daughter, our total cost was $18. The first time we visited, we probably looked like the crazy zoo people my friend had described. Despite our toddler’s satisfaction from playing with shapes in the first room, we quickly moved her from one exhibit to another.[2]

Furthermore, at $18, it was pricey for only 45 minutes of entertainment before naptime. Consequently, we didn’t return to our children’s museum for a while after our initial visit. Several months later, my wife informed me she had purchased a family membership at the children’s museum.

You: So the person wearing the pants in your family is—

None of your business.[3] Since members can visit the museum at no additional charge, our $60 annual family membership means:

• We stress less during our visits. It doesn’t matter what our daughter does at the museum or if she’s totally disinterested in an exhibit where we had to plead with her to share the last time. Sometimes we arrive only an hour before the museum closes. Since we’re not trying to get our money’s worth out of every visit, each trip is a pleasure.
• We visit much more frequently. Instead of being concerned about the admission cost, membership means we go whenever we feel like it. We discovered the museum is a perfect rainy or cold day activity. Plus, it’s a great excuse to get out of the house and burn some toddler energy.
• We increase our tax deductions and lower the tax we owe, since a children’s museum membership is tax deductible. So our true cost to join was less than the $60 we paid.
• We support an important organization in our community. Members are the lifeblood of most non-profits.

For these reasons, we’re members of several similar local organizations. While memberships first appear to be expenses, they actually save us money and allow us to do more. That’s a fiscally responsible behavior. On the other hand, deciding never to do things solely because of money can make you feel cheap, if not downright unhappy.

I’m convinced my friend at the zoo had it right.

You: But you said you didn’t have a friend living at the zoo!

He doesn’t live there!

[2] Makes you wonder if a child’s attention span is really short because her brain isn’t fully developed or if other factors are at play.

[3] Or the subject of a future book. Stay tuned.

Here’s my next video on debt management. I hope you enjoy it?

You: Is the volume going to be a problem again?

That depends.

You: On?

On whether you want to hear it.

You: Of course I want to hear it!

Good. Then just increase the volume.  But keep in mind – in a work setting, far better for a video’s volume to be set too soft than too loud.  Especially when we’re talking about debt.

Enjoy and please let me know what you think.  Like videos? Want more? Podcasts instead? What topics?

I’m a bit skeptical of the quality and impact comprehensive online-only financial planning can make, but the thought has enough merit to have garnered several million dollars in venture capital investment and prominent Wall Street Journal coverage. Take a look at the WSJ article and share your thoughts. One of the key reasons I went to the educational model was because I felt too many people who needed the advice couldn’t afford (or wouldn’t choose to pay for) it. Has the Great Recession changed your attitude about or ability to pay for such comprehensive advice?  Would you ever do so via one of the models discussed?

I recently recorded a video on financial responsibility for Ode Magazine. Please take a few minutes to watch the video below and let me know your thoughts (only the first commenter gets to complain about the low volume, please). =)

I just heard about Chelsea Clinton’s upcoming wedding.

You: It was announced some time ago.

Well, somehow I missed getting an invitation.

You: Yeah, me too. Are you surprised?

Not at first, since I don’t know Chelsea Clinton. Or Bill. Or Hillary.

You: You don’t know who they are?

I know who they are – but I don’t know them personally.

You: Me too.  So why did you come to believe you’d be invited to a wedding you only just learned about?

I thought everyone was going to be invited.

You: That’s ridiculous.

I know that now. So I had to do some research. Turns out that the expected $3 to $5 million cost is only going to cover about 500 invited guests.

You: That’s like $1,000 a plate!

No, on the high end, it’s actually about $10,000 a plate.

You: Oh my.

If that had been the cost per person at my wedding, I’d still be single.

You: C’mon Michael, we know you love your family.

No doubt, but we didn’t spend anywhere near $20,000 on our wedding. As such, either my wife or I couldn’t have attended, let alone any of our guests. Of course I would have selected my wife to attend rather than myself, but I am not sure how well the first dance would have gone over.

