56 + 1 = 57... and Life Insurance

Sayonara, 138! I weighed in at 137 this morning, for a loss of 1 lb. last week. It was a week that tried my willpower. Lots of chilly temps, cloudy skies, and rain. Conditions that conspired many times to making my walks seem so not the thing to do. And wouldn't you just rather curl up indoors on a day like that, eating comfort food and watching season 4 of The Office on DVD? Well, I managed to pull one out in the end, but it wasn't always a given. Onward and upward! I've got 3 more lbs. to go to reach my mini-goal of 134 by Saturday, February 20...

Life insurance - the face of your policies should amount to 2 or more years' income

When it comes to life insurance, the authors of The Manual don't have any insta rule-of-thumb on what percentage of your income should be spent on premiums. Probably because the amount and type of life insurance policies varies so much per family.

How much life insurance? For a family of two, enough insurance to pay bills in case of the husband's death, and to provide a temporary income for the wife - say a $5000 ordinary life insurance policy type costing $80-$100 a year. When a child is expected and for every additional dependent in the family another policy should be taken out in temporary-term life insurance of $1000 to $5000 or more, costing only $10 a year for $1000, and carried until the child reaches majority.

As a one-member, single-income family, I guess the only life insurance I need to carry at this point in my life is enough to pay any bills related to costs of death - funeral expenses and something to cover whatever costs there might be in closing my estate, however small it might be. My employer pays about $1 every two weeks to carry a basic $15,000 life insurance policy in my name. That's probably enough, right?

The Manual goes on to address retirement savings. For those without a pension or who couldn't look forward to any kind of Social Security income, it was recommended that they purchase an "old age annuity" from their life insurance provider. I've been contributing to a state retirement plan for two years now and have been paying into Social Security since I was 16 years old. I'm not always sure that the Social Security will even be there by the time I retire, but at least I have something else now for retirement savings.

Most teachers look forward to a pension, and are depositing annually 5 per cent of salary for it; through Social Security legislation, most workers anticipate old-age pensions; any family that does not have this old-age protection should devote 5 per cent or more of income to an old-age annuity secured from a life insurance company.

Finally, some sage advice on payment plans. You can save big bucks - or purchase a better policy - if you pay the premium in one lump sum instead of in monthly payments. This is something I need to begin doing when it comes to auto insurance.

Families that are buying their life insurance by weekly payments to a collector should transfer to a plan payable every three months, or once a year, at the company's office, thus increasing their insurance by half as much again at the same annual cost. In a few states it is possible to buy life insurance cheaply through savings banks. This type of insurance should be made legal in all states.

Life insurance is the last of the categories of expenses for which the Manual provides some guidelines in its "pattern" budget. Next up: a summary of my income and expenditures for the month of January 2010. How do my actual income and expenditures compare to what I've estimated I'm spending in each category?

Dorothy Dix Says...

This week's column - which dates to January 25, 1940 - is a back-to-the-basics lesson in etiquette. The letter writer must have written the morning after a dinner party she hosted or attended was ruined by a very late guest.

Dear Dorothy Dix - What do you think of a woman who never keeps any appointment or arrives at any function on time? When she is invited to dinner she keeps her hostess and the other guests waiting thirty or forty minutes while the soup scorches and the souffle falls and everybody gets hungrier and hungrier and crosser and crosser and the affair is ruined. Otherwise this woman is charming and pleasant, but she is losing all of her friends by her utter disregard of other people's convenience.

Answer - It is said that promptness is the courtesy of kings, and certainly nothing shows utter lack of breeding as for a selfish individual to make other people wait for him or her. I knew one woman who solved this problem of the dilatory guest very satisfactorily. In her house when dinner was at 8 it was promptly at 8, and the guests who arrived late were served the course that was then in progress, and if they only got in for the salad it was just too bad for them. The result was that as far as Mrs. B., who was noted for her famous food, was concerned, her guests were always on time. I recommend this plan. It always works.

