I have a few codes for a free month of Netflix (new members), which gives you an extra 2 weeks over their normal deal. These expire October 31st. First come, first serve...
www.netflix.com/tellafriend
As it is now mid-January of the new year, I think it is fitting to reflect on the goals I made for 2007.
1. Give $200 per month to charity or non-profits. Accomplished. I now look forward to this every month.
2. Move to an apartment where either I or my husband can bicycle to work in order to save on transportation costs. Semi-accomplished. Moved to an apartment where I can walk to work, but usually didn't chose to do so. However, saved on transportation costs because the commute was much shorter.
3. Guard against lifestyle inflation in the case that I and/or Andrew receive a raise this year. FAILED. Both Andrew and I received raises in 2007, yet spending also increased beginning around mid-year. I began to spend more than double the former amount on food when I switched to shopping at Whole Foods. We also spent more on entertainment, especially movies and travel. We shopped and splurged more. I attribute the increased spending levels to my break with moneybucks. When I was writing about personal finance weekly and accountable to an audience, it was much easier to keep spending in check.
4. After a year with my current employer (August), request an annual performance review and a raise. Not necessary as I was given a 15% raise before I reached the one year mark.
5. Observe a no-spending day at least once a week. I quickly realized that this was somewhat a pointless goal and abandoned it. I usually observe several no spending days weekly anyway, and it matters what you spend not what day you spend it.
6. Increase our net worth to $50k dollars, not including material assets such as vehicles. Accomplished.
7. Max out my Roth IRA for the year by contributing $4k. Accomplished.
8. Continue contributing enough to Andrew's 401k to receive the full employer's match. Accomplished.
9. Determine a plan and timetable for becoming a homeowner. Failed. We are just as undecided as ever.
10. Adjust our withholding so we don't overpay or underpay the IRS. I believe I was successful at this. I will know more in a few weeks after I do my 2007 taxes.
Currently, there are multiple threats to the US economy. (The dollar is losing value. The stock market is extremely volatile. Homes are losing value. People are losing their homes to foreclosure. It has become harder to obtain a mortgage. It has become harder to refinance. There are liquidity problems in the financial markets. The price of oil is at a record high. Inflation is a problem. The national debt is $9.1 trillion. The federal deficit is $163 billion. The Fed is lowering interest rates in order to keep the US out of a recession. ) In short, there has never been a better time or a better incentive to get your financial house in order.
Here are some preparation ideas to help weather an economic storm:
There is breaking news on the front of the declining dollar. There are speculations that China, who is the second largest holder of US Treasuries and Mortgage-Backed Securites, is thinking of diversifying out of the dollar and into more stable currencies. "The currency slumped after Cheng Siwei, vice chairman of China's National People's Congress, told a conference in Beijing the country should improve the structure of its $1.43 trillion of foreign reserves by favoring stronger currencies."
The dollar has repeatedly been hitting record lows during recent months against currencies such as the Euro, the British Pound, and even the Canadian Dollar. The dollar is at a 26-year low against the Pound, a 23-year low against the Australian Dollar, an all-time low against the Euro, and a 57 year low against the Canadian Dollar.
The negative implications of the declining dollar are many.
 | |||
 | |||
| 120 days | latest (Oct 10) 0.706364 | lowest (Oct 1) 0.70279 | highest (Jun 13) 0.752162 |
 | |||
| |||
| 120 days | latest (Nov 6) 0.9243 | lowest (Nov 6) 0.9243 | highest (May 24) 1.0841 |
(click to enlarge)Many things have transpired since I shelved this blog back in the Spring.
I haven't been writing, but I have been unendingly reading and researching all the turmoil that has been hammering our housing market, our stock market, our financial institutions, and our currency. My outlook and strategy on personal finance has evolved from being more or less mainstream into something decidedly outside the norm. Thus you may find my tone has changed, just as I have changed as a blogger.
Additionally, I have decided to nix most of my ads, except the eBates. This blog is more about education and expression than earning income. Plus the ads clutter my
page...
During my break from moneybucks, I have found myself not tracking my own money so closely. It is quite often far from my mind, and as a result, I have been spending more freely and with less guilt. My break from writing in one sense was a welcome return to normalcy. If one writes about money all the time, it's inevitable that that subject will become too significant and too present in one's stream of consciousness. Thus, this blog will never be an everyday thing enduring month after month year after year. I will shelve it once again, maybe next time for good. But for now, I have more to say...
