Mission:Nontrivial

Opportunity cost of rental property

2006-07-12T19:43:00.000-05:00

I've been putting a lot of thought into the true "cost" of renting out our house while we're in China. Assuming we can rent it out for an amount that covers our mortgage, taxes, management fees, etc, we're still tying up a lot of money in an investment that may not appreciate much over the next few years, if at all.

First of all, it's pretty clear that we'll lose money every month, sorta. We'll be able to just barely clear interest, taxes, fees, and have a little left for maintenance, but we'll still be shelling out for much of the equity portion of the mortgage payment. So while we'll be building equity, we won't be generating income. That's fine, we've only had the house a few years.

The bigger issue is the equity that's already tied up in the house. Renting out the house may not be a good investment compared to selling and investing the equity in a guaranteed investment paying 5 or 6%. If we had the house paid off completely, the rental income and investment income (at 5%) both work out to be about the same, $30K, before taxes. After taxes, it's still about a wash, with funky tax credits being the difference.

Of course, we don't have the house paid off. Our mortgage is very close to the rental income. As a medium-term investment, we'd likely be better selling the house, and investing the equity. But that doesn't take into account two things. Houses are not fungible, and we'll have to live somewhere when we get back from China. I just hope we don't lose too much on this "investment".

For another look at this problem, My Open Wallet has a great blog entry (with comments) on just this issue.

Wiki financial advice

2006-06-27T20:59:00.000-05:00

Here's some obvious, but amusing, advice from Wiki on how to retire in your 30s. Number 3 is always good advice:

3. Lower your expenses. The #1 reason people in high paying salaried jobs are still working hard when they are fifty is because they can't keep their spending under control. To soothe their agony regarding their dull, demanding job, they placate themselves with toys that fail to make them happy: a penthouse apartment, a fancy car, a diamond ring. Resist the massive pressure to dress, eat and shop like your peers, and live a modest lifestyle. Focus on work, as your play will come later. Some keys to not spending:

* Rent a modest apartment. You will be at work all the time, so do not splash out on housing. Clean and small will do just fine.
* Don't eat fancy dinners. Unless you are a gourmet connoisseur, you have to admit that a $5 burrito tastes 90% as good as a fancy steak served on fine china.
* Keep a budget. Track your expenses. Set goals for saving and celebrate when you meet them.

Obvious, sure, but valid. It's a renter's market right now, and it's always a $5- burrito market.

Worldwide Cost of Living, 2006

2006-06-26T19:31:00.000-05:00

This year's cost of living ranking of world cities is out. Moscow is now the worlds most expensive city. Tokyo, which had won for several years, dropped to third behind Seoul. New York City, which was chosen as the "zero", with a base score of 100, tied for tenth with Oslo.

Of greatest interest to me is the ranking of Chinese vs. US cities. Hong Kong (not quite China), ranked fourth, with a score of 116.3, meaning it cost 16.3% more to live in Hong Kong than in New York. Beijing ranked 14th, with a score of 94.9. So Beijing is only 5% cheaper to live in than NYC! Shanghai, ranked 20th, with a score of 91.2. Washington DC and Boston ranked 83 and 84, with cost of living scores of 77 and 76.8.

So what does all this say to me? That this ranking is ~~complete bunk~~ very subjective, and dependent on an arbitrary standard of living. Based on what I saw in Shanghai, and anectdotal evidence, living in China is a LOT cheaper than living in DC, or Boston. So where are these scores from? From trying to live like a New Yorker while in China!

Parts of Shanghai were very much like New York. Expensive condos, western food, Porsche dealerships, etc. But why would you chose to live that way? By eating local food (Shanghai food was a bit greasy, but excellent), and buying things off the local economy, you can save enough to live like a king. Take taxis everywhere, have live-in help, whatever you want. Our standard of living will be higher in China than it is in DC, and it will cost less, because we won't insist on living within a pocket of DC while in China.

11 deals to avoid, or not

2006-06-21T21:17:00.000-05:00

Money.cnn.com comes through again, this time with advice on 11 financial deals one is likely to encounter. Mostly obvious stuff, but mostly good advice. An example:

Balance transfer cards

You open your mailbox to find a pre-approved offer for a credit card charging 0 percent interest on balance transfers for 12 months. Sounds tempting, especially since you're paying off a balance at a high rate on another card. Deal?

DEAL IF...you plan to do all of the following: Put only the balance on the new card, never pay late, and pay off the entire amount in 12 months. (First you'll want to find out how much the fee for the transfer is; you don't want it to cancel out the benefit.) If that much discipline makes you cringe, read on.

NO DEAL IF...you're not so diligent. This card charges 0 percent on balance transfers, but unless otherwise stated, not on new purchases. What you charge gets hit with a higher rate (sometimes 18 percent), and your payments typically go toward the zero-rate balance first.

Even if you're slowly paying down the balance, the finance charges on new purchases are piling up.

Plus, miss a payment - oops - and the rate on your balance transfer could go from 0 percent to 30 percent in a second.

Why they chose the annoying "Deal, or No Deal" format, I don't know, but at least the article doesn't have Howie Mandel.

Improper firearm handling

2006-06-21T20:56:00.000-05:00

Today's feel-good story is short enough to quote the whole thing:

Man tests gun, shoots hole in his left hand

This one might earn an honorable mention in the Darwin Awards, Wichita police say.

A 28-year-old man wanted to see whether his girlfriend's Walther .22 handgun was loaded, so he pulled the trigger -- and blew a hole in his left hand.

For some reason, Capt. Joe Dessenberger said, the man had placed his hand in front of the barrel as he pulled the trigger on Monday in east Wichita.

The man was treated at Wesley Medical Center.

Walther .22 handgun? That's most likely a Walther P22, an excellent plinker, when used properly. The slide is so light that Stephen Hawking could work it. There's really no reason to have to discharge it into your hand to determine if it's loaded.

Red Sox on TV

2006-06-20T18:10:00.000-05:00

Since we don't pay for a cable package that includes ESPN, we only get to watch the Red Sox play in Camden Yards, or on nationally televised network games. Tonight, though, they are playing the Nationals at Fenway, and we get to see them on MASN, the Mid-Atlantic Sports Network, which our cable company provides for free.

Since MASN's existence is basically devoted to the Nationals, they are a bit biased. They are really pulling for the Nationals. It's almost as bad as Tim McCarver during Fox's broadcast of the 2004 ALCS.

Still, anything beats "watching" the game by reloading Boston.com, which I've done many times when not near a TV.

Retire at 47?

2006-06-12T20:33:00.000-05:00

Money.cnn.com is my go-to site for interesting financial stories. Today is no exception. This question and response has great rules of thumb for anyone thinking of retiring.

Just keep a few things in mind. You may end up living a lot longer than you thought (who'd have thought that would be a problem?), and don't count on any money outside of your control (pension, social security, etc.).

I'd figured we'd need about $4 Million in 2006 dollars to retire. By even the most conservative estimate generated in my last post, we'll have that by the time we're 50. At least until we're bankrupted by inflation and kids. ;)

Net Worth predictions

2006-06-09T20:06:00.000-05:00

If I could predict the future, I wouldn't need to save and invest much money. I could make a fortune speculating instead.

But, I can make an educated guess. I now have about 18 months of Net Worth data. By holding our house value constant at it's June 2005 level (I think the $650,000 value is pretty accurate. That's $40K less than the Zillow estimate, but I suspect there will be at least a slight dip), I have 12 months of data that show only the effect of our tangible assets, and decreasing debt.

In that time, our Net Worth has consistently trended upwards each month. The monthly increase has been as little as 0.47%, and as much as 3.27% (great month for stocks). The average monthly increase is 1.25%, giving an APY of 16.08%. A lot of that "yield" is due to savings and debt paydown, not just to investment returns.

So, while past performance is no guarantee of future results, that's a real number. Complex things like tax rates, stock market performance, savings, and income all come into play, but the net trend is all that matters.

Using the 1.25% monthly increase, and holding the value of the house constant, we'll be worth more than $500K in February 2008, and more than $1.0M in September of 2012. Not bad, I s'pose. Using the 90 day weighted average of our Net Worth increases, 2.01%, makes us millionaires by May of 2010. That's an APY of 27%, tough to maintain, but it makes for an ambitious goal.

More China news

2006-06-09T18:57:00.000-05:00

How does that Warhol quote go? "In the future, everyone will go to China for 15 minutes"? The more people I tell about my pending move, the more people I find have been there, are going there, have opinions, whatever. I'm obviously not the first blogger to go to China, there are LOTS of great China Blogs. But I did think I was at least one of the first PF Bloggers. Not so.

MyMoneyBlog is on a family trip to Beijing. So why not take this opportunity to comment on his observations. After all, I've spent nearly twice as much time in China as he has. ;)

* Haggling is a pain in the butt, but makes a huge difference in the price you pay for stuff if you're a tourist. It's like picking a fight every time you want to buy a gift for somebody. In the end the vendor looks like you just said his mother was ugly, but you know in the end his profit margin was still astronomical.

Haggling is a pain in the butt? No! It's fun as shit! Perhaps is my Boston attitude, or because I read a lot of TalkTalkChina before I went there, but I found the haggling to be one of the better parts of the trip. The best method I found was to truly not want the item, and just walk away. Let the vendor do the work of chasing you down and showing you a price on their ubiquitous calculator.

* Smog. Beijing is way too smoggy. Even though they actually shut down entire factories to improve the air quality before the 2008 Olympics, everything is still a haze. Even on a perfectly clear day you can't see a blue sky. I couldn't live here.

That's great. I have two years of this to look forward to. Apparently the smog is much worse than it was a few years ago. Forget the sky, you can't even see the sun on most days, just a diffuse light blur that casts no shadows. Also, smog is too nice of a word. It doesn't fully capture the special blend of factory emissions, car exhaust, and the abrasive sand from the Gobi desert.

* Street food is pretty tasty and cheap, but I'm pretty sure I got ripped off a couple times since I can't read the signs. Ripped off is a bit harsh since at most I paid 50 cents more than a local would have.

Just like with buying gifts, you're only getting ripped off if you're paying more than what the item is worth to you. You will always get the "Chinese Price" for things (so they say). After walking out on a few transactions, you can probably figure out what the true "Chinese" price is, or at least what the lowest bai ren price is (still lower than the Japanese price, according to more than one vendor).

