Everybody Loves Your Money

I painted a bit more trim this morning while it was still cool outside.  We are waiting around for the electrical inspector and then once that is done, we’ll be heading out.  Here’s a shot of the front:

I know I said I was going to try and do some blogging out here at the lake but it hasn’t worked out too well.  The fact of the matter is, I’ve been busy.  Since last Thursday we have:

Leveled the ground with a trackhoe (around the house)

Finished the gravel driveway and culvert

Finished wiring the cabin

Had our electrical inspection

Fixed the garage doors from an earlier installation

Painted the exterior of the house

Installed gutters on the house

Painted some of the trim on the house

I’m very happy with the progress over the last week.  I had hoped to get all of this done but I wasn’t sure if it was realistic.  Of course I didn’t do all of this by myself.  I paid a friend of ours to come out and spray the house.  (We’ll do all the trim to save money).  I hired a company to come out and install the gutters.  Past experience has taught me that you really don’t ever want to try to install your own gutters, especially when one of the runs is 44 feet long.  I rented the trackhoe and my friend and I did all the dirt work.  We also bought 10 yards of crushed rock to spread on the driveway and to fill over the culvert/ditch.  By doing all the wiring in our house, we saved a TON of money.  I estimate it would have cost me $7-8K to have the place wired.  I think we ended up doing it for about $1000 in materials.  Same deal on the plumbing.  I’d guess the plumbing cost me about $1200 or so and it would have probably cost about $3-4K to have a professional do it.  I only had a rough idea of how to do the wiring and had to think back to how I helped my dad wire their cabin a few years ago.  I was happy to find out that we only had to fix a couple very minor things in order to pass the inspection.

Once we have the power hooked up permanently (have to call the PUD to have them come out and connect the house now that the electrical has passed), we’ll get the framing/mechanical inspection out of the way and then we’ll be ready for insulation and sheet rock.  I can’t wait to get to that point.  It will be nice to have heat/cool in the house and I expect that we’ll spend the winter completing the inside.

We’ve had a great week out here.  We even took some time to go out and play in the lake and had some great bonfires and drinks with friends that we’ve met out here.  I can’t think of anywhere else on earth I’d rather spend my vacation.   (Which is a good thing since I’m rather committed to this area now unless I sell the place).

Here is a photo of the outside:

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This site is run by, and updated by an amateur. I have no professional experience and you should not make any financial decisions based on what you read here. I am not responsible for any decisions, or conclusions that you draw from reading content on this site.

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It’s a disappointing trend.  Yet another lottery winner who has lost his winnings and is now back to living the lifestyle that he had prior to winning the lottery in the first place.

Andrew Cicero used to be a security guard.  He won $5.5 million in the Wisconsin megabucks lottery.  He started out with annual payments of about $98,000 per year but ultimately sold off his payments for about $2 million in a lump sum.  He took that money and invested it in a Smith-Barney account with the help of some financial advisers.  Unfortunately it was the height of the dot come craze and the advisers had him heavily invested in tech stocks.  We all know what happened after that.  He lost heavily.

Andrew also didn’t realize that taking the lump sum had tax implications and the IRS hit him for over $200,000.  Now Andrew is down to just about a pension and social security.  From the article it sounds like he isn’t destitute, but he’s certainly a far cry from being a wealthy lottery winner.

I’d just like one chance to handle a chunk of winnings from a lottery.  I know that, with basic personal finance skills, I could responsibly invest the money for the future like Brad Duke did.

Five Cent Nickel is celebrating it’s two year anniversary with a great promotion!  Nickel is giving away some outstanding prizes (not your typical free book type promotion).  I’ve been reading Five Cent Nickel for just about the whole two years it’s been around.  I started my blog almost two years ago as well and back then there weren’t nearly as many PF blogs around.  Nickel has always done a great job of staying on topic and has really built a great collection of personal finance articles.  I think I’ve been linking to Five Cent Nickel just about the whole time we’ve been around, although I’m sad to say Nickel doesn’t link back to me.  Maybe he will in the future, I can only hope. 

One of the more recent articles that I read at Five Cent Nickel was The Cost of a Wired World.  Did you know that it cost businesses worldwide over $7.2 billion in energy costs to run their servers?  I was amazed at this figure when I saw it.  I work for a large company and was also amazed at how much water we use to cool our data centers.  I guess virtual sites aren’t quite as environmentally friendly as we thought.  Maybe we should go back to reading our news on paper…..

Anyway, go check out Five Cent Nickel and see what you think.  He has great relevant articles that you will most likely learn a little from.

It’s a question I have asked myself a hundred times.  Is earthquake insurance worth the money?  I used to ask that question when I didn’t have earthquake insurance.  I finally decided to buy it because I live in a high risk area for earthquakes.  I’ve had the insurance for just over a year now and I still find myself asking whether it is worth it or not.

Here are the details of our insurance:

2700 square foot house

$460,000 valuation

Two story, wood built home on a flat lot

Insurance cost: $365 per year

Insurance deductible: $50,000  (yes you read that right)

As you can see, I’m not buying insurance to cover every little possible crack in the drywall that might happen.  I’m really just insuring our home for the big one.  If we were to experience a smaller quake, we wouldn’t even bother calling the insurance company.  With such a high deductible, they wouldn’t even want to hear from us.  I looked at policies with a lower deductible, but the lowest I could find was around $20,000 or so.  I figured that I might as well drastically lower the premiums by choosing the higher deductible.

