Everybody Loves Your Money

Wow.  Yesterday was a busy day.  No, it wasn’t too bad at work and I didn’t have much to do around the house, but I sure was busy looking at all the things I could blow my money on.  I don’t know why, but I had an incredible urge to spend money yesterday.  I started by looking at Dell’s new 9" mini laptop.  Wow, that looks neat.  As I admired the size and capabilities of it, I ran through all of the "good" reasons I should buy it.  It would be handy for sitting in the family room watching tv.  I could watch a show and keep up with stuff online.  Never mind that I already have a laptop.  This one seemed "better".

While I was looking at the Dell mini laptop, I couldn’t help but notice their full size 15" Studio laptops.  Those look very nice.  I think I must be drawn to them by their thin size and similar features to the Dell XPS laptops.  In the end, I didn’t buy either of them.

A little while later I started looking at new cel phones.  My contract is up in April and I’m probably going to switch away from Sprint.  I never thought I’d say this, but I’m seriously considering an Iphone.  Of course, I’ve got a lot of time to lust after an  Iphone since my contract doesn’t expire until April.  I went to ATT’s website and chose the phone and calculated out what it would cost each month to use it.  For a family plan with 2 phones I’d be paying $83 a month (with corp discount) before all of the extra fees.  That includes texting and unlimited data (because why on earth would you get an Iphone without unlimited data access?).  The price also includes a standard phone for my wife.  Currently we pay about $55 for two phones (including fees) so this would be a drastic increase in cost.  Is it worth it?  I don’t know but I’ve got a few months to decide.

Last night as I was watching Seinfeld episodes on my Tivo, I decided to surf the web with my laptop.  Last weekend I DJ’d a  party at our lake community and it was a BLAST.  I’ve done this a couple times before and always really enjoyed it.  I started thinking last night, "It sure would be cool to have some lighting effects next time".  Without hesitation I was off to Ebay to look at what was out there.  I searched for "DJ lights" and found a ton of very cool lights.  My favorite are the LED versions that move around and throw tons of light on the floor.  The good news is that they are only $69 plus shipping.  I didn’t buy one.

I was able to squash all of my shopping impulses yesterday but I have to admit there were a few close calls.  I need to come up with a method for shocking myself back in to reality.  Sure, I’d love to have any of these things but I’d love to have my house paid off even more.  A new laptop or DJ light won’t help me quit my job earlier.  It certainly won’t help me pay off my house sooner.  I think I might make a card with a simple question on it.  "Will this purchase help me meet my financial goals?" 

Got any ideas for a better question for the card?

CNN has an article that talks about some of your options when you are hit with medical bills that you can’t afford.  It’s definitely worth reading.  Just because you have insurance doesn’t mean you won’t find yourself in a difficult situation.  If you don’t have insurance, it’s even more important to read this article.  It’s amazing what you can get when you simply ask!

Here are the key mistakes people can make:

1) You ignore your bills

2) You don’t look for errors in your bills

3) You don’t negotiate the price down

4) You’re embarassed to ask for financial assistance

5) You don’t work out a payment plan

Anyway, go check out the article.  It’s worth the few minutes it will take to read.

After 15 years of paying premiums to Allstate, I have finally started the process of shopping for a new insurance company.  I can’t say I’ve been unhappy with Allstate but it’s time to see if they are truly giving me a good deal or not.  A couple things have caused me to do this.  First, I’ve read too many times that you should do some comparison shopping on your insurance once in awhile.  I’d say after 15 years, it’s time.

The second reason I’m shopping around is because of a massive insurance claim I handled for my parents over the last 1.5 years.  In December of 2006 my parents had a massive fire at their home.  Two weeks later my dad passed away.  Once we got over the shock of both of those events it was clear I needed to step in and handle the rebuilding of my parent’s home.  I learned a TON through the process and one thing has haunted me since going through that.  It was early in the process and I had a couple contractors in the house giving me estimates.  As the two contractors wandered through the house they ran in to each other and one said to the other, "I wouldn’t even want to bid this job if it was Allstate."  Yikes.  The other contractor chuckled and nodded his head in agreement.  Between that comment and the outstanding job that Hartford insurance did managing my mother’s claim, I’ve known for awhile that I needed to explore other options.

