Saturday, December 17, 2011

Timebanks and CSAs

In this, the great recession that we're slowly (arguably) coming out of, I have realized that there is quite a bit of opportunity for us to learn about ways to make better lives for ourselves by leveraging new movements and ideas (some of which are really just re-made ideas from the past).

Two ideas that are really worth considering, in my opinion, is the idea of "timebanking" and "CSA". Both of these ideas were covered as part of a documentary that aired on "Now On PBS" titled "Fixing The Future". While these were only two of the ideas covered, I think it is a good short documentary that gives some hope to the somewhat difficult mess that we're in as a society.

The first idea that might help us is the idea of "timebanking". Timebanking is a system whereby you donate your hours into a shared pool with lots of local members and then are able to get a comprable portion of time from someone else. This is sold as an item that builds community, recognizes that everyone has some skill, and even if you think that you have a more valuable skill, it is worth noting that these transactions are tax-free, so there can be a significant discount by using them. Learn more on this website: http://community.timebanks.org/

The second idea that was mentioned was the idea of a CSA. This is Community Sponsored Agriculture--essentially a local farm. The advantage here is that you learn and are aware of the origin of your food. And this provides some availablity/value for the produce that might not be available otherwise since the food would have to be shipped and cause pollution. In my area these seemed a bit expensive, but to be fair, there's an element of uniqueness and value in it that offsets the additional cost if you either have kids or enjoy the experience, in my opinion. These CSAs often take a yearly fee and then provide produce each week for your family that is grown locally. Learn more about them at this site to see if you're interested: http://www.localharvest.org/csa/

Personally, I am looking into both of these to see if there's a way that I can use these resources locally also.

Wednesday, November 09, 2011

Yes! You Should Keep Saving

Recently I was browsing an internet message board (Net Worth IQ) and I realized that for the rest of my life I will find personal finance fascinating because so many people have so many different outlooks and perspectives.

One person's recent question was essentially: Should I Keep Saving since it doesn't add much to my Net Worth as a percentage of the total?

My response is as follows:

I think that the real thing you're driving at is whether or not you've reached "critical mass". Bob Brinker uses this term to indicate the tipping point where your investment "dividends" are putting enough out in order to do two things:
1. Generate enough income for you to live your current lifestyle
2. Put out additional income on top of #1 such that the total principal grows enough to keep up with or ahead of inflation.

The main point here is that you should keep putting the 1k in each month -- not because you think it will up your net worth by 1, 10, or 50%, but because you want to get to critical mass. Critical mass enables you to be the boss and be literally 100% free with respect to your money from any kind of tragedy/job loss/etc.

I hope that helps! To that end, perhaps networthIQ should be tracking not just the growth in net worth, but also how much is from "income" vs "dividends" and what a persons' velocity of increase is.

Thursday, September 29, 2011

Computer Virus Woes

So, this past weekend I was looking at funny pictures. I highly recommend the site PetsWhoWantToKillThemselves.Com. It had me giggling all day as I kept thinking about some of the photos on there.

At any rate, over the course of the day, I determined that there was some sort of virus, malware, or rootkit installed and my AVG Anti-Virus started going haywire. Wanting to take no chances, I quickly backed up my files and decided it was time to wipe out my computer.

Of course, it is always tempting to try to salvage it to avoid doing crazy reinstalls of everything, but I decided that in this case it would be better to just go for broke. Being an IT guy, I was able to do it myself, but it totally took the whole day, even though there was no real issue or crisis to it. It just takes a really long time. And one thing it made me realize is that I should get back into doing that more often because the money was decent compared to the amount of effort it took.

Friday, September 16, 2011

A Debt Reduction Christmas

Being debt free is sexy. There. I said it. Nothing is more attractive than someone who has their financial house in order. It often indicates this person is self confident, has drive and motivation,and most importantly, knows how to execute. Who doesn't want to be with someone who knows how to execute?

All that being said, what is the best thing that we can do in terms of reviewing the debt reduction strategy for Christmas. The first, and it bears repeating is that you should reduce spending on Christmas and avoid putting anything on credit cards.

The next two ideas are more novel and could really help with your debt reduction.

1. When you are asked what you want for Christmas say you want some help paying off some debt. Give you friend/relative the address and account number of the bill and have him/her pay an amount equal to your gift. Some might think this is tacky or smells like a hand out but I disagree. This is admitting you need help and directing resources someone wants to freely give to where there is he most good.

2. Ask for food and gas gift cards. Obviously these are things you will be buying anyway and this will free more money in the month after Christmas to pay down debt.

If you try these ideas, you just might have a very happy new year when it comes to your money.

Tuesday, August 23, 2011

Its a Dogs Life

So, with the past week there was a big financial change -- a new puppy. So far it has already run over 1500 dollars and there are many more bills to come. To say that it was expensive is a huge understatement; to say that it was totally worth it, is completely true.

For those interested in getting a dog, be aware of the expenses involved with the amount of vet bills and things of that nature. Even the preventative medicine is not cheap. On average, the expenses run about 30 dollars per month for a total of 360 dollars yearly, not even including the vet bill, accessories, food etc. In general, it makes sense to budget about 100 dollars monthly for the dog, and that is what I plan on doing.

