Archive for Personal Finance

Stimulus check, ho

Yes, you can read that anyway you want to.  But the point is that I got my (wait for it) . . . letter telling how much my stimulus check will be and where on line I can go to find out where the hell it is.  That sure sort of stimulated  me.

Especially since I am sort of floating between the save it all in the Emergency Fund and the spend part of it to buy something I have been putting off getting for about a year.

Like most music-heads of my generation, making tapes was what you did.  But as technology evolved, and like, has gotten, well, different, I have moved away from making my own.  I used to listen to music all the time back when FM meant free from commercials music.  But these days of promos instead of honest reviews and downloads and Ipods and MP3s just feel fake to me.  Plastic in the old sense of the word.

When I saw the Crosely CD Recorder though, my mind went immediately to the treasured 300 albums I still have stored safely in my workroom.  I could splice some great stuff was my first thought.  But my second thought was to impose the 10 second rule while pondering what else I could do with the $300 out of pocket.  At that time my ING savings were earning 3.4% so adding $300 to the 5k already there would bring in about $15 a month compounded.  Not bad.  Plus,  well that was it for the pluses. 

So I went ahead and hesitated.   Seven months went by and every time I was in Target or Linens & Things I somehow found an excuse to check to see if it was still there and maybe on sale.  Target dropped its price twice, once by $10 and once by $25.  Still . . .

Then came the news of the Stimulus Checks.  Whoa!  Since the money was extra I could just treat it like found money, right?  Plus, ING was now down to 3% and falling.  So now I was looking at $9 a month compounded that I wouldn’t earn.  Okay then, this was my emergency/special occasion fund wasn’t it?  All systems were go but somehow I found reasons for not.  Damn, how did I turn so frugal?

Fate, meanwhile seemed to be working the situation too.  My check is being sent in the July cycle.  Gas prices show no sign of falling, the economy be heading deeper into a recession followed by a spectacular inflationary period and now is not the time to slip down the slope.

And then I saw it.  Posted in the window for all, and especially me, to see.  20% off on your first purchase when you sign up for our Linens & Things store credit card.  Uh oh!  that is $60.  My dream for just $240 of found money, I’ll pay the credit card off right in the store.  

I’ll only lose out on $240 worth of interest earning but I will gain that in pleasure just in compiling my first CD.  I think I am going for it.  Come July or high water, that is.

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Let’s Get Stuffed

JD over at getrichslowly.org  sparked a little controversy with the we-are-Number-One-crowd last week when he posted this chapter from the Story of Stuff.  The offence taken certainly indicates how screwed up this whole consumer thing has gotten.  For one thing, we are all tied into the process through our economics (social capitalism) and our economy (the free market) and our politics (based in a fear of communism) and our religion (the failure to recogize the atheist in all of us).  So any discussion of this kind leads almost inevitably to arguements and anger and dismissal of the original idea which was that we all have too much stuff.

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These feet were made for walking

Sometimes I just have to ask myself where did I get this frugal part of my nature.  It makes me laugh to think how odd it might seem to people that I really wear things out, literally.  It has to have an unfixable hole or an unremoveable stain before it goes in the bin.  And shoes, well, forget about it.  For one thing, I go barefoot a lot.  But my current pair of sandals are approximately 10 years old.  They’ve been resoled, insert supported, and resoled again. 

And that brings me to my current tennies, which are on their third life thanks to my local cobbler.  I have always wondered about the built in obsolescence factor in clothes.  You like a particular style, better buy two, because next year and for sure the year after that the style will have been newly improved and you’ll be left trying to make the oldie but goodie last. 

 So that brings me back to the built-in frugality.  I can remember countless times watching as my mom or grandmom patched a shirt or resewed a seam. “There’s nothing wrong with this shirt that a little love can’t repair.”  So that’s what I give those shoes when I take’em to the cobbler.

 “Can you patch the inside of the rim of the heel cup?” 

 “Sure.”

“Can you resole just the heels?”

“Sure.”

Since 2003, I have had the same pair of work shoes.  They were a good solid, comfortable fit when I bought them.  And now, they are even more so.

