Search Results for “slow-carb-diet-how-to-avoid-going-bat-crazy/travel-expenses-why-i-splurge/money-problems-day-1-setting-goals/three-alternatives-to-a-budget/future-dreams/debt-burnout/brown-bagging-your-way-to-savings/subscribe-by-email/quit-smoking-my-first-frugal-move-ever” — Page 9

Don’t Screw Future-You

Finance, Life

A conversation between me and my temporally displaced self.

Future Me: Excuse me, Jason?

Me: Yes?

FMe: <Slap!>

Me: May I ask what that was for?

FMe: Of course.

Me: What was that for, jerk?

FMe: That was payback for all of the hell you have put me through.

Me: What?!? I’ve never even met you, before.

FMe: Of course you have. I am future-you, and I’m sick of getting screwed by past-me, that is, you.

Me: Huh?

FMe: Listen close. You’re not the sharpest brick in the box and I don’t want to explain this twice.

Me: ???

FMe: A long time ago, when you first met our wife, you were dumb.

Me: I don’t appreciate….

FMe: Shut up. I was dumb then, too. Remember? You…err…we bought a new truck, built an addition on our…err…your…err…whomever’s house, got married in the same year. On top of many other expensive decisions. Do your recall?

Me: Yes, I do. So what?

FMe: If that wasn’t enough, you and your smoking-hot bride are still shopping like you’re rich. You drive a new car. Your kids wear new clothes. You’ve got a house full of new furniture. How did you pay for all of that?

Me: Naturally, I charged it. Zero payments, zero interest for a year! Pretty smart, huh?

FMe: What happens in a year?

Me: I don’t know. I’ve got a full year to figure that out.

FMe: <Slap!> I’ll tell you what happens! Future-you, that’s me, gets screwed! Your raise didn’t come through. You had a baby. The truck broke down. Your wife took maternity leave. A roommate moved out. You took a loss in the stock market. You didn’t plan! You had no savings to cover any of those problems because you were too busy servicing debt to pay for your current life.

Me: How was I to know?

FMe: <Slap!> Life happens! You never know what is coming next. You need to plan and save for what might happen. Otherwise, you’ll just accumulate more debt to be serviced by yours-truly. That is not acceptable.

Me: So? What are you going to do about it?

FMe: <Slap!>

Me: Really? Again?

FMe: <Slap!> I’m struggling to pay your debt. Your son starts college next year, but you’ve left me completely unable to help. Your daughter wants to get married in a couple of years, but the Father-of-the-Bride can’t afford a tux. My wife, your beatiful bride, wants a vacation that I can’t afford. You’ve screwed me, dude.

Me: I’m sorry. What can I do to fix it?

FMe: Buy me dinner, first.

Me: Huh?!?!?

FMe: Stop the excess spending. Spend less than you make, for a change. No credit.

Me: None?

FMe: None. Nada. Zip. Zilch. Only spend what you can afford. Budget. Pay off those nasty bills. Don’t leave me hanging.

Me: So, what you’re saying is that, if I don’t have the money, I shouldn’t buy it?

FMe: Exactly. That’s the path to wealth, freedom, and financial independence. Live in the real world.

Me: Gee, thanks, Future-Me! Now I know.

FMe: And knowing is half the battle.

What would your future-you have to say to you?

Does Money Make Miley Cyrus Act Crazy?

Celebrities

If you’re like millions of people who saw Miley Cyrus’s performance at the MTV Video Music Awards recently, you’ve probably wondered what the effect of massive success on the music and acting star. Cyrus seems to be

Cover of "Hannah Montana The Movie" — Cover of Hannah Montana The Movie

doing everything possible to remake her image in the exact opposite of her squeaky clean mold that Disney and other companies have created for her over the last several years. (A rumor has it that Disney even created a contractual obligation for Cyrus to maintain a certain haircut during her “Hannah Montana” television show.) There’s a sense of someone taking on their first sense of independence, and running with it — the star seemed to be sending the message to the audience that she was not going to live according to the expectations of others anymore, and from the look of it, they got that message loud and clear.

