Thursday, April 28, 2016

We've Got to Start Talking About Money

The Atlantic Magazine story about the shame and realities embedded in our US middle class money mess rang a lot of bells.  Mine in particular.  I'm sharing as far and wide as possible.  

It was inspired by research that shows almost 50% of Americans wouldn't be able to quickly find $400 in cash to cover an emergency.    

But to me it was more than that -- it was a mesmerizing  peek behind the reality-money-show that is Neal Gabler's life.  He is such a talented writer that he was paid to write a movie script, he's written books, he was paid to critique movies on television, he's a great Dad and husband, has two successful children.    If that's not success, what is?  

His reality-money-show reveals a different backstory, though.  Because he made a series of understandable and common money mistakes that caused a great deal of debt, Gabler suspects he will be working every day of his life, Monday-Sunday, sun up to sun down, until he just can't work anymore.  

Some of the blame for this sad situation falls to our economy and our "head up the butt" (as they say in the south) denial of stagnating wages and other US economic realities.  We are not recognizing, accepting or dealing with the bad news that the middle class is shrinking and the economic cards really are stacked to help those who live off dividends and investments.   Yes, the rich are getting richer.  Yes, our tax code is partly to blame.  Yes, your congressmen and women are not helping you, in most cases.

But some of the blame lies with Gabler's refusal to educate himself about money.  It's not always fun. This blog is designed to help and inspire those who want to get educated and to show them how it can be a blast of achievement, pride and satisfaction.  But it's still tedious at times.   You have to take your "head out of our butt" as they say here and deal with some sobering news about money.  

Good for you for "dealing with it."   By getting a little more frugal in your habits, you are beating a system that is rigged in someone else's favor. By consuming less, you are saving on sales taxes, you are building a safety valve for the inevitable bumps in the money road and you are beating a system that really is rigged against you. 

Unless you think you can lobby Congress, change the tax code and fight Wall Street's sometimes shameful practices of crazy financial product development (i.e., mortgage securities that go bust),  going at least a little more frugal is the best step you can take.     

Of course there will be months when it sucks.  Or when you make mistakes.  I spent an extra $1k on travel and gifts this April.  Two weddings.  Pretty spring days.  There it went.  But I'll be back.  I caught it because I track every penny of spending, a la the advice in  "Your Money or Your Life."     And I follow the geniuses on this free resource, the Early Retirement Forum, among many, many others.  I'm even dragging my book club through a Review of "The 7 Money Mantras" (i.e., if it's on your ass, it's not an asset).  

Good luck to you.  I'll be back next with a juicy, frugal fun blog post.  In the meantime, I'll be clipping a few coupons so that I can enjoy the things I love best -- like going out with my friends.   And maybe I'll set up a GoFundMe account for Neal.  His contribution to our money discussion in America has spurred a conversation that we should been having a long time ago.


Tuesday, December 22, 2015

5 Best Guides to Beginning a Life Free of Financial Worry

It is beginning "the thing" or "the change" that can be the hardest, isn't it?

When I was at my lowest financial point of worry and anxiety, these five books lifted me up and over debt toward a life of fun frugal living and some financial security.  So I'm sharing the wealth.

Amazon has it on sale from time to time
1.  How to Get Out Of Debt, Stay Out Of Debt and Live Prosperously

This was the first book I read that took the shame out of debt and addressed some of the emotional issues.   It inspired me to take a second job as an adjunct professor.  This didn't pay much per hour but the extra $2K in a year helped lift my family out of debt.  I felt like a cork, bobbing above the water and suddenly seeing the shore.  What a relief that was! 



I found a copy of this one for .01 on Amazon!
2.   "The Only Investing Guide You Will Ever Need" 

This was the second financial self-help book I purchased and still have on my bookshelf.  Why?  Because it's so funny, lighthearted and real.  

