Hypocrisy

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Sometimes people make choices for a variety of reasons entirely outside of my knowledge and understanding.  Yet somehow, I still manage to be dismissive and occasionally derogatory.

What I have come to realize is that there are numerous reasons for making apparent bad decisions.   It is easy, though often not correct, to dismiss these supposed mistakes as character flaws, without taking the time to fully understand the decision-making process.

For example, I am usually quick to point out the folly of gadgets.  Odd, that, for a gadget geek.  So many gadgets are merely ego purchases, bought because the are “cool”.  Obviously a waste of money.   A smartphone serves no practical purpose for an average person, right? What if that person’s life is so difficult to manage that a calendar sync including both spouses and multiple calendars will allow a family to make sure every kid gets to every activity on time?  Or he has a side business that is easier to manage with ubiquitous email?  Or even a strong urge to limit the number of items carried every day?  A phone/mp3 player is fewer gadgets than separate appliances.

Another example is a close friend who started running several months ago, to be met with questions of why somebody would run without being chased.  It’s easier to play on the internet or ride a bike, right?  And the special running shoes?  Silly.  Except running is cheaper than biking and running shoes beat knee surgery any day.   Running on the street is more effective than a treadmill, since you can’t step off after running two miles away from your house.

So here I sit, a runner with a crackberry and plate full of crow.

“Don’t judge a man until you’ve walked a mile in his moccasins.”  Indeed.

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How have you improved your situation today?

Every day, in some small way, it’s important to do something to improve your situation.  Whether it’s paying down debt, researching inexpensive alternatives to your existing expenses, or something as simple as hugging your spouse or playing games with your kids.

Educate

I was once told that every day, you either get smarter, or you get dumber.  Don’t do the latter.   Never pass up an opportunity to educate yourself.    Make the day good for you.

  • Read a book.  There are hundreds of personal finance books available.  Dave Ramsey’s Total Money Makeover is a great place to start.
  • Read a blog.  Once again, lack of choice is not a problem here.  There are thousands of choices.  My favorites are in my sidebar, to the left.
  • Find a mentor.  Failing that, get a PF-Buddy. Find someone you can call when you need the moral support to make an appropriate or difficult financial decision.
  • Take a class.  Whether it’s a personal finance class, or some other way of improving yourself, do it.  Many cities offer affordable community education classes. Ad Hoc college courses are another option.

Elucidate

It’s incredibly important to understand your situation.  If you don’t know where you are, how can you control where you’re going?

  • Examine your finances.   I heartily recommend Quicken to track your finances, but Mint is a great place to see where your money has gone.
  • Know your debt.  It’s important to know your debt. Own it.  Know your fees and your rates.  Know every cent you owe.  Get a spreadsheet or a notebook and write it all down. Keep it updated.   Mint is great for this.  I update my debt-sheet monthly.
  • Know your spending.   This is another plug for Mint.   There’s no better way to see where your money has gone in the past.  I use Quicken for the present and future, Mint for the past and snapshots.
  • Find your waste. Do you have the cheapest plans that meet your needs for television, internet, phone service?  Do you have AAA and roadside assistance through your insurance company?
  • Talk to your spouse.  Discuss your finances. Make sure everyone is on the same page and there are no surprises or hidden bills.  Plan together.
  • Eliminate problems early.  If you see a problem, eliminate it before it gets out of control.  The earlier you identify a problem, the easier it is to eliminate.
  • Family meeting.  Get the family together so everyone can participate, even the children.   Young eyes sometimes have a clarity that a lifetime of habits has clouded. If your kids understand the concept of money, they are old enough to participate and even help.   Brainstorming means that no idea is a bad idea.  It may not be implemented, but everything is worth hearing.

Eradicate

What’s left? Eliminate baggage.  Kill your bills.  If you’re paying for something you don’t want or need, get rid of it!

  • Unnecessary items.  Do you have an extra cell phone or an insured motorcycle in the garage?  Time to cancel.
  • Unused items. Do you really use the movie package in your cable bill?  Are you saving money with Netflix, or would Redbox be a better option?
  • Forgotten bills.  Did you sign up for an identity protection scheme or an appliance repair plan for an appliance that no longer exists?  Cancel!
  • Fees.  What fees are you paying?  Do you have an annual fee for your credit card or minimum balance fees at your bank?  Find new institutions.  Loyalty to your bank may be costing you money.

Unused or unnecessary bills are nothing but unhappiness generators. They don’t provide value so trim the waste and get rid of what you don’t need.

 

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Building 5 Bad Habits

Meth powder hexagon

Meth powder hexagon (Photo credit: Wikipedia)

Good habits are boring. I mean, yes, they will help you succeed and provide some security, but so what? Bad habits are fun. Except meth. Meth is a bad habit that is decidedly not fun. Don’t do meth.  Seriously.

There are so many entertaining bad habits that I couldn’t possibly cover them all. I’m going to stick to the bad financial habits that will make your life more exciting.

