Everybody Loves Your Money

I’m sure, if you are like me, you’ve read more than a few articles about whether money buys happiness.  I happened to read the latest version on Newsweek.  I particularly liked their comments on each consumer being trained to want more and earn more.  It is true that our economy thrives on increased growth and production.  Anyway, here’s a quote from the article that I liked:

“If more money doesn’t buy more happiness, then the behavior of most Americans looks downright insane, as we work harder and longer, decade after decade, to fatten our W-2s. But what is insane for an individual is crucial for a national economy—that is, ever more growth and consumption. Gilbert again: “Economies can blossom and grow only if people are deluded into believing that the production of wealth will make them happy … Economies thrive when individuals strive, but because individuals will strive only for their own happiness, it is essential that they mistakenly believe that producing and consuming are routes to personal well-being.”

So, next time you pull some equity out of your house and buy a new 96″ flat screen TV for your wall, just remember.  It’s not as much for you as it is for the rest of us.

Prostitutes aren’t exactly known for their good money management skills or financial knowledge.  Most of them are in a vicious earn, give to pimps and spend cycle.

In India, a group of over 900 prostitutes has started their own bank so that they can start saving and, hopefully, pull themselves out of the vicious world of prostitution.  Many of them have the same dreams as everyone else.  Save for an education, buy a house, or save for a future they hope to have.

There were a couple points in the article that I found interesting.  First, they were saving very small amounts of money, but they were still saving.  They certainly act as inspiration for those people that think they don’t make enough money to save.  Secondly, they take their money to the bank daily.  I’m sure they aren’t in an environment that really gives them a place to keep their money, so the daily bank visit helps them keep the money safe.  Third, they recognize that no one is looking out for them and it’s up to each of them to take care of their situations.

Anyway, I just found it interesting and thought you might too:

http://seattletimes.nwsource.com/html/nationworld/2003977799_bombay27.html

It’s done.  I sold my 2006 Toyota Tacoma and am now driving a 2000 Toyota Tacoma.  While it was a bit stressful to do, I don’t regret it one bit.  The 2000 has only 55,000 miles on it and should last for quite some time.  I ended up getting about what I wanted for the 2006.  The check has cleared and the money is in our account.  We’ll be using a bit of the funds to get the sheet rock in the lake house completed.  Once that is done, we’ll do some painting and then we will be doing all the finishing work.  At this rate, I hope to have occupancy by early spring.

It’s nice to look at our net worth charts and see that cars are a very tiny portion of our overall net worth.  The less depreciating assets on the books, the better.  As the lake house is completed, I’m also looking forward to funding my 401K more aggressively.  In the past I was contributing up to the IRS annual maximum but have had to pull back from that a bit to use the funds on the lake house.  Currently we are only contributing 8% of my income, along with the company match of 6%.  Contributing 14% to your 401K is pretty decent but it puts us just shy of the IRS maximum so we’ll be trying to increase that soon.  I fully intend to roll all of next year’s raise in to the 401K each month.  That should easily put us over the mark.

I’d like to say I’ve learned my lesson on buying new cars.  I’ve had a couple episodes where I bought brand new cars, only to sell them less than 2 years later for a loss.  How does that saying go, “Fool me once………”.  Yeah, I don’t learn very easily when it comes to cars.  I think I need to recognize a couple things about myself.  First, I’m rather indecisive and can easily change my mind on something.  Second, I love cars and always will.  With this in mind, my new goal will be only to buy a car that I know I can sell later and break even on or make a bit of money on it.  Not easy to do, but also not impossible.

The hope, for now, is that we have two reliable cars that will go many more miles.  We have a Toyota Tacoma, like I mentioned above, and also a 2000 Honda Accord.  Both of these cars have strong resale values (a sign of quality) and also are known to be quite reliable.  We’ll be banking on that for the next few years.

I posted about a week or so ago about the fact that I bought an older used truck and am selling my 2006 Toyota Tacoma.  I need some advice on how to handle the transaction.

Here are the details:

Received a token few hundred dollars via Paypal to hold the truck

Buyer is from Vancouver BC (a few hours north of where I live)

He is happy to pay me in whatever method I request

So, here are my questions:

What is the best way to have him pay me for the truck?