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I realize I didn’t need any security at my wedding, but $600,000 for air conditioning? I got married in July in Florida, yet still “negotiated” no separate AC charge.

A few weeks ago, I put a poll up on this site (you can still see it to the right) asking the question How do you feel about how much tax you pay?

While it’s admittedly a non-scientific poll, the same could be said about the voting for the final roster spot on Major League Baseball’s all-star team.

You: But at least there were millions of votes.

True, but not necessarily millions of voters.

You: Point taken.

Remember, no one knows you’re a dog on the Internet.  Anyway, the results were a bit surprising, as more than three-quarters fell voted “My tax burden is too high.”

You: Why did that surprise you?

With half of all Americans paying no income taxes, I thought I’d see more people happy with their tax burden.  True, it’s a small non-scientific sample.  Aside from the aforementioned caveats, why do you think the results are as they are?  Have you voted yet?

You: Why are you talking about IRA’s now?

What do you mean?

You: It’s the dog days of summer.

Huh?

You: April is over, Michael.

So it is.

You: Most people only concern themselves, or in your case write about, IRAs during April.  Why is that, anyway?

Because the due date for contributing to an IRA for the previous tax year is the filing deadline of your tax return, typically April 15.  But April 15 is only the cutoff date;  you could contribute to your IRA right now if you wanted to.

You: Why would I want to contribute today if I could wait until next April to do so?

For at least two reasons. First, the earlier you contribute, the sooner you benefit from tax-deferred (regular IRA) or tax-free (Roth IRA) growth.  Second, by not waiting until the very last minute, you may be able to contribute more money.

You: Why do you say that?

The annual maximum contribution allowed is currently $5,000 ($6,000 if you are 50 or older).  But few people have $5,000 laying around right at the deadline.  More likely: a few dollars each and every month.  With 10 months to go before the deadline for 2010 IRA contributions, you could contribute $5,000 to your IRA without ever transferring more than $500 a month in the account.

You: That’s still a lot of money each month.

Indeed it is. But, when you’re struggling to save for retirement, don’t look at an IRA as an all-or-nothing proposition. Whatever you can manage to save is worth it. It will make a difference.  But saving a little bit each month is far more likely than squirreling away a big lump sum in one shot at some point in the future.

You: But then I have to choose between a regular IRA and a Roth IRA. How do I do that?

Fortunately, I recently posted Roth IRA or Regular IRA – Choosing an IRA at my About.com retirement site.  Take a look!

When speaking on college campuses I often give student an opportunity to make some money.

You: Seems nice of you.

To get the cash, they must stay after my seminar for a market research study.  Since I offer $25 for 30 minutes of their time,  nearly the whole audience wants to participate.

You: What do you do then?

I tell them it’s a joke.

You: You do?

Yes – I do it to make a point.

You: And what point is that?

How eager most people are to make money.

You: That’s not terribly insightful, especially given college students often have very little money.

Perhaps, but contrast this with the same audience’s (and just about every other audience’s) lack of enthusiasm for saving money.

You: What do you mean?

Well, a college audience ought to be filled with people who would love to save money. Yet most people lament the idea of working to save.  I find that both unfortunate and ironic.

You: Ironic?

Yes.  If you work hard to save money, you keep 100% of what you save. If you work hard to earn money, you keep only about two-thirds of your earnings.

You: Why?

Because of taxes.

You: Right – argh.

So, as a society, we should actually be more motivated to save money than to earn – but my expereince says most people are not. I bring this up because I moved yesterday.

You: How did it go?

Not bad, but tiring.

You: You did it all yourself?

No, the job was too hard and the items too heavy.

You: So you hired movers?

Yes.

You: That can be expensive.