"The birds are molting. If only man could molt also - his mind once a year its errors, his heart once a year its useless passions." -James Allen
Moneybucks will be closing for the spring and summer, and will re-open in the fall. Consider it summer break from finance class.
Thank you to everyone who has faithfully followed moneybucks for the past 6 months. I've really enjoyed writing it, and I hope it's been insightful, empowering, and encouraging to all my readers.
If you wish to be alerted via email when this blog is back up, click here and choose 'get moneybucks delivered by email'. In the meantime, check out my archives as well as my favorite three (more prolific) bloggers:
The answer is yes and no, according to recent studies.
For those living in poverty, additional money yields higher levels of reported happiness. However, once escaping poverty, additional money does not increase levels of reported happiness.
Those are the averages. How can you be the exception? If you are going to use your money in pursuit of greater happiness, studies suggest using excess money to buy experiences rather than things. Accordingly, here are some examples on what and what not to buy, if you are using your money as a stepping stone to happiness.
Experience expenditures (to buy):
When most people are on vacation, their day-to-day restraint and good sense regarding spending disappears. It's as if splurging on vacation is perfectly acceptable, no matter the cost.
This may be fine if you only want to take one vacation per year. However, if you can cut back on the lavishness of your trip, the more trips you can have. In order to vacation often without breaking the bank, it is important to control spending both in the planning stages of the vacation and during the vacation.
Take for example, my upcoming trip back to my Alma mater. By making small tweaks to my plans, I have trimmed 40% of the trip's cost.
Gasoline has been surging in recent weeks (64 cents since January), but the Energy Department announced today that the gasoline price increases should level out to a national average of $2.81 during the summer driving months. This would be $0.03 lower than the average price for a gallon of gas last summer.
The Department predicts that May will be the most expensive for drivers, although the average price of gasoline is not expected to top $3 per gallon like it has the previous two years. It is also projected that motorists will consume 1.2% more gasoline this summer than last, suggesting that $3 may be the new consumer threshold to pain at the pump.
Disclaimer: This forecast assumes that there is "no new international crisis this summer".
My personal threshold for discomfort is more like $2.50. This is why, in three weeks, I am moving apartments so that I can ride my bike to work! That, or have a shorter commute...
"Everything in life is somewhere else, and you get there in a car." -E.B. White
From the Ben & Jerry's website:
On Tuesday April 17th from 12pm until 8pm participating Ben & Jerry’s scoop shops around the world will be hosting Ben & Jerry’s Annual Free Cone Day. Click here to find a participating scoop shop near you!April 17th, coincidentally, is also tax day this year. (April 15th falls on a Sunday, April 16th is Emancipation Day.) So, mark your calendars and consider this a reward for paying the IRS on time.
The cost of refinancing a mortgage can be significant, but it is usually worth the costs if you can significantly reduce your interest rate over an appreciable amount of time. But what if you only have 2 years left on the mortgage? If you refinanced, the associated costs would negate the effect of a better interest rate. Enter the credit card.
Could you pay off your mortgage in one year if your entire payment went towards principal? If so, you could 'refinance' your mortgage with a credit card. You do this by transferring your balance -- a term which applies not only to other credit cards but also to other loans such as a mortgage. All you need is a card with a high credit limit that offers a 0% interest rate on balance transfers for 12 months, preferably with low to no fees. (Check the offers on your current cards or try this Discover card or this GM card with $99 fee). At the end of 12 months, you can either pay off the balance (preferable) or transfer it to another low rate balance transfer card (if available). Some advice:
Recently I decided to cull my personal belongings -- by fifty.
This was an effort in an on-going fight with household inflation. Every time I go shopping, every time I have a birthday, every time Christmas rolls around, our household gains more things. With so many things coming in, I similarly try to ensure things are going out.
I have several reasons for wanting to keep a check on the items I own.
-I have to house everything I own. It is very expensive to have a storage facility or extra bedrooms just to hold stuff.
-Everything I own I have to clean, insure, and maintain. This causes hassle and costs both time and money.