So I called an insurance agent today to see whether the rates I’m getting and the coverage I have is right for my family.  I gave them some basic information and am waiting for them to email me a quote from 6 other companies, including Hartford.  If Hartford is the same or cheaper than Allstate, I’ll probably switch.  In the end Hartford paid a very large sum of money to rebuild my mother’s home and reimburse her for her lost personal property.  They didn’t try to nickel and dime my mother and were fair about pretty much everything that we asked for.  I think the most amazing thing they did for us was to hire an outside contractor to come in and inventory the 24X60 garage to help us identify all the things that we needed to claim (and believe me, there was a TON of stuff in there).  Other insurance companies might have just told me to fill out the personal property form.  That one decision that the Hartford claim adjuster made to get a "post fire" inventory company to come in and sift through the charred property increased my mother’s settlement by over $50,000.  It’s completely unrealistic to think that I could have sifted through all of my dad’s stuff in that garage.  He had thousands of things in there and I wasn’t in the emotional state to be able to try to identify each and every item.  As it was, I spent way too much time in that burned out structure and it was incredibly difficult because it brought back so many memories.  Having someone come in and document everything that was there was like having an angel from heaven drop in.

What am I getting a quote on?  We currently have policies on our main home, our lake house, both of our cars, a boat (for the lake), and an earthquake policy on our main house.  Needless to say, we are paying a pretty decent chunk of coin for insurance every year.  Getting competitive prices is probably long overdue.

The sky is falling.  Okay, well maybe not yet but I sure have been reading a lot of articles about gloom and doom.  Our budget deficit is around $9.5T (yeah, that’s trillion), real estate is declining rapidly, consumer prices are rising rapidly, loans are harder to come by, our national spending is increasing and is causing billions of dollars in increases to our national debt, consumer credit is out of control, layoffs are imminent at many companies, local and state governments are not hiring and I could go on and on.

What I can’t tell from all this is when the crisis starts.  Is it time to panic yet?  I’ve been practicing running around the yard yelling, "We’re all gonna die!!!!" so that I’m ready when the time is right.

Seriously though.  How do we work our way out of this tough spot?  Does it just take time for the magic to happen?  Do we just hold on and keep doing what we’re doing?  My gut tells me NO.  The only solution that I can see is for a drastic change in behavior at the consumer level and at the governmental level.  We need a drastic change in strategies here.  The longer we wait to face our reality, the worse it’s going to be.

I read an article yesterday that talked about how a depression might actually be good for our country.  After the initial shock that someone might think that, I read on.  The author’s point is that we need a shock to our system.  We need people to experience the pain of not having everything in order to alter their behavior.  It’s hard to argue that something isn’t needed to change people’s approach to money management.  While I don’t want to see our country go in to a depression, part of me wonders if we are headed there no matter what.  If you only read one article that I’ve linked to here today, I’d make it the link in this paragraph.

You know how I love reading about the trials and tribulations of lottery winners.  Brad Duke is the example of someone that knew how to turn his lottery winnings in to a life long investment.  Unfortunately most other people aren’t that successful with their winnings.

Take Rhoda Toth as an example.  She won $13 million 18 years ago and has long since gambled and spent that money.  In 2006 she and her husband were accused of tax evasion and the trial just completed.  Unfortunately for her husband Alex has since died so it’s just poor Rhoda facing the music.

At her sentencing, she claimed that she had MS and couldn’t walk.   When the judge saw video of her walking around, he opted to sentence her to jail, rather than let her off with a smaller punishment.