Savings

Savings (other than life insurance) - 10 per cent of income

Moving from expenses to savings, the authors of The Manual take an interesting tack when it comes to the kinds of things that qualify as "savings." I'd never really thought of it like this before, but they count payments on the principal of your mortgage as savings. Makes sense. Unlike us schlups in Apartment Land, you homeowners are building equity every time you make a mortgage payment - at least with a portion of that check! Here's a rundown of the other things considered savings:

Another column of your tentative budget lists savings and investments. Figures for payments on property (exclusive of interest), annuities, endowment policies, life insurance, stocks and bonds, deposits in the savings bank and your reward fund are entered in this column.

Well, I don't own any real property. I'm also not building any kind of annuity or endowment policy, but - as a state employee - $151.72 is deducted from my paycheck every two weeks ($303.44 per month) and deposited in a state retirement account. That money is mine should I leave the state's employ at any time, so I guess we could consider that an annuity of sorts. Life insurance will be considered in my next post. I don't purchase any stocks or bonds. During the past month, I've transferred a total of $187.50 from my checking to my savings account. My total savings during the past month then are $490.94 or 13% of my gross monthly income of $3666.67. Good news! Though I doubt my savings would be quite this healthy if that retirement contribution wasn't whisked away without my even seeing it, I'm toeing the 10% mark set forth in the "pattern" budget.

Some families whose incomes boast a small surplus, or who can "manage" to reserve a few dollars over and above expenses, like to build up a separate bank account as an emergency reserve or "balance wheel." This account should never be drawn upon for minor emergencies or to make up deficits. Authorities recommend that $500-$1000 be built up and maintained in this account.

There are various types of savings accounts described by the authors of The Manual. The first is your basic emergency reserve. $500-$1,000 may not sound like much, but in today's dollars it's actually more like $5,921-$11,841. Wow! My emergency reserve only totals $500 - and I was darn proud of having put that aside for the first time in my life! The figure recommended by vintage "authorities" is closer to the "three to six months' expenses" often cited by financial experts today. I'm falling far short of the mark of a healthy savings in this respect. I built that small emergency reserve by transferring $25 each pay period ($50 per month) into that account and stopped when I reached goal. It sounds like I'd best go back to doing that. Pronto.

One dollar a week seems a minimum amount to save, and as income increases one should save up to one dollar in every ten dollars earned or more; these savings should go part into life insurance and part into the "balance wheel" account.

$4 per month in 1945 dollars = $47 today. So $50 sounds like a reasonable contribution on a monthly basis toward building a more healthy emergency reserve.

Another type of savings account described by the authors of The Manual is a reward fund - or a fund designated with specific expenditures in mind:

The reward can be big or little, ranging from a new set of dishes to a car or a house. You may decide to make a five-year plan or a one-month plan, depending on the goal. The important thing is that a reward is in view. This reward should be of interest to the whole family, of course, and a council should be called to decide on something that the majority are eager to have.

Get the family together and list everything that everybody wants: the clothing items each one needs; new equipment for kitchen and laundry and tools for work bench or garden or garage; household furnishings for living room, dining room and bedroom, whether repair of old or purchase of new; a rug, a picture or a musical instrument; and then personal needs - for games at home and sports outside, for recreation, for arts and crafts, for reading, music, plays and movies. Of high importance are books, magazines and lectures that will aid father in his vocation and mother in her homemaking. When the lists are made, discuss them in a breezy family round table and choose the most important items to try and secure month by month for next year. Many will have to be deferred, but why miss the thrill of thinking that we will have it too! Such goals are good for family ambition. Some things desired can be made at home; free books and magazines are awaiting us at libraries, free lectures and music are available for the asking or the arranging of a committee to provide them which we might help establish. Once the goal is established, set the date for achievement, and plan to put aside a certain sum each week or month until the reward is won.

Now you are ready to construct the rest of your spending plan, in order to find the ways and means to save the reward fund. You may find so many small "leaks" after a month or so of budgeting that the reward fund will accumulate more rapidly than you had hoped.

My reward fund started out as a relocation fund. I hated feeling trapped in this town and wanted to build enough in a savings account so that moving "home" would actually be an option for me one day. These days, relocation is not a priority. To be frank, I have a hard time imagining living 3,000 miles away from my darling Kitten and Poppet. For any reason. So the relocation fund has become the money I'm planning on spending to feather my nest this year. To buy some new furnishings, a new mattress and boxspring, maybe do a little decorating. I've managed to sock $2,256.76 away over the past nine months. (Funny - I guess I started building that account just about the time I started my vintage fitness and reducing plan. I hadn't realized that!) Next up: Life Insurance.