-Having too much stuff causes me to enjoy the things I have less.
Because of these reasons, I decided to get rid of 50 things, which I recently completed. It really wasn't a very difficult task in the ways that one might think. I didn't have a hard time locating superfluous items and I did not have a hard time parting with them. The difficult thing was all the negative emotions that were wrapped up in the things I was discarding.
The dark side of paring down:
The items that I selected for removal were often items that I wasted money on, items that were bad decisions. Many items were gifts that other people wasted their money on -- sometimes at my request. Some of the items I associated with negative events, hence their spot on the chopping block. Another unexpected source of negativity began innocently enough when I decided to list an item of particular value on craigslist. Two days later I found myself negotiating with a seemingly poor, elderly lady with a cane. Even though she was a legitimate, interested buyer, I couldn't help but feel guilty that I was selling my stuff to her instead of just giving it to her. All of this unexpected negativity really got to me until I deposited the remaining items at Goodwill.
But now I am better off for my efforts. My life is less cluttered. I am able to move to an apartment that I like better even though it has less square footage. The things that I never used now have homes. I have some extra cash to put towards an upcoming vacation. And now I may just have the power to control spending splurges by simply remembering my battle with excess stuff.
"Frugality is one of the most beautiful and joyful words in the English language, and yet one that we are culturally cut off from understanding and enjoying. The consumption society has made us feel that happiness lies in having things, and has failed to teach us the happiness of not having things." -Elise Boulding
I found an excellent article today by Jeffrey Strain over at TheStreet.com, entitled 10 Reasons You Aren't Rich. These reasons emphasize that your relationship with money is more important that the salary you make. Here are the top three reasons with explanations and a recap of the remaining seven:
1. You Care What Your Neighbors Think: If you're competing against them and their material possessions, you're wasting your hard-earned money on toys to impress them instead of building your wealth.
2. You Aren't Patient: Until the era of credit cards, it was difficult to spend more than you had. That is not the case today. If you have credit card debt because you couldn't wait until you had enough money to purchase something in cash, you are making others wealthy while keeping yourself in debt.
3. You Have Bad Habits: Whether it's smoking, drinking, gambling or some other bad habit, the habit is using up a lot of money that could go toward building wealth. Most people don't realize that the cost of their bad habits extends far beyond the immediate cost. Take smoking, for example: It costs a lot more than the pack of cigarettes purchased. It also negatively affects your wealth in the form of higher insurance rates and decreased value of your home.
4. You Have No Goals
5. You Haven't Prepared
6. You Try to Make a Quick Buck
7. You Rely on Others to Take Care of Your Money
8. You Invest in Things You Don't Understand
9. You're Financially Afraid
10. You Ignore Your Finances
Junk mail is something nearly everyone dislikes, and with good reason. It's a hassle, it distracts us from the mail that is important, it produces unnecessary waste, the catalogs tempt us with items we don't need, and the pre-approved credit card offers raise the risk of identity theft.
Fortunately, there are several easy steps to reduce the amount of junk mail you receive. Even using one or two of these suggestions should significantly cut down on your junk mail.
1)Opt out of pre-approved credit solicitations by calling the Pre-Screening Opt-Out Hotline at 888-567-8688
2)Call the companies that send you mail. If you no longer wish to receive a catalog, for instance, just call the 1-800 number listed on the back and ask that your name be removed from their mailing list.
3)Opt out of all unsolicited sexually oriented advertising by filing USPS Form 1500, available at your local post office
4)Fill out the online form at the Direct Marketing Association's site. This request costs $1, but it will stop an estimated 75% of national mailings.
5)Whenever you donate money or order a product, specify that you do not want your name or address sold.
6)Avoid sending in warranty registration cards, which are usually not necessary for the warranty to be effective. These cards are often used for the purpose of obtaining and selling your address.
"I get mail; therefore I am." -Scott Adams (Dilbert)
I recently read an article by the Pew Research Center on 'What Americans Pay For - and How'. Although this article covered a lot of material, I am highlighting two of their most interesting findings by reprinting the following two tables.
This first table shows what bills the average American pays each month, by age. The most common bill across all age groups is Cable TV. For a population so heavily in debt, I am a little surprised that cable is the most common household expense. Apparently I am one of the few that still enjoys no monthly cable bills, compliments of a bunny ear antenna.