As for the enjoyment and exercise and zest for life that it brings, I don't know if there is a price you can really put on it. And that was something that I really didn't understand until this week.

Thursday, June 23, 2011

Life Insurance Redux

So, now that I have joined a credit union, I realize that it may be time to once again take a stab at increasing the life insurance coverage. Currently, I have a group term policy through work that is decent and would allow the payoff of a large portion of debt and make things manageable, but I certainly wonder if having a little bit extra might make some difference. The other thing that you never know is what the situation will be with jobs in the future. So, for that reason alone it is tempting to look at more insurance.

This was a pleasant surprise but the thing that I thought which was rather interesting is that this policy is considered group term life and yet there is an application and a lot of medical questions. I am not sure if this is a soft thing or if this is something that really will pan out. Of course, I will need to call them to find out more information on it, but so far, I've gotten a large amount of offers from this Credit Union -- even more than my regular bank.

My original idea behind getting a credit union was the idea that I would be able to get more favorable treatment with respect to the eventual small car loan I expect to take out (More on that later), but I think now that it might be more trouble than it is worth. We'll see.

Saturday, June 11, 2011

Bank Fees Ate Me Alive

Recently a review of the bank account revealed that there were some fees charged on my bank account each month. I was completely annoyed by this because I was sure that this was not something that should have been happening and instead was something that was just going on due to my lack of paying attention. In reality, this was an account that I didn't check on very frequently. After spending some time in the local branch (and time is rather scarce), I was able to get a representative to resolve this. At nearly 20 dollars monthly, the fees were no small potatoes.

But the story, unfortunately did not end there. After about 6 weeks, I noticed that the charges began again. This time, I went to the branch again but was shocked that there was only one representative working and it looked like it could easily be another hour in the lobby before I would get it resolved. I left and attempted some miracle working by talking to the customer service via the bank's internal email. It worked! So, in this case, the bank doesn't get an A, or even a B. However, I will not switch yet, but I am thisclose. And believe me when I say that I will keep watching.

Lesson learned: keep track of fees and activity on all of your accounts regularly!

Tuesday, June 07, 2011

Quantitative Easing Round Three

It appears that we have another round of Quantitative Easing in the works. If you've been listening to any of the money shows over the past several months, you'll note that most of the major players were not anticipating that! However, a recent update from the Bernanke indicates that the possibility of Quantitative Easing Round Three (QE3) is a very real one....but not in the near term. This article from International Business Times does a good job of explaining the thought process around a possible QE3 and why the timing is not likely to be now.

All that being said, the CPI is up and the price of energy is skyrocketing. It is not an easy thing for people to get to work in cars that are not efficient. However, that is not stopping people from certain segments of the political/media spectrum from announcing dirty secrets about Clean Energy. I find that Google News has a great mix of stories from all over and this story -- the increased energy costs is certainly one to watch.

Because of all the things that impact the prices of both stocks and also things we buy every day, the two biggest factors that I can see (and neither of which I can influence) are gas prices and Ben Bernanke's Fed.

Saturday, May 28, 2011

Car Payoff

It has been a long time coming and I would be lying if I said that I hadn't really been looking forward to it. After about two years of payments, finally enough money being in the emergency fund, there was enough to pay off the car. And that, about 26 months early! The best part was the phone call from Toyota. The service rep asked if there was any interest in buying a new car. Of course, they would offer a discount of 1% on any financing needed.

I just think that there is a tremendous amount of pressure both from the company and from the society in general to stay in debt. I wasn't that surprised, but everyone loves to have someone in some sort of hock to them. And this, is the real crux of a personal issue I am struggling with. Dave Ramsey is so strongly against debt, it makes me wonder if there are some cases where it makes sense. Regardless of your feelings on this issue, it undoubtedly is better to not have any debt. And this month is the first month that there will be no car payment--I'm already looking forward to the bills this month!

Next on the list is to make sure that there is money taken and put into savings as well as continuing to pay on the remaining non-mortgage debt which is the student loan. After that, the next item will be saving money for the next car. The goal eventually is to start buying the cars at least 50% cash and it would be great to start doing that with the next one. I wonder how many people do that already.

Friday, May 27, 2011

Back From Trip to Europe

So, recently I went on the trip of a lifetime. I say that with a straight face because I truly think that I will never return to that part of the world in this lifetime for that kind of trip. The trip was to Monaco, Greece, Turkey, Italy and Cyprus. Originally it was to include Egypt and Israel but due to unrest in that part of the world, those destinations fell through.

Since this is a money blog, I will say that this trip was quite expensive for us; there were four of us that went total, all friends from back in my college days. This trip last two full weeks and the cost I am including includes meals and tours and activities for each day. Most of the days were aboard a cruise where the food and lodging were provided as part of the cost.

All told, this trip cost more than 5000 per person, USD. I am not saying that to brag, but merely to indicate the amount of difficulty for that kind of trip. Put simply, that was a serious percentage yearly earnings -- far more than I have ever spent before on a vacation. (It can be justified if you don't do it but once in your life.) All that said, it was a wonderful trip and there were lots of things that I was able to see that I didn't even know existed and I am a lot happier about my decision to go.