I hope MyMoneyBlog enjoys the rest of his trip. I certainly enjoyed mine. I'm not looking forward to the pollution, though.

Networth IQ update for June

2006-06-05T18:18:00.000-05:00

The market took a hit last month, and it reduced our net worth increase. We're still positive, and took the opportunity to invest some extra cash. Overall, we're up $3628-, or 0.91%, to $393,873-.

Interestingly, our overall "retirement" account (which totals our two active 401(k)s, and all of our IRAs, etc) is exactly the same this month as last, coming in both months at $67,779-. The money we contributed over the month exactly matched, to the dollar, the value that was lost due to the market dip.

Crazy debt

2006-06-04T20:04:00.000-05:00

Don't be Rachel.

She asks this financial question to Dave Ramsey on wnd.net:

I think I made a big mistake when I bought my car. I'm having a hard time affording the $500 a month payments because I only make minimum wage at my job and work 35 hours a week. My boyfriend, who was supposed to help me pay for it, has moved out and left me. I owe $20,000 on the car, but I know it's still worth about $19,000. What can I do? -Rachel

Rachel is spending more than half of her monthly earnings (not counting FICA) on her car. I hope there's room to sleep in the back, and she doesn't have to drive it anywhere.

Interview with the Nuge

2006-05-31T18:49:00.000-05:00

I love animals. They're delicious!

Ted Nugent is a strange dude, as is proven by this interview. For example, his thoughts on deer:

They're only interested in three things: the best place to eat, having sex and how quickly they can run away. Much like the French

Of at least equal entertainment is the commentary of the nutty interviewer. I've never seen a "Glock revolver" myself, but Ted's British interviewer has. Or perhaps he's just fixated on the Beatles.

Jay and Silent Bob's tale of addiction

2006-05-30T20:33:00.000-05:00

I'm pretty fortunate to have not been directly affected by addiction. There's no easier way to screw up your life, and annoy your family, than to develop an expensive, self-destructive habit. It's tough to save money when you start treating capital assets as potential income sources to support a habit. Except for lead slinging, the cats, and the recreational use of gasoline, Mrs. Random and I are lucky not to have many expensive habits.

So, having only peripherally witnessed other peoples addictions, I found Kevin Smith's description of Jason Mewes' beginning, bottom, and eventual end of drug use fascinating. It's a great read, especially if you are a fan of Kevin Smith's movies (except for Jersey Girl).

Two warnings: It's quite explicit, which you could probably guess if you've ever seen Clerks, and the tale is spread over a whopping NINE sections!

Me and my Shadow, Part 1; 2; 3; 4; 5; 6; 7; 8; Conclusion, Part 9

Mint harvest

2006-05-30T17:28:00.000-05:00

There are a few non-financial benefits of spending much of my free-time on my most hated of activities. All the landscaping I've been doing has helped me appreciate what's actually in the yard.

Perhaps it was due to the mild winter, but the yard looks pretty good. Trees planted when we moved in are doing well. Deer-eaten plants have sprung back and bloomed. And I've passed one litmus test* of being a fine Southern gentleman, the herb garden has mint growing in it.

I came across this recipe for Mint Julep a few weeks ago. I'd never had one before, but was familiar with the concept. Mix sugar and bourbon with crushed mint, serve over ice, and sip on the porch, preferably while wiping sweat from your brow with a handkerchief. Bonus points for plotting a gold heist. And for the ladies, stupid hats are optional.

It's not quite as disgusting as it appears. I've found that using a little less bourbon than the knock-you-on-your-ass 4 oz. called for in the recipe helps. I also use a garlic press to pre-crush the mint leaves, which saves a little time.

And with the temperature today above 90, it's just getting into prime Mint Julep weather.

* Other tests passed: I own a truck, I own a gun, I live in Virginia, and I actually like Mint Juleps.

"Your Tenants are NOT your Friends"

2006-05-30T16:56:00.000-05:00

One of my favorite PF bloggers is Adventures in Moneymaking. It's a refreshingly different perspective than the typical "save money, pay down debt, look what's on sale at blah blah blah". Today's post is on a bounced rental check. He offers some harsh advice:

It never pays to be nice to your tenants. They just take advantage of you. Remember your tenants are not your friends. You are not in the welfare business. If they can't pay their rent, they need to ask Uncle Sam for help.

Mrs. Random and I are preparing our house for rent. One key difference is that this action is NOT an investment. We don't expect to make much money on the rental, if any at all. But it is our home, and we'd like it to still be in decent shape when we return.
So, how do we motivate our renters to not trash the place without being a little bit nice to them? I hope we find out.

Gaming the McSystem

2006-05-29T22:07:00.000-05:00

McDonald's has (re-?)introduced a line of sundaes. Mrs. Random wasted no time and drug us there on Saturday. They are quite yummy. After eating my "Apple Pie A la Mode", she pointed out that what I just bought for $2.29 could be purchased as components for only $1.50, with some assembly required.

Today, we put this to the test. We bought two apple pies, and two caramel sundaes from the dollar menu. Total cost (with outrageous 7% Fairfax city tax), $3.21, vs. $4.90, a savings of $1.69, or more than a third! And we got two free packets of peanuts. We did have to assemble the "sundaes" ourselves at home. But they were just as yummy.

Of course, even with the DIY method, a sundae still costs 6 times what a McDonald's ice cream cone costs in China.

Memorial Day Weekend

2006-05-29T20:46:00.000-05:00

Instead of going anywhere, Mrs. Random and I spent the long weekend working on landscaping projects. A few big projects got knocked off the list, and the last of the major outdoor projects is now underway. With a bit of work in the evenings, we should be done outside by the end of the week.

We also remembered the whole point of today's holiday, which was too much to ask of Google. They do know about Percival Lowell's birthday, though.

World news links

2006-05-24T21:05:00.000-05:00

I still haven't downloaded our photos from China. But, the Pentagon's annual "China is coming to get us" report is out. I will say that while we were in China, we saw a few recruiting posters around town. I'll have to go through our photos to see if I have an image. You wouldn't think China would be hurting for recruits, though.

In other news, Bush has, again, called for new nuclear (nukyular?) power plants.

For the sake of economic security and national security, the United States must aggressively move forward with construction of nuclear power plants. Other nations are.

Let's hope someone pays attention this time. Too bad they didn't five years ago, or ten years ago, or 27 years ago.

Cheap eats at Costco

2006-05-24T20:54:00.000-05:00

Tell me something I didn't know. When we were poor college students, we'd have dinner at Costco once a week.

Nigerian scammers

2006-05-23T19:11:00.000-05:00

After reading this article, I'm beginning to wonder if part of the most famous spam campaigns is true. Someone in Nigeria clearly has too much money.

So, when using eBay, don't sell stuff to 14 year old Nigerian scammers. You might not get paid.

DIY savings update

2006-05-16T19:00:00.000-05:00

After saving thousands on landscaping with a bit of DIY chainsaw action, we've now completed phase I of a long-term driveway project. This was a job that was quoted to us at $25,000! Over the next few years, we want to replace the aging concrete driveway with pavers. Phase I was just a small section, but it served as a proof of concept.

We've only done about 5% of the project, at a cost of $400-, total (see this post for what to do/what not to do when buying pavers). Projecting into the future, the whole job should cost about $8K (including renting a jackhammer, and not buying crazy amounts of gravel like we did for the test section). That's a savings of $17,000, enough to buy a new car to park in the driveway.

Unfortunately, a few of our projects have a defined time limit. We have to get the house ready to rent and we only have a few months remaining before we leave for China. Based on a referral, we've found a realtor and property manager. With luck, we'll almost cover our mortgage. The more we can take care of ourselves, without having to call in an expensive professional, the less we'll end up loosing.

What's wrong with this (motion) picture?

2006-05-16T18:29:00.000-05:00

Around the world, The Da Vinci Code is sparking protests, and calls for boycotts and censorship, lest a work of fiction shatter the shallow faith of the easily misled. But not in India. Foxnews uses this image to underscore their coverage of the protests.

But they miss the bigger story. In India, a fictional account of Jesus' love child(ren) pales in comparison to the threat posed by the “Story of a Sexy, Bold, and Naughty Nun”. The other poster in the image is for Tickle My Funny Bone, an Indian comedy.

Why does this remind me of Bert and Osama?

$7 worth of Coke Zero

2006-05-09T20:54:00.000-05:00

Giant (the better of the two main supermarkets in NoVA, now that Safeway has gotten boutique, and pricey) is celebrating their 70th anniversary. As a result, strange things are on sale. For example, 2 liters of Coke are on sale for $0.70 each. The only trick is, I had to buy TEN (10!) bottles to get that price.

As I was loading my cart with 20 liters of Coke Zero, all I could think of was Barry and Levon, and the $240 worth of pudding.

Aw Yeah...

Nonsensical Asian tattoos no longer popular

2006-05-09T20:31:00.000-05:00

I didn't know that this fad dated all the way back to the mid-ninties, but this article about tattoo removal is pretty funny. The tattoo in the article, BTW, says "beautiful spirit", when translated literally.

The money quote from the article, though, is the conclusion:

And Morel predicts the next big tattoo fad people will want off.

"It's like the lower-back tattoo — the tramp stamp — probably will be."

Too bad SNL already covered that, two years ago.

Cash vs. Credit in China

2006-05-07T22:03:00.000-05:00

FMF has made this point, repeatedly, and I believe incorrectly:

Use Only Cash
It seems impossible to exclusively use cash in today’s credit-oriented world, but those who do “create” significant cash. How? By spending dramatically less. Ron Blue, author of Master Your Money, notes that the mere use of credit cards causes a family to spend 34 percent more even if the statement is paid off monthly. Author Nancy Dunnan agrees in Never Call Your Broker on Monday by noting, “People like your parents or grandparents actually went through life using checks or cash. It worked then and it works now. Do the same and you’ll wind up spending 20% to 45% less.”
So use cash and reap a windfall. Imagine how spending one-third less could impact your family finances!

I don't believe it. It's the fiscal equivalent of saying "Only eat pre-packaged food and you'll end up loosing weight". Well, the only diet I've ever seen work is one where you, gasp, keep track of what you eat. By counting calories, I was able to loose 20 lbs. over a few months. It's the same for spending money. That diet works for money, too. By keeping track of what we spend money on (by actually looking at our credit card records online) we save money.

