Everybody Loves Your Money

I saw high definition television last weekend. We were visiting some family and they have a very nice HD tv and subscribe to the HD service from Comcast. You know something? It was beautiful. We watched a little bit of football and I was sincerely blown away by the quality. Some day I’ll be able to watch tv like that.

Why not today? Well, because I’m a cheapskate. To buy a comparable television would cost me somewhere around $1500 to $2000. Then, on top of that, I’d have to get digital cable and also add on the HD signal. All told, it would set me back nearly $90 per month. While I really like the picture, I also like the picture in my head of my wallet stuffed with money. I’m going to pass for now.

Needless to say, I think I’ll be stopping by my sisters house more often to watch some tv.

I was making my way around all of the PF blog sites this morning and came upon a site that chronicles the happenings of a guy who is doing a lot of web based marketing. He called it affiliate marketing and talked a lot about click throughs and pay per click. As I looked around and explored his links, I found another site that actually linked to their site that they derive income from. It was pretty interesting. It basically was a list of articles that they had written with a ton of ads integrated in. My first thought was it’s the equivalent of html based SPAM. You know what I’m talking about. A web page that exists solely for them to put ads on. The content was pretty weak. Is this what it’s all about?

I’ve been posting to this site because I find it therapeutic. At best I’m hoping that I’ll get enough income from this site to cover the hosting costs now that I’m not on blogger.

Maybe I should consider putting up a few other sites. I’m not sure what I’d post on them, and know that my time is limited enough that I probably wouldn’t make a ton of progress on it. I think I’ll just work an hour or two of overtime and call it good. I know that defeats the purpose of passive income, but I can make so much more money in such a short amount of time, compared to the amount of effort I’d have to put in to other sites. What do you think?

Signed,
Passive Incomeless in Seattle

You have to smile and think, “Amazing” that we’ve sunk to such a low. How did they do it? What did they do to turn so many Americans in to crazed lunatics. Running, screaming, shrieking as they push each other out of the way to be the first person in to a Walmart, Sears, ToysRUs, etc.. Yes, $397 is a pretty good price for a laptop, but is it worth standing in the rain for hours, freezing, just to get a “chance” to purchase one? Oh, they are giving away a free doughnut? A cup of coffee? Neat.

I hope that all these people planned these expenditures. Something tells me that a large percentage of them are going to put these purchases on credit cards. So, while they get a lower price on the latest “Tickle me Elmo”, or $5 off a purchase of $50 or more, they end up paying 5 times that savings in finance charges as they carry this debt for the next year. Just about the time that they get these purchases paid off (yeah, I’m making the generous assumption that everyone will pay these purchases off within 12 months), it will be time to do it again. If these folks would just catch up, then they could save themselves some REAL money as they paid cash for everything and avoided all the finance charges. It would be like an 18% discount all year round. Call me crazy.

And since when did they start calling it Black Friday? Let me get this straight. We have declared Nov 25th as the first official day to start buying gifts for our friends and family for Christmas and we named it “Black Friday”? WTF. Black Friday sounds like the day that millions died. They were all hit with some sort of plague, or disease. Oh, maybe that’s it. Millions of Americans have been hit with a disease called consumerism.

http://money.cnn.com/2005/11/23/pf
Well, I never thought I’d actually link to an article about Billy Graham, but here I am linking to it. He articulates that Americans shouldn’t spend so much money for Christmas and cites the rampant consumerism that is so prevalent these days.

http://money.cnn.com/2005/11/22/pf
An article that gives tips for dealing with paying for all this consumerism

http://today.reuters.com/news/newsArticle.aspx
Debate over what is going to be the HOT item of the shopping season. My bet is flat screen tv’s and monitors, but I guess we’ll see.

http://finance.yahoo.com/columnist/article/moneymatters
Suze gives us 4 ways to avoid overspending this holiday season. Hey Suze, I thought you recommended we all buy new vehicles. Didn’t you say that was “smart”? Oh, never mind, that was just you selling out for a buck.

http://www.marketwatch.com/news/story.asp
How about some alternative gift ideas that all of us personal finance bloggers might like?

http://www.capitolhillblue.com/artman/publish
Consumers are wary this shopping season, at least that’s what this guy thinks. Just in case you are worried about your coming heating bills, many companies are advertising early to get your money before you need it for energy.

