Everybody Loves Your Money

I think I may have some sort of split personality disorder.  While I’ve been working hard to lock down our spending, I’ve also found myself “giving in” to a few desires.  One of those desires is a new 47” LCD TV from Costco.

For the last 7 years we’ve been using the old picture tube TV that was in our house when we bought it.  It has worked fine but the picture isn’t very good so we’ve been watching the LCD prices and waiting for them to come down to a more reasonable level before replacing it.  We finally found what I believe is a good solid value at Costco and pulled the trigger.

The picture on the new TV is amazing when watching movies and using the Xbox but the cable TV picture is subpar.  The problem with getting a TV like this is it causes additional desires to pop up.  Why have a great TV and a crappy cable TV signal?

I decided to call Comcast and find out how much it would cost to bump up our cable package to HD (high definition).  I was hoping it was under $10 a month extra but it turns out that it would cost somewhere around $20 a month extra.  Argghh.  So, I have to pay them $20 more a month to have them improve their signal to me?

If there’s one thing I hate in life, it’s monthly bills.  I hate watching our lifestyle creep up causing more and more monthly commitments.  I’ve worked hard over the years to minimize our monthly bills because I think it’s the number one way that money trickles out of our bank account.

After having thought about it for quite awhile, I decided I’m not going to give Comcast any more money.  Here’s what we are doing:

I put a high quality splitter on the coax cable coming out of the wall so that we can get a signal through the cable box AND directly through the wire.  By utilizing multiple inputs on the back of the new TV we can now watch the local channels in high definition, and still get all the other channels in the std definition format.  The reality is that we don’t watch a lot of live TV so this will work out fine.

We have also decided to start watching the majority of our shows through Netflix on the Xbox.  We are paying $8.99 a month for one movie at a time through the mail and that gives us unlimited movie streaming through the Xbox.  I was surprised to find that they have added a TON of new TV series on Netflix so we won’t be running out of programming to watch.  I’m also thrilled to see that there is a LOT of HD programming on Netflix.  We’re finding all kinds of new and interesting programming that we would have never seen if we’d stuck to the traditional model of paying for hundreds of channels that we never watch.  Instead, we are using a much more “pull” based approach to TV watching and we’re really liking it.  The $8.99 a month that we are spending on Netflix is turning out to be a much better value than I ever realized and I’ve managed to avoid seeing our monthly bills pop up another $20.

MSNBC has a feature on their website that lets you check the health of your bank or credit union.  I took a look at my credit union and found that they have a troubled asset ratio of 18.  That’s actually pretty good.  There are over 389 banks (as of Dec 31 2009) that had a troubled asset ratio of over 100 which means that they had more troubled loans than they had money set aside to cover potential losses.

It’s definitely worth taking a look to see where your bank or credit union falls.

When I was younger, I think I always expected I’d have a house payment forever.  As I’ve gotten older I have realized that debt is evil and the sooner we can pay off the mortgage, the better.  I can’t wait until the day that I can walk through the front door of my house with the deed in hand, much like Nickel over at Five Cent Nickel.

What makes this more difficult is that we live in a part of the country where housing is relatively expensive.  The original purchase price of our house was $280,000.  While we’ve been paying on that for almost 7 years, we still have a long ways to go.  The good news is that if we were to magically find about $130K, we’d have the option of paying the house off.  You can bet if we do come in to any amount of money like that, we’ll definitely pay the house off right away.

The thought of living in a home that is paid for is very exciting to me.  While we’d still have taxes and insurance to worry about, the reduction in our monthly bills would give us a ton more options.  Even with the mortgage, we are currently living on about 50% of our after tax monthly income.  If we were to lose our mortgage as well, it would drop us down to living on about 32% of our after tax income.  At that point, we could definitely think about pursuing work that we are more passionate about with little regard to what the compensation was.

Wow.  CNNMoney has an article up today about a recently released survey from the Employee Benefit Research Institute.  They surveyed 1153 US workers and retirees older than 25 years of age in January.  Here are some of the results:

54% of workers said they have less than $25,000 saved for retirement

24% have delayed their retirement in the past year

27% of workers said they have less than $1000 saved

43% have less than $10,000 saved for retirement

Personally, I think there is a reason that defined benefit plans like pensions have been such a popular thing.  It would appear that the majority of people either don’t  know how to save, or have never been able to put themselves in a financial position to have the extra money to save at the end of the month.  Either way, it doesn’t speak well for our collective future.  While I’m glad not to be in any of the statistics above, I still wonder how it will impact me.

This is a question I’ve struggled with over the years and have posted about in the past.  I’ve gone back and forth on whether I should have earthquake insurance.  A few years back, I decided that the odds were against me and I bought some.  The premiums are $370 per year which is not that bad for a $315,000 house.

A few things help me keep the price down.  My house is on a level lot, it’s pretty much all wood and is newer construction that incorporates a lot of the more current earthquake reinforcements.

What brought this up for me again is CNNMoney has an article that talks about who should consider getting the coverage.  Since I live in the “RED” zone (Pacific Northwest), it just reinforces my decision to have earthquake insurance.  There is no question that we will have a large earthquake here.  The only question is when.  Paying $370 per year gives me the peace of mind that I can put my house back together if we have the “big one”.

Check out the map and see if you live in a hot zone.

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JD over at Get Rich Slowly has written a book that is due to be released shortly.  JD has built up a massive following at Get Rich Slowly and his writing style is top notch.  If his book is half as good as his blog (I’m sure it’s just as good), it should be a great read!!

You can pre-order it on Amazon.com right now!

