Everybody Loves Your Money

Free Money Finance is having a March Madness event that is highlighting the best of the best personal finance blog posts. He’s pitting two great articles against each other in a series of games. It’s a great way to check out some quality personal finance articles and broaden your reading list of good PF Bloggers.
Go check it out!

If you do any blogging on the Internet, I’m interested to know what blogging platform you use. I’m really interested to hear what type of desktop blogging software you are using in conjunction with Wordpress. I’ve been having trouble with Windows Live Writer with Wordpress. It only seems to work for a little while after I upgrade to the latest Wordpress version. After awhile, it stops working and I have to use the web Wordpress interface until the next Wordpress upgrade is published. Anyone else having that kind of experience?

We spent the weekend out at our lake house in the Hood Canal area of Washington state. We had a nice, low key time there and mostly just enjoyed spending time with family. We’ve been trying to keep the costs of going out there low by not heading to the grocery store on every trip out and instead just pulling what we have in the cupboards at home to cover the meals for the trip.

Me, being the social butterfly that I am, spent time talking to a few of the neighbors and friends out there. I spent a couple hours with one friend of mine who is really struggling right now. He is faced with $5000 a month in expenses and has very little income due to the tough sales environment for the products he sells. So far he has liquidated a couple items to help cover the mortgage but the prognosis for the long term isn’t very good. He has been trying to sell his house “by owner” but has not had any calls so it’s looking more and more like he may be heading down the path of walking away, although he really doesn’t want to do that. Without a doubt, he’s spending a lot of his free time fretting about his financial situation. I can tell it has been really dragging him down. As he opened up about his expenses, I offered some advice on cutting his monthly costs. In the span of about 15 minutes I had demonstrated how he could reduce his costs by about $200 per month. His initial reaction to that was, “I need to lower my costs by $2000, not $200”. I pointed out to him that $200 per month is $2400 per year. I asked him if he realized how much money he’d have to have in savings to generate $200 a month in interest. As we talked further, I think I started getting through to him that managing expenses aggressively can help more than he realizes. My hope is that he sits down with his finances and has an honest internal conversation about what he really needs to survive. If I was in his shoes I think I could shave about $1500 a month off my expenses within 30 days. It would take large sacrifices and impact my standard of living significantly, but there’s no question that it’s exactly what the financial doctor would order.

During the same weekend I also spent time with my sister’s family and some friends of hers. Her friends were actually up visiting for the weekend to scope out potential land and existing houses that are for sale in the area. Most of the attention was targeted towards a bank owned house two streets up from the lake. They had a realtor meet them there and they walked through it and I think they were somewhat interested in it. This house was for sale last year for $165K. At the peak of the market, it probably would have sold for somewhere near $200K. It’s now bank owned and the most likely sales price will be somewhere around $115K. That’s cheap enough that I’ve considered buying it as a rental if my sister’s friends don’t follow through on the purchase.

I found it interesting to spend time with someone that is so close to financial doomsday, and then, during the same weekend, to be watching a family consider purchasing a bank owned home as a vacation property. It was striking to have such different conversations with two people in very contrasted situations. There’s no question that each of them have very different relationships with money. One has been fairly freewheeling with their approach to money (but might be somewhat offended that I say that as they probably don’t realize it), while the other has clearly been much more conservative about saving money. I’ll let you try to figure out which is which……..