Well, the articles on interest rates and variable rate mortgages are starting to flow pretty heavily now. I guess that’s to be expected. If you recall some of my previous posts about variable rate mortgages during the lowest interest rate period in 40 years, I was questioning if variable rate mortgages were the right decision for people. A lot of people got them. Not only did they go for variable rate mortgages, many also aren’t paying any principal for the first X number of years.

So, here we are. Rates are rising and the panic is starting. (at least in the media). I’m very grateful that we decided to lock in a fixed rate loan so that we only have to worry about taxes increasing our payment. If you have a variable rate loan, you may want to consider looking in to refinancing to a fixed rate loan soon. The experts are predicting we could see high 6% to 7% mortgage rates within the next year.

So, since the only debt we have is a fixed rate mortgage, I’m actually hoping for much higher rates. I’d love to get a higher return on all of my short term investments. I’m getting 4% at Emigrant, but I’d be happy to get 5-6%.

Are you concerned about the rates going up? Or are you happy about it?

I worry a lot. I suppose that’s one of the reasons that I save. There is too damn much uncertainty in the world. There is not a very big part of me that wishes I’d been born one generation earlier, but there is a little. I mean hell, One generation ago they didn’t have:

-Personal computers
-Ipods
-Microwaves
-Cellular phones
-Cruise control
-Our level of quality health care
-Not to mention a ton of other modern conveniences

On the other hand, they also didn’t have:

-Current level of violence
-Indian call centers
-Chinese garment makers
-Extreme capitalism (returns at all cost)
-Soaring health care costs
-Declining pension plans
-Social security at risk

Which brings me to my personal worries. You probably got a flavor of what I worry about in the bullets above, but just in case you didn’t. Let me give you my list. I worry that:

I won’t have a long healthy life
I won’t be able to retire with enough money to have security
I won’t be able to keep my job long term (due to outsourcing, automation etc)
I won’t have a pension when I retire
I won’t get any social security
My children won’t even have the opportunities that I do today
Our country won’t be competitive globally
We’ll all end up working at McDonalds or Walmart

So, what do I do? I save, and then I save some more. Not to the extent that I’m not enjoying life now, but I do save a LOT. The higher my net worth, the more options I feel I have and the less I have to worry about the above. Every day that I see my net worth climb, I worry a tiny bit less. I can’t wait until I reach my magic number where I feel I have enough security to tell all my worries to go screw themselves!

I’ve decided to start a new campaign. I call it “Paper or Plastic”. Let me explain.

Plastic = credit. You know what this is. 18% interest (or worse).
Paper = cash. We all know what this is. Greenbacks.

I believe you should always use paper. ALWAYS. Sure, there are a few people out there that have the self discipline and knowledge to use credit to their advantage (Jonathon), but for everyone else, you should strive to use paper. Here’s a short list of things:

Groceries: paper
Gas: paper
Entertainment: paper
Eating out: paper
Mortgage: plastic
Everything else: paper

Okay. That pretty much covers it. In my humble opinion, the only thing you should EVER finance or carry debt on is your home. When I say home, I don’t mean, home equity lines of credit to buy consumer goods, I mean, just mortgage payments.

If you need further incentive to use paper instead of plastic, consider this. If you’ve been using plastic (and not paying it off at the end of the month), you are paying more for everything you buy. How much more? Depends on what interest rate you are paying on that debt and how long you carry the debt. But, if you have been on the roller coaster of credit card debt and then get off of it, you instantly give yourself a discount on everything you buy. If you were paying 18% interest on your credit card, it’s like you’ve suddenly been given an 18% off discount on EVERYTHING you buy. Now that’s a deal!

So, when you buy something, pay with paper, and take it away in plastic!

I was going to try to say something smart tonight but I realized that I let my company suck all the words out of me today. I guess I’ll just sit here and seek out other’s words.

