Saving Smart
Thoughts for saving long-term
By J.J. & Paula Montanaro
Paula: After living in a steady stream of apartments and rentals while on active duty, it was pretty cool to actually move into our first house. It was a big change and had a big price tag, but we learned – by necessity – that you’ve got to break the many expenses tied to that first home into manageable pieces. It’s okay to have an empty dining room for a while. In fact, it’s a great spot for the Christmas tree and yes, the many improvements you plan for the house can take years to complete. We decided to save for whatever it is we wanted to buy or do, rather than running up those credit cards.
J.J.: I agree – it took us nearly two years before we replaced the glittery-gold vintage 1970’s-style kitchen countertops with something a little more up-to-date. We lived in that house for eight years before we finally fixed the cracked retaining wall beside the driveway.
Paula: While we were living in that house, we developed the practice (still in use) of making lists. Basically, they were prioritized shopping lists that included home improvements, vacations and other stuff.
J.J.: Our lists gave us a plan to navigate by. When all was said and done, life was good and our house appreciated about 6% per year – probably a reasonable increase at the time. I think we could all benefit from an understanding of “reasonable expectations.” Don’t make big bets on huge appreciation in the near-term like we saw before the recent real estate bubble burst.
Paula: And don’t buy something you can’t afford. With our first house we were able continue life as normal when I stopped working and went back to school. In today’s environment it may not be school that turns your dual-income family into single income, but it still makes sense to be safe.
J.J.: Buy serviceable and smart. On the downside, we’ve also made some blunders over the years. We got a lifetime supply of soap and detergent when we bought a water softener (good idea) for probably four times its market value (bad idea) and still have the Kirby vacuum cleaner that came with two “free” movie tickets. I guess what I’m saying is that we learned the hard way to avoid impulse buys and pressure sales situations.
Paula: Joe, we’re still using the Kirby after 17 years. I’d call that a great buy. But you’re right. We learned to team-up. If you’re falling under the spell of a slick salesman or I’m craving the latest and greatest gadget, we temper each other’s enthusiasm. We’ve probably saved a lot of money in the process over the years.
J.J.: Speaking of enthusiasm, paying off our cars has been a great boon over the years. Being able to take the money we would have spent on a car payment and using it for extra savings, debt reduction or even for fun money has been a reason to celebrate over the years. Pay raises and promotions have also provided opportunities to increase our savings.
Paula: And do all those productive things with a smile. You’ll be celebrating all your financial successes in the years to come.
Joseph "J.J." Montanaro is a CERTIFIED FINANCIAL PLANNERTM practitioner with USAA Financial Planning Services, one of the USAA family of companies. Montanaro served in the U.S. Army for six years on active duty. He recently retired as a Lieutenant Colonel in the U.S. Army Reserve. Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.