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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?

Budgeting Bulimia

Finance

As the President is so quick to point out, ten years ago, there was a large budget surplus. Naturally, the government went into a massive cycle of lifestyle expansion. That expansion, combined with lower tax revenue and a recession has brought us from a $230 billion surplus to a $1.4 trillion deficit. That’s a bit above the trivial level. A definite binge.

In Minnesota, there was a $2 billion surplus just a few years ago, which was obliterated by, once again, government expansion and a recession. During the boom years, government programs were enacted with no thought to sustainability. Nobody thought about the fact that a surplus isn’t a balanced budget, either. We just kept adding to the budget, thinking the good times would last forever. Another binge.

Last year, the governor of Minnesota had to “unallot” money from the budget. He went through the budget with a red pen and struck line items until the budget was balanced, a requirement in this state. This infuriated his political opposition. They were not prepared for the purge.

Federally, the purge hasn’t happened, yet. Give it time. Excessive spending using imaginary money can only last so long. It will stop. The longer the binge, the harder the purge.

Families are doing the same thing. Four years ago, I got a raise and immediately bought a new car. Binge. Two months later, I was laid off and had to cut everything possible to make ends meet. Purge. Tax refunds, inheritances, drawings. So many of these things give us an excuse to commit to long-term expenses without planning for long term sustainability. If I inherit $5000, is that a good time to add $500 to my monthly bills? No! That’s an unhealthy binge. In ten months, if the money lasts even that long, I will be forced to purge something to keep afloat.

The responsible, healthy way is the same as healthy, responsible eating. Diet and exercise. Spend less, save and earn more. That’s the strategy that will let you level out life’s valleys, instead of puking all over the floor. Don’t spend every cent you see, just because it is there. Set some aside for a rainy day.

Leave the binge-and-purge financing to the politicians.

Update: This post has been included in the Festival of Frugality.

Credit Card Glossary

Finance

As evil as credit cards are, most adults have one. Have you ever wondered what percentage of those people know the details of[ad name=”inlineright”] their credit card agreement, or even what all of the terms mean?

Here’s a quick list of the terms and their definitions.

Average daily balance – This is the balance most card companies use to calculate your interest. They add the balance each day and divide it by the number of days in the billing cycle. This number times the interest rate is (roughly) the interest you have to pay.
Annual Percentage Rate(APR) – This is the interest rate expressed as the interest accrued in one year. The actual calculation is much more complicated.
Balance transfer – If you’ve ever paid your VISA with your Mastercard, you’ve done a balance transfer. These often have a great introductory rate and a lousy permanent rate.
Cardholder agreement – This is the contract that defines all of the terms of your card: interest, default consequences, payment terms, and everything else. You should never sign for a card without reading and understanding this document.
Charge-back – If you dispute a charge on your card, the issuer may issue a charge-back, and take the money back from the merchant to return to you.
Credit line – This is the amount you are able to charge. You should fear this number and stay as far away from it as possible.
Default – When you stop paying your card, you become delinquent. If it goes on too long, you will be in default. Read: screwed. This is when they crank your interest rate to the sky and cut your limit to match your balance. It’s also the point that affects your credit rating.
Due date – This is the day which, if you miss it, will cause you to acquire an extra $15-39 fee for the privilege of misreading your calendar. Always pay your bill before this date.
Finance charge – This is the actual interest accrued for the billing period. This is money you are paying for the privilege of borrowing the rest of the money. Next month, you’ll pay a finance charge on this money, too. Yay!
Grace period – For most cards worth owning, you get 20-25 days before the issuer starts charging interest. The best way to manage your card is to pay it off completely twice a month. That way, you’ll never use up your grace period and never pay a cent of interest.
Introductory rate – Many cards will offer a crazy-low interest rate for six months to lure you in…like crack. They’ll get you hooked, then raise the rate and force you to charge new toys at the higher rate. Ideally, you’ll never carry a balance, so you’ll never have to worry about the introductory rate.
Minimum payment – If debt has an evil heart, this is it. If you pay nothing but the minimum required payment, you will be in debt for the rest of your life. Always pay more, even if it’s just an extra $20.
Over-the-limit fee – If you ignore your credit limit and keep spending, you’ll get hit with another $15-39 fee for the privilege of not controlling your irresponsible impulses.
Periodic rate – This is your APR expressed in relation to a specific time frame, usually as a daily periodic rate. For example, if your interest rate is 18%, your daily periodic rate is 18/365 or 0.0493%
Pre-approved – When you get a pre-approved card, you are actually just getting a notice that you have been pre-screened as not being too much of a deadbeat for that particular card. You will still have a full credit check before the card is issued.
Secured card – If you’ve got lousy credit, sometimes your only choice to repair it is to get a prepaid card. You give the company $200 and they will let you charge $200. They are almost always loaded with fees and are usually a very bad deal, but if it’s the only game in town…?
Universal default – Sometimes, if you default on one card, every other card you have decides to gang up on you, because your “risk profile” has changed. Yet more proof of the evil that is credit-card debt.
Variable interest rate – Some card tie your rate to the Prime interest rate, so when that changes, your rate does, too.