55 + 1 = 56... and Advancement

Advancement - 15-20 per cent of income.

The title to this category caught me off-guard at first. What could they mean by "advancement"? Here's the scoop:

Now for another main heading of our budget - advancement or development. Under this heading come health, recreation, pocket money, personal care, automobile expenses, gifts, contributions and education.

Okay, I get it. The "pattern" budget includes separate columns for both "health" and "automobile expenses" - acknowledging that these items probably make up the lion's share of expenses related to advancement. This is such a wide-ranging category it's going to be tough for me to come up with any kind of estimate as to what I'm spending, but I'll give it a shot.

Under health we list medical and dental care and drugs. Regular visits to your physician and dentist are cheaper than emergency measures necessitated by neglect. The Chinese pay their doctors to keep them well, and this seems to be the best idea of all. Hospital insurance, costing two to three pennies a day, is a wise investment for every family, even though they may never need it. And meeting bills caused by illness, through membership in an insurance association, is a method which is now becoming available.

Thankfully, in 2010, I can count on more than just "hospital insurance" - as long as I'm employed at my current job, that is. I spend $73.70 per month on medical, dental, and vision insurance premiums + $39.16 per month on long- and short-term disability premiums. During the past month, I've also spent $70.00 on co-pays. As near as I can figure, I've spent $35.58 on medication and vitamins during the past month. Though my premiums are steady from month to month, these last two figures will always vary. My total spending on health during the past month is somewhere in the neighborhood of $218.44.

Monthly automobile expenses include my car payment ($210.14) and car insurance ($60.17). I've only spent $26.33 on gas during the past month, but I'd better deduct from that the $18.63 I estimate spending on gas for my commute to work during the past month. (That falls under the "shelter" category in my vintage budget.) That leaves $7.70 spent on gas for non-commuting travel. I haven't had any maintenance or repairs this month, so my costs are definitely on the low side. My total spending on automobile expenses during the past month is about $278.01.

Recreation almost deserves to be listed under health, so essential is it to well-being and happiness. It is not at all necessary to be extravagant in order to have fun, but neither is it wise to be stingy to the point of starvation.

Sadly, I can't think of anything I've purchased during the past month that truly counts as recreation. Something to think about...

Magazines, newspapers, books and circulating-library fees all come under the head of education, as do fees for professional associations, school expenses, etc.

Nope, nothing here. I don't have any magazine or newspaper subscriptions. I rarely buy books, and the libraries I visit don't charge any circulating fees - unless you're late! I don't have any expenditures to chalk up to education during the past month.

What's left? Personal care --- here's where beauty products, haircare, and other toiletries come in ($63.24 during the past month). I've spent $10.79 during the past month on gifts and $11.00 on contributions. The one item I haven't really been able to categorize, but seems to fall into the "advancement" area, is a bouquet of tulips I bought last weekend for my desk at work. I guess I'll just have to consider that $12.95 as pocket money!

My total spending on "advancement" during the past month = 594.43 or 16% of my gross monthly income of $3666.67. I fall squarely into the 15-20% figure recommended by the authors of The Manual when it comes to this category. Next up: Savings.

PS: I weighed in at 138 this morning --- 1 lb. closer to my mini-goal of 134 by Saturday, February 20. All aboard! It's full steam ahead on the reducing train!!!

Dorothy Dix Says...

Dorothy Dix has been currying a lot of favor for the last few weeks, but this week's advice may be a bit more controversial. In a column first printed on December 17, 1940, she weighs in on the issue of publicizing adultery.

Dear Miss Dix - I have been married for 30 years. My husband has been kind to me and a good provider, but he has always been a philanderer. Recently I discovered that he had been having a love affair with a young business girl in our home town and that this had been going on for five years. I came across some love letters in his coat pocket from this girl. After reading them I passed them on to my 15-year-old daughter and also to several friends. Finally I gave them to the girl’s employer to read. I knew he was a man of high morals and that he would dismiss the girl if he knew of her conduct. He did so reluctantly, for she was a very competent and dependable worker. Now I would like to know whether I did wrong in publishing my husband’s shame to the world and causing the girl to lose her job?