This next table shows credit card habits, by income bracket. Only 58% of respondents cite using a credit card each month. This is lower than I would have expected. However, of those that have a monthly credit card bill, only 41% pay off their balance in full each month, while 53% make only a payment towards their balance.
Here's an imaginative article from Real Simple, "Decorate on the Cheap with Everyday Items", that gives 10 ideas for decorating using items that you ALREADY HAVE. I have pictured some of my favorite ideas below.
You can also use these ideas as inspiration for resurrecting the things you have on-hand in order to avoid a shopping trip (and a credit card charge).
-Placemats from dish towels
-Vase from a toothbrush holder
-Photo arrangement using binder clips
After reigning in your spending, you finally have something extra left over each month. That's great. But do you know what to do with it?
To answer that question, I am outlining the best things to do with your money beginning with the highest priority below.
1) Obtain car liability insurance and health insurance.
2) Build an emergency fund of $1000. Do not touch this money unless it is an emergency. Gifts, seasonal clothes shopping and vacations are never emergencies. Keep it somewhere easily accessible, such as in a savings account at your bank.
3) Sign up and contribute to your company's retirement plan if they offer a match. Contribute as much as you can up to the point where you receive the maximum match from your employer. Through matching, you are earning a return of 50%-100% of those contributions, so it's important to not leave that free money on the table. The only exception to this rule would be if you planned to change jobs before you become vested.
4) Increase your emergency fund to cover 2 months worth of living expenses. Keep the portion of your emergency fund over $1000 in an online savings account in order to earn a better interest rate; I recommend Emigrant Direct. Keep the $1000 in a savings account in your normal bank where you have your checking account.
5) Pay off high-interest debt such as credit card balances. I would consider high-interest debt anything over 8%.
6) Obtain disability insurance. Obtain life insurance if you have children.
7) Open a Roth IRA, with a goal of fully funding it each year ($4000).
8) Pay down other, lower-interest debt.
9) Build your emergency fund to cover 4 months worth of living expenses.
10) There are many things that could go in this space. Some ideas: increase your contributions to your retirement plan at work. Save for a down payment. Pay off your mortgage. Increase your emergency fund to 6 months worth of living expenses. Save for your child's education. Beef up your insurance coverage. Save the start-up capital necessary to create your own small business.
Two excellent sources of additional information:
My Money Blog's Rough Guide To Money (covers budgeting and investing for beginners)
My Money Blog's You Have Some Money. Where Do You Put It? (an alternative take on my "What to do with your money" list)
I love going to Starbucks. For me, it's the place. I love to go and think and plan and discuss and read. The coffee for me is like popcorn to a movie -- it's not the main event. However, unlike at a movie theater where I rarely buy popcorn, I always buy a drink at Starbucks. Buying a drink at Starbucks is not cheap, but there is a way to downsize the cost.
Order the unadvertised short drink, which is one step down from the smallest advertised size, the tall. (There is actually a whole range of drink options that all baristas know but are not published on the menu -- this is one of those options.) A short drink does not have as much profit built in for Starbucks, but it's great for the consumer's wallet and waistline. A short is only available for hot drinks.
The difficulty is that if some of your products are cheap, you may lose money from customers who would willingly have paid more. So, businesses try to discourage their more lavish customers from trading down by making their cheap products look or sound unattractive, or, in the case of Starbucks, making the cheap product invisible. -Tim Harford.Read more about the mystery of the short here. For an insider's guide to the Starbucks menu, go here.
If you've been wanting to start a small business or already have one, you may want to check out this free Simple Start version of QuickBooks accounting software. It is not a trial version; it will never expire. Here's a summary of the features it offers compared with the $99.95 Simple Start QuickBooks version.
With this free Simple Start version, you can create invoices, track payments, receipts, and deposits, write checks, issue refunds, create reports, etc. If you ever need to upgrade to a more deluxe edition of QuickBooks, all your data can be exported into the other editions. I am very surprised that QuickBooks is offering this for free, and I think it would be a valuable tool for any starter business.
"Do what you love. When you love your work, you become the best worker in the world." -Uri Geller
Goal #9 on my 2007 Money Resolutions List is: Determine a plan and timetable for becoming a homeowner.