The horrified looks of Rihanna, Drake, and Will Smith aside, the real question people had is whether the massive financial rewards of Cyrus’ singing career can explain her crazy behavior. Cyrus is said to be worth about $100,000,000 — certainly a fortune by any standards. And since she is still struggling with the problems of young adulthood — forming an identity, understanding her values and taking a place in society, it’s very likely that her finances contribute to at least some of her behavior.This effect of money can come from many different areas of life. For one, many people who become wealthy at a young age are suddenly struck with the fact that they have no need to work, but who often want to develop a career and contribute to society. Take Steve Jobs for example, who at 31 years old was fired from Apple Inc. by the company’s board of directors. Jobs had in fact started the company himself, and was worth well over a hundred million dollars by that time. And yet, feeling like contributing to society was more important to his life than resting on his laurels, Jobs started a new company, NeXT, where he hoped to contribute inexpensive computers to universities.

The fact that Cyrus is barely into her 20s should tell you something about how much time she has to develop her career. She has enough to retire at an age when most people are just starting their first real job. And that is a tough position to be in. If she is hoping to push her singing and acting career well into adulthood — as most artists would like to — it may be that she is trying to make her mark now. Think of it a bit like Bob Dylan in 1964, releasing electric music for the first time, when before that point he was primarily known as a folk singer making gentle acoustic music.

Dylan’s idea may have been a bit like what Cyrus’ is. That is to say, maybe Miley Cyrus is trying to avoid becoming a has-been, a relic of the 2000’s who burned out playing inoffensive pop music. If this is the case, Cyrus may be able to shift her career into a different mode by showing herself to be an uncompromising artist. Remember that even the greats of the past — Frank Sinatra for example — were once viewed as essentially music for teenagers, and not serious artists. Sinatra even suffered career failure in his 20’s when his audience grew up and moved on to other things. But he came back to record success when he began allowing his music to mature and his ideas to gain focus. If Cyrus can pull such a move, she may not be remembered as a teeny-bopper, but as a serious artist.

Money Problems – Day 8: Insurance

Finance

Today, I am continuing the series, Money Problems: 30 Days to Perfect Finances. The series will consist of 30 things you can do in one setting to perfect your finances. It’s not a system to magically make your debt disappear. Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.

I’m not running the series in 30 consecutive days. That’s not my schedule. Also, I think that talking about the same thing for 30 days straight will bore both of us. Instead, it will run roughly once a week. To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.

On this, Day 8, we’re going to talk about insurance.

What is insurance? Insurance is, quite simply a bet with your insurance company. You give them money on the assumption that something bad is going to happen to whatever you are insuring. After all, if you pay $10,000 for a life insurance policy and fail to die, the insurance company wins.

A more traditional definition would be something along the line of giving money to your insurance company so they will pay for any bad things that happen to your stuff. How do they make money paying to fix or replace anything that breaks, dies, or spontaneously combusts? Actuary tables. Huh? The insurance company sets a price for to insure—for example—your car. That price is based on the statistical likelihood of you mucking it up, based on your age, your gender, your driving history, and even the type of car you are insuring. What happens if a meteor falls on your car? That would shoot the actuary table to bits, but it doesn’t matter. They spread the risk across all of their customers and—statistically—the price is right.

What kinds of insurance should you get?

Homeowner’s Insurance

For most people, their home is, by far, the largest single purchase they will ever make. If your home is destroyed, by fire, tornado, or angry leprechauns, it’s gone, unless you have it insured. Without insurance, that $100, or 200, or 500 thousand dollars will be lost, and that’s not even counting the contents of your home.

Homeowner’s insurance can be expensive. One way to keep the cost down is to raise your deductible. If you’ve got a $1500 emergency fund, you can afford to have a $1000 deductible. That’s the part of your claim that the insurance company won’t cover. It also means that if you have less than $1000 worth of damage, the insurance company won’t pay anything.

You can get optional riders on your homeowner’s insurance, if you have special circumstances. You can get additional coverage for jewelry, firearms, computer equipment, furs, among other things. You base policy will cover some of this, but if you have a lot of any of that, you should look into the extra coverage.

Auto Insurance

Car insurance is required in most states. That’s because the kind caretakers in our governments, don’t want anyone able to hit you car without being able to pay for the damage they caused. To my mind, I think it would be more effective to just make whacking someone’s car without paying for it a felony. If someone is a careful driver or has the money to self-insure, more power to them.

Auto insurance comes with options like separate glass coverage, collision, total coverage (comprehensive), or just liability. Liability insurance is what you put on cheap, crappy cars. It will only pay for the damage you do to someone else.

Rental

I’ve never had rental insurance. The last time I rented, I could fit everything I owned in the back of a pickup truck with a small trailer, and it could all be replaced for $100. Heck, I had the couch I was conceived on. Err. Ignore that bit.