Exactly – it can be, but it doesn’t have to be.  We got a couple of quotes for moving us three miles, each in the vicinity of $1,000.  As such, I started wondering – can I do this for less without breaking my back (literally and figuratively)? Answer – hire moving labor but not a moving company.  A few web searches later and I have free lance guys showing up and worked their butts off for a fraction of the cost the moving company quoted. What did I give up by not hiring the moving company?

You: A name on the truck that didn’t say “U Haul” or “Budget.”

Correct – and a driver.

On the other hand, my additional expenses were the truck (about $50 all in) and the effort of driving the truck.  Given that I drove the truck 16 miles and saved more than $500 in the process, I saved over $36 a mile.  Since I saved – not earned the money -  the $500 won’t go on my W2 and I won’t pay taxes on it.

You: Cool.

Think about it this way: Saving $500 is like earning $750. Next time you have a decision that might mean a few more phone calls and a bit more effort to save $500, recall how hard and how long it takes to earn $750. If you’re a high-priced Philadelphia lawyer earning that an hour, hire the moving company, but tell me again, why are you reading this blog?) For the rest of you, enjoy the savings.

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Thoughts on hiring a moving company vs. getting help only on the hardest parts? I’ve done it both ways and, when the moves are heavy and/or long, a moving company can be worth it. Otherwise, I’ll keep some of the profit thank you.

If you wanted your child to learn how to play baseball, who would be the ideal teacher?

You: Dustin Pedroia.

Okay, I love how the guy plays the game, but let’s just say his current professional career makes him unavailable to teach your kid for the next 20 years.

You: Darn.

Realistically, who would you want to teach your child how to play baseball?

You: A good local baseball coach.

Me too. I’d hope for the best baseball coach around. Ideally, he’d be someone who’d have played in high school, maybe college. He’s a natural teacher – maybe that’s his day job.  He’s really good with kids and knows all about the fundamentals.

You: Makes sense.

Now let me ask you a different question. Who would you want to teach your child about money?

You: About money?

Yes.

You: For my son’s contract negotiations?

Ah – no. He’s got to learn how to hit off the tee first.

You: The kid’s got loads of potential.

As did Drew Henson.  So, who would you want your kid to learn about money from?

You: Not sure.

For my children, it would be someone with the same characteristics as the baseball coach, with an obvious shift in the area of experience. Said another way, I’d want someone who was really good with money to teach my children. Someone who was a proven excellent saver, understood how to use credit effectively, and had a great work ethic. Obviously, someone  patient with a knack for connecting with others would be an ideal candidate.

You: Makes sense.

Unfortunately, the federal government disagrees.

You: Huh?

The government has a different suggestion for advancing financial literacy.

You: What’s that?

Themselves.

You: How so?

Through their own web site.

You: Why is that a bad idea?

It’s kind of like learning baseball from Bloat.

You: Who’s Bloat?

Bloat – you know the kid. He was the 8-year old who really hated sports, especially team sports.  His parents made  him play, but his attitude was horrendous.   So the coach batted him 9th and put him into right field, where the ball never came. Still, he managed to get in the way of his teammates’ efforts, once getting his chewing gum all over the baseball bats.  If you ran into Bloat years later – he’s still looking for that first real job at age 38 – would you ask him to teach your kid everything he knows about baseball?

You: Of course not – he’s the last guy I’d ask.

Precisely. So why would the federal government, an institution run by a group of multi-millionaires, many via the old-fashioned work ethic or marrying money or inheriting money, who collectively spend billions more of other people’s money than they have, be the ones to teach us and our children about money and saving?

You: I wouldn’t choose them.

Doesn’t matter.

You: Why not?

Bbecause they’re the federal government – they decide and they’re confident. It’s like Bloat saying look man, I didn’t care back then, but now I am really into baseball and I am going to turn your son, and both his and your future around. And you’re thinking -

You: Yeah, right.

My exact reaction when I read Is There a Cure for Financial Illiteracy?

Your thoughts?  Who’s going to teach you and your children about money basics?