Here is the description of the book:

Keeping your financial house in order is more important than ever. But how do you deal with expenses, debt, taxes, and retirement without getting overwhelmed? This book points the way. It’s filled with the kind of practical guidance and sound insights that makes J.D. Roth’s GetRichSlowly.org a critically acclaimed source of personal-finance advice.

You won’t find any get-rich-quick schemes here, just sensible advice for getting the most from your money. Even if you have perfect credit and no debt, you’ll learn ways to make your rosy financial situation even better.

• Get the info you need to make sensible decisions on saving, spending, and investing
• Learn the best ways to set and achieve financial goals
• Set up a realistic budget framework and learn how to track expenses
• Discover proven methods to help you eliminate debt
• Understand how to use credit wisely
• Win big by making smart decisions on your home and other big-ticket items
• Learn how to get the most from your investments by avoiding rash decisions
• Decide how — and how much — to save for retirement

Anyway, based on what I know about JD, it’s definitely worth reading!

February was a quick month, as it always is.  Normally I’d expect it would be an average or below average month for income.  This February turned out to be one of our higher income months and it wasn’t even a “3 paycheck” month for us.

A combination of factors helped boost our income this month and helped us add a solid $5500 to our savings account in February.  The first factor was the blog.  There were a few renewals as well as some new business.  I book the entire prepaid amount for advertising in the month that I receive payment (as opposed to averaging it across the subscription period), so I saw a bit of a spike in the blog income in February.

The second contributor was my annual bonus at work.  It wasn’t as large as it has been in the past but it was better than zero and definitely helped increase our income for the month.

Along with the extra income, we also locked down our spending more than we have in quite awhile.  As I reviewed our Mint.com spending summary for February I was happy to see that we only exceeded our budgeted spending by a few hundred dollars.  That’s mostly my fault because I bought a new audio receiver from Newegg.com that was ridiculously priced (low).  No regrets.  The other area that we were over budget on was our food/dining.  Not a big surprise.  We usually overrun this, although we are trying to do better at it.

Needless to say, I’m happy with how the month turned out from a budget perspective.  I’m also fairly optimistic about the rest of the year as we don’t anticipate any major expenses this year.  Luckily most of the big expenses are out of the way for the foreseeable future.  We shouldn’t need a car for the next 5+ years, we have a new roof and new siding on the house, and the lake house construction is basically complete.  Sure, we could probably come up with a few ideas on how to blow a bunch of money, but the overall theme at our house this year is going to be SAVING!  If we are able to control our spending we should be able to double our savings through 2010.  With the potential instability with my employment next year, frankly, the more we save, the better.

It’s been a tough week.  There’s really no other way to put it.  Layoffs at work have hit closer to home than they ever have before and the overall mood in the office is absolutely horrible.  Since last Friday I’ve been slowly hearing about many friends and really good employees that have been given their layoff slips.  Why?  Because the company has decided to try to outsource as much as they can to improve the bottom line.  Did they have to?  No.  We showed a very good profit last quarter and I believe we’ll continue to see very good returns.  I definitely feel a bit bitter about the whole situation and am really kind of mad at my company right now, and I didn’t even get a layoff notice!  Okay, enough about that.

I read an article today that talks about a recent Slate commentary from Charlie Munger titled “Basically, It’s Over”.  If you aren’t familiar with Charlie Munger, he’s been the sidekick of Warren Buffet for decades and I consider him to be pretty damn smart.  While you can always find gloom and doom articles out there about the end of America etc etc, I’ve always been impressed with both Warren Buffet and Charlie Munger.  They have always seemed incredibly honest and they have a great way of putting things.  So, when I read the article, I have to admit, it put a bit of fear in me.  I’ve often wondered how long we can sustain the massive debt levels that we’ve seen over the last decade (and beyond).  There is not a limitless supply of money or resources in this world and sooner or later all the excess spending at the government and personal level is going to come back to haunt us.  It appears that it might be sooner than later.  I found the comments about “blind optimism” to be very interesting.  While I haven’t studied history as much as I should have, I do know that we’ve seen many societies rise and fall.  It’s fairly likely that eventually the US will fall from world dominance and now seems like as good a time as any.  With trillion dollar deficit spending, the rise of a global economy and educated global workforce, rising unemployment and consumer debt levels that have never been seen before, it’s not a tough case to make for a rather gloomy future.

On the plus side, I just saved a ton of money on my car insurance……

Anyway, go check out the Yahoo article and the original Charlie Munger article as well.  Definitely worth reading.

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Another week, another free breakfast.  IHOP is giving away a short stack of pancakes today from 7 am to 10 pm.  There probably won’t be quite the lines that there were for the Denny’s giveaway, but you don’t get as much food either.

http://www.ihoppancakeday.com/pancake-day-details.html

In a sign that not all people are capitalistic monsters, Bob Moore, the founder of Bob’s Red Mill in Oregon, has decided to give his company to the 209 employees that work there.  Bob could have sold the company for a large sum of money but decided that money isn’t everything.  WOW!

Bob has turned down a number of buyout offers over the years and the business continues to grow steadily.  A company news release shows that they are growing over 20% annually.

In order to qualify for a stake in the ownership, an employee needs to be vested over a three year period.

I’ve been down to their retail store in Oregon and was very impressed with the operation.  I have purchased a number of their gluten free products and have never been disappointed.  It’s a great company!

Anyway, I just love reading stories like this.  It seems to blur out many of the other negative stories out there about “profit at all cost”.  I bet Bob sleeps pretty darned good at night!