Is there a way to have his bank wire my bank instantaneously?

What about dealing with the currency conversion?

Could I have him Paypal me the whole balance or would Paypal take a chunk?

Are there any sites or pages that you’ve seen that offer any advice?

Also, do I have additional responsibilities when selling to a Canadian?

Basically I’m trying to make sure that the transaction is safe for me.  HELLLLLLLLLP!!!!!

This is all going down next week.  He is trying to arrange a ride down for early next week so I’m not going to have too much time during “business hours” to research this.  I’m hoping the PF blogging community might have some experience with this collectively.  I appreciate anything you can tell me!

Thanks!!!

Everyone likes an instantly wealthy person.  I have a special fondness for the newly rich.  No, I don’t have a business proposition for you.  Nope, don’t need a loan either.  I just care about you and your pile of cash.  I want you to be successful like my good friend Brad Duke.  (okay, he’s not my good friend and he doesn’t even know me, but I have a lot of respect for him.)  Good old Brad Duke is one of the few lottery winners that hasn’t had to go back to eating Top Ramen.

Why is it that lottery winners so often find themselves broke and depressed after only a few years from winning their loot?  Well, there are a ton of pitfalls they encounter.  Let’s look at a few of them.

Cousin Earl:

Just about everyone has a cousin Earl.  You know the guy.  Scraping by month to month on a low income from an entry level job.  You won’t even have the oversized 2 foot by 4 foot check in your hand before Earl calls.  “Hey good buddy.  I heard you won the lottery.  Can you help me out a bit?  If I can just get a little bit of cash, I can finally get myself out of this dead end future and on to bigger and better things.”  Earl most likely won’t boost himself up with your new winnings.  There’s a good chance that Earl will hire himself a few working ladies and buy a few rounds at his favorite watering hole.  Don’t give Earl a nickel.

Old high school buddy:

Geez.  You haven’t talked to old Bob for 20 years.  It was great to hear his voice.  I’m sure it was a coincidence that Bob called you two days after you won the lottery.  I bet he just saw your name in the paper and said, “Gosh, I haven’t seen him forever.  I’m gonna see what he’s up to.”  Except, Bob knows what you are up to.  You are up to your eyeballs in cash and he wants to get a little taste.  Tell Bob it was good to hear from him and you’ll give him a call in 20 years.

Concerned Citizens for the Preservation of Spam:

Spam (the meat byproduct) is an important part of our society.  Hell, it’s an important part of this world.  Of course that depends on who you ask.  If you ask the Concerned citizens for the preservation of Spam, they’ll tell you that there is a serious crisis.  Spam sales are down.  The security of our country is at risk.  I mean, if we had a huge man made or natural disaster and the assembly lines weren’t cranking out adequate volumes of Spam, we could all starve.  It’s all crap.  Don’t worry.  We won’t all die if they don’t build a museum of Spam history.  We’ll be okay if you don’t personally give some of your newfound wealth to Spam Incorporated.  Hint: Don’t get too caught up with the Spam theme.  If you win the lottery, you will be approached by every organization on the planet asking for money.  Tell them all to move on.  There’s no gravy for them in your gravy train.

Are you starting to get the idea?  Before you give a cent of the money away, think about how this money could benefit you in the future, as well as some well thought out charities or family members.  The key here is to get the money working for you.

Now, substitute lottery winnings with a few other windfall situations.  Inherit some money?  Same rules apply.  Just hit it big with the latest tech stock?  Same rules apply.  Is there a huge fountain of thick black oil coming up out of your lawn?  Same rules apply. 

Money is not a “here and now” thing.  If you win the lottery or come in to a large amount of money, stop thinking about the lump sum you are going to receive and start thinking about the income that lump sum is going to generate for you.  If you win $10 million dollars, it’s not really $10 million dollars.  It’s more like 5% of $10 million dollars each year for the rest of your life.  For all of you liberal arts majors (myself included) that comes to $500,000 every year for the rest of your life.