Did I miss any terms?

Toxic People

Business, Life

You should never be in the company of anyone with whom you would not want to die.

-Duncan Idaho, from God-Emperor of Dune

Some people suck the life out of everyone they encounter. Whether it be through lies, unreasonable demands, emotional abuse or manipulation, or just a vile personalty, the people they meet are worse off for the encounter. The people they interact with every day are screwed.

My time is too precious to waste any of it unnecessarily on people who remove value from it. I like being with people who enrich my life, instead.

Unfortunately, since I’m not an advocate for the use of hitmen, not every toxic person is easy to eliminate from your life.

Toxic people come in 3 basic varieties: professional, personal, and family. There is some overlap between the categories.

The personal category is easiest to deal with. These people aren’t relatives or coworkers, so you won’t see them at family gatherings or at work. I’ve dealt with these people in two ways.

First, there is the direct approach. One former friend, who was really only a friend when it was convenient for him(a pure leech), got told that he wasn’t invited to one of our parties because I was inviting his ex-wife, instead. That was the last time he called me.

The second option is far more passive. I set up a contact group in my phone called “Life’s too short”. At first, I set it up with a fairly insulting ring tone, but I later switched it to no ring at all. I don’t know they’ve called until I check my voicemail. It’s far less direct, but also far easier than the direct approach.

Dealing with the toxic people in your family is more complicated. You’ll see them at holiday gatherings, or hear about them during unrelated visits. You probably have a lot of memories growing up with them, and may feel some level of obligation–deserved or not–to maintain contact. It’s hard to break a tie that you’ve had your entire life.

Can you fix their behavior? It’s worth trying to have a frank discussion about how they are treating you, or the things they are doing. If the problem is that they are constantly bringing over their methhead boyfriends, banning the drug addicts from your home, while still welcoming the relative may be an acceptable fix. If the problem is a constant need to belittle you, demanding they stop may work. If the problem is a lifetime of emotional abuse, it probably isn’t fixable.

Is banishment an option? Can you put that creepy cousin on the Life’s Too Short list? You’ll still have to deal with him at family gatherings, but you can always leave the room when he comes in, right? Don’t engage, don’t participate in any conversation beyond a polite greeting, and don’t offer any encouragement towards regular contact.

It’s possible that it won’t be possible to fix their behavior and that you won’t want to banish the offender. If, for example, the offender is your mother (Not you, Mom!), you may feel a sense of obligation to maintain contact, or even be a primary caregiver at times. This is a line nobody else can draw for you. At some point, the current bad behavior could overwhelm the past obligations. When that happens are you prepared for it? That can be a traumatic break.

The other option, as cold as it sounds, is to wait it out. Nature will take its course, eventually. Can you wait that long, while maintaining your sanity and emotional equilibrium?

Professional toxic people include customers, vendors, and coworkers, none of whom are easy to get rid of.

If you own the business, you can fire your problem customers if the hassle outweighs the benefits you get from the relationship. You can find a new vendor, and you can fire the problem employees.

What happens if you are an employee?

If the problem is your boss, your options are to suck it up, talk to his boss, or find a new job. If the first is intolerable, and the second is impossible, it’s time to polish your resume.

If the problem is a vendor, you’ve got some options. Document the problems, first. Does he make inappropriate jokes, or badmouth you to your customers? Then, research the alternatives. Does one of his competitors offer an equivalent product or service? Take the documentation and research to your boss, or whoever makes that decision, and see if you can get your company to make the switch. The other option, is to request someone new to deal with at the vendor’s company, but that may not always be possible.

Finally, we come to the problem of toxic coworkers.

Some coworkers have the same problems as a toxic boss. Is the company vice-president the boss’s baby brother? You’re probably not going to find a win there. You’ll have to suck it up or move on.

Is the problem person working in an unrelated department doing unrelated tasks? It may be possible to start taking breaks at different times and leave him where he belongs: in the past.

Is the difficult individual sharing an office with you, demanding everything be done his way, and throwing daily tantrums? This is the one that has to be dealt with. He’s the one sucking the life out of you every single day.

First, start making use of a voice recorder. If you’ve got a smartphone, you’ve probably already got one. Otherwise, drop the $20 to buy one. This lets you document the evil. When his behavior goes hinky, record it.

Second, stand up for yourself. If he’s making unreasonable demands, tell him it’s inappropriate. He’s a bully, and bullies tend to back down when they are confronted.

Third, make sure the boss knows about the behavior. Yes, this is tattling. Get over it. If he wasn’t acting like he was a spoiled 4 year old, you wouldn’t have to tell the boss that he was. If the boss doesn’t know there’s a problem, he can’t deal with it.