  1. Break your budget. A budget constrains you, keeps you from buying the things you want and traveling to distant, exotic places when you know you can’t afford the trip.   The best way to build this habit is to not only avoid tracking your expenses, but also avoid tracking what you actually spend.  If you don’t know what you owe or what you’ve spent, the end of every month is an adventure!
  2. Impulse shopping. For the next week, I want you to go to your favorite store every day.  Buy the first thing you see that makes you want to hum.  Every day.  Don’t worry about being able to afford it.  That’s what credit is for, right?  Bonus points for buying it on the “no interest for a year, then we screw you” plan.   I’m sure you’ll be making more money by the time the bill is due.   You could get lucky and have a rich relative die and leave you a fortune.   That’s like winning the lottery twice, because you won’t have to buy him Christmas cards anymore.
  3. Meals on the go. Cooking is a drag.  Besides, who wants to slap a slice of meat and cheese on a couple slices of bread, when you can get a drive-through case of the Aztec two-step for $5.    Did you know that the big yellow ‘M’ stands for “Montezuma?”   On your way to practice impulse shopping, pick up some lunch.   For your money, you’ll get less convenience, more additives, and the opportunity to gamble on the lunch employees caring as much about cleanliness as you do.  It’s a win for everyone!
  4. Ego shopping. Actual accomplishments and improvement are hard.  It’s much better to wrap up your sense of self-worth in the smartest phone, the shiniest car, or the Gucciest purse.   Allowing Mastercard to finance your self-esteem guarantees that your next smile is just a shopping trip away.   Who needs the hassle of dealing with things that matter?   After your impulse purchase, buy something fancy!  Show your friends that you are not only a more discerning consumer, but also that you are better than they are. Watch them turn green with envy.  When they shrug and tell your that their phone has the one feature they need–the ability to ring when called–know that it is envy speaking.
  5. Expensive Vacations. You need to relax.   I know how hard it is lugging that iBlackPhoneP(a/o)doid in and out of the designer sportscar with all-leather cow interior and big, brown baby seal-eyes for headlights.   It’s work.    Back and forth buying crap you don’t need to fuel your ego, dodging vicious calls from creditors and having to Dine-N-Dash every time a friend invites you out for dinner makes a dude tired. Take a week in Europe to calm your thoughts.   You deserve it, even if you don’t actually have the money for it.   Isn’t Great-Uncle Horace sick?

What are your favorite bad habits?

Update:  This post has been included in the Carnival of Personal Finance.

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4 Ways We Keep Wasting Money

DENVER - NOVEMBER 22:  A traveler undergoes an...
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MSN Money has an article up on common ways money is wasted.    Here is my spin.

We(as a species) tend to do a great job of wasting money.   Between inertia and the emotional pain of cutting off something we have gotten used to–whether it be Netflix or a 3rd arm–it’s hard to kill wasted costs.  As Robert Heinlein said, “Man is not a rational animal, he is a rationalizing animal.”

MSN listed 4 ways to make your money go bye-bye:

1.  Credit cards

According to the article, in the US, the average rate of interest is 15% for a total nation-wide debt of $850 billion-with-a-B.  That’s insane.   I lucked out and quit using my cards before the CARD act forced all the issuers to send their rates to the moon.   I’ve opted out of every agreement change since then, while I pay off the remaining balances.   15%! If you buy something for $1000 and pay it off in a year, that’s $1150.   What could you do with an extra $150?   It’s time to get out the torches and pitchforks and drop by Mr. Debt’s house.

2.  Overdraft fees

I set up an overdraft protection account years ago, because it was a heckuva lot cheaper than bouncing checks.   It came with a 25% interest rate and a $2 fee per use.   A couple of months ago, they boosted the fee to $10 per use.   Jerkface, you’re already cashing in on my interest, do you have to touch me like that at the beginning of the date, too?   Thankfully, we haven’t used our overdraft protection since we went on our debt-killing crusade in April of 2009.   Oh, Mr. Debt!  You’re going to have a really bad day when I get to your house.   There will be a smoothie à la Otis when I get there.  Side note: If you’ve got a dark sense of humor, rent Otis.    Not only will you love it, you’ll get the smoothie joke.

3. Unused memberships, gift cards and rebates

Gym memberships are the big example here.   People buy a membership because they set some awesome New Year’s resolution, use it for 2 months, then spend 6 months telling themselves they’ll start using it again soon before they finally cancel.   At $30 per month, that’s $180 that could have been spent sending me presents.   If you must get a gym membership, wait until spring.  That’s when people tell themselves they don’t need a membership because it’s so nice out, they can just exercise outside.   When people tell themselves that, the gyms cut membership costs to lure people in to start their own 6 months of denial.

Take a look at your other recurring costs, too.  Do you use the cable package you have, or could you be just as happy with the next one down?  Do you need the donkeys-and-kneesocks-around-the-world channel?   You’ve gotten your 10 CDs for a penny, can you tell Columbia House where to go with their $20 per CD commitment?

4.  Airline fees

This one is easy.   Forget the 3 hour lines, fees for showing up, Pervo-Scan™, and minimum-wage molestation agents masquerading as cops.   Drive whenever possible.    If it’s not possible, show up in a kilt, regimental-style(assuming you are a guy!).   Don’t check a bag, just ship if overnight to your hotel.   Most of the time, that’s cheaper than $50 per bag, anyway.  Avoid the fees as much as possible.

What other ways have you wasted money?

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