Conversely, while we were in China, very few places accepted credit cards. We spent cash on everything. Now, we could have been really anal, and kept track of all of it (we do have the ATM receipts, of course), or we could just make intelligent decisions about which cheap Chinese crap we brought back for our family. Good thing we didn't do that. ;)

I like credit cards. We don't carry a balance, we get cash back, and we can keep track of every purchase. Cash can't do that. And, I'm fairly certain the credit cards in my wallet are not counterfeit, which is a lot more of a concern in China than you'd probably like to think.

Networth IQ update for May

2006-05-07T21:37:00.000-05:00

Calculated in RMB, currently about 8:1, we're multi-millionaires! But in regular USD, our net worth increased by $6962- last month, or 1.82%, to $390153-. This is half of last month's jump, and is helped by an up-market. The trip to China and the tax bill hit our cash reserves, but our retirement investments did fairly well.

BTW, our net worth in China, 3.12 million RMB (CNY, ¥, 元, etc), would yield a 20 foot tall stack of 100 RMB bills.

Back from China!

2006-05-07T21:32:00.000-05:00

It was a long trip, but a lot of fun. I haven't even downloaded the photos yet (about 500). More on all that soon.

China was really nifty. By the end of the trip, it didn't even seem weird anymore. I don't know if that's good or bad.

Hiring advice

2006-04-14T08:06:00.000-05:00

FMF comments on a list from CareerBuilder.com of the top 10 reasons why you're not finding a job. Of note:

6. You don't recognize that face-to-face interviews are the only things that matter.
There are all kinds of things you can do to get face-to-face interviews, but you have to get them. Pulling out all the stops by doing anything you can to get in front of a hiring authority with pain (the need to hire someone) is key.

I can vouch for that. A great resume is important, but the interview is the key.

Home Depot advice

2006-04-13T20:36:00.000-05:00

I haven't been posting a lot lately because I've been taking advantage of the great weather to get some outdoor projects completed. One of the big ones hanging over my head was to finish off the driveway project. As it turns out, I needed about 300 pavers to do it. I didn't know that when I stopped at Home Depot on my Friday off and picked up the first batch.

It was a great experience. I asked if it was possible to load up a pallet of pavers, and after making sure my truck could handle it, two HD employees found an empty pallet, and proceeded to load the pavers themselves. They wrote down the SKU, to make things run smoothly with the cashier. I paid up front, and they told me they'd bend the rules to let me load up from the loading dock. They forked the pallet into my truck, and I drove home. No problem!

After putting down the first load of pavers, I realized I would need a few more. I thought it would be a breeze. I even brought my "own" pallet back and Mrs. Random and I loaded the pavers ourselves. When I proposed my idea of getting an employee to fork the pallet into the back of my truck, they treated us like we were conspiring to steal stuff. The problem, I realize now, is that my timing was wrong. It was the weekend, and Home Depot had their B-team on the clock that day. After 15 minutes of standing around, and insisting that it made NO sense to carry the blocks to the front of the store, and load them one-at-a-time into my truck, they finally relented. But an important lesson was learned.

Contractors (i.e. people who act like they know what they're doing, and drive trucks) shop during working hours, like my Friday off. Punk-ass homeowners shop in the evenings and on weekends. Home Depot mans the store accordingly. In the future, if I have to buy anything more complicated than a box of drywall screws, I'll be sure to do it on my flex-day.

UPDATE: This is my 100th post!

First trip to China

2006-04-13T19:11:00.000-05:00

I'm going to China in a few days. I'll be taking lots of pictures, so I'll finally have something to photoblog. I'm looking forward to testing out my rudimentary Chinese.

Wheee!

2006-04-13T18:56:00.000-05:00

For the three of you who don't have Firefox, watch this.

It may be funnier if you're already a fan of Firefox, or borderline insane.

Is a liberal arts degree a waste?

2006-04-13T18:11:00.000-05:00

Yes, though any degree is better than none, even though a Bachelor's degree today is roughly equivalent to a high school diploma from a a generation ago.

But that's not the question asked in this article. The real question is:

Still, I'm worried that business employers will see a degree in English as useless and irrelevant. Should I have majored in business instead? Is anyone going to want to hire me? -Second Thoughts

Well, obviously ST should have majored in business instead. In the article, Annie Fisher, "FORTUNE senior writer", tries to convince ST that it will all work out. And maybe it will. ST did the right thing and interned while at school. I'm now involved in hiring at my job. Relevant work experience and attitude puts candidates at the top of the stack. It's much more important than a particular type of degree (though we're only looking at engineers in general).

But, to answer ST's question, if you want a job in business, get a degree in business! If you want to be a writer and start your own business, major in English.

I wonder if Annie is an English major, too...

Death, taxes, and pizza

2006-04-13T17:57:00.000-05:00

To celebrate being done with taxes, and our next to last night at home for a while, we ordered a pizza from Papa John's. Now through tax day, April 17, they have a promotion for a large, 5-topping pizza for $10.40, just enter the promotion code 1040. With the delivery fee and tax, it works out to about $12.50, plus tip. Unfortunately, you can only order one at a time.

Overbuilt Garages

2006-04-11T21:31:00.000-05:00

This article from Fortune/CNN/Money details exactly how to sink the price of a Bentley into a marble-tiled parking hole. I can see buying a lift, if you work on your own car (if only my garage had 12 ft ceilings...). But a bar?

Tax day

2006-04-11T20:29:00.000-05:00

The tax man approacheth. Mrs. Random finished the taxes, and I'll mail them off on Friday. We knew we were going to end up owing money, so we put it off as long as possible. We're actually getting some back from Virginia, so we only really owe an extra $2K or so.

Our total tax burden was 30.28%, which breaks down as follows:
Interestingly, Fairfax County and Virginia both took about the same amount of taxes. Ouch.

Networth IQ update for April

2006-04-02T21:59:00.000-05:00

An up-market, and some reckless savings, have created an interesting situation. Our net worth now stands at $383,190. This is an increase of over $12,000, or 3.27%. That's more than twice the increase of last month.

I'm quite surprised, really. I'm projecting that next month will be flat, though. Yay taxes. But it's a marathon, not a sprint.

End of month savings report, Mar '06

2006-04-02T21:23:00.000-05:00

I don't know what happened this month. We set up two new online bank accounts (EverBank and NetBank), and we shifted some funds around. Somehow, our automatic allotment deposits got mixed up, and we ended up sending a lot of extra money into savings:
Yup, that's a 40% savings rate for the month of March. It's completely unsustainable. A lot of bills will be hitting in April, not least of which the tax bill, so we'll be tapping into March's savings to pay some of them. Money that should be sitting in the checking account waiting for is instead "saved" in ING or HSBC. If not for the 401(k) contributions, our total savings rate for April might be negative. Still, the reckless spending had an interesting effect on our net worth.

Free cash from Sharebuilder

2006-04-02T01:14:00.000-05:00

Most pf blog readers will recognize the quote from The Richest Man in Babylon (and perhaps elsewhere, before that, but since the book was written in 1925, that's good enough for me).

I logged into my Sharebuilder account to check on the balance for the monthly net worth update. The $85- signup bonus from Costco has been credited to my account. That's a good return on what I've invested so far. It will also cover about 18 months of fees for the bare-bones investment plan.

April Fools?

2006-04-02T00:17:00.000-05:00

I skipped April Fools this year, and I'll probably skip Buy a Gun Day, April 15 (although tax day is actually April 17th this year, and Easter is April 16, BAG day is a fixed holiday). As it turns out, April is a GREAT time to buy used guns, as they are a few hundred bucks of liquid assets for people who end up owing the tax man at the end of the year.

And since we're still up after the GMU loss, Mrs. Random and I may get to ring in the lost daylight-savings hour.

Trip to the Range

2006-03-30T23:09:00.000-05:00

Today was a good day. Or at least I thought it was when I started writing this post. Work restructured the way it does time, so I was able to switch from the 9/80 schedule (work 9 days, for a total of 80 hours, every two week pay period), to a first-80 schedule. Maxing out at 10 hours per day has given me a four day weekend! And, after being on travel myself for 3 of the past 5 weeks, Mrs. Random is finally out of town herself. I have the house to myself. It's like a mini-vacation.

It was a great day in DC. I got some chores done, studied some Chinese, and got to participate in one of my expensive vices. I went to the shooting range. It was great:
I flicked about 400 dimes downrange (the average price of a round works out to about 10 cents). Shooting's great that way. Although guns don't depreciate much after the initial drop when they're first fired, nearly everything else about the hobby is pure consumption. A book of targets, gone. Cleaning swatches and chemicals, used up. And cartridges are expended, leaving little more than a pile of brass an the scent of cordite. It's worth every penny, and dime.

As I'm blogging this, in front of the TV, of course, I've just found out that today is the 25th anniversary of John Hinckley Jr.'s attempted assassination of Ronald Reagan. The story on the local news started out well, interviewing the cameraman who captured the footage everyone has seen. But then it ended as little more than a Brady Campaign press release.

So, while I'm all for background checks for [legal] gun purchases, and have nothing but good things to say about the felons that have been prevented from purchasing guns [legally] from [legal] sellers, I do have one nitpicky thing to point out:

Hinckley used a 6-shot, .22 cal revolver. And not even a good one, but a cheap piece of trash. Nothing the Brady Campaign has managed to do, even the background checks that I support (especially in their current "instant" form) would NOT have stopped him from buying it. The rest of the provisions in the so-called Brady Bill, now expired, wouldn't have stopped him.

BTW, the other provisions in the Brady Bill would have cost me some time at the range today. Limited to 10 round mags, I would have had to reload, like, 5 more times, costing whole seconds! And without the flash suppressor or bayonet lug on the AR15, I'm not even sure the gun would fire! It's a good thing the DC Snipers weren't able to stab anyone.

So, as it turns out, today is a bit of a sad day. As much fun as I had at the range, I just spent the past hour remembering a tragic event in American history. And like all tragic events, it ultimately lead to well-intentioned but ultimately pointless and inconvenient legislation.

I did have a lot of fun at the range, though.
UPDATE: Looks like I spoke too soon. The Brady Campaign has now admitted that a few of their proposals were mistakes, bringing them more in-line with what I consider to be the reasonable position. Good.

