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Actions Have Consequences

Image by reidmix via Flickr

Six months ago, my laptop quit charging.  This particular model has a history of having the power jack come loose inside the laptop, so I ordered the part and waited.  When it came, I disassembled the computer, carefully tracking where each screw went.   I installed the part, the put it back together, with only a few extra pieces.

It didn’t work.

After spending the money and doing the work, I tested the external power cord.   I could have saved myself a few hours of work if I would have done that first.  It was trash, so I ordered a new one.   That’s time and money down the drain due to my poor research.

As an adult, I know that I am responsible for my actions, even if the consequences aren’t readily apparent.   If I tap another car in a parking lot, I am going to have to pay for the damages, even if I didn’t see the car.   This has manifested itself in credit card statements I didn’t read, speed limits signs I didn’t notice(or ignored!), and–on occasion–my wife and I not communicating about how much money we’ve spent.

Kids have a much harder time grasping that concept.

My son enjoys playing games online.  Some of the games are multiplayer games  he plays online with his friends, others are flash games he plays at home while his friends watch.   They like to take the laptop into the dining room where they can play without being in the way.   A small herd of 10 and 11 year old kids hopping around expensive electronics can’t be a good idea.

Yesterday, we saw that the power cord was fraying at the computer end from being dragged all over the house and jerked by kids tripping on the cord.   We got six months of life out of the cord because of kids who should have known better not acting appropriately around the cord and the computer.    Not happy.

My son got grounded for a week and honored with the privilege of replacing the cord.   Now he isn’t happy, but he understands that he needs to pay for the damage he causes, even if he didn’t know that what he was doing could cause the damage.    If it was something he would have had no way of knowing, there would have been no punishment, but he should have known not to jerk on the cord of leave it where it can be tripped over.

What do you think?

3 Things You Need to Know About Homeowner’s Insurance

Six Shooter Flood
Image by ecstaticist via Flickr

If you are a homeowner, you need homeowner’s insurance. Period.   Protecting what is mostly likely the biggest investment of your life with a relatively small monthly payment is so important, that, if you disagree, I’m afraid we are so fundamentally opposed on the most basic elements of personal finance that nothing I say will register with you.

If, however, you have homeowner’s insurance, or–through some innocent lapse–need homeowner’s insurance and you just want some more information, welcome!

The basic principle of insurance is simple.  You bet against the insurance company that you or your property are going to get hurt.  If you’re right, you win whatever your policy limit is.  If you’re wrong, the insurance company cleans up with your monthly premium.  Insurance is gambling that something bad will happen to you. If you lose, you win!

Now, there are some things about homeowner’s insurance that you may not realize.

1.  Homeowner’s insurance will not protect you against a flood. For that you need flood insurance.  The easiest way to tell which policy covers water damage is to see if the water touched the ground before your house.  An overflowing river, or heavy rain that seeps through the ground and your foundation are both considered flooding.    On the other hand, hail breaking your windows and allowing the rain in or a broken pipe are both generally covered by your homeowner’s policy.

Do you need flood insurance?  I would say that, if you live on the coast below sea level, you should have flood insurance.  If you’re on a flood plain, you need flood insurance.   If you’re not sure, use the handy tool at http://www.floodsmart.gov to rate your risk and get an estimate on premium costs.   My home is in moderate-to-low risk of flooding, so full coverage starts at $120.

2.  You can negotiate an insurance claim. When you have an insurance adjuster inspecting your home after you file a claim, most of the time they will lowball you.   Generous adjusters don’t get brought in for the next round of claims.  If you know the replacement costs are higher than they are offering, or even if you aren’t sure, don’t sign!   Once you sign, you are locked into a contract with the insurance company.  Take your time and do your research. Get a contractor out to give you a damage estimate, if you can.

3.  Your deductible is too low. If you’ve built up an emergency fund, you can safely boost your deductible to a sizable percentage of that fund and save yourself a bunch of money.    When we got our emergency fund up to about $2000, we raised our deductible from $500 to $1000 and saved a couple of hundred dollars per year.   That change pays for itself every 2 years we don’t have a claim.  I absolutely wouldn’t recommend this if you don’t have the money to cover your deductible, but, if you do, it can be a great money-saver.

