Category — Personal Finance

In the late 80s, the nightly news featured story after story about the homeless crisis in America. The growing homeless problem was a nightly story…. until it stopped driving viewers to the news and then they moved on to the next crisis. The same was true of the obesity crisis, the war on drugs, the war on terror, stranger danger and anything else the idiot box decided was the next big thing for America to worry about.

In 2008/2009 the story has been the financial crisis facing America. While it’s true that the stock market has performed poorly, banks have had their bad loans catch up to them and some companies have had layoffs, I have to wonder how much of this is something the average American really needs to worry about.

Did anyone really expect that loans without income verification were not going to have a high default rate?  It’s not really news, yet it makes headlines. Why? Because it’s a trainwreck and people like to gawk. But the news agencies can’t stop there, they have to keep making the news… and so doom and despair are the headlines of the day.

The leading story on tonight’s news won’t be about the millions of Americans who are now refinancing their home loans at amazingly low interest rates or of the positive things that are happening in the country today.

10,000 jobs cut at a major employer?  Check out this graph from a study by John Haltiwanger of the University of Maryland and Ron Jarmin and Javier Miranda of the Census Bureau job creation and decide just how newsworthy it really is.

Television is a for profit enterprise funded by advertisers. To make money networks need to get eyes on the screen. So when you watch the news you should be asking yourself ‘just what are they trying to sell me?’

I wonder how 2008 has impacted believers in the Prosperity Gospel? With large losses in the stock market, church giving being down and unemployment rising, do they see it as a sign? Are they being punished for being greedy and or valuing money above their god? Do they see that their pursuit of wealth at any price allowed for evil and immoral people to destroy the wealth and safety of others? Do these Christians feel any culpability whatsoever?

Or is God is testing them? I bet many believe this financial crisis is a test of /their/ faith. But what if the accumulation of wealth was the test? What then?

James 2:24 You see that a person is justified by what he does and not by faith alone. 

A pack a day smoker spends $1825 annually on cigarettes (according to this calculator @ $5 per pack). I’ve got plenty of friends who like to make fun of smokers for wasting their money on cigarettes yet they’re putting nothing away for their retirement. Clearly the smoker has made a choice to waste their money on cigarettes, but my non-smoking friends are simply making less obvious decisions to spend their money in other ways instead of putting the money into savings.

Whether it’s the Marlboro factor or the latte factor (or heaven forbid, both) it’s easy to fall into bad financial habits which do nothing to advance our long term goals. And it’s not enough to just break those habits (as hard as it might be)  you have to start a new habit of actually saving and investing the savings.

Creating a new habit is hard, but you can help yourself by setting up an automatic transfer to savings. If you were to transfer $150 per month to savings each month you remove the money you would have spent on <insert vice here> from your available pool.

Some recent events have started me thinking about the need for me to flesh out my personal safety net. Conventional wisdom holds that you should have the equivalent of 3 months of your net salary in savings for emergencies. I’ve been more focused on long term retirement savings over short term, but I’m beginning to think that might have been a mistake. So I’ve decided to dedicate the first half of 2008 to the following goals:

• Increase my safety net to 3 months take home pay
• Identify recurring expenses which can be eliminated
• Add to my professional certifications
• Reconnect with 10 professional contacts a month
• Update my resume

I think the lesson for me anyway is that I need more balance in my investing. Ideally I’d probably make this transition a more balanced one rather than making a 180 degree change, but my concerns are somewhat time sensitive. By June I should be in a position to reevaluate my overall strategy and I think the next iteration will do a better job of determining and funding my investment priorities in the proper proportions.

Here’s a great way to piss your kid off!

Step 1. Offer to hold onto their money for them.

Step 2. Write down exactly how much they’ve given you to hold for them.

Step 3. Every time they ask for some of their money, charge them $1.50 for the convenience of having a portable bank.

Fun right? I mean how dare they get upset because you are charging them $1.50 for the convenience of having a portable bank. I mean you have to update their balance every time they make a withdrawal; don’t you deserve to be compensated for all of your hard work? How can they be so ungrateful?

Oh wait… most banks charge the same thing to their customers and they make billions doing it. So clearly the average American is just fine with these fees in the name of convenience. But what happens when banks start jacking up those fees? Will customers just sit idly by and take it? The sad thing is most of them probably will. I’m leaving my banks because of “stupid” fees and poor returns.

Step 4. Stop torturing your kid, waive the fees.

Step 5. Stop torturing yourself, do the same.

I have a confession to make about the biggest leak in my financial boat. I eat out entirely too often. To help combat that I am implementing the Double Thermos Savings Plan. The plan is simple; every day I will take two thermoses to work. The first, a Nissan Thermos FBB1000 34-Ounce Stainless Steel Vacuum Insulated Briefcase Bottle. The second, a Zojirushi Mr. Bento Stainless-Steel Lined Lunch Jar. The first will be filled with tasty Ruta Maya coffee brewed at home. The second will contain my lunch.