Just think.  18 years ago she was on top of the world.  Now, she is facing jail time and is broke.  Had she invested that money all those years ago, she’d be dining in the same restaurants as Warren Buffet.  (Okay, bad example because we all know Warren eats in pretty darned normal restaurants, but you get the point.)

http://www.tampabays10.com/news/local/story.aspx?storyid=86972&catid=8

I just discovered the next movie I want to see.  It’s called IOUSA and is a documentary about the massive debt we have in our country and what the long term implications are.  It isn’t being released on a large scale but I was able to find some theatres near me that will be showing it.

Here is the link to the official movie site:

http://www.iousathemovie.com

Here is a link to a review about it:

http://seattletimes.nwsource.com/html/businesstechnology/2008103033_pfdebtfilm10.html

Since I haven’t seen the movie yet I can’t say much about it but I will post a review once I’m able to see it.  Is there a way out of this huge overbearing debt?  Is Rome falling?

About 6 years ago my wife just had to have a bread machine.  We looked around for quite awhile and finally settled on a machine from Costco.  The smell of fresh bread baking in the kitchen was quite a treat.  Never mind that those first loaves cost us far more than just buying a loaf at the store.  I think my wife had the desire to bake bread because she was raised with freshly baked bread in her parent’s home.  On top of that, her grandfather has been baking his own bread over in England for many, many years.  I wasn’t all that excited about buying a bread machine because I was worried it wouldn’t get used.  After the first couple months the fresh bread started to disappear.  The times that we would make bread were getting farther and farther apart.  Finally, the bread machine was put away in a cupboard not to be seen again for 3 years. 

A couple years ago I started to notice I wasn’t tolerating bread and wheat very well.  I’ll spare you the details but after a visit to the doctor, it was found that I am allergic to wheat (as well as darned near everything else on the planet).  After the initial shock of not being able to eat wheat any longer I started looking around.  Luckily for me there are a lot of other people in the same boat, although they have a much more serious condition known as celiac disease.  In their case, they REALLY can’t eat wheat or it could end up killing them in the long run.  The numbers of people with celiac are actually quite high and are getting higher all the time as more and more people are getting tested.  This has caused a much higher demand for alternatives to wheat and gluten.  There is a company called "Bob’s Red Mill" based in Oregon that makes alternative flours made from bean flour, tapioca flour, rice flour etc.  They actually have a bread mix that we have started buying to make our own gluten free bread.  That old bread machine has finally come out of retirement and is getting a ton of use now.  It went from being a "mistake" purchase to being one of the most used appliances we have.  While I’m not a big fan of keeping "stuff" around indefinitely, in this case, it turned out to be a very good decision.

Have you ever kept anything for years only to find that you started using it on a regular basis at some point?

I have been having a terrible time knocking off the 20 pounds I really need to shed.  For the last year or so I’ve been creeping up on the scale and all my clothes are getting rather uncomfortable.  Every time I drop a few pounds, the clothes start fitting better and I give up, only to put the weight back on quickly.

I had been contemplating joining Weight Watchers because I figured that would motivate me to lose the weight.  Weighing in every week in front of people I don’t really know would probably be a pretty decent motivator.  The cheapskate in me just can’t bring myself to spend the money.  Basically I’d be giving away money because I lack the discipline to drop the weight on my own.  My relatives have been doing the Weight Watchers thing for years and have been pretty successful with it.  I’ve learned a lot from them and am able to calculate the point values for various foods which made it even tougher for me to justify paying just to weigh in once a week.

Just when I was about to join, I got another idea.  My brother in law is also trying to drop a little weight and is actually on the Weight Watchers program.  I called him up and asked him if he was interested in having a little competition.  The plan was to weigh in once a week at his house (he only lives a couple blocks away) and track our progress.  I built a spreadsheet and we enter the weight in weekly.  We also agreed that the target would be to drop one pound a week for 17 weeks.  If either of us weighs more than we did the previous week, we have to pay the other person $10.  At the end of 17 weeks we each have to pay the other $10 for every pound that we miss our goal.  So, I need to weigh 190 at the end and if I weigh 195, I have to pay my brother in law $50.