Bonus tip: If you get angry that your homeowner’s insurance doesn’t cover flooding, even if you haven’t had to deal with a flood, and you cancel your insurance out of spite, and you subsequently have a ton of hail damage, your insurance company won’t cover the crap that happened during the window where you weren’t their customer.

Are you one of the misguided masses who prefer to trust their home to fate?

Do you have an insurance horror story?

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The Story of Sammy

As I’ve mentioned, we’re cleaning out my mother-in-law’s house.   She was a hoarder who passed away a couple of months ago.   As of yesterday, we’ve filled two 30-yard dumpsters.   For perspective, that’s big enough to park our F150.

I’m not here to talk about that, or the 20 year old can of green beans that burst and ran down my leg on Saturday.

Last month, we put a recliner out on the curb with a free sign.   A few minutes later, a couple of guys stopped by and grabbed it.

Last week, one of the guys–I’ll call him Sammy–stopped by and left a note on the windshield of one of our inherited cars, asking about buying it.

Long story short, we sold him two cars.  One hadn’t been run in a year or two, and one had been parked for almost 20 years.   We signed this titles and let him take the cars while he was still $50 short of the purchase price.  This isn’t a story about the cars.

It’s a story about Sammy.

Sammy doesn’t have a lot of money.   He’s living off of a monthly check from an old injury, and his fiancee works part-time.   They’re living in Section 8 housing, and consistently have more month than money.  When he was younger, he made some decisions that make some forms of employment difficult now.

On Friday, Sammy stopped by.  He was supposed to give us $50, but said that getting one of the cars running had cost more than expected, and it still had a problem that was keeping it from being safe on the road.   He asked about an extension.

No problem.

Then, he looked around my mother-in-law’s overgrown yard and asked if he could help.  After we negotiated the price, he asked if he could a) borrow our tools for the work, and b) get a ride Saturday morning.

I am a nice guy.

Saturday, I was planning to pick him up, then drive downtown to pick up a friend who has been living at the Salvation Army since moving to the area.   His friend was so excited about the work, he hopped on a bus at 6am and got to Sammy’s house.

When I got there, Sammy also had a teenager he was mentoring.   He told me that his dream was to start a lawn-care business with his friend, so they can put kids to work and help them turn into productive citizens.   Idle, broke, and bored teenagers are a recipe for disaster.   Teenagers who grow into men not believing they have a chance to change their future are worse.

I dropped them off and went to have a chat with my wife.

We’re far from rich but, at the moment, we are fairly flush.  We’ve found some cash, and a there is a bit of life insurance money.   Most of that will be going into remodeling the house, but we have a bit extra.   If we can take a few hundred dollars, and help launch Sammy into a business that will help him, his family, and a circle of kids with few prospects, I think it’s the right thing to do.

When I told Sammy what we were considering, he started to break down.   It was a truly emotional experience for him to know that somebody was willing to take a chance on him.

I told him to put together plan.  I want to know what it would take for him to get started.  Hopefully, he’s serious enough to do that.   I’d like to help.

 

 

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Sunday Roundup

Eye of horse.
Image via Wikipedia

My girls have been riding in horse shows lately.  Sometimes, it seems like that’s all we’ve been doing on the weekends, but they love it.  My wife’s favorite hobby now matches my daughters’ favorite pastime.   As a bonus, we’ll never have to paint their room again, with the way they are accumulating ribbons.

Best Posts

It is possible to be entirely too connected.

My life is now complete.  It’s possible to buy 95 pounds of cereal marshmallows for just $399.   Breakfast at my house just got perfect.

I wholeheartedly agree with Tam, “You don’t need to make any excuses for crashing things into each other at the speed of light in an underground tunnel longer than Manhattan that’s had the air pumped out and been chilled to a couple degrees above absolute zero. That doesn’t need a reason. “

Carnivals I’ve Rocked 

Credit Cards: My Failed Experiment was included in the Best of Money Carnival, the  Carnival of Wealth, and the Totally Money Blog Carnival.

My niche site article on how to Make Extra Money with Keyword Research was included in the Totally Money Blog Carnival.

Thank you! If I missed anyone, please let me know.

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