Almost everything you can get homeowner’s insurance to cover will also cover renter’s insurance, except for the building. It’s not your building, so it’s not your job to replace it.

Life Insurance

If you care about your family, you need life insurance. This is the money that will be used to replace your income if you die. I am insured to about 5 times my annual salary. If that money gets used to pay off the last of the debt, it will be enough to supplement my wife’s income and support my family almost until the kids are in college. You should be sure to have enough to cover any family debt, and bridge the gap between your surviving family’s income and their expenses. At a minimum. Better, you’ll have enough to pay for college and a comfortable living.

Life insurance comes in two varieties: whole and term. Whole life…sucks. It’s expensive and overrated. The sales-weasels pushing it will tell you that it builds value over time, but it’s usually only about 2%. It’s a lousy investment. You’re far better off to get a term life policy and sock the price difference in a mutual fund that’s earning a 5-6% return.

Term life is insurance that is only good for 5, 10, or 20 years, then the policy evaporates. If you live, the money was wasted at the end of the term. The fact that it’s a bad bet makes it far more affordable than whole life. It doesn’t pretend to be an investment; it’s just insurance. Pure and simple

Personal Liability Umbrella

An umbrella policy is lawsuit insurance. If someone trips and hurts themselves in your yard, and decides to sue, this will pay your legal bills. If you get sued for almost anything that was not deliberate(by you!) or business related, this policy can be used to cover the bill.

If you call your insurance company to get an umbrella policy, they will force you to raise the limits on your homeowner’s and auto insurance. Generally, those limits will be raised to $500,000, and the umbrella coverage will be there to pick up any costs beyond the new limit.

A little-known secret about umbrella policies: They set the practical limit of a lawsuit against you. Most ambulance chasers know better than to sue you for 10 million dollars if you only have a policy to cover 1 million. They will never see the other 9 million, so why bother? They’ll go for what they know they can get.

The flipside to that is that you should not talk about your umbrella policy. Having a million dollars in insurance is a sign of “deep pockets”. It’s a sign that it’s worthwhile to sue you. You don’t want to look extra sue-able, so keep it quiet.

Insurance is a great way to protect yourself if something bad happens. Today, you should take a look at your policies and see where you may have gaps in coverage, or where you may be paying too much.

Karate Guess So

Finance, Life

“Walk on road, hm? Walk left side, safe. Walk right side, safe. Walk middle, sooner or later, [makes squish gesture] get squish just like grape. Here, karate, same thing. Either you karate do “yes”, or karate do “no”. You karate do “guess so”, [makes squish gesture] just like grape. Understand?” -Mr. Miyagi

It occurred to me that lately, I’ve changed my day-to-day cash flow plans a couple of times.

A year ago, I was running on a fairly strict cash-only plan.

A month ago, I was running on a strict budget, but doing it entirely out of my checking account.

Now, I’m loosening the budget reins, and moving all of my payments and day-to-day spending to a credit card, including a new balance that I can’t immediately pay off.

The thing is, changing plans too often scares me. Like the quote at the beginning of this post, I start worrying about being squished like a grape.

The simple fact is that any plan will work.

If you want to get out of debt, just pick a plan and run with it. If that means you follow Dave Ramsey and do the low-balance-first debt snowball, good for you. Do it. If you follow Suze Ormann and do a high-interest first repayment plan, great. Do it. If you follow Bach and pay based on a complicated DOLP formula to repay in the quickest manner, wonderful! Do it!

Just don’t switch plans every month. If you do that, you’ll lose momentum and motivation. Squish like grape! Just pick a plan and go. It really, truly does not matter which plan you are following as long as you are following through.

This applies to other parts of your life, too. For example, there are a thousand fad diets out there. Here’s a secret: they all work. Every single one of them, whether it’s Weight Watchers, slow carb, or the beer-only diet. The only thing that matters is that you stick to the diet. If you manage that, you will lose weight on any diet out there. Except for the jelly bean and lard diet. That one will make you extra soft.

Another secret: the productivity gurus are right. Every single one of them. David Allen, Stephen Covey, Steve Pavlina, and the rest. They all have the One True Secret to getting the most out of your day. Really. Pick a guru and go! But don’t try to Get Things Done in the morning and do 7 Habits at night. Changing systems, changing plans, changing your mind will make you sabotage yourself.

The real secret to accomplishing great things, whether it’s paying off $100,000 of debt, dropping 40 pounds in 3 months, or tripling your productivity is to do it. Just get started and, once you’ve started, don’t stop. If you keep going and stay consistent, you’ll accomplish more than anyone who hops from system to system every few weeks.