MRS. L. M. D.

Answer - It is easy to see how a wife, driven mad by discovery of her husband’s infidelity and with jealousy of the woman who has supplanted herself in his affections, does things in the stress of her emotions that are neither wise nor right. Much excuse is to be made for her. Not many of us can be calm and judicious in our reasoning when our hearts are torn to tatters and our world is crumbling about us.

No one can wonder that in your fury at being betrayed you took the first means at hand to revenge yourself upon your husband and his lady love. But you have found, as we all do who try it, that revenge is not as sweet as we thought it would be. It is gall and wormwood in our mouths. For it makes us do and say things that we spend our lives in regretting.

I know that you must be very sorry that you showed those incriminating letters to your young daughter, because they shattered her ideal of her father and forever killer her respect for him.

Never again can he be a hero in her eyes. She will always see him as an amorous old man having a sordid intrigue with a girl and double-crossing his wife. To the young elderly Romeos are not romantic. They are disgusting.

No matter how your husband has treated you, you were not justified in hurting your daughter in order to hurt him. To shake a child’s faith in her father is almost as bad as to shake her faith in God.

And you must also be very sorry that in the fury of your passion you blazoned your husband’s shame to the world, because that puts you in such an undignified position if you go on living with him. The only way a married woman can save her face when she has a philandering husband is to pretend that she does not know about his infidelities.

Food

Food - 20-35 per cent of income (the smaller the income, the larger the percentage that must be spent for food)

This is going to be the shortest of my budget posts as I've taken an in depth look at this category in the past. Last winter, I spent a month tracking my food expenditures - adding the total amount spent and breaking it down by food group. Six months later, I tried the mission again and the difference my reducing plan had made was dramatic. The total amount I spent on food for a single month had dropped from $375.67 to $286.25. The majority of my "food dollar" (37%) was spent on fruits and vegetables. Six months before, the majority of my spending (66%) went toward fats, sugar and miscellaneous items!

I'd like to try this mission again sometime just to keep myself honest, but the information from August's tracking should be helpful in estimating how much I spend on food today. If I'm spending something like $286.25 per month on food, that's only 8% of my gross monthly income of $3666.67 --- a far cry from the 20-35% recommended by the authors of The Manual. Part of the reason my food expenditures seem so small is that I'm not using one income to feed six mouths. My income only has to feed me. The other reason is quite simply that food costs a heck of a lot less now than it did during the 1940s. When you allow for inflation, the average American bag of groceries is astonishingly cheaper now than it was in grandmother's day. This is good news for the hungry, but bad news for the family farm. Government-subsidized agribusiness has pushed the inflation-relative cost of food so low that the small family farm is no longer viable.

At any rate, I guess I'm in good shape when it comes to food. Next up: Advancement.

Power Marketing

As I was doing my marketing yesterday evening, it occurred to me that this biweekly trip to the grocery store is a great opportunity to burn some calories. Having a tough time trying to figure out how to fit a workout into your busy schedule? Make your marketing work for you!

1. Park on the edge of the parking lot.
Do you drive to the grocery store? Well, put your legs to work next time and park your car at the very edge of the parking lot - as far from the store as possible. Not only can you avoid all the congestion near the closest parking spots, but you'll burn some extra calories walking to and from your car.

2. Take that cart up and down every aisle.
Every aisle - whether it contains items you need or not. Weave it in and out every stack of fruits and veggies in the produce section, too. And don't forget the bakery! As your cart gets more and more full, you're adding resistance to your workout. Not only is this a great opportunity to burn some calories and tone leg muscles, it keeps me from forgetting anything I need at home. I always take a list to the grocery store with me, but there's inevitably something that slipped my mind as I was making up my list. Walking up and down each aisle reminds me of anything that I'm low on and need to add to my cart.

3. Return your cart to the cart corral.
It's always been a pet peeve of mine when people leave their grocery carts willy nilly all over the parking lot --- ripe for rolling right into other cars or blocking off just enough of another parking spot that it has to be bypassed when spots are scarce. Take an extra minute and return your cart to the nearest corral. You'll be doing your fellow drivers a favor and burning a few extra calories at the same time. A win-win!