 

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Semi-retirement

It isn’t that I haven’t written about this before but I have been thinking quite a bit about it since I pointed out to T that she was now living in semi-retirement.  We were sitting by the pool listening to the lapping of the water, squinting at the sunshine glints, and talking about our latest movie day.  She turned her head away from the pool and smiled at me. “I like the sound of that but what does it mean?” she said.

I could feel the little thoughts start running around in my brain.  I didn’t really want to have to think.  But that’s the problem with having a conversation, sometimes you have to converse.  “It means to me that you work when and if you want to and on the things that you decide are important and at your own pace.”  I felt so proud.  I knew John D. McDonald wouldn’t turn over in his grave though now that I thought about it I wondered how such a prolific writer ever got to live his own semi-retirement.  Oh well, he’s gone now and so is Charles Schultz the man who created my other fictional role model, Snoopy.  Which reminds me did anyone else ever see that movie “My Life as a Dog”?  Because there is the perfect example of what it means to be semi-retired.  Dogs are born that way.  Cats even more so.  Domesticated ones at least.

Of course, a semi-retired human does so at their own peril.  This is not a world that likes us to do things halfway.  Either retire, you know get out of the rat race, or get back to work and, as the old song goes, “git me some money now.”  Yes, it’s also a little more difficult to be semi-retired if you live with someone who is still working.  You can see it in their eyes.  They don’t like the fact that you’re reading the paper while they’re packing a lunch.  Even if you do the housework, the laundry, the cooking, and take care of all the bill filing that doesn’t absolve you from causing them the pain of having to go into the “damn office” day after day after day.

Which is why it is really important that you figure out a way for your partner to semi-retire too.

Five ways to semi-retire without quitting your day job:

  • Set up a budget analysis – You need to know what your finances are.  How much of what you make is left over?  This can be done simply by just making a list of your expenses in one column and a list of your income streams in another.  Add up each and subtract the first sum from the second.  Think of this as laying the groundwork.  So if it turns out to be a negative amount you have already taken the first step by seeing that you are working hard for no reason since you now know that you are just treading water in the labor pool.

I know this seems like work but trust me organizing things on paper is a great way to relax.

  • Make out a list of your spare time activities – How do you unwind?  Are you a gym rat?  Do you head to the nearest bar?  What happens on the weekends?  Do you spend time alone or with friends?  When was your last semi-vacation?  You know, the kind where you went somewhere but brought your laptop just in case you had a little spare time to catch up.  While you are making this list, use a calendar to remind yourself of when these things actually happened.

Time is sometimes hard to quantify.  It passes on by or stacks up.  When you take the time to look at what you do in this backward looking way take note of how many unplanned things you do to.  Unplanning is key in the semi-retirement world.

  • Take a look at your job – Look at a week on your job, day by day.  How does each day start?  What is the first, second, third, …, thing you do once you get there?  Who is your boss or rather what is your boss?  Is a person in charge of setting your task load or are you in charge of doing that?  Do any tasks carry over from day to day?  Who do you work with?  Where do you eat that sack lunch and how long do you take to do it?  What happens at day’s end?  Do you drop your tools and head home or do you pack up some of the work to take with you? 

A semi-retired mind is in control.  The best way to get control is to know what your job really is about.

  • Figure out your hourly pay – Go back up to your budget, take the amount you added up from column two and divide it by the actual number of hours you spend working at, thinking about, and doing your job.  I know, sometimes the amount you get might turn into a reverse motivation, but that’s life.

Again, a semi-retired mind doesn’t spend a lot of time thinking about the hourly stuff but you might have to do a little growing in order to reach a point where you can mentally afford to semi-retire.  Maybe you’ll even have to do some work on the self-advancement plane in order to get there.

  • Figure out your hourly pay for the spare time activities – Same deal, go back to your budget only this time look at column one.  Total up how much are you spending on leisure time into two columns, one for cash expenses and one for credit expenses.  Divide the hours you spend into the credit expenses to see how much it is really costing you hourly to do those things.