China Blogs

2006-03-29T23:11:00.000-05:00

And speaking of China, here are a pair of griping blogs: TalkTalkChina and ChinaRant. The comments are the best parts. I can't wait to try the worst restaurants in Beijing.

And for a good (though no longer updated) photo blog, try The Beijing Observer.

UPDATE: I forgot to mention one website that has been a great help: On-line Chinese Tools. And just like most Chinese restaurants, grocery stores, etc, the ~~Chinese name~~ URL is different than the English name.

Also, I really do mean griping, since they are blogs, not trashy paperbacks.

Online bank comparison

2006-03-29T21:32:00.000-05:00

As part of the preparation to go oversees, Mrs. Random and I have started to break our reliance on brick and mortar banks. Already we have two online savings accounts (HSBC and ING Direct), and about 90% of our bills are paid online through our other banks' online billpayer services. Still, thanks to some great offers, we decided to give two fully online banks a try, EverBank and NetBank. The conditions of the offers both dictated an initial deposit of $1500-

So far, EverBank appears to be the keeper. Mrs. Random completed the setup, funded the account, linked in other accounts, and has nothing but good things to say about the service and the website. With the linked accounts, EverBank acts like a junior version of MS Money. Plus, all the info is stored remotely, so you can log in from any computer and have access to all your accounts. They sent us a free book of checks, and the online billpayer service appears to be a breeze. EverBank deal is that you'll pocket $50- if you cancel the service. I seriously doubt we will.

NetBank, on the other hand, has not been so easy. They did send us some deposit slips, and though it is possible to link accounts, I was not able to do so in such a way that I could make transfers to fund the account. I have to actually (gasp!) write a check and mail it. Most annoyingly, the website is NOT compatible with my copy of Firefox. I had to use (gasp #2!) Internet Explorer to access the website. One more gasp, and I would cancel this service for the cancellation bonus. But NetBank is clever. Their bonus is based on keeping money in their bank for a set period of time. (I chose the NestEggz bonus, linked, but to find other bonuses, try doing a Google search for site:https://secure.netbank.com/cgi-bin/fulfill?p=pro).

So far I've set up the services, and initialized the funding that should qualify me for the offers. In a few weeks, the first of the direct deposits should go through, which will give me money beyond the minimum to start cutting checks. I'll let you know how it goes.

Don't buy stuff you cannot afford

2006-03-26T21:29:00.000-05:00

You've probably already seen this, but it's still funny. Good advice from SNL.

Travelin'

2006-03-26T21:08:00.000-05:00

I've been on travel for three of the past five weeks. With no internet access. But, I'm done with that for a while. Yay.

Living the lifestyle

2006-03-14T21:17:00.000-05:00

So I was completing the PF blogger/perfect husband trifecta:

Dye Mrs. Random's hair (saving LOTS of money).
Watch SATC and take notes while Mrs. Random rinses in the shower.
Continuing to sit on the couch with her during SATC, while writing a blog post.

So it's no great secret that Carrie's lifestyle is unsustainable. Carrie is the perfect counter example for any responsible person who wants to spend less than they earn. (Did I really just write that? And did I really just ask "Is that a Burberry blindfold?" while watching the show? Whiskey Tango Foxtrot?). But that's old news.

What really struck me, or perhaps it was the ammoina fumes, was an ad for HGTV's "I Want That":

I Want That! showcases innovations for the home that are so new they almost haven't happened yet. Be the first in the know about the latest high-tech gadgets and new design trends.

All I can say is, wow. HGTV has closed the loop. Now the ad is the show, the show is the ad. The spice is the worm. It's like an issue of Lucky Magazine (or SkyMall) in a half-hour televised format.

I hope they do an episode on the 2006 versions of all the things mentioned in Cake's Italian Leather Sofa, my favorite song about income-limited spending.

Microsoft product packaging

2006-03-14T18:59:00.000-05:00

This video was actually created by Microsoft to illustrate their overpackaging. It's hilarious.

I'm impressed that Microsoft has such a knack for intentional self-parody. Though you couldn't tell by visiting my house, I can appreciate that an empty space can be as meaningful as a filled bookshelf. Apple clearly gets the less-is-more concept. And whoever commissioned the video does too.

Income gap narrows?

2006-03-13T22:20:00.000-05:00

This article from CNN/Money shows that no good news goes unpunished.

The evidence is in a new Fed study of family finances, the latest in a triennial series. It shows modest but clear signs of incomes converging rather than diverging. Between 2001 and 2004 (the most recent year for which data are available), incomes of the poorest 20 percent of families increased while incomes of the richest 20 percent fell. Basically, the poorest families' share of total incomes grew, and the richest families' share shrank. Incomes became just a little less unequal.

No problem with the shrinking of the income gap, right? Well, maybe.

As for income inequality, pretty much everyone has always hated it, and its growth was a certain cue for handwringing and brow furrowing. Well, it's not growing anymore. Because our best-educated workers are earning less, and the incentives for higher education may thus be declining, the result could be a more uniform--and lower--standard of living. Be careful what you wish for.

I love this article. Lot's of handwringing, and little data to back it up. Short answer, you're still better with a college degree. A LOT better.

Online wine sales? Great!

2006-03-09T22:16:00.000-05:00

I really shouldn't complain. When we moved to VA, getting our wine club deliveries became such a hassle that we ended up cancelling, savings us a few hundred bucks a year. Then the Supreme Court comes out with a ruling that makes it a bit easier, and cheaper.

Don't worry, Arizona's on that. I have no doubt that they will enact a law that will protect the (tax-generating) in-state middlemen, rather than permit direct shipments. I guess alcohol/tax laws are insane everywhere (I grew up in MA, I should know).

US and China at opposite ends of the savings spectrum

2006-03-09T22:10:00.000-05:00

I stole the title of this post from this article. But, that's just because they stole the idea for the article from my blog post from two months ago.

But that's okay, because the article does show some of the ramifications of China's thrift, and America's spendthrift.

Another update of cashless experiment

2006-03-09T21:24:00.000-05:00

While on travel, I did find a few places that only take cash:

1. Taxi cabs. While it is possible to pay with a credit card, it is still a hassle. And when your plane comes in late, and you catch the last cab out of the terminal, it's probably best to pay cash, and tip well. Fortunately I had hit the ATM by this point.

2. Airplanes! The airlines have stopped providing free meals, and they only accept cash. This lead to a very long plane trip. I'm glad I had a backpack full of granola bars.

3. Also, though not encountered on travel, Toll Booths. We only have one EZ-Pass in the family, so I keep some change in my car.

Networth IQ update for March

2006-03-07T21:10:00.000-05:00

A few days late, but my net worth has been updated on NetWorthIQ. Despite a slight drop in stocks, I show an increase of over $5100- since last month, or 1.4%. That's more than 50% more than last month.

For the second time, I used the median balance in our primary checking account, rather than the end balance, the mean, the lowest point, or any other way. For all other accounts, the end balance was used.

End of month savings report, Feb '06

2006-03-07T19:39:00.000-05:00

I'm a bit late with my monthly updates, owing to spending two weeks on the left coast with no internet access. Here's my monthly savings report:
Mrs. Random and I both increased our 401(k) contributions to match our raises. As a result, we beat last month's savings rate quite handily, 24.57% to 30.84%. This means we actually beat my long term goal of 30%. I figured a savings rate of 30% would be something we might be able to pull off for the last few months of the year. Now the trick will be to stay at this rate. In the meantime, I'll set my new monthly goal at 33 1/3%.

BTW, the graph represents the initial disbursement of funds (which is the actual savings, usually money that is sent off as a direct or automatic deposit). Transfers after the fact, from savings to investments for example, are not shown in the graph, nor are they double-counted, I hope.

More firewood

2006-03-07T19:15:00.000-05:00

We visited my parents over the weekend, and came home with another load uncut logs. After sharpening my chainsaw, I turned the pile of logs into about half a cord of firewood. With that, and the pine tree that came down in the snowstorm, I should have enough wood to last through the end of the year. And according to the latest gas bill, we're on track with the proposed savings.

It looks like Free Money Finance could use a woodstove, too.

Family Free-Riders?

2006-03-06T21:33:00.000-05:00

This post by Shannon Love on the free-rider problem of childless couples has a lot of points to ponder. Basically, Love argues that the costs of raising children is borne primarily by the parents, yet everyone (especially the economy as a whole) benefits from the next generation. If too many people chose not to have kids for short term financial gains, the economy would collapse.

It's worth reading the whole thing. The comment thread is also amusing. I would like to comment on one of her points, though:

(2) Except for some trivial income tax deductions, parents pay all the taxes that the childless do plus all the significant cost of rearing the children. Children provide no economic return to their parents. The entire population benefits from the productivity of the next generation but only parents pay the very real economic cost of creating the next generation.

Well, kids provide no economic return to their parents while they're still kids, sure. And while Mrs. Random and I may pay the same taxes as our neighbors with kids, they actually get something for that money. Their kids get a free-ride of sorts. The vast majority of taxes I pay to the county get used in the schools. One of the only reasons to have kids would be to stick it back to the county. ;)

I'm only half kidding. I'll let you guess which half.

Snakes on a Plane!

2006-03-03T21:57:00.000-05:00

I'm back from my trip. There were no snakes on the plane. Samuel L. Jackson was not a passenger. And, there was no sleeping. I picked the exit row, but the flight was so empty that I would have otherwise gotten an entire row to myself. Instead I got armrests that didn't flip up, and a seat that only reclined two inches.

I had no internet, so I'm only now getting caught up. Somehow, I missed this when it first came out. Fark has been all over it for the past few days. I can't wait. Be sure to watch the trailer.

If you still have no idea, try Wiki.

UPDATE: Somehow I missed these trailers.

47 percent of British drivers talk to their cars

2006-02-20T12:22:00.000-05:00

This doesn't seem strange at all.

On Travel

2006-02-20T10:36:00.000-05:00

Blogging may be light, or non-existant, for a while. I'll be on travel, and may not have access to the internet. At least that would give me a chance to catch up on my reading, and my Chinese.

Update on my cashless experiment

2006-02-20T10:15:00.000-05:00

I'm entering my third week of not carrying cash. This seems to go against a lot of PF bloggers' advice, but it's working for me so far. I didn't start the experiment on purpose, I just spent all the cash in my wallet. After a week, I found I didn't miss it.