Totally Money Carnival #5, the Superbowl Edition

Misc

Welcome to the Totally Money Carnival #5, the Superbowl Edition. It’s my privilege to be the first outside host for this carnival.

I don’t watch the Superbowl. I’ve never been into spectator sports unless I have some skin in the game. If I’m playing, or have some money riding on the outcome, I’m watching. Other than that, I’ll usually pass. Yesterday, a bunch of grown men in tights earning envy-inducing amounts of money ran around for a few hours in front of people, some of whom paid 5 figures for the privilege of watching. Yay!

Editor’s Picks

http://www.youtube.com/watch?v=hpjaOUjUPUc

Mike Piper presents Protecting Your Private Files posted at Oblivious Investor, “How can you keep your sensitive documents (scanned tax returns, for instance) both backed up and protected in the event of computer theft?” Ed. I love this solution, and I use it. All of my tax returns, online receipts, and documents I don’t want to lose get treated this way.

Suzanne K. presents The Psychology of Why You Can’t Budget—And Five Tips to Help You Do It posted at PsychologyDegree.net. Ed. I’ve always been a fan of trying to understand what makes people tick.

Silicon Valley Blogger presents Prepare Your Tax Return: Tax Products vs Tax Pros posted at The Digerati Life, saying “If you don’t enjoy preparing your taxes, you’re not alone. There are various ways to get your tax returns done. How do you go about preparing your taxes: DIY or with the help of a pro?” Ed. Tax time sucks. If we abolished payroll deductions and made everybody in the country write a check to the IRS every year, there would be a revolt on the next April 15th.

Kevin McKee presents How To Know if Your Job is Expendable posted at Thousandaire, saying “When businesses start doing poorly, some people are at risk of losing their job, while others are safe. Find out which category you fall in with these simple questions.” Ed: I was given a demonstration that defines expendability in the workplace. Fill a glass with water and place it on the counter in front of you. Stick your finger in the glass. Now, pull it out. See the impression you’ve made? I’ve done the rockstar bit, and I’ve been in positions that were necessary for the profitability of larger divisions of large companies. It doesn’t matter. Corporate loyalty is a joke.

Budgeting

35% of people who attend the game write it off as a corporate expense. (source)

Miss T presents 5 Ways to Lower Your Monthly Bills | Prairie EcoThrifter.com posted at Prairie Eco-Thrifter, saying “Believe it or not, there are lots of ways to save money, no matter how much of it you have- or don’t have.”

Credit

http://www.youtube.com/watch?v=jRYLhkOV2so

Tim Chen presents Pentagon Federal Offers Best Gas & Airfare Credit Card Rewards, Period. posted at NerdWallet Blog – Credit Card Watch, saying “There is only one credit card in America that offers no strings attached 5% cash back at any gas stations (excluding the likes of Costco) – the Pentagon Federal Platinum CashBack. It also gets you 2% back at grocery stores.”

Miranda presents Accelerate Your Credit Card Debt Pay Down posted at CreditScore.net, saying “Use these techniques to pay down your credit card debt faster.”

Buck Inspire presents Moving Up and On From Prepaid Debit Cards posted at Buck Inspire.

Ryan Hudson presents How I Got a Credit Card Late Fee Waived posted at Best Credit Cards IQ, saying “Don’t take accidental late fees laying down. Do something about it. Here’s how I got rid of my late fee.”

Debt

No network footage exists of Super Bowl I. It was taped over, supposedly for a soap opera.(source)

John presents Get Out of Debt Fast – How to Speed Up the Process posted at Passive Family Income, saying “There are quite a few people today that are beginning to dig their way out of debt. They have monitored their spending, created a budget, and have done the best that they can to stick with it. But, as many of you have experienced, the excitement of becoming debt-free gets pretty old after a while.”

Finance

http://www.youtube.com/watch?v=VRDx18GYITw

Mike Collins presents Defined Benefit vs Defined Contribution posted at Saving Money Today, saying “Understanding the different types of retirement plans.”

Boomer presents 10 Ways For Women To Obtain Financial Empowerment posted at Boomer & Echo, “It’s not that difficult to get your financial life under control (your control). Remember, a man is not a financial plan.”