4. Take your time getting the groceries into the house.
The fact that my apartment is on the second floor of my complex gives me a chance to combine a stair-climbing workout with my marketing. Instead of trying to carry every one of my grocery bags into the house in one trip, I take just two bags at a time. One in each hand. If I've got a particularly heavy bag that needs to be hoisted and carried in my arms, I'll take that up by itself. I carry my bags all the way into the kitchen. Set them down on the table, then head back downstairs for the next (small) load.

I've never used a pedometer to try and calculate the amount of calories burned by adding these extra steps to my marketing trips, but all these little steps have got to add up when taken week in and week out. Think of it as "power marketing."

In a February 1944 advertisement, the Borden Company (think Elsie the Cow) offered up four tips of their own for weary wartime housewives. These tips were designed to make marketing a little easier during an era of food shortages and ration points, but the last one would be a great power marketing tip for those of you who live close enough to a grocery store that you might be able to turn a "quick run for a few things" into a workout. The Trader Joe's I shop at on Wednesday evenings is just two blocks from my apartment complex and I've always stopped there on the way home from work to do my shopping. Maybe it's time I start driving all the way home, then walk back to the store to pick up my groceries and carry them home in my own two arms. I never buy more than one bag worth on Wednesdays...

1. DO YOUR WEEK-END SHOPPING EARLY IN THE WEEK! Miss the Saturday mob - and get better service.

2. PLAN YOUR SHOPPING LIST AT HOME! Means less time in the market - and helps budget ration points.

3. KEEP UP-TO-DATE ON POINT VALUES! Check ration calendars... Know when points expire. Your grocer will love you for it - and you'll get your points' worth, too.

4. CARRY YOUR PACKAGES! Then you won't have to worry about slow deliveries.

53 + 2 = 55... and Operating Expenses

Another week, another weigh-in. And a successful one at that. I weighed in at 139 this morning for a loss of 2 lbs. during the past week and a total loss of 55 lbs. since April 2009. It's time to set a new mini-goal! How 'bout this: by Saturday, February 20, I want to weigh in at 134. Now, on to the fun stuff:

Operating expenses - 10-15 per cent of income

Operating Expenses is a wide category. From electricity to toilet paper, it covers all of the basic utilities and supplies - with the exception of food - that it takes to keep a household running smoothly. I may have a tough time estimating how much I'm spending for some of the items listed under Operating Expenses, but I'm going to give it a whirl. I'll know more as the new year progresses and I'm tracking my actual expenditures every month.

Electricity
I logged on to my electric company website and can see that during that last 12 months I've spent $682.83 for electricity (Yikes!) or an average of $56.90 per month.

Gas
I suspect they're not referring to automobile gas here, but natural gas piped into a home. None used here.

Fuel
This category covers any alternative sources of energy. In the '40s, coal, wood, and kerosene might typically have shown up here.

Telephone
Here's another place where those online accounts come in very handy. During the last 12 months, I've spent $664.48 for telephone service (Double yikes! That's for just a single land line!!!) or an average of $55.37 per month.

Garbage Collection
My rent includes garbage collection, so nothing extra here.

Water
My rent also includes water, so nothing here.

Ice
This item made me giggle at first, but I suppose it was a very real expense for homeowners of the '40s who still owned an icebox.

Service and Repairs
I'm not sure what kind of subtle differences the authors of The Manual might have intended between "service" and "repairs." Any ideas? At any rate, most of my household repairs are taken care of by the landlord at no expense to me.

Furnishings
Can't wait to spend some cash on furnishings during 2010! My expenditures in this category have been few and far between, so it's hard to hazard even a guess here...

Household Supplies
I've saved my supermarket receipts for the past two weeks, so I've got a little something to go on. My purchases in 2010 that have fallen under this category include toilet paper, dishwasher detergent, a refill for my hand soap dispenser in the bathroom, garbage bags for the kitchen, a box of envelopes, and some of those one-time-only mini loaf pans I used to make up the rest of my holiday quick breads. I seem to be spending an average of $14.60 per week on household supplies - which works out to about $58.40 per month.