Thanks to MS Money, it's a lot easier to see where money gets spent through credit card statements. The only cash I do carry is a small pile of change in my car for tolls, and the Taco Bell drive-thru (McDonalds takes credit cards).

Economic disincentive to two-career housholds

2006-02-20T09:22:00.000-05:00

Fark comes through again. This article from Newsweek points to how Europe's family friendly leave policies have made it difficult for women to have careers. It's an interesting read. However, rather than a true black and white difference, Newsweek missed out on a few things that have made the US more like Europe.

The article starts with a comparison of the two models. A is the US, B is Europe:

Choice A offers new moms 12 weeks of maternity leave, almost no subsidized child care, no paid paternity leave and has a notoriously hard-driving business culture. Choice B gives them five months to three years of paid time off from their jobs after having kids. Millions put their offspring into state-sponsored day-care centers for several hours a day. Government agencies, full of female directors and parliamentarians, protect workers at the expense of business and favor a kinder, gentler corporate culture.

But Choice A isn't always as harsh as that. Specifically, the Family Friendly Leave Act (even better than the Family and Medical Leave Act, but specific to Federal employees), makes it possible for fathers to use paid sick leave for certain events, including childbirth. Some companies are combining annual and sick leave, giving more flexibility.

Then there's this little tidbit:

European countries base their tax structures around the notion of a single breadwinner. The result: taxwise, it's often advantageous for families if the mother doesn't work. Germany is exhibit A. Second incomes are immediately taxed at the highest bracket.

Well, it's not so rosy here, either. All of my income is taxed at whatever rate Mrs. Random's leaves off at. Make too much, and certain deductions and the child tax credit go away. There's a sweet spot that it may make sense for Mrs. Random to work while I stay home with the kids we don't have yet.

So, read the article. To quickly summarize, Europe views family leave as a challenge requiring an entitlement, to be paid by taxes. The US views it as a personal choice and gives it's workers the flexibility required to find a solution that works for them. As a big fan of flexibility, I'd much rather live under the US system.

Beijing opens the world's first "specialty penis restaurant"

2006-02-18T11:01:00.000-05:00

As a source for offbeat news, Fark.com never disappoints. This article from the Sydney Morning Herald is just nasty.

I may go back to being a veggie full time while I'm in China. Stories like this certainly don't help. The good news is that most ex-pats (and the vast majority of Zhongguoren) can't afford to eat there.

The [tax] cost of marriage

2006-02-15T19:48:00.000-05:00

Despite claims to the contrary, the marriage penalty still exists for high wage earners. Its effects are lessened, thanks to the President's Tax Relief Act of 2001, which removed the penalty for the lowest tax brackets, but Mrs. Random and I calculated our penalty to be fairly significant.

This article, from CNN Money (my new favorite site) points out a few of costs of being married. It misses a big one, though. Mrs. Random and I cannot contribute to a Roth IRA due to our combined income. Singly, however, we would both qualify. Just as with the other examples in the article, the cutoff for married IRA contributions is less than double the cutoff for singles. Interestingly, 401(k) plans are completely individual, so there is no marriage penalty for those contributions.

I s'pose in a fantasy world, one could construct a civil contract giving all the rights and privileges of being married (survivor benefits, power of attorney, etc.), yet still be "single" for tax purposes. In the real world, it's still worth a few $K to be married, in the spirit of Valentine's Day, of course.

Sharebuilder update

2006-02-15T19:38:00.000-05:00

I mentioned before that I had signed up for a Sharebuilder account through Costco. Yesterday, my first trade went through. I received notice that my $85- promotion bonus will be credited in 4-6 weeks. Woot!

Festival of Frugality

2006-02-14T20:51:00.000-05:00

My post on woodstove savings has been selected for the Valentine's Day themed Festival of Frugality #10, hosted by Boston Gal's Open Wallet. Be sure to drop by.

Dubya in Mongolia

2006-02-11T22:56:00.000-05:00

Somehow, I missed Bush's trip to Mongolia in November. Nothing earthshattering in the WaPo's article "Feeling the Squeeze of China and Russia, Mongolia Courts the U.S.", but it does give me a chance to post an interesting image, and plug the Mongol Rally.

Bad news on the Rally, though. Mongolia may have stopped waiving the import duty for cars as they finish, or at least made it more difficult. This means that it could be a lot more expensive to participate in the future. Apparently, things don't happen quickly in the land of Genghis Khan.

Primerica Financial Services

2006-02-11T20:12:00.000-05:00

I don't know if you've ever come across Primerica Financial Services, but it appears to be a pyramid scheme indepenently operated but wholly owned by Citibank. Mrs. Random came across the Rip Off Report on PFS. It's a long, but strangely entertaining read. Some of the supporters of PFS,

No one can rebut the fact that alot of the financial concepts taught by PFS is not taught in schools. If it were, then society as a whole would not be in dire straits as it is today from a personal finance perspective, wouldn't that be true?

come off sounding like Time Cube ~~cult members~~ Cubicists (or Cubics). Perhaps PFS is based around this book.

Woodstove Savings

2006-02-11T18:26:00.000-05:00

In November of 2004, I had the upper half of my chimney replaced. At the same time, a 6" stainless steel chimney liner was put in for the downstairs fireplace, and a wood burning insert was placed in the firebox.

During the winter of 2004-2005, the fireplace usage was somewhat sporadic. I didn't really have enough wood to last the winter, so the fire only ran when it was really cold, or when we wanted to have the downstairs lounge heated. This winter, I've made an effort to keep the wood stove burning full-time. The effect on the gas bill has been quite dramatic.

Whereas gas usage during January had previously spiked, this year I actually used less gas in January than I did in December. I'm sure the unseasonably mild weather helped this some. For the 03/04 gas year, I used 652 therms (435 from July through January); for 04/05, I used 553 therms (355 from July to Jan); and for 05/06 I'm projecting using 350 therms, with 212 actually used from July to January. Based on the summer usage, about 100 therms a year are used just to heat the hot water in the house.
So, last winter I saved 100 therms (80 through Jan), and this winter I've saved a remarkable 233 therms, and I'm predicting a total savings of 302. Last year, gas worked out to about $1.50 per therm (it fluctuates, and there are some fixed costs, but that's the average). This year, its closer to $2.37. That means that last winter, I managed to save a grand total of $150, while this year I've saved over $500, with a projected total of over $700 through the end of the winter. I've cut my gas usage by about half, and the total bill by even more than that, since gas prices have gone up.

To counter the $850 savings, I should comment on my expenses. In a recent post, I pointed out that I tried to be frugal about gathering wood, but I I had few specifics. I can lay those out now.

The largest expense was the wood burning insert itself. With the chimney liner, the total came out to be about $2400 (the top and shoulders of the chimney needed to be replaced anyway, and aren't counted). Last winter, I spent about $50 on incidental supplies (wood carriers, chainsaw lube, etc.). This year, I bought a new chainsaw ($150, massively on sale at Sears), as well as about $40 worth of incidentals. I also spent about $60 in gasoline, or in extra* gasoline, transporting wood from a friend's family farm or from my parents' house. So over two years, I've burned or collected perhaps 6 cords of wood, and spent about $300 gathering it. A cord of wood has a street value of about $200, delivered, in Northern Virginia.

So by the end of the winter, I'll have saved about $850 in natural gas. In doing so, I'll have burned $1200 worth of wood, saving $900 after the gathering expense (it's interesting how close these numbers are, it's as if a "therm" of wood costs about the same as a therm of natural gas). I also won't need a new chainsaw for a while. Where does that leave me? I'm either well on my way towards paying for the wood stove and liner, or I'm already turning a profit. This is because the wood stove does something that can't be quantified financially. It turns the lounge, the largest and best room in the house, into a livable space during the winter.

If I wanted to stretch the savings even further, I could count the chainsaw as a landscaping expense. And it gets better. There is a lot of chainsaw landscaping that needs to be done by next fall. By doing it myself, I will have saved $2000 vs. an estimate from a professional landscaper by taking down some pine trees, juniper, and leaning maples in the yard. I can then burn it for free.

* Extra gas -- Since I'd visit my parents anyway, the cost of transporting wood from their house to mine is only the extra gas burned by my truck (20 mpg) vs. taking one of the cars (25-30 mpg).

UPDATE: Welcome to all readers of the Festival of Frugality! Please check out the rest of the blog, and leave a comment if you like.

Amazon sale

2006-02-11T16:32:00.000-05:00

The story actually starts with a 10% off sale (with your Sears card) at Sears this weekend. We went there hoping to find an old-fashioned, canister vacuum cleaner. The one we wanted, a Hoover Windtunnel S3639, was panned by Dwell magazine for not being stylish enough, even though it was the best performer, and the cheapest. Sears did not sell it.

So Amazon it is. There is a $25- off coupon for $125- or more in housewares, and free shipping, so it worked out to $135- total. Not bad. The Dwell street price was $199-.

What's in my wallet

2006-02-11T11:32:00.000-05:00

It's time for a cleaning anyway, so why not use this opportunity? Unlike Cap at StopBuyingCrap, I don't have the patience to blur a bunch of images, so I'll just post a list.

My wallet is a plain bi-fold black wallet that Mrs. Random bought for me for Christmas from Overstock.com. It's niftiest feature (as yet unused) is a zipper inside the fold that give access to another pocket behind the credit cards.

Identification:

VA Driver's License
Aetna HMO card
Two copies of my business card (I gave away 4 yesterday, time to print more)
One blank check (and yes, the number is recorded in the register, in case my wallet gets stolen). It serves as emergency cash, and also as identification for buying guns in VA (I'm not kidding). I haven't used it in a long time, though.

Credit Cards, etc:

GM Card, MasterCard, image is a Pontiac Solstice
Discover Card, blue transparent card
MBNA Platinum Plus, MasterCard, from my college Alumni Association, no fees on foreign currency transactions (this is my newest card)
Local bank ATM card, which acts as a Visa check card (I almost never use this, since Discover gives a 5% kickback at the grocery store)
Travel card, Visa

Membership cards:

AAA Plus Mid-Atlantic
Sears Craftsman Club
Costco Executive Member (2% cash back)
NRA Range, annual membership
Petco, Wegmans, Giant, and CVS Pharmacy store bonus/discount/kickback cards

Other stuff:

Metro card with $3.80 left on it (Pandas on the front, Nationals on the back)
Laminated photo of (now) Mrs. Random and my Mom's favorite yellow cat, dated June 1996
Emergency contact phone #
Login passwords for my computer
Business card for my Chinese teacher
Receipt for $36.50 store credit at Ranger Surplus
10% discount card at Casual Adventure
~~Three Subway Sub Club coupons~~
Free breakfast buffet at Quality Suites
Arigato lunch sushi buffet card (with 2 of 8 stamps)
UPDATE: Uncashed check for $7.60 from the US Treasury (overpayment of my now closed Federal student loans)

Notable omissions:

I have NO cash. MCD takes credit cards now, so what's the point? I spent my last three bucks on a tip for a haircut (my first in 4 months). I don't even have a lucky penny, or Irish money.
I don't even have an emergency $20-. Well, that is bad. I should keep enough for a taxi ride home, at least.
I don't have a spare key for my car. The zippered pockets are screaming for this.

