Everybody Loves Your Money

If I ever have ridiculous sums of money, I think you’ll find me on a tour like this:

One thing that I’ve been doing is trying to learn more about stocks.  I have a friend of mine who damn near seems like Warren Buffet.  He learned his skills from a family member and has shown me some amazing stocks.  I’m not someone who just wants the latest stock “tip”, rather, I’d prefer to understand how to find the stock myself.  So, over a few lunches, my friend has been showing me a few things.  I’ve only forgotten about half of what he has said to me, but I guess that repetition will help.

So, picking stocks isn’t easy.  Over time I will perfect my skills and then be a plain old mediocre investor like most everyone else.  You know what’s going to make me different though?  The zoo.  I’m going to go to the zoo once a month and hold up large “flash cards” with stock symbols on them.  Whichever card the monkey points out first will be the stock I buy.  I know, I know.  It’s brilliant.  I may have to look in to a zoo pass though because monthly admission on top of the fees I’ll have to pay to trade the stocks will really start to add up.

Mutual funds seem like they’d be so much easier.  The only problem with mutual funds is a WHOLE BUNCH of them suck.  Their expenses are high and their returns are TERRIBLE.  I have taken the approach of just buying index funds.  It seemed easy enough.  But, you know what?  That isn’t so easy either.  It turns out that some index funds are performing far better than others.  Take the S&P 500.  I have been investing in that for the last couple of years.  Too much as a matter of fact because the returns on the S&P haven’t been that good.  A few months ago I moved some money over to an international index and a Russell 2000 small cap index.  Guess what.  They are kicking some gluteus maximus.  (Yes, I spelled that correctly without a spell checker) :)  Anyway, I’ve learned a couple good lessons.  I feel a lot better about my portfolio now and have even gone so far as to purchase a value investing fund that has very low expenses and has had a strong return year over year.  Long term I think these choices will pay off.

What’s your method for choosing funds?

My wife and I have been talking and she is considering a career change when she goes back to work.  She has been staying at home with our daughter for almost 3 years, but we know that we want her to go back to work at some point. (not that what she’s been doing at home hasn’t been work).

She currently has two bachelors degree.  Neither of them are degrees that will let her earn a good living, although they do make her quite employable.  Over the first few years that we were married, she found that she wasn’t particularly enjoying her line of work.

So, she is considering going through a masters in teaching program.  The total cost of the program would be about $26K.  Once she graduates from this program, her income would be nearly $36k per year.  This represents about a $4k premium to what she would make if she continued working in an office environment.  So, it would take nearly 7 years to see our return on the investment.

Besides the financial aspects we have to consider, we also need to be thinking of lifestyle benefits.  If she became a teacher, she would have a similiar schedule to our daughter’s once she was in school.  She would really like to teach and believes that it would be fulfilling.  I kind of like the idea because it’s a very portable skill set.  Eventually, we could move to another area and she would be able to bring her teaching skills/certificate with her so that she could find employment pretty much anywhere.

So, that’s what the discussion is around our house these days.  Anyone have any advice?

I have a confession to make.  You know all that talk a couple months ago about being tempted to buy a new truck?  Well, it happened.  I bought a 2006 Toyota Tacoma with pretty much every option you could get on it.  It’s amazing and I have to say, I’m not having any post buying regret.  I wrote a check for the entire purchase.  It ate up a decent chunk of cash, but overall, I’m happy with the decision.  I still need to sell my old truck, which should bring me about $10K to pay myself back.

So, as you can imagine, right now I’m thinking less about blogging and a little more about burning up some gas.  Feel free to send a few arrows my way.  It wasn’t the best financial decision I could have made, but it is me “living a little”.  Since cars have always been an obsession for me, it’s the one area I tend to be a little more lax on.  Of course, they are pretty much the worst item in the world to “love” since they are expensive and lose so much of their value over time.

By the way, I also received about a 5% raise this week.  Overall, I’m quite happy with that outcome too.

This morning I was going through our investments/assets/expenses which I keep in a custom excel document that I created a few years ago.  This spreadsheet includes multiple tabs, and a couple charts.  I call this my Financial Dashboard.  At a glance I can easily see all the figures that make up my net worth.  It also shows me what my expenses are, what percentage of my after tax income each expense is and how much left over money I should have after all investments, expenses etc are deducted from my income.  All it takes is one look at this page and I find myself motivated to push forward.  I’d guess I review this about once a week, more for the motivational aspect than anything.  I update the data about every two weeks after I’ve made a couple investments (401K, Roth etc).

This morning, I happened to look through my “investment” folder on my PC.  I found some older spreadsheets (about 8 years old).  As soon as I opened one of them, I was struck with how much I’ve changed in my financial outlook.  In the earlier days, I used to track my income and then just keep track of all the things that ate up that income.  At the bottom of the page, the total seldom included any left overs after all the bills were paid.  I was also struck with how many bills we had.  Not just any bills, but bills that were for excess purchases, and a couple cars.