Yes, here’s the key to semi-retirement.  It is a cash only state of being.  No credit card liabilities allowed.  Just remember that the reward is in knowing you can stay semi-retired for life once you take control.

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Scooterville

For several months T has been looking at bikes.  Harleys, Vespas, Yamahas, and now at our local Costco, a Schwinn.  Yes, they all have motors which works just fine for her since she really doesn’t like pedalling a bicycle very much.  Says the seat is too hard, or there are too many hills, or it’s too much like exercise to be fun.  Weird eh?  Anyway, as gas prices have continued to rise, we’re at $4.05 today in California, she has become more and more concerned.  It takes $50 to fill her little run around BMW and that lasts about a month.  But the truck we have to take to the field to pick up our produce every other day costs $100 a tank and has to be filled weekly.  So her awareness has risen.  She also likes to think of herself riding a motorcycle, roaring around the curves of the road that leads from our produce stand back up to our house.  But that’s just a dream because the lightest Harley is way to heavy for her to balance.  Hence the Vespa or the Yamaha.

Vespa has a new model, the 2008 Vespa S, that sells for around $4,200 and weighs in at 243 lbs and get about 69 miles to the gallon.  While Yamaha’s 2008 Vino comes in at $2700, weighs 229 lbs and claims to get 96 MPG.  Both fit her needs but the extra $1800 has her leaning towards the latter though she likes the history of the former.  Strange but true, if she can’t get the big bike then she’d like to get the one everyone knows.  But neither one of the above has a wind screen so since bugs in her teeth isn’t her style either, we have been forced to widen our search.

Here’s where price makes a difference.  Honda has its Silver Wing ABS for $8,600, and Suzuki has its Burgman 650 executive at $9,000.  Both are more solid and good for freeway traffic if you have to but since she doesn’t we are now taking a long look at Yamaha Majesty.  It’s priced at $6,000, gets 51 MPG and weighs in at 432 lbs. 

Once we make a pick though the fun really starts with the training.  First, it’s highly recommended that you practice first by doing some bike riding.  Get used to the balance required and the comparitively easy shifting.   I have to laugh as I tell her this but she doesn’t appreciate the irony.  Then take a safety course.  The Motorcycle Safety Foundation offers a 4 hour scooter school but we found out it’s not available in Cali.  Luckily, California has its own Basic Ridercourse offered through the California Motorcyclist Safety Program.  A 15 hour course leading to the M1 license that’s required here if you want to drive a bike that engine-sized over 49 cc. 

Still I have one bike I have been leaning towards that I think may be our best option.  It’s a motor bike.  It’s light in weight and is offered at least 8 different models all priced at below $2,000.  To be truthful, every time we see someone riding a motor bike, that’s really the one that T seems to like. 

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New bet, the same old tax?

But first, that was just too easy.  Lakers over Spurs and the starters rest for most of the fourth quarter.  Hmmm.  Seems similar to the Spurs in New Orleans.  I’m just saying.

Anyway, perusing the LA Times OpEd page on Friday and came across this item about how the state and the gov think that the best solution to the current budget problem is to float a bond issue against future lotto revenues.  Here are a few factoids from the opinion:

  • a 1999 national study conducted by Duke University concluded that families making less than $25,000 a year spent roughly $1080 on lottery tickets.  10% of their income.
  • Families earning between $50,000 and $100,000 spent only $495.  1% of their income.
  • The state of California spent over $93 million the last three years in advertising the lotto.

As the writer, Michelle Steel – BOE member for the 3rd District, points out, “the governor’s plan to pay for the state’s irresponsible spending rests, ironically, on getting Californians to spend more irresponsibly.”   I really do love it when things get ironic.

Remember last summer when everyone in the personal finance blogs, well maybe not everyone, was posting about how to save on fuel while driving?  Drive slower, plan your trips so that you do more on each one, carpool, use public transportation, and go ahead, ride a bike to work.  Remember.  Well, one of the tips I remember had to do with going to the pump early in the morning or late in the evening because the day’s heat affects the gas by expanding it.  You get less gas more hot air in the middle of the day.  Well, yesterday it was reported that “a survey shows that Californians could be overpaying as much as $3.4 million a day as heat makes gas expand.”  More irony.  You moved to California for the hot weather only to find that the automobile state is costing more to live in because of it.