Currently my husband and I are apartment renters and have just signed a lease that will run from May 2007 to April 2008. One of the reasons we are still renting is that Austin is currently in the midst of a strong seller's market. Unfortunately, the Austin real estate market shows no signs of slowing down as evidenced by the following recap on the February real estate numbers:
New listings were down by 16.32%, Solds increased by 16.28%, and "New Listings" average list price is up 15.65% to 298,480. Sold average sales prices increased 6.45% to $232,259 compared to $218,188 in 2006. Commentary: Sellers are enjoying the times and getting their prices and terms. Multiple offers are very common on the the best listings.Every month seems to be the same story. Austin job growth is high, the population keeps growing, real estate investors are fleeing other declining markets and buying heavily here -- all contributing to the rip-roaring Austin real estate market.
Essentially, the subprime mortgage industry -- which lends to consumers with credit issues -- is gone. Alt A lenders, those one rung up the ladder creditwise, will be next. Together, they comprise approximately 40% of the market.Will this decline in subprime lending eventually take a toll on Austin real estate? If so, will it be enough to turn Austin into a buyer's market?
This credit collapse is an unequivocally important event. Because, as I've been writing, the ability of anybody with a pulse to get a loan for any amount is what drove the real estate market, and the real estate market is what drove the economy. Sometime in the next three to six months, the real-estate market will basically just freeze up. Of course, inventories are going to explode and prices will eventually drop rather dramatically as a vicious cycle feeds on itself.
This list should be titled something like "approaches for having less job." It is the result of a brainstorming session I had earlier today and is by no means exhaustive nor instructional -- it is merely a springboard of ideas for limiting the encroach of a job on life.
1) Become a teacher and take summers off.
2) Be a seasonal worker. Ideas that come to mind are summer camp positions, tax season work, holiday retail jobs, national park summer employment programs, or agricultural and landscaping work.
3) Find an hourly job that strictly monitors/guards overtime wages so that you are always worked under 40 hours.
4) Be an independent contractor and only accept short-term contracts, or schedule substantial breaks between large contracts.
5) Be a freelancer, with similar arrangements as number 4 above.
6) Take part-time work.
7) Hold many different long-term jobs with significant breaks between each. See lifelong semi-retirement.
8) Work for a temp agency. Only accept assignments when you need work.
9) Work as hard as possible now in order to retire early.
10) Job Share.
11) Find a full-time position that is generous with its unpaid leave options.
12) Own a business that eventually requires only minimal work/supervision.
"A lot of us are working harder than we want, at things we don't like to do. Why? It figures! In order to afford the sort of existence we don't care to live." - Bradford Angier
(click to enlarge)"So, what do you do for a living?"
I never noticed this question so much as when I was unemployed (read "job-free") during the months of May-July of last year. I had chosen to take a summer off between jobs to pursue my own interests and enjoy time. During that period, I felt as if I heard the question "What do you do for a living?" at every turn. Furthermore, many of the individuals who knew I wasn't employed constantly greeted me with the "So, what did you do all day?" question.
I felt as if society was was telling me that my existence as a young, college educated, able bodied person without kids required me to either be holding down a job or actively seeking out one. I soon wearied from defending my position as an unemployed (job-free) individual, and resumed wage slavery in August. I have thus made my peace with society, for now.
But what am I doing with my new found job and salary? I am squirreling away all the money I can in hopes to retire early. Or to retire multiple times. Or to allow my husband and I to alternate between periods of work and unemployment.
I was advised by a coworker at my previous job that I should never take an extended period of time off from the working world, because it would be résumé suicide. Apparently prospective employers don't want to see long breaks in your working history. While this statement may be true, I was aghast at his suggestion. I knew that no matter to what detriment, I could not live life for my résumé. I took my extended break and successfully secured a job three months later.
How then should I shape my next chapter? For now I am living below my means, saving the salary, and biding my time -- storing up freedom in the bank if you will.