Frugality

The Super Bowl is measured in Roman numerals because a football season runs the span over two calendar years. This year the season began in 2010 and ends in 2011. (source)

Madison DuPaix presents Substitute, Improvise, and Make Do With What You Have posted at My Dollar Plan, saying “So often, when we run out of things we need, we run to buy something or spend money when we don’t have to. Find out how you can avoid this trap.”

Money Beagle presents The Power Of The Free Calendar posted at Money Beagle.

Amanda L Grossman presents Homemade Diversion Safes: Save Money by Making Your Own posted at Frugal Confessions – Frugal Living, saying “You can purchase your own home security money safes (diversion safes), but I thought it would be more frugal and fun to think of ones to make on your own. See what I can do with a used deodorant!”

Money Management

http://www.youtube.com/watch?v=KQkK1UCH1EU

MoneyNing presents What Would You Do with a Million Dollars? posted at Money Ning, saying “I know what I would do with a million dollars. How about you?”

Other

More drivers are involved in alcohol-related accidents on Super Bowl Sunday than any other day of the year (except St. Patrick’s Day), according to the Insurance Information Institute. (source)

Joe Morgan presents Is Gen Y Irresponsible, Or Is It A Matter Of Perspective? posted at Simple Debt-Free Finance, saying “Generation Y has a reputation for having a sense of entitlement, but here’s one reason it may just be a matter or perspective.”

Saving

http://www.youtube.com/watch?v=_78ylMLa0JQ

Ryan @ MFN presents Roth IRA Qualifications posted at The Military Wallet, saying “Are you qualified to open a Roth IRA? Find out income and contribution requirements to see if you are eligible!”

Brian @ BeBetterNow presents Money’s Golden Rule: Spend Less Than You Earn posted at Be Better Now, “In the end, most personal finance advice boils down to spending less than you earn. Here’s another article to reinforce that.”

Spending

http://www.youtube.com/watch?v=g364TG_8Qmw

Barb Friedberg presents Wealth in Life: 25 Cheap Ideas for Fun posted at Barbara Friedberg Personal Finance, “Join in to build a massive list of low cost fun!”

Taxes

http://www.youtube.com/watch?v=R55e-uHQna0

PT presents Tax on Unemployment Compensation posted at PT Money, saying “A detailed look at what taxes are due on your unemployment compensation.”

Ken presents Important Tax Update for 2010 You Don’t Want To Miss posted at Spruce Up Your Finances, saying “A few of the tax provisions applicable to tax year 2010 such as the extension of tax filing date, expanded tax benefits, phase out on some limitations, etc.”

Fanny presents Top 10 Tax Deductions for Parents posted at Living Richly on a Budget, “Being a parent is one of the most important roles in life. Why not take advantage of all the deductions you qualify for?”

Thank you all for participating! Next week’s host is Saving Money Today, so be sure to submit your posts.

Dreams

Finance, Life

Ever since she was a little girl, my wife has wanted to be a horse. Err, work with horses.

The problem is that most jobs working with horses pay horse-crap. It’s hard to raise a family on a stablehand’s income.

Her alternative was to own horses. This comes with a different set of problems. The biggest problem is that we live on 1/8 of an acre in a first-ring suburb. That’s not a lot of room to graze, though I would be willing to give up my spot in the garage.

I rock like that.

Boarding a horse costs a minimum of $200 per month. Two girls means two horses, otherwise, they won’t both be able to score in the saddle club. For the math challenged, that’s $400 per month, plus about $300 in preventative vet care per year.

$5100 for a year of boarding an extremely obsolete car.

Then, you need a trailer to get the horse to shows. You need saddles and reins and and short-legged stirrups and feedbags and muck-rakes and brushes and combs and hoof-cleaning-thingies and other stuff that will catch me by surprise for years to come.

Expensive.

My rough estimate is that it costs at least $10,000 to get into horse ownership, and that’s not counting the horse itself.

You can buy a horse for well under $1000 if you aren’t concerned about registration or speed. A 15 year old horse can last 10-15 more years, so it’s not money down the drain.

That’s $12,000 to get in and $5100 per year to stay in. Minimum.

Never let it be said that I’m not a pushover. Last month, we bought an SUV that can pull a horse trailer. Last weekend, we bought the trailer. That’s two major steps towards making my wife’s dreams come true. The rest of the plan culminates in a hobby farm in the sticks.

There are several steps in between.

I just need to put the brakes on every other step. We’ve been offered the free use of one pony next season, and we may be able to get another for the same price. Beyond that, we need to be patient. There will be no ponies purchased until the new truck and old mortgage are paid.

Period.

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