I’m not really trying to combat the literal latte factor here, the coffee is mostly because what I brew at home tastes significantly better than what we have in the office. But taking my lunch at least 4 days a week is a primary requirement to meet my savings goals for 2008. I’m hoping that this system along with more frequent reviews of my actual spending in various categories vs. my budget for those same categories will help me keep on track.

Ever wondered where the dollar you just got in change has been? Where’s George is a currency tracking project that may have the history on your bill. Grab that bill and visit the website. Enter your bill’s serial number and your zip code to find out if anyone else has entered any details about that bill and it’s serial number.

As of this writing Where’s George was tracking 121,290,560 bills totaling $666,369,732. Pretty cool. Got to have fun with money once and a while. All work and no play makes Jack something something.

This year I decided that I would spend some time investigating new ways to track my finances. In prior years I’ve used everything from paper and pen to simple Excel spreadsheets. For 2008 I thought I’d go all high tech and so far it’s been interesting. Here’s my first review:

Microsoft Money Plus Home & Business
According to Microsoft’s website the price of this software should be $59.99**. I have no idea what a ** is, but apparently it translates to roughly $30 additional US dollars.

Strike #1: Don’t play around with pricing on products for people who actually care where their hard earned dollars go. I tried to buy the software from Microsoft’s website and imagine my surprise when the shopping cart had a mysterious $30 Microsoft tax associated it it.

I downloaded a 30 day trial figuring if it was worth it I might bite the bullet. After installing the software I tried to connect to my bank and download my statement. Apparently to use Bank of America online I need to pay a surcharge. While technically this is a BofA problem (one I will be rectifying shortly by switching to a new bank… I’m tired of them and this is just the last straw), I didn’t see anything anywhere in the product summary which hinted that there might be a problem.

Strike #2: Whatever problem Bank of America has with Money and it doesn’t appear to have with some other financial management applications; so either Microsoft failed to use its monopoly powers to benefit the consumer here or more likely they are taking a cut of this new revenue stream from the bank. Either way at $9 a month to use Microsoft Money with my bank, I’m not impressed.

Online I can download a copy of my statement in a Microsoft money compatible format and import it. I tried this and couldn’t get it to remove the other account or really work with it in any meaningful way after nearly 30 minutes of trying. I’m sorry, I want something to make my life easier when it comes to managing my finances and I didn’t see anything here that would do that.

Strike #3: I manage complex enterprise level networks and applications serving in excess of 2 million users. I understand computers. I’ve been using the Internet since before there was a Word Wide Web. If I can’t figure out how to open your financial management application and use it like a simple check register in under 30 minutes who in the hell is your target audience?

So Microsoft Money has struck out. It has been uninstalled and deleted. Sadder still, I could have gotten a copy for free if I actually liked it.Even at free, I don’t see this as being better than other applications I am testing or for that matter, better than pen and paper.

I’m sorry this review is so short (both in length and in terms of technical and functional detail). But life is short as well, and I wasn’t going to waste another second on this <searching for a word I can use in public> application. This thing makes Microsoft Bob look like a brilliant piece of programming. Sorry Microsoft, I’d prefer managing my finances in PowerShell to this.

When my son came to live with me, I decided that I wasn’t going to be an ATM for him. Instead I wanted to provide him with an allowance, that if he managed it properly would allow him to purchase things he wanted. I also needed some help around the house. I love my son, but a neat freak he isn’t. So I needed him to pick up after himself and pitch in with some chores. We also didn’t have the best relationship at the time.

I spent a lot of time trying to decide how best to set the parameters of our new financial relationship with my son. And so far it’s been working fairly well. I’ve told a few friends of mine about the arrangement we worked out and the reactions have ranged from impressed to mildly amused. I thought I’d share our system here.

One of the primary things I wanted my son to know is that I trust him. So I pay him his allowance in advance each week. I make it perfectly clear that that the reason I’m paying him his money before he’s done a lick of work is that I know he’ll hold up his end of the bargain and that if he doesn’t then the allowance stops until he regains that trust. The primary advantage to this system is that if he slacks off, I call him on it and if it continues I stop paying him until he’s put together several weeks of consistent effort. Like most people my son doesn’t like working for free, so it only took 1 or 2 instances where the allowance train got cut off for him to decide that it was easier to help consistently.

This also lets him know he’s already been paid for the work he’s about to do. When he lived with my ex he also got an allowance, but he didn’t always get paid. With this system he never has to keep track of how much he’s owed and there’s never any disagreement on the total. Since he’s paid up, there’s no chance for resentment over being asked to contribute when I’m not holding up my end of the bargain.

And finally, the amount of allowance was non-negotiable. If he wants more money the boy needs to get a J O B.

The cost of the average American wedding has spiraled completely out of control. Based on the most recent numbers I could find (2005) the average American wedding costs over 1.3 million dollars! OK, OK I hear you…. that number can’t be right. But it is. [Read more →]