To reduce stress, a friend in the group arranged the trip, paid for items on her credit card to get the bonus points, and was reimbursed by me to pay the bill; this worked out quite well so that we didn't have to deal with being frustrated about the cost after the trip.

Besides saving money for a longer period up front than a normal vacation, there was really very little in terms of special things that I did. We're in the process now of deciding whether or not to go again and at this point it is difficult to tell whether we will do this again; largely due to the financial implications.

Sunday, February 06, 2011

3 Lessons Learned from My Banking Error

This past week was filled with excitement, albeit the uncomfortable variety when I had to pay my bills quickly via my bank's electronic payment system and made a mistake which will be annoying at least, and costly at worst.

First, the week was a busy one in which I did not feel like I had the time I needed in order to do it properly.

Lesson Learned: carve out time in your normal routine to pay bills and check on finances. Not doing so will cause mistakes.

The mistake was a rather easy one to make: I paid one bill on my electronic banking instead of another bill. They were named something similar so the mistake was fairly easy to make. The result was a large credit on one account and an outstanding balance on another.

Second, I discovered the mistake but was so blindsided by it that I didn't handle it properly, immediately and instead intended to simply run up this month's expenses against the card with the credit. And thereby paying everything off within the next 30 days or so, no real harm done. This turned out to be incorrect as I had incorrectly identified the account that this had happened on.

Lesson Learned: Once a mistake is made, don't try to be clever. Just fix it (reverse it) as fast as possible. Being clever makes things more confusing and causes more problems.

All told, I should be able to call tomorrow and get this sorted out, but it is likely to take even more time than it would have were I to simply do the right thing in the first place and take my time with the bills. The situation is rather annoying, but I have to guess fairly common.

Thankfully, I tend to keep a buffer in the checking account of about 2-4 weeks worth of bills for just such a mistake. This has saved me multiple times.
Lesson Learned: Keeping a one-month buffer of cash in your account is well worth the interest you're giving up.

Thursday, January 20, 2011

Holiday Shopping is a New Game of Chicken

Thinking about the recent holiday this weekend has given me a bit of perspective regarding gift giving. Something that I had forgotten until I was recently reminded is how very much people really fill up their emptiness with the shopping and busyiness of the holiday season. I had a conversation with family members recently to reiterate the importance of a reasonable (read small) amount of gifts. For some reason, no matter how much I stress this, there is always resistance. I find the whole ritual can be somewhat frustrating. Gift giving becomes a stressful game of chicken with often little more than wasted money and hurt feelings.

Now that I have outlined the problem, what are the solutions?
1. For me, early and often discussions about the issue seem to help. Sometimes the gifts can be a way for people to try to make up for lost time and connections during the year. So to alleviate that, make more time for loved ones.

2. Avoid going nuclear. When doing the gift giving, stay consistent. Make sure not to increase each year either with your increased success or in response to what you got last year. Once you start increasing regularly, especially increases outside of your normal gift range, you've begun to set an expectation that is unrealistic.

3. Budget, budget, budget! There's no easy solution. If you're going to celebrate holidays at all, and not become someone interested in Festivus and merely an airing of grievances, you must move toward getting something in the way of a budget started. I find that this works well when I work toward adding buffer to my freedom fund.

Sunday, January 02, 2011

Year and Week in Review - 2010

This week has been relatively relaxed for me and I will admit that I have really enjoyed it. By my nature, I am a doer. I like to feel like I accomplished something; this goes along with my work ethic I suppose. But one thing that sticks with me about vacations is something that my grandfather told me and it still rings true: Vacations can be expensive. What he means is simply that the more leisure time you have, the more things you'll want to do with that time that take money. This can be things that are hobbies, travel, or even home repair. All of these things take money -- money that you'd otherwise save if you had been working instead. So in that respect, unless you alone in a public park, homeless, and not eating food on your leisure time, leisure time is expensive.

Well, this week I noticed that this still remains the case, but I feel like I did relatively well. For a full week off, I spent only about a hundred dollars for travel, food etc. Given that I normally spend about that much during a week at work for gas, parking, and lunches, I figure I probably did just fine. But I will say that it was a pretty conscious effort.

Christmas has strapped the finances, despite good and early planning. As expected, there were the "unexpected" gifts, food, excursions which all had to be paid for. And given a big trip that is coming up in a few months, I've resisted the temptation to let these debts linger on credit. I want to make sure my finances are strong going into this trip and that does not include credit card balances. While I'd like to think that there is nothing wrong with the level of spending, I know that this could be improved. I am continuing to work on ways to reduce the cost of my lunches by "brown bagging" it, but it is difficult. There was very little expense on Christmas decorations per se however. Wrapping paper and ribbon for 10 dollars was probably the biggest expense.

Besides my finances, I've also begun to take a fresh look at my health; I found that it was a bit lacking since I had not been going to the gym as regularly as I should. So I took the time and decided to start back again. The membership is not exactly cheap, so I should make the most of it.