Laundry
I spend $4 per week (or $16 per month) to do my wash in the laundromat in my apartment complex. Haven't bought any new detergent yet this year, but that'll also fall under this category. As would any other items somebody might regularly use, like dryer sheets or spray starch. Do you send anything to the dry cleaners? Better include that expense here...

So my best guess is that I spend about $186.67 per month on Operating Expenses. That's 5% of my gross monthly income of $3666.67. I'm sure once I start indulging in some of the new furnishings I have in mind for 2010, I'll have no problem spending something more like the 10-15% figure recommended in the "pattern" household budget! They were planning for the expenses needed for the average family, though. One income split six ways - where I'm only splitting one income one way. The authors of The Manual also have some suggestions when it comes assessing your expenditures on Operating Expenses:

Are you amazed at the present cost of running your house? Which items seem too high? Can you cut them? Don't sacrifice good lighting, but don't keep lights on in empty rooms. Learn to operate your kitchen range and electrical appliances economically. Keep track of telephone calls so that you won't exceed the limit unless absolutely necessary. Operate your heating plant efficiently. Buy furnishings with an eye to wearing qualities and cleaning ability. Don't waste water by letting faucets drip. As you see, there are many ways to cut operating costs if you are determined to do so.

Dorothy Dix Says...

Ah, the eternal problem of the not-so-empty nesters... A stepmother trying desperately to wean her grown children from home wrote to Dorothy Dix for advice. This column was first printed on December 27, 1940.

Dear Dorothy Dix - I married a widower with three nearly grown children. I was good to them and they love me. So well that they are not willing to leave mother and her cooking. The two girls married soon after leaving college and they chose fine, sensible, well-educated young men, but was it easy to get them out of the house? I should say not. They never would have gone if I had not kept moving into smaller and smaller apartments. Because they can’t come home, where there is no room for them, they have settled down to a salutary routine of cooking and housekeeping and baby-rearing. Now the problem is the boy. He is 21. Won’t go to school. Won’t work. Hates the slightest physical or mental exertion. Sits at home and does nothing but play solitaire and read newspapers and detective stories and smoke. How can I get him on his way out of the nest in a way beneficial to him?

MRS R. J. H.

Answer - Get the boy a job and tell him that henceforth he is his own meal ticket, and that if he wants to eat he will have to work. Then go to live for the time being in one room in a hotel so there will be no place for him. Evidently he is one of the birds that will never leave the warm home nest of his own accord. He will not only have to be pushed out of it, but you also will have to destroy the nest so he cannot return to it.

There is no problem that parents have to face that is more difficult than that of what to do with their lazy, purposeless children who settle down on mother and father to be supported, and who refuse to make the slightest effort to provide for themselves.

It is a problem so complicated with a false idea of parental duty, and so mixed up with maudlin affection, that most fathers and mothers lack the nerve and backbone to solve it in the only rational way. Which is by turning the youngsters out on their own and locking the door behind them.

But few parents have the hardihood to apply such a drastic remedy, although they know it is the only cure. They can’t bear to think that Mamie may be having to cook a poor meal over a gas jet, or Sammy may have no nice, comfortable bed to sleep in. So they let Mamie and Sammy sit around idle year after year, with nothing to do but play golf or pool or follow some sort of temperamental occupation which brings in no pay envelope.

All of us know dozens of cases like these. We know plenty of homes in which there are husky young men and women with plenty of intelligence and plenty of energy in amusing themselves, who positively refuse to leave home long years after they should have been out of it and about their own business.

It is the knowledge that there is always home to stay in and three square meals a day that is responsible for nine-tenths of the no-account loafers that encumber the earth.

It is the boys and girls who know that they can always go back home and be taken care of who are the quitters and shirkers, who throw up a job the minute it gets hard sledding and there are disagreeable bosses to be contended with.

The boys and girls who have no one but themselves to depend on, nowhere to go but the room their labor pays for, nothing to eat but what they can earn, are the ones who stick to their work and put their hearts and backs in it until they win out to success.

So the parents who are afflicted with parasitic children who refuse to take an education or hold on to a job do their youngsters the greatest kindness they can possibly perform when they follow the example of the birds and push them out of the nest and make them try their own wings.