So, that begs the question.  Is it really worth buying earthquake insurance?  I’m basically paying about $30 per month for the peace of mind that if we were to have a massive quake, I’d still end up with a house after it was all done.  After watching the catastrophe in Louisiana and the gulf coast and hearing first hand from my inlaws what it’s like to experience such a huge loss, I just don’t want to lose so much.  We have a lot of equity in the house and I’d hate to lose it all due to a natural disaster like an earthquake.

What is your opinion?  Do you have insurance that covers natural disasters?  (In addition to your standard homeowners policy)

I’ve often wondered why people have such radically different relationships with money.  Certainly the way their parents handled money impacts how they handle it but I believe there are other things that also affect how each of us deals with money.  I think that there is a strong correlation between people that worked as young children and those of us who choose to save as adults.

I started earning money when I was pretty young.  I would earn small amounts of money helping neighbors with chores when I was between 7 and 10 years old.  I learned to love the satisfaction of helping someone and getting something in return.  By the time I was 10 years old I was dying to have my own paper route.  I didn’t fulfill that dream for another two years, but when I finally did start earning money from a paper route, I was thrilled.  Unfortunately, I didn’t save a cent of it.  Every month I would go around and collect the money from each customer and then, after I paid the newspaper company, would then proceed to blow every last cent of it.  At the time it didn’t appear that I learned anything but I did.  I learned that in order to have the things I wanted, I needed to work hard for them.  After about a year of having to wake up early 3 days a week to deliver newspapers, I decided that I wanted more so I started delivering an afternoon paper as well.  I had to deliver the afternoon paper every day.  I can still remember the weight of all those newspapers hanging on my shoulders as a 13 year old kid.  I would pack my cloth newspaper carrier as full as I could and then carefully get on my bike and start pedaling.  More than a few times I had to walk my bike around until the load was a little lighter.  On those hot summer days, I can remember wishing that I had chosen another type of work, but no matter how badly I wanted to quit, I kept going.  I had a responsibility to deliver those newspapers and I took it seriously.

In the summer months, on top of delivering newspapers in the morning and afternoon, I would also mow lawns in the neighborhood.  I had a route that wound through my neighborhood and during the peak of the season, I would mow about 6 lawns a week.  I must have pushed that lawnmower at least 50 miles each summer going from lawn to lawn.  I can still feel the heat of the pavement as I pushed that lawnmower up and down the hills around my neighborhood.  Unfortunately, I was also cursed with terrible grass allergies.  I had to take a pocketful of Kleenex in order to make it through each lawn.  By the time I was done with the lawn, my eyes were red, my skin itched and my nose was running like a river after a tropical storm.  It was pure misery, but I never dreamt of quitting.  If I wasn’t mowing lawns or delivering newspapers, I wouldn’t have had any money to spend and would have just sat around the house.

All these years later, I don’t yearn to mow other people’s lawns or deliver their newspaper.  I yearn for the day that I can sit back and make money without lifting a finger.  It only took me 30+ years to realize that what I really want to do is work smarter, not harder.

Just in case you were ever considering investing your hard earned money with the promoter of boy bands, this story is for you.  Lou Pearlman, who is best known for his creation of boy bands, ‘N Sync and the Backstreet Boys was also apparently quite the smooth talker.  Over the years he has been taking money from unsuspecting investors in a massive pyramid scheme.  Pearlman disappeared a couple weeks ago and there is no money to be found.  Well, that’s not entirely true.  Officials just froze $250,000 that Pearlman was trying to transfer to Germany.

Here’s the thing.  I don’t think I’d ever consider investing money with someone like Pearlman.  If there is one thing I’ve learned in life so far it’s that just because someone might be good at one thing, it doesn’t mean they are good at everything.  Pearlman got lucky with the boy bands.  He figured out a formula that was hot at the time and made some money at it.  So, there are lots of people that lost hundreds of thousands of dollars to this crook.  A lot of them crowded a Florida courtroom on Monday to hear that the chance of recovering their money is very small.  Pearlman has been living a pretty comfortable life at the expense of others and officials think that either he has spent most of it, or has it hidden in offshore accounts.  Luckily one of the victims did receive an autographed edition of Pearlman’s book called “Bands, Brands and Billions - My Top 10 Rules For Making Any Business Go Platinum.”  I’m sure that’s got to be worth at least .99 if they sell it on Ebay.

I need to keep an eye on that Charles Schwab character.  If he ever starts really living high on the hog, I’m going to take my money back.

I’ve always like Ben Stein.  The guy is just plain smart.  I’ll always think of him as the teacher in Ferris Bueller’s Day Off, but over the years, I’ve also come to think of him as an intelligent investor.  In Ben’s latest post he talks about two different friends of his.  One spends his days working and buying cars and facing the impact of poor financial decisions and the other has done a good job of having their money work for them.  The post is strikingly similiar to countless personal finance blog posts, including a couple from ELYM.  Nevertheless, it’s worth reading to reinforce what many of us already know.

So, check out the article. It really is good reading, although there are a few typos in it.