So far this competition has been working great.  We intentionally set the weigh in date for Monday so that we would have to eat better on the weekend (which is when we both have the toughest time eating well).  It’s been two weeks and I’m down almost 5 pounds.  My brother in law is too.  It’s funny how a little bit of money at stake can alter my behavior so much.  If I was intelligent, I’d look at all the other benefits for losing weight, such as living longer, being healthier, being more comfortable and having higher self esteem.  Instead all it takes is a measly $10 risk every week to keep me on track.  Pathetic but it’s working!!

For the first time in a long time, we spent the weekend at home.  We decided about a week ago that we were long overdue for just taking it easy and staying home on a weekend.  We had absolutely nothing on the agenda for the entire weekend which was both good and bad.  My wife would call it a good thing.  She’s much more comfortable just floating along through the weekend doing whatever comes to mind.  Unfortunately I’m not very compatible with that approach and was continually looking for things to do.  I cleaned the garage, trimmed all the hedges and bushes in the front yard, mowed the lawn, and washed the cars.  It was nice to get some of the chores done but I kept wondering, "Gosh, I bet it’s more fun at the lake" or "I wonder what everyone at the lake is doing?".  Yes, I know, it’s not a very healthy way to live your life.  I tried to focus on the moment and did have a ton of fun spending time with my wife and daughter but I guess I just have one of those personalities that can’t sit still.

The other thing that probably made me feel a bit caged up is that we agreed ahead of the weekend that we wouldn’t mindlessly spend any money.  (Shouldn’t this always be the goal?)  We did spend a little money on groceries but we steered clear of Costco, where we are always at risk of spending too much.  The one free thing that we did this weekend was we drove down to the north end of Boeing field in Seattle and watched all the airplanes, including the Blue Angels, take off over our heads for the Seafair air show.  It was very cool to watch fighter jets take off right over our heads and feel the rumble of their massive engines.

We also didn’t spend any money at restaurants this weekend.  As part of our "watch what you spend" weekend, we opted to cook steaks from the freezer on the barbeque and we enjoyed fresh vegetables from our local fruit and vegetable stand.  A nice steak with corn on the cob and baked beans really hit the spot and was a LOT cheaper than buying a comparable meal at a restaurant.  The total cost of the meal was around $6.00 for all three of us to eat.  I have to admit, I think it tasted a little bit better knowing that it was a $6.00 meal instead of a $50 meal.

Our emergency fund is starting to build back up.  For every thousand dollars that it increases I think my financial stress level goes down two notches.  Don’t get me wrong, I’m not a walking stress ball about it but I do like the security that a pile of money in the bank brings.  Other than that, not too much going on for us.  We, like many others, are watching the economy and the price of gas.  All the indicators point to some tough times ahead.  Gas is coming down but the overall economy doesn’t look too rosy.  If we can both keep our jobs through all of the drama, I’ll be a happy camper.

The time has finally come.  Our little girl is growing up and is entering kindergarten this Sept.  While I am feeling many emotions ranging from fear of the unknown to happiness that my daughter is growing up, I also feel a bit of excitement that we’ll be seeing a very large expense reduced.  For the last couple years we have been paying over $800 per month for daycare.  We wanted the best daycare that we could get after having had my wife stay home for the first three years.  I think that we chose the facility that we did because it had a very good reputation and it helped us emotionally send our daughter off to strangers after having sheltered her all of her short life.  It turned out to be worth every penny and the experience has drastically helped our daughter improve her social skills and she is already reading at the 2nd grade level.

We won’t see a full $800 per month increase in our budget because we have opted to put our daughter in the "all day" kindergarten program which costs us $225 per month.  Additionally we will also have to pay a daycare near the elementary school for a couple hours a day.  Total cost will be about $400 per month for both kindergarten and daycare.

So, we’ll be saving a full $400 per month in our budget which we’ll use to increase our daughter’s 529 monthly contributions as well as increase our ROTH ira contributions.  It didn’t seem to make a lot of sense to us to just pull that money back in to the budget and leave it unaccounted for.  If we don’t align it to investments or savings we’ll be much more likely to spend it.