I will leave you with a thought from Thoreau:
"Perhaps I am more than usually jealous with respect to my freedom. I feel that my connection with and obligation to society are still very slight and transient. Those slight labours which afford me a livelihood, and by which it is allowed that I am to some extent serviceable to my contemporaries, are as yet commonly a pleasure to me, and I am not often reminded that they are a necessity. So far I am successful. But I foresee that if my wants should be much increased, the labour required to supply them would become a drudgery. If I should sell both my forenoons and afternoons to society, as most appear to do, I am sure that for me there would be nothing left worth living for. I trust that I shall never thus sell my birthright for a mess of pottage. I wish to suggest that a man may be very industrious, and yet not spend his time well. There is no more fatal blunderer than he who consumes the greater part of his life getting his living."
Today I read a very insightful essay by John O. Andersen about Lifelong Semi-Retirement.
This essay comes at a time when I am trying to re-evaluate my work-life balance and determine how to better keep work separated from life. This week's postings will be dedicated to topics such as the way society ties personal identity to career, the anti-wage slavery movement, and the musings of Henry David Thoreau and other like-minded individuals.
The following is an excerpt from Andersen's Lifelong Semi-Retirement:
______________________________________________________________
Lifelong Semi-Retirement
Lifelong semi-retirement is an exciting career especially suited for people with wide interests, a preference for living deliberately, and an uncontrollable passion for learning. It's available to nearly everyone, not just the wealthy.
Semi-retirement refers specifically to a person's relationship to paid work. The semi-retirees work for pay only enough hours to meet their monetary needs. After that they spend much of their time in non-paid work like strengthening relationships, pursuing hobbies or performing community service. Semi-retirees arrange their lives so that they can afford the "luxury" of not having to work for pay from sun up to sun down.
Continue to read John O. Andersen's full essay here, over at www.whywork.org.
Furniture can be unnecessarily expensive when it is purchased new; fortunately, there are many cheaper alternatives to the furniture retail stores.
All of the pictured furniture here was found on the side of the road or beside a dumpster, and now each piece has a happy home inside my apartment. Both the art easel and the entertainment center were in near-perfect shape, and even though the coffee table was just a frame when I found it, it became functional and beautiful after adding a tiled center. I've also received other free pieces of furniture from generous family members who were either upgrading or moving away. 
You don not have to pay a lot for furniture, sometime you don't even have to pay at all. Here are the best methods for obtaining furniture for nothing or next to it.
1) Craigslist - Free Section. If you live in or near a city that has a large Craigslist community, find the FOR SALE section and click on the 'free' sub-section. In Austin, for instance, today's free listings include a chest of drawers, couch, love seats, table & chairs, dryer, water bed, swing set, entertainment center, and a dog house -- over 74 listings so far today. 
2) Dumpster diving. Despite the term, this method does not have to involve actually going inside a dumpster. When individuals have furniture to get rid of, they often set it beside the dumpster. To locate this stuff, drive by dumpsters of local apartment complexes on good weather weekends, especially at the beginning and end of a month. Another lucrative opportunity are college apartment complexes at the end of school semesters.
3) Curb Surfing. This method is more hit or miss than dumpster diving, but it can yield higher quality pieces. To execute, simply drive through affluent neighborhoods and keep your eyes open. Once again, the best times for this are weekends with good weather. To further increase your odds, determine the day for large item pick-up in the specific neighborhoods, and go driving either the night before the pickup or early that morning before collection.
4) Ask your friends and family. It seems America is always upgrading or redecorating, which leads to furniture cast-offs and spares tucked away in attics. Even if your friends and family do not have any surplus furniture, they may know someone who does, or they will surely keep you in mind the next time they do.
5) Buy it cheaply. If you can't find it for free, you can likely find it inexpensively using the aforementioned Craigslist under the For Sale -> Furniture section. Other options include the garage sale circuit and thrift stores.
Give back: Just as you receive free furniture, consider giving some of your surplus items in return. When you need to replace or downsize an item from your lifesyle, leave it beside the dumpster, give it away to a friend, or take it to your local Goodwill.
In the past year we've 'given back' a mattress, DVD player, papasan chair, and a potted tree at the foot of our apartment's dumpster. We are fortunate (?) enough to have our bedroom window overlooking the dumpster, so it's been very interesting and fun to see how popular our items are by how fast they disappear.
And, really, where is this elusive "away" into which we throw things?" "from the good book of bartering at Yeah, Me Too Coffeeshop" -Fred Kohn