Fourth, for any problem that isn’t directly aimed at you, ignore it. If he makes a habit of throwing a tantrum because somebody emptied the coffee pot, or because the company switched health plans, let him. Only get in the way if it’s directed at you. Over time, the tantrums will get more noticeable and out of hand, forcing the boss to deal with it, preferably by handing him a pink slip.

Your goal is documentation, awareness, and avoidance. Make the worst of it go elsewhere so you can be as productive as possible, document what you can, and let the boss become aware of the situation and how bad it has become. And be patient. This isn’t an overnight fix.

How do you deal with the toxic people in your life?

Be Prepared or Be Me

Finance, Life

We had some nasty storms roll through over the weekend. There was a lot of tornado-ish activity, 70 mile-an-hour gusts of wind, hail, and an electrical blackout. For almost 24 hours, we were living in the stone age, with nothing but smartphones for internet, and high-lumen flashlights being used to see. With no cartoons for the girls, we were forced to read them bed-time stories, while my son and his friends were forced to use their imaginations to entertain themselves.

Every time we called, the electric company added 12 hours to their estimated repair time. Amazingly, they came in 7 hours ahead of schedule, if you don’t count the first two revisions.

By Saturday afternoon, we were out shopping for things we should have already had ready.

For years, we had discussed buying a generator. For some reason, it never became a priority. We have a large freezer and refrigerator full of food. With no electricity, a generator was suddenly prioritized. All of the places near us were sold out of budget-priced generators when we decided it was better to drop $400 on that than to lose $600 worth of food. We did find one, eventually, but it would have been better to take it out of the garage than have to shop for it when we needed it. Naturally, 10 minutes after we got it home, the power came on. Do yourself a favor: if you own a home and have a small corner available for storage, start shopping for a generator. Pick one up on sale instead of waiting until you have no real choice.

We have a ton of batteries. It’s one of the things we stock up on when they are on sale. Unfortunately, our broadest-beam flashlight takes a 6-volt battery, and we don’t keep a spare. By the end of the night, it was getting pretty yellow and dim. Another night would have killed it completely. This wasn’t a widespread blackout, so there was no shortage of batteries, but it would have been nice to have the spare already at home. Check your emergency supplies and make sure you have replacement batteries that fit everything you need.

The one thing that would have improved the night most is a good lantern. We had our 5, plus two of my son’s friends all trying to play board games by flashlight. A lantern could have been set on the entertainment center and lit most of the room.

For everything we were without due to the blackout, the one thing I truly missed was the air conditioner. When the storm died, so did the wind. Completely. Opening all of the windows didn’t help at all. Other than that, it was nice to have everyone forced to interact. Nobody was whining about being bored and we were all having fun.

I want to schedule a pseudo-blackout more often.

You’re not alone: Help with Bankruptcy & Debt

Finance

Frequently regarded as an indication of personal failure, bankruptcy is still today widely considered a highly sensitive topic. Many will even feel uneasy speaking about their debt problems with close relatives and friends. If you, too, are facing serious debt issues and are in need of help, rest assured you are not the only one afraid of sliding into bankruptcy. In fact, thousands of households in the UK are threateningly close to insolvency and most are experiencing the exact same feelings of shame and despair. This perfectly understandable reaction has, meanwhile, unfortunately overshadowed the fact that there are hands-on practical steps especially designed to help you resolve your debt situation.

There is a good reason why addressing the issue of bankruptcy has an urgent ring to it. Recent statistics indicate a steady rise of individual company insolvencies in the UK, particularly since the 1990s. According to the British Insolvency Service, the rate of bankruptcy on an individual level has risen from a total of 24,441 in 1997 to staggering 106,645 in 2007 in England and Wales. Alarmingly, the peak doesn’t seem to have been reached yet. As respected online-service ‘This is Money’ reports, ‘record numbers of people were declared insolvent in England and Wales’ in 2010, further noting that ‘an all-time high of 135,089 people were declared insolvent in 2010—0.7% up on the total for 2009.’ As you can gather from these numbers, you are certainly not alone with your debt problems: Around 140,000 adults are facing bankruptcy as a direct consequence of mishandling their debt issues, which translates to 385 new cases per day. It has already been pointed out that ‘the number of victims will be enough to fill both the London 2012 Olympic stadium and the Emirates Stadium.’

So, if you’re facing bankruptcy, there’s no need to feel ashamed. By taking an active stance and addressing your debt issues, you may even be able to avert insolvency altogether. With years of experience and several distinctions to our credit, the Debt Advisory Line have established themselves as leading experts in the field of debt management. We’ve already helped thousands of individuals and households who thought bankruptcy was their only option. Settling debt issues is our forte – and you shouldn’t settle with anything less.

This post brought to you by Debt Advisory Line.

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