That's it. It's a lot less stuff than I used to carry around. Still, I'll be first in line to have a credit chip implanted in my palm. And those store cards are killing me. I should just make a separate key chain for them and leave them in my car.

UPDATE: I happened to be at the mall, and had lunch at Subway. They told me the Sub Club cards I had are worthless, thanks to rampant counterfeiting.

Home inventory software

2006-02-11T10:58:00.000-05:00

It's raining right now, and snow is predicted for today and tonight, so Mrs. Random and I are taking care of some indoor projects related to the move.

Right now, she's using free inventory software from knowyourstuff.org. Thanks to MyMoneyBlog for posting the link. It seems to work pretty well. It looks a lot like a Microsoft Access database that someone has made a really nice interface for. It also accepts digital images, which will be especially useful when we we start packing things for shipping and storage. We could even document the "before" condition of any furnishings and supplies we leave for the renters.

According to Mrs. Random, the software is great, but the process is time consuming. But, that will be true no matter what you use.

Free Barron's Online

2006-02-11T10:21:00.000-05:00

Barron's Online is free, this week only. Thanks to Random Roger (no relation), who's site is always worth a look.

UPDATE: In addition to a bearish feature article about Google, there's a great article about how 1.3 million Americans have voted with their feet and moved from states that charged income tax to those that didn't between 2000 and 2004.

I moved from a high tax state to a medium tax state, but I chose VA over MD or DC because of taxes and other freedoms. VA has a %^&*#@ income tax, but it could be worse, and I'm sure it will be.

Netflix sticks it to their best customers

2006-02-10T23:07:00.000-05:00

This article is worth a read, especially if you use Netflix. I cancelled my subscription a few years ago, back when I was too busy to fully take advantage. I had considered starting up again, especially since my Mom's subscription appears to only be valid for chick movies (every time I visit..., though this was unexpectedly amusing). I guess I'll hold off on the membership renewal.

Creative money savings methods

2006-02-09T21:10:00.000-05:00

In the continuing saga of cheapness, I should report on our wood-burning-as-primary-home-heat-source experiment.

So far, We've done a pretty good job of keeping the fire going nearly full-time. It's reflected quite dramatically in our gas bill. Last February alone we used 133 therms of natural gas, for a total bill of $180-. This "February" (Jan 6 - Feb 6), we used 60 therms, for $122. Despite gas prices that are 50% higher than last year at this time, we managed to save money, and cut our gas usage by more than half (correlating with our electric bill, it even seems that we spent MORE time at home this year than last year, which should raise our heating needs).

A lot of this savings is due to our remarkably mild winter. Probably most of the savings. But some of it must be due to the wood stove. Along those lines, I've found a few creative ways to save even more money.

First of all, I never pay for fuel. Ever. I've cleared trees in my yard, I've poached wood from construction sites (including my parents'), and I have a friend with links to a family farm. I use recycled newspaper and construction debris as kindling (all free, I don't even subscribe to a newspaper, I get it from a neighbor), and I split it all myself.

Second, I rarely pay for materials. Minus the wood stove itself (ouch, but part of a needed home repair), I've spend about $200-. Most of that was for a new chainsaw (I got one free with the house, but it's seen better days. The new one is nice). And, since it also facilitated needed landscaping improvements (the chainsaw has taken down many dead pine trees and juniper), it can't really count against the wood burning materials bill.

Third, I pay very little for transportation. The worst I've done was a 90 mile round-trip drive for about 2/3 of a cord of wood. I did that twice. The rest of the long-distance wood was from my parents. But since I'd visit them anyway, the only legitimate difference would be due to the mileage of my truck (20 mpg) vs. whatever car I'd have taken instead (25 or 30). Just a few bucks. Even the truck was free! My dad gave me his old one when he bought a new one.

Finally, I don't pay for stove maintenance. All the parts are easily replaceable (I'll probably end up replacing the door gasket at the end of the year). Best of all, I just swept the chimney myself. This is a service that usually costs about $80 to $100-. It was quick, easy, and kinda fun. And unlike every other home improvement project I've undertaken, this took zero trips to Home Depot (my norm is 3), and only two trips up the ladder onto the roof. I didn't even pay for the sweeper, I borrowed it from a friend.

All told, I've put about 3 cords of wood through the woodstove this year, with one more waiting to go. Each cord has a street value of about $200, delivered. And by burning landscaping debris, I've saved even more money by doing the chainsaw landscaping myself, and not paying to dispose of leavings. I won't say that the stove has already paid for itself, but it's getting close.

Does home equity count towards legitimate net worth?

2006-02-08T21:39:00.000-05:00

I've pondered this question a bit. Is your primary dwelling an asset that should count towards your net worth? Does its assessed value really mean anything if you're not going to sell it (other than for tax purposes)?

Well, I don't know. I have to live somewhere, and I can't improve my situation (bigger house, closer to work, etc.) without taking on a higher mortgage than I have. So, the value of my house is meaningless, really. I'm not going to sell it -- even when we move to China, we'll rent it out. The only thing the remarkable rise in house values has done is raise my taxes.

Speaking of that, check out Zillow.com. It's still a beta, and not perfect, but it does show the remarkable trend of house prices. According to the site, my house is worth $30K more than I had figured (my number was based on an actual assessment, the Zillow number is based on a formula, comps, tax records, etc.).

One interesting feature of Zillow is the graph it can generate. I had guessed that house values in my neighborhood had leveled off last summer, and Zillow confirms it. It's pretty nifty. I don't know how accurate it really is, but I'm a big fan of charts.

So for now, I'll keep my $650K estimate in NetWorthIQ. A constant number makes it easier to track real change (i.e. savings, investment appreciation, debt paydown, etc). I just have to keep reminding myself that our house is not an investment.

Prepping for China

2006-02-08T21:00:00.000-05:00

Blogging has been a bit light, lately. I've started taking a Mandarin Chinese class. I should probably be studying right now, in fact.

Mrs. Random and I also started to go to Asian grocery stores. Tonight's trip to a Korean-owned international market was quite pleasant. There was a great selection of veggie food, and prices were much better than Giant or Safeway. About a third of the store was stocked with standard American food, and the produce section was quite extensive.

A few weeks ago, we hit another grocery store in Fairfax. I think that trip was better preparation for what is to come. The prices there were even better. Most of the food was Korean, with about 15% Japanese, 5% Chinese and other. Almost no "American" food was availible at all. Both places had similar layouts, with sections of imported cookware, fish markets, and restaurants in the store. But the Fairfax store seemed cramped and crowded. It was also the Saturday before the Chinese New Year, so that couldn't have helped things much.

I did learn one thing that may come in handy in Beijing. The freshest and cleanest green onions are at the very top of the stack, buried as far out of reach as possible. It is perfectly acceptable to literally climb over the bottom onions to get to the good ones. Perhaps that's why the front ones are not as fresh...

Despite the differing shopping experiences, we've been very happy with the exceptionally yummy food we've picked up. Cheap, easy to prepare, and capable of soaking up large amounts of soy sauce.

February Net Worth, again

2006-02-07T21:26:00.000-05:00

Blogspot is acting strangely. My post of 4 February, titled "Revised Net Worth for February", disappeared. Strange.

Fortunately, the Google cache came through. So here's the text of that post:

I posted this already, but I hadn't been as precise as I wanted to be last month, so the numbers came out wrong. Our corrected net worth is $365939 as of Feb 1, an increase of 0.81%. I had to edit this month and last month's figures to come up with these numbers.

The big revision was account for our annuities -- our almost worthless pension plans. I don't count on being able to draw them out like a true pension, but we do pay in a tiny fraction of our income, and the resulting number is tracked. Fortunately we don't have any other annuities.

Also, and this is subject to debate, I changed the way part of our "cash" was calculated. For most accounts (which are savings, or checking accounts intended for specific investments), I take the value at the end of the month. But for our main checking account, there are several ways I could have done this.

I could have taken balance in our main checking account on Feb 1, but I didn't like that since it's an arbitrary point in time for an account that fluctuates a lot. I could have taken the lowest point to which the account dips (the day the mortgage posts), but that, too, is arbitrary. A one day swing in one of our pay dates could make a huge difference. Also, some months, like December, have a "bonus" paycheck (5 Fridays, since Mrs. Random and I are payed bi-weekly, and offset a week). Mrs. Random does a good job of making sure that everything gets covered, despite the wacky schedule (it was so much easier when we both got paid at the end of the month), and of making sure that not too much is sitting in a checking account not earning interest.

So what to do? What is the true number? I decided to go with the median checking account balance through the month (in Excel, MEDIAN(C1:C31), for example). Arbitrary, I know, but I think it reflects the truest value. And as long as I'm consistent, I should be able to track the trend.

What do you think? How do you calculate your monthly checking account cash? Please leave a comment.

No Credit Needed is debt free

2006-02-07T20:30:00.000-05:00

Stop by to congratulate him.

At the other end of the spectrum, some PF bloggers carry a metric crapload of credit card debt. Neo, of Neo's Nest Egg, has roughly $70K of credit card debt, presumably all of it as zero interest balance transfers. At the current rates (HSBC is at 4.25% APY, 4.80% for the next few months), that could generate $3000- per year, or more with a little risk.

I don't think I'd want to play that game (we much prefer paying off our cards each month), but it is an interesting idea.

UPDATE: 2million has a great post on how to take advantage of 0% balance transfers. It's worth a look.

Back to the Future

2006-02-03T17:13:00.000-05:00

50th post!