Okay.  Now that we’ve got all that out of the way.  If you recently won the lottery and have found any value in this post at all, please send a large donation to:

ELYM

PO Box 55543

Seattle, Wa 59102

Or better yet, leave a comment and I’ll contact you shortly.  (and by shortly I mean, the second I read your comment)

Happy Sunday morning to you.  Here are a few links I came across this morning:

Retire in paradise, whatever that might mean to you:

http://seattletimes.nwsource.com/html/businesstechnology/2003948199_overseas14.html

Not enough to retire?  Start a home based business.  10 million other people are:

http://seattletimes.nwsource.com/html/businesstechnology/2003948225_sellathome14.html

1 in 5 families are struggling to make ends meet:

http://www.marketwatch.com/News/Story/even-jobs-41-million-americans/story.aspx?guid=%7BC5F1A412%2DD153%2D4477%2D96DE%2D9CEA8CA63DCB%7D

Are credit cards the next major crisis?

http://www.baltimoresun.com/business/bal-bz.hancock10oct10001523,0,987590.column?coll=bal_business_util

MadameX realized she’s been loaning her money to the banks a little too cheaply:

http://www.myopenwallet.net/2007/10/what-should-i-do-with-all-this-extra.html

If you are a long time reader of ELYM you know that I tend to make some rather “out of character” moves now and then.  Usually these out of character moves have to do with automobiles.  If I was smart, I think I’d just sell everything and head on over to become an Amish man or a Mennonite.  At least in their culture, there is one kind of transportation; a black cart being pulled by an animal that poops right in front of you.  While the poop doesn’t sound too appealing, the lack of choice in vehicles might drastically improve my long term finances.

I bought another truck.  Before you pummel me and excommunicate me from the rather large “circle” of personal finance bloggers, please hear me out.  For starters, I have hated my new Toyota Tacoma since I bought it in 2006.  I think the quality sucks and Toyota just wasn’t able to make it right.  I’ve been driving it for about a year and a half and have watched it depreciate (although not as badly as many other brands).  With the huge commitment to build our lake house, I could really use the money that I’ve got wrapped up in the truck.  I paid cash for the truck originally so it really is a lot of money to have tied up in one automobile.

So here’s what I did.  A friend of mine announced that he had decided to buy a new truck.  He bought a 2000 Toyota Tacoma brand new back in 2000.  Ever since I bought the 2006 Tacoma, I’ve missed my old 1997 Tacoma.  More than once, I’ve wished I could go back in time and not have made the 2006 purchase.  Since I can’t do that, I’m doing the next best thing; cutting my losses.  I was able to buy the 2000 at a very good price.  It is 3 years newer than what I had before and has half the miles.  By my calculations, I should be able to get many years of loyal service out of it.  The best part is that if it breaks, I know how to fix it.

What am I doing with the 2006?  I’ve got it all cleaned up and have put it up on Craigslist for sale.  So far I’ve had a few “virtual tire kickers” and am hoping to convert them in to real tire kickers in the next couple days.  Once the sale is complete, I’ll have a TON more cash that we can use to finish up the lake house.  The sooner we get it done, the sooner I can start accelerating paying off the lake house completely.  Believe me, it will feel great to have one house paid for and the other with over 50% equity in it.  It’s all part of my master plan to build wealth in multiple ways.  This plan would be much easier to execute if I’d quit sandbagging myself by buying a new automobile during moments of weakness!

So, one million isn’t enough for you, right?  I know it’s not enough for me.  I know I need much more than that.  Will $2 million cover you in retirement?  If so, are you on the right path to meet that goal?  About how much money should you have at your age?

Age 65: $2138558

Assumptions:

You put away $4250 per year (notice you have to save a lot more than when you are saving for a measley one million $)

You earn 9% on your investments (yeah, I cranked it up 1% from last time)

Observations:

Notice how the money takes on a life of it’s own as you get older and your investment balance increases?  Your individual contributions tend to matter less and less as you get closer to age 65.  I love compound interest.

File this one under “amusing time waster”:

http://www.mcvideogame.com/game-eng.html

Someone took the time to build a Mcdonalds simulation.  I’m sure the folks at McDonalds aren’t very happy about it but if you give it 10 minutes, I think you’ll find it’s a bit addictive.

I was able to make decent money but I kept having to deal with pathetic employees, environmental groups, health conscious consumers, earth destruction and sick cows (to mention just a few of the things you’ll encounter in the game).  I think I’ll stick to my day job…….