And then there is this.  A long time ago I read a novel by Calder Willingham called Eternal Fire.  It was a fine trashy, sexy novel about a sociopath and his love life in the New South.  Yes, I read it mostly for the sexy, trashy part.  But there is a section the story that chronicles how a court trial is rigged so that an innocent person is besmirched.  The scripted actions of the community leaders and the judge has always stuck in my mind and is frequently brought to the fore when I read things like the headline story about the Congress defying Bush by passing the Farm Subsidy Bill or the Military Spending Act.  Who are they kidding?  Bush who has favored these programs all through his two terms now gets to act all righteous while the bills still get passed and the Congress now run by the Dems gets to seem defiant.  Wow! What a script.  The bills still get passed though.  $630 billion for defense, $10 billion for not growing crops.  What’s ironic is that our media actually purports to be covering the real story.  Hah!

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Real Estate, the new wasteland

Yes, that’s right it’s so T.S. Eliot out there and the turf has certainly turned arid.  No more money to be made lapping at the door.  Now it is a desert crawl through a landscape cactused with for sale signs.  And yes, you may need a guide to get you through to the occasional oasis. 

  • Short Sales – This can be a job.  Yes, you heard me.  You can shop Craigslist, or the classified, or just drive your city streets looking for real estate for sale, especially those that are for sale by owner.  Then you cold call the seller and ask one simple question.  “Would you be interested in a negociated short sale?”  Of course, the owner might start crying at that point, so be prepared to listen to a little pain while he or she or they try to explain their story.  Be sympathetic but honest.  A short sale arrangement will leave some mark on their credit but it is not a bankruptcy nor a failure to make your mortgage payment.  It is a way to remove the mortgage from your debit ledger and a way to walk away from the anchor that the house has become.  It costs you nothing except time as there are an array of consultants, arrangers, brokers, and downright vulture types ready to help.  They get theirs from the resale of the property somewhere down the line.  Now doesn’t that make you feel all warm and toasty?

 

  • Appraisals in the new market – Face it, everything is reset.  That zillow.com report you ran last fall is so not true anymore.  You know this because the news has it that home prices have dropped by more than 10% since then and that’s just on average.  Of course, if you had a Line of Credit attached to your property, you know this too, because those wonderful lender folks have probably reset it to $0.  What, you didn’t know.  Oh, that’s right because in most cases the borrower isn’t finding out unless they try to use it.  On top of that, in order to get your property reappraised you will have to find an independent appraiser.  Can’t have the mortgage lender do it because there have been incredible laxities in the regulation of appraisers so that the government had to step in and mandate that the appraiser cannot have any affiliation with the lender. 

  • Sell or holdon – Now here is where the deal gets really tight.  Say you bought into this whole Kiyosaki thing.   Bought into the cash flowing rental property market.  Bought and bought and bought using OPM.  You know, leveraged your buys so that now you are stretched across the deals like the ultimate plastic man/woman.  (See reset above.)  That snapping sound you hear is your own fingers as they have to let go of something because the property value you were counting on has suddenly sunk and that renter you had locked in has suddenly rediscovered the urge to buy for herself at the newly depressed but now equal to her monthly rental payment prices.  Oops!  So suddenly the question isn’t when can I raise the rent again?  It’s what if I raise it and they go shopping?  The smart owner at this point has already sent out a letter to all renters stating that the possibilty exists that they might buy from you.  The smart owner is facing the fact that this downturn has not bottomed out.  Those frustrated renters who have been sitting just outside the candy store window watching everyone else claim the American Dream are now girding their loins, so to speak, and becoming the new wave of home owners.  That’s the real Tsunami in the room.  Your bankruptees will become your renters while your frugal renters get some justice.  Oh man, the free market economy may finally be adjusting in favor of the little guy.

That’s it for today.  Tomorrow we will continue this journey with a look into the following water holes:

  • Carry Bank Loans
  • Credit Union vs Bank
  • Retirement real estate and the reverse mortgage

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