I picked up a copy of the Back to the Future trilogy at Costco today (remarkably, it's actually a buck cheaper at Amazon). I'm not the only person with a copy, though, as evidenced by Brokeback to the Future.

How People Pick Stocks

2006-02-01T22:23:00.000-05:00

I found this buried a few clicks below the 33rd Carnival of Personal Finance. It's old news, but interesting. Recently Mrs. Random and I have been doing some rebalancing. We used our free Ameritrade trades to purchase some value stocks, to be held for the very long-term. This appears to be the "correct" way to do it. I like this comment from beneath the article:

Great article! I like the way you point out the flaws of these three main types of investing styles. I would also point out that there are more billionaires made with “Value” investing than the other two types. However, the other two styles have a lot more seminars, conferences, and self help gurus. You can draw your own conclusions from that.

So, just as it will be the banks that benefit from the housing boom, stock brokers and seminar speakers benefit from short-term traders. Here's a nice graph that shows this point.

Networth IQ update for February

2006-02-01T20:22:00.000-05:00

Our net worth has been updated. It now stands at $365,575, an increase of about $3500-, or just under 1%.

UPDATE: I had cut a few corners calculating last month's net worth. It's fixed now, but look for a new post analyzing the new numbers.

State of the Union Followup

2006-02-01T17:27:00.000-05:00

Here's what I wrote last night:

9:43 The Dems seem pleased that they stopped Social Security reform. Good for them. I guess none of them have kids who might someday want to retire.

I was specifically referring to the standing applause when Bush mentioned that his attempt to reform Social Security had failed. I'm not the only blogger to notice this.

Glenn Reynolds noticed it. So did Tom Elia, Paul Mirengoff, Daniel Casse, and John Tabin.

Since when was fiscal irresponsibility something to rally around?

Also, special thanks to The Silicon Gadfly, who accuses me of nailing the live-blog game:

Looking good over at mission:nontrivial. Short and sweet, but he's keeping up and keeping it relevant in Liveblogging the State of the Union Address.

Thanks, that's really nice.

Liveblogging the State of the Union Address

2006-01-31T21:10:00.000-05:00

Why? Why not? I'm watching the streaming video feed from the WaPo while our main TV is occupied by Mrs. Random.

9:10 Bush takes the podium, applause gavel.
9:11 Bush just winked at Cindy Sheehan, his secret Ace.
9:12 Bush predicts afterlife reunion of MLK jr. and his late widow.
9:13 Mrs. Random is now watching the broadcast. Unfortunately, the WaPo feed is two seconds ahead.
9:13:30 Spoke too soon, SATC is back on.
9:16 Terrrrrrists drink
9:17 122 "democracies" in the world today. Does that count China?
9:17:30 More than half of the people of the world live in democratic places. I guess not.
9:18 Terrrrrrists drink
9:18:30 Weapons of Mass Murder no drink!
9:19 "We love our freedom, and we will fight to keep it" applause The WaPo feed can't keep up with the crowd shots. I can't tell who else is there, other than Laura's bright pink outfit.
9:20 "We will never surrender to evil" applause
9:21 Did I mention Iraq yet?
9:22 "We are winning" applause, and half the room on its feet (guess which half)
9:26 War poetry
9:27 Standing applause for the family of a fallen soldier. Both sides of the room standing for this.
9:28 US supports democratic reform across the broader Middle East.
9:30 Nukyular (x2) chug
9:31 We respect Iran?
9:32 Poverty causes Terrrrrrrism? Uh oh. This excuses the Terrrrrrists, doesn't it?
9:33 Reauthorize the Patriot Act! (woot!)
9:34 Bush is reminding people that spying on Terrrrrrists overseas is legal and required. The Dems don't seem too happy about this one.
9:36 Reject isolation. Asks for bi-partisan support. And the Dems stand up! So, why didn't the Patriot Act get properly renewed?
9:38 This economy could not function without immigrants.
9:39 Economy depends on growth.
9:40 Remember those tax cuts? 4 years of growth.
9:41 Urges Congress to make the tax cuts permanent. How 'bout rolling back the AMT, while you're at it...
9:42 140 poorly performing programs to be cut. $14 billion in savings. Deficit cut in half by 2009.
9:42 Earmarking reform depends on the line-item veto? Why not just have a responsible Congress instead. Where's the legislation for that?
9:43 The Dems seem pleased that they stopped Social Security reform. Good for them. I guess none of them have kids who might someday want to retire.
9:44 Need open and secure borders.
9:45 Need a temporary worker program that rejects amnesty.
9:46 Affordable healthcare (raucous applause).
9:47 I guess Bush doesn't read blogs if he thinks the latest healthcare payout is a good plan
9:48 Invest in clean coal, wind and solar, and Nukyular energy.
9:49 Yay, more ethanol. ADM will be happy.
9:50 End the dependence on Middle Eastern oil (no plan to prevent oil from remaining a global commodity).
9:51 More R&D money for nanotech and other buzzword technologies (any of that for stem cell research?)
9:52 No applause for the mention of the No Child Left Behind act? What's wrong with this crowd?
9:53 We've become a more hopeful country.
9:54 "A life of personal responsibility" It looks like Gens X and Y are rejecting the Boomers. Perhaps we won't pay for their retirement, either.
9:56 I've really discovered the edges of performance of my 6 year old laptop. No more links in this post...
9:57 I think I may have also detected the edges of my attention span.
10:00 Nap time over. Is he selling homesites in a floodplain? I must have heard that wrong.
10:02 Yup, his lips keep moving, but I stopped listening 5 minutes ago. Damn you, SATC.
10:03 "May God Bless America!" And we're done.

Next up, my Governor, Tim Kaine.

Savings rate lowest since 1933

2006-01-31T19:49:00.000-05:00

This can't be good. With so many people borrowing to maintain their lifestyle, banks are the real winners. Perhaps this will be the year they break out.

Foreclosures in MA at a 12 year high

2006-01-31T19:25:00.000-05:00

This is a story from yesterday's Boston Globe. With interest rates going up, people who used ARMs to buy near the crest of housing prices in Boston are getting hit with mortgage payments they can't afford.

Well, duh! If you can't afford the house, WTF are you doing buying in this market? It's a renter's market right now. This is the money quote from the article:

"When prices are skyrocketing, you have the option" of selling the house for a gain or refinancing, said Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University.
''In an economy where price appreciation is more modest or doesn't exist, what option do you have left?" he said. ''Sadly, one of those options is foreclosure."

That's right. If housing prices don't "skyrocket" each year, what choice DO you have BUT foreclosure.

Of course, another option is to buy a house you can afford, with a fixed rate mortgage. ARMs require you to fortell the future. Either your house has to be worth a LOT more in future, or interest rates have to remain constant. Neither is guaranteed, of course.

But the inability to live within their means is not the fault of the people who overextended themselves when they bought their houses. They're victims of the economy!

End of month savings report

2006-01-31T17:38:00.000-05:00

I stated that one of my goals was to save 30% of our pre-tax income. Here is how we did:
Not so bad, 24.57% saved this month. That included less than one percent of "paydown", which I define as additional payments towards long-term, interest bearing debt. (Note that this does not include credit cards, which get paid off each month, or other obligated payments, such as mortgages or student loans. Only additional principal beyond the norm is counted).

Last month, the savings rate was 28.8%, but that included a large extra car payment (last one!), which skewed the trend. Without that paydown, the savings rate was only 20.5%, which was the number I was working with when I came up with my 30% goal.

So, it's a good start. If I hadn't read 2Million's post and started thinking about debt paydown and savings, it would seem even more impressive.

Valentine's Sliders

2006-01-30T17:11:00.000-05:00

This article makes me wish there was a White Castle closer than New Jersey. A road-trip to Columbus, OH, would not be out of the question, but I'd have to tie it into a larger trip. Lot's of fun roads in that direction, though.

I don't know how frugal going to White Castle really is. Even when you pay 7 cents or so for a slider, it all adds up.

Pajama-clad investors

2006-01-29T20:47:00.000-05:00

Here's an inspiring article from Forbes. The trick is to remember that the goal should be investing, not trading. Wealth accumulation, not additional income. After all, income is taxed, wealth that is not held in the form of real-estate (or cars, in backwards places like MA and parts of VA) is not.

Government debt and the Future

2006-01-29T20:06:00.000-05:00

I came across this article a while ago, and bookmarked it expecting to have a lot to say. Better just to post it, I s'pose. One interesting quote (not the whole point of the article):

It's a cold world these young people are facing. Then again, it always was. Let's not forget the ancient sage advice against trying to lavish our heirs with luxuries. ``The finest inheritance you can give to a child is to allow it to make its own way, completely on its own feet,'' said the dancer Isadora Duncan.

This is warning against "weakening the weak", which is discussed at great length in The Millionaire Next Door, one of the books that inspired me to start this blog.

ROV attacked by octopus

2006-01-29T14:14:00.000-05:00

This article is pretty funny, and only partly because it was written by someone with no background in science. It wasn't a "submarine" that the octopus tried to eat (or mate with), it was a Remotely Operated Vehicle (ROV). A tethered, underwater robot. Submarines, even mini-subs, carry people.

At least this article on the same incident calls an ROV an ROV, mostly.

Finally, this version of the story seems the most correctly written. However, they still get the details of the ROV wrong. The ROV is actually a Seaeye Falcon, made by Seaeye Marine, not Suboceanic Sciences, the operator during the incident. The Suboceanic website even points this out:

SubOceanic Sciences operates a Seaeye Falcon.

So what's the moral here? 3 versions of a remarkably simple story get simple terminology wrong. Sure, it's nitpicky, and the humor of the story is the real point. But, what does that say about articles written about economic topics, or tax law, or Social Security reform. The same liberal arts majors are writing these stories, too. Can they be bothered to spend 10 minutes with Google to check their stories? A lot more rides on opinions about the AMT legislation or pork barrel spending than on octopi.

manamana

2006-01-29T13:51:00.000-05:00

I'm a big fan of Dr. Pepper. I've been to the Dr. Pepper museum in Waco, TX. I've stocked my vending machine with Diet Cherry Vanilla Dr. Pepper. And I got the manamana song stuck in my head thanks to their recent commercial (click Media Gallery, then on the first of the TV links).

What I didn't know, until a friend sent me this link, was the original source of the song. It's even funnier in context.