On my latest spreadsheet, I keep track of those kinds of things, but the focus is so drastically different than it was 8 years ago.  Instead of focusing on all the bills, the majority of the spreadsheet is about net worth, passive income earnings, Point in time balances, estimated balance “look aheads” etc.  Anyway, it really has been a gradual evolution to be where I am at today.  I feel so much more empowered now.  I feel in control and content with how we are progressing now because I can easily see where we are at.

Okay, along the same lines as submitting a torn up credit card application and actually getting the card is this:

This guy decided to get creative on what he signed on his receipts.  He started out just using a different looking signature and progressed to writing square boxes, X’s, Mariah Carey, and on and on.  It’s worth a look.

I have to wonder what the point of all this security is if people can simply ignore them all.

http://www.zug.com/pranks/credit

About a year and a half ago, my wife and I decided to REALLY splurge and went out to dinner at the Keg restaurant near our home.  The Keg has outstanding steaks and the service is great.  While we were there, we noticed that they had a birthday club card to fill out.  It turns out that if you fill out the card, they send you a postcard each year during the month of your birthday for a free steak and lobster dinner.  This meal usually costs $28.99 but they give it to you with no strings attached.

Of course, we go together twice per year (once for her bday, and once for mine) so we end up spending about $25.00.  But, for that $25.00 we get a steak and lobster dinner, another steak dinner and a couple soft drinks.  That’s a great deal.  Each time, we’ve gotten a babysitter and have gone there as a “date”.  We always request a seat by the fireplace and the lights are low.  The atmosphere is great.

So, that’s what we did for dinner tonight.  I ate too much and had a great time.  They’ve definitely got me hooked twice per year.

Well, this is a bit scary! If you’ve never visited http://www.cockeyed.com, you gotta do it. In one of his latest experiments, he rips up a credit card app, just like many people do, and then tapes it back together and sends it in to see if they’ll send him a new card. Sure enough, he received his credit card app in the mail at an alternate address and was able to activate the card with a different phone number. No wonder identity theft is on the rise.

Click here to see the credit card experiment

Click here to see the TGI Friday’s menu experiment

Click here to see Target V Walmart

And his most in depth analysis of “Work from Home”

Warning!  Fark is overloading his site so the response time might be a little slow.

Well, I just read that Tivo is changing their pricing structure.  This furthers my speculation that Tivo is a dying company.  I’ve got Tivo.  If you recall, I got my 140 hour Tivo for free.  All I had to do was pay the first years subscription.  Any way you slice it, this was a good deal.  I fully plan to either get them to lower my monthly subscription after the year is up, or I’m going to sell this thing on Ebay.  If that doesn’t get me much, I might just keep using it without the schedule information.  (You can use a Tivo unit as a recorder, but you just have to pick the time and channel to schedule instead of using their super sexy on screen guide)  I love Tivo, but I’m not emotionally attached to it.  Basically, I love the idea of recording shows to a hard drive and being able to watch it on my schedule.  The only problem for Tivo is that they aren’t the only ones that can do this, and the PVR space is only getting more crowded with each passing day.

Now, before I poopoo on them too much.  Let me tell you what I like about Tivo:

I like their interface and menus

I like their remote

I like pausing live TV

I like having LOTS of shows on the Tivo that I can watch “on command”

Now, what I don’t like about them:

While their newest features (streaming internet music, movie listings, tie in’s with Yahoo) are neat, I won’t use them.  It’s just not something that I would find myself wanting to use.

I don’t like the slow response when hitting buttons.  (They used slow, inexpensive components to run their OS)

Anyway, it is looking like Tivo is frantically trying to tweak their business model to survive.  You can’t blame them, but I just don’t think their long term subscription model is going to work.

I can’t help but draw a comparison between good financial decisions and good eating habits. I’m not sure which is more important. I’d have to lean towards good eating habits simply because money isn’t too valuable if you are dead. (I suppose your heirs might beg to differ with you, but you get the point) Anyway, last weekend was brutal for my goal of eating well. I think I probably shaved a few years off my life. I won’t go in to the details, but needless to say, I added a couple pounds. This would be really bad, except for the fact that I’ve been sort of following the Weight watchers plan. I say sort of because I’m not actually enrolled in it, but I am using their tips and tricks to manage my food intake. Anyway, because I’ve been following this for a few weeks, it won’t be too dificult to recover from this binging.

So, how does this have anything to do with good money management? Well, just like eating habits tend to include the word moderation, so does good financial management. While I was busy eating until I couldn’t move, we also spent a little money this weekend. Nothing too drastic. We bought new silverware from Costco. Did we need it? Well, not really. We got about 8 years out of our last set. I think of it as renting. We also bought that set at Costco and I believe they had an average cost of about $6 per year ($50/8 years). If I can average my cost down that low on everything we buy, I think we’ll be in good shape. How could we have been extreme on this purchase? Well, we could have bought the really expensive brand from a major department store and spent 5 times as much. Would that silverware have made my food taste five times better as it went in to my mouth? Nope. Would my friends and family have been 5 times as impressed with my silverware? Nope. Would I have felt better about myself using really expensive silverware? Nope.

I think that the silverware we bought is the good stuff because it says “China” on the back of every piece.