On a separate note, I did get another raise. (Second one in 2 months). Last time was a 10% raise. This time it’s another 5%, although it may be temporary, as I’m filling in for someone. Oh well. I’ll take every bit I can get. That helps me jump up to almost 30% surplus income after all investments and bills are paid. I guess I better start trying to figure out something smart to do with this money.

I’m anxiously awaiting the $300K net worth mark. By my calculations, I’ll probably hit it some time in the first quarter unless the stock market and real estate market flatten out. I’ll cross my fingers.

And, in the spirit of rambling: Is it just me, or are the personal finance blogs multiplying faster these days? I’m having trouble keeping up. I did find a new site that is trying to collect as many of these sites as possible. It’s at: http://www.moneyandfinancenews.com
Check it out!

Create Some Good Fortune for Yourself

You may have heard this statement before, but I’d like to make it for those of you who haven’t heard it:

If you don’t ask, the guaranteed answer is no!

Now, with that in mind. Here’s a list of things you can do to try to lower your outgoing expenditures:

Call each credit card company and ask them for a lower rate. Tell them that you are considering moving your debt to another card with a lower interest rate and see what they say.

Call your phone company and ask them if they have a lower priced plan that has a few less features. Ask them if they have any new plans that would give you basically the same features at a lower price

Call your cellular company and ask them the same things as you did to your phone company.

Call your cable company and ask them if they have any plans that are cheaper than what you are paying today. Tell them that you are considering changing to satellite because you saw a free equipment and free install promotion with a lower monthly payment

Call your internet company and tell them that you are having trouble meeting your bills and are considering changing to a lower priced internet service. Ask them if they have any slower speed plans that cost less. Don’t let up on them. Tell them that you will probably have to cancel once you sign up for the other service that is cheaper. (if you have cable internet access, tell them that you are considering switching to the low cost DSL. It doesn’t matter if it’s not available in your area. They don’t know that.

Call your garbage service and ask them if they have any less expensive options. Do you really need yard service? Would it be cheaper to buy your own garbage can at Home Depot and then cancel your monthly rental of their tub?

Call your insurance company and ask them if you can lower your cost by increasing your deductibles. Insurance is becoming less and less a tool to cover small expenses and they usually increase your premiums if you make small claims. Insure yourself for the first thousand and save on the monthly premiums.

Call any companies that you have high interest debt with (department stores etc) and ask them for a lower interest rate. If they say no, pay the debt off with a lower interest credit card and then cut up the card.

Did you just get charged a fee for a transaction at your bank? Call them and ask them to take it off. If you are a good customer, most of the time they’ll take the fee back off.

Any other ideas? The point here is that you have to force the companies you do business with to give you the best possible rates, services etc. They won’t call you to lower the price you are paying for their services.

Man. I have got to start buying the more expensive gas from the ridiculously overpriced gas station down the street. Today we filled up the tank at Costco. Gas was $2.34 per gallon. We haven’t seen it that low in a LONG time. If you have read this blog for awhile, you know I am a huge Costco fan. I love their prices, and I love the way they take care of their employees by giving them a decent wage and decent benefits. I think that their employee strategy is paying off because I always find that their employees are helpful and happy. And, even in a huge store like that, the faces become familiar because they don’t have such high turnover. Okay, back to my story. So, there we were. Gas tank was full and we were getting ready to continue our drive home when I said, “Do you want to go in to Costco and look around? [This is where I make the mistake]. We go in.

Did I mention I love Costco? I find myself mesmerized by some of the GREAT stuff they have there. Well, while I was in my trance, I came across a new faucet for our kitchen sink. When we moved in to this house about 3 years ago, the kitchen faucet had to be replaced. It was the one thing in the house that really needed some work. So, I went to Home Depot and bought a cheap faucet. [This is yet another mistake that I made 3 years ago] I think that faucets are one of those items that you just don’t want to skimp on. Yeah, I know, I’m all over the map with this post, but, needless to say, we needed a new faucet. So, we bought this really nice one at Costco for about $70. Add to that a few other items, and we ended up spending a hundred bucks. All because we stopped for gas.