China Marketing 101

2006-01-29T11:32:00.000-05:00

This list of 12 facts about the confucian customer is an interesting read. Most interesting is this:

11. Chinese people squirrel away 40 percent of their income, despite making, on average, less than a tenth of U.S. per capita income. The Chinese believe the fickle hand of fate can turn against them at any time. And there’s virtually no safety net.

The savings rate in the U.S. is at an all-time low. Perhaps even negative, depending on who you believe. I really like this graph to show that point, which also reflects the housing bubble, which is the only thing that is increasing net worth for the vast majority of Americans (from The Big Picture):

So, why do the Chinese save so much, and Americans so little? Could it have something to do with our perceived safety net? Well I for one am not counting on the government to tax the next two generations to pay for my retirement. The Chinese are well ahead of us in terms of personal financial independence. Even my 30% fantasy savings goal won't keep up with their remarkable average.

Costco Sharebuilder Incentive

2006-01-28T21:27:00.000-05:00

I came across this post on Budget Living in Orange County. Costco Exective members are eligible for an $85- kickback when joining Sharebuilder. However, there are some hoops to jump through.

First, go to the Sharebuilder Costco page. Note that it's only a $55- kickback. But don't despair. Click on the Special wallet offer. The bonus shows $85- for Executive members, and $65- for other members. Plus a 25% or 10% rebate of scheduled transaction fees. This expires 4/2/06. You have to click through to this page, I can't just post the direct link. In fact, you may have to start on the main Costco page, and click through from there.

There are a few stocks that I'd like to aquire over time. However, the transaction fee structure of brokerage trading encourages making all or nothing trades. I can't, say, accumulate more shares of Exelon one or two at a time (or fractional shares of Google, not that I'd want to). Sharebuilder fixes that. So, I'll sign up, and post again after I've given it a try.

UPDATE: I'm all signed up. It was a lot easier than sigining up for Ameritrade (20 minutes vs. 3 hours), and no paperwork to mail in. It was easier than even ING Direct!

NPR Marketplace, Live from China

2006-01-27T22:16:00.000-05:00

I only caught a little of the original broadcast, but this series from a few weeks ago was worth a full listen according to one of my coworkers. Who knew there was more to NPR than Palestinians and Car Talk?

It turns out Marketplace is a pretty good website for an alternate perspective on financial issues. Thinking about joining a credit union? Here's a quick, one sided report with no stated conclusion, just like their news!

Bad feedback for $3 eBay sale leads woman to new career in phone sex

2006-01-27T21:38:00.000-05:00

I much preferred the Fark headline (the title of this post) for this article, conservatively titled Online CD purchase brought her harassment. However, the real issue is identity theft, and eBay was only involved in the target aquisition, not the means of the theft. Still, it's an interesting cautionary tale of the dangers of interacting with people online. And for some reason, eBay seems to attract some strange people.

Take this sad example. A woman and her daughter are found dead 26.2 miles from Boston. The husband is a "person of interest" who had recently begun scamming people on eBay.

So, if you use eBay, be careful out there. The odds are probably about as low as being a victim of road rage, but I predict that eBay rage will become a widely reported problem, even if there is no real trend.

Student Loan Debts

2006-01-27T21:11:00.000-05:00

This article is quite astounding. Basically it's a slow news day in Seattle, so a reporter interviewed some near middle-aged people with crippling student loan debts. The best example of debt is a couple with $350K in debt from becoming acupuncturists. Huh? How long could that possibly take?

The best example of raw stupidity, however, is a woman who spent $110,000 to get a Master's degree in non-profits leadership. She already worked in the field. I know that Seattle University, where she got the piece of paper, is not a non-profit.

I'm sorry, but I gotta be harsh here. Staying in school past your expiration date can be one of the dumbest things you can do. First, it delays having a "real job", meaning that you're missing out on income-producing years. Second, who really profits from a Master's of Basketweaving? Only the school. Getting a graduate degree should show a return measured by an increase in your income, or at least your income earning potential.

So, if you're already independently wealthy, go ahead and go back to school to pursue a passion. Otherwise, there are only three reasons to go to grad school: 1. It is paid for by a fellowship, TA position, etc. (a great reason to be an engineer, you can get paid to go to grad school), 2. It is paid for by your current job (just look out for retention commitments), 3. It is an entry requirement for a high-income profession (i.e. MD, JD, etc. Acupuncturist apparently doesn't count).

Thanks to Everybody Loves Your Money for the link.

Is debt paydown "savings"?

2006-01-25T21:49:00.000-05:00

Depending on who you ask, paying down debt can count as savings. So, for example, principle paid on a mortgage could be considered "savings", since you're adding net worth every time you pay down your debts. The only real problem I have with that is when determining the difference between obligations and voluntary debt paydown.

Clearly, if you are carrying credit card debt month to month, that should be your highest priority debt to pay off (except for certain types of gambling debt, I s'pose). Say you have $10K in CC debt, which you plan to pay off in 20 months. You pay off all new charges, the interest in the balance, and put in an extra $500- per month to pay off the principle. Is that really savings? Perhaps, but only that $500-. Not the interest, and not the new charges. If you had no CC debt, paying off your monthly balance certainly couldn't count as savings. If it did, there'd be a savings incentive to spend MORE each month.

So, I'd say that "savings" can only be counted if it meets a few criteria. First, it has to go to pay down principle. Interest, monthly charges, and obligated minimum payments can't count.

Second, for mortgage payments for example, the part that counts as "savings" has to be beyond what the mortgage requires. If you have a 30 year mortgage, likely you're paying off about $1-150 in principle per $100K loan at the beginning of the loan. This will increase over the course of the loan, but initially it's mostly interest. You're still required to pay that principle, so it can't count as savings. The only "savings" that could be counted would be additional payments to principle made that are not required by the loan. Remember, if you make one additional principle payment each year equal to your total monthly payment, a 30 year mortgage will be paid off in 22 years. That's quite a savings over the length of the loan.

Finally, debt paydown has to be a benefit over time. Paying off your monthly credit card charges helps you today. You incur no interest on that debt. Paying down long term debt acts just like money in a savings account. It avoids interest charges over a long period of time, which is the same, to you, as earning interest in your ING account.

So, when I made my New Year's resolutions to save 30% of pre-tax income, I wasn't thinking about counting debt paydown. I won't start now, but I will track it. Perhaps I'll see some interesting trends.

Please leave a comment if you have an opinion one way or the other. Is debt paydown "savings"? Thanks!

UPDATE: Here's the post that started me thinking about this topic. Next week I'll have my end of the month financial figures up. I'll be sure to track debt paydown as savings separately.

I'm a Ferrari 360 Modena, apparently.

2006-01-25T21:24:00.000-05:00

Not the first choice of most PF bloggers. The Miata was another possible outcome, but not the Pontiac Solstice, or even the newly announced Pontiac Solstice GXP.

Take the Which Sports Car Are You? quiz yourself at tomorrowland.

At least I'm not a Mazda RX-8. Bleech...

Credit Cards and Cash Back

2006-01-20T21:08:00.000-05:00

I can't imagine any PF bloggers supporting carrying credit card debt from month to month. Still, if you pay off the charges every month, thereby incurring no interest charges, there's no harm, right? Don't tell that to ncnblog.

I am glad you pay off your balances, but people spend MORE with credit cards than they do with cash. (Be HONEST, and think about how YOU are with your credit card!)

He may be right. Even if you pay off the balance every month, the credit card may encourage additional spending. I wish I could find the quote, but I've seen/read that using a credit card for most purchases increases monthly spending by 30% or so.

I am glad you were going to buy these things anyway... But, are you being totally real with yourself? On occasion, don't you purchase items with the thought in the back of your mind... "Well, I don't really need this, but I will get some cash back, and I might use it..."? Ladies, go check your closet for that purse or pair of shoes you charged, and think of how you justified the purchase... Guys, go out to your shop and look at that tool or gadget that you just had to have. If you did not have a credit card, would you have purchased those items...? BE HONEST.

Okay, I've fallen into this trap. You should see all the shoes I have in my closet. Kidding. But I do have a lot of tools in the garage.

However, I would counter with a few observations. There are certain purchases that are unavoidable. Groceries and gas are the most obvious. There's not much I can do about how much gas I need in a month. And the more frugal I get about not eating out, the MORE I end up spending on groceries. So, why not take advantage of cash back if your credit card offers it? If I can get a 5% discount for using my Discover card at Giant, why wouldn't I. How is that any different than the kickback I get from FatWallet?

Also when used properly, credit cards can be a great way to track spending. All of my accounts are linked through MS Money, including and especially my credit cards. This has proven to be a great way of keeping track of what gets spent on what. After seeing the trends develop for a few months, I don't know how I ever got by without Money.

So, I'll have to disagree with ncnblog overall on this issue. I still think the benefits of credit cards outweigh the drawbacks. But be careful with them.

Joint bank accounts

2006-01-20T19:43:00.000-05:00

The Young Professionals Financial Blog asked the question: After getting married, do you and your spouse combine all of your bank accounts?. My wife and I did. Actually, we've had a joint account since we were dating. It came in quite handy as we put each other through college. We've never believed in "mad money" independent accounts.

Recently, we've set up our "own" savings accounts, ING Direct for me, HSBC for her, and I've set up another checking account through a credit union for use as an investment money source. However, all of these accounts are joint. They are "mine" or "hers" only in the sense that the direct deposits come from only one of our paychecks.

So, having joint accounts has worked for us. But that may be a function of our relationship. My wife and I have been together for most of our adult lives. The reasons listed in this CNN Money article never applied to us.

Wicker

2006-01-20T18:53:00.000-05:00

It's no secret that I hate wicker. There is no wicker in my house. However, my mom has no such hangup.

She was shopping at Lowes today, looking for towel racks. There were a few items on the clearance rack that she was interested in, but not enough for a complete set. Apparantly they are somewhat wickery in appearance (I guess the ends have that wicker texture, but must still be metal, right?) She asked one of the employees if she could get the mates off of the store display. The employee gave her the entire display, for free.

So, it always pays to ask. Be frugal, and look for those deals. Even if they're wicker. I'm just glad the towel racks aren't going in my house.

Preview of China

2006-01-20T17:11:00.000-05:00

I was fortunate to have a genuine Chinese experience last night. I suspect it was related to the catered deli food I had for lunch on Thursday. I came down with a very bad case of food poisoning. Apparantly this is a pretty common experience in China. I can't wait.