Tobias is a Harvard graduate who helped me understand that when I avoided buying something, or saved $1.00 on something, I was actually saving $1.50.   A penny saved is a penny and a half earned! And understanding how our taxes affect your personal finance is mission critical. 

If you are being taxed at the 25% marginal tax rate for federal income tax, then add in state income tax, then add in sales tax -- well, you could say that you are being taxed at approximately 50% (for the ease of the example, even though it might be a little high).  

So, as Tobias gives as an example in the book, if you go out to eat on Thursday night and spend $40?  Well, to replace that $40 could mean that you have to earn $50-$60.  

Even though Tobias is a very wealthy guy, he still buys canned tuna "long" (i.e., on sale), and stores the extra cans under his bed.   He goes "short" on tuna when it's very expensive (i.e., he uses up his stores).  


Seriously people, this is how rich people act.  Just be careful you don't overbuy on tuna and never use it.


I Will Teach You To Be Rich
This is about $8 on Amazon
3.  I Will Teach You to Be Rich

So inspirational and easy to read.   

Ramit promised to show me how to make $1K a year in a side gig.  I didn't think I could do it.  But then I did.  And I still make $1k a year doing a side gig.   

I don't know how he does it, just call it "Ramit Magic"



Found this for .01 on Amazon too -- great deal! 
4.  Your Money or Your Life

Ground-breaking,loving and practical approach to understanding how you are trading your "precious" life for that new toaster, or pair of shoes, or kitchen blender, etc., etc.  -- is it really worth it?  Good practical guide to understanding how much your job is really paying you per hour.   

Think you are getting $30 per hour?  Add in all those hours to commute, the wardrobe costs, the unpaid CEU hours, the hours just unwinding from the stress...  hmmm...  maybe it's time to rethink that hourly rate down to about $5!   And the toaster really cost you four hours of your precious life.  Hmmm...

Definitely an eye opener for me and one of the inspirations for Breaking Free From the Corporate Cube.    Inspirational for living well on less.   


Still about $10+ on Amazon
5.  The Millionaire Next Door

Last, but certainly not least, the granddaddy of them all, "The Millionaire Next Door."  Reading about this scene from the book (page 27), with the Decamillionaires (worth $10 million or more) is the best take-away you can have this frugal Christmas.

The professors who wrote the book wanted to study millionaires, so they invited the subjects to a focus group.  Wanting to make the millionaires comfortable, they provided wine and caviar for the group.   Here's what happened next:   When one of the group members (who owned several pieces of downtown New York property) was offered a glass of 1970 Merlot, he said 

"I drink Scotch and two kinds of beer - free and BUDWEISER!"  

It's also where I first heard the phrase, "Big Hat - No Cattle," -- a term the millionaires saved for those who flashed fancy cars and clothes, but had no assets.  

Here are more millionaire tips.

That's my top five that will keep you busy learning through the cold winter nights ahead.  Do you have a favorite I missed?  Share It!


Disclaimer:  If you do decide to click on one of the photos and buy one of the books, I will receive a small commission from Amazon.  It didn't affect my list one whit -- I've had these books on the shelves for years.  And any proceeds will go back to making the blog better!


Monday, December 14, 2015

Deadline 12/14/2015! Special Offer to Get 10% Rewards on Chase Freedom and Amazon Purchases

If you enjoy Chase Freedom credit card rebate points like I do, then be sure that you sign up TODAY for your 10% cash back rewards through 12/31/2015.

The deadline is December 14th for this extra cash back offer.

(And even if you are reading this after December 14th, 2015, use it as a reminder to check your Chase Freedom Cash Back status.
There are plenty of juicy deals for the basic 5% to take advantage of before the end of the year.)   

Monday, December 7, 2015

Why Your Monthly Budget is a Dangerous Myth

 

Caution:  Your Monthly Budget is Only About 66% of the Story 

I have a budget built after years of study – and it’s about $3K per month in expenses.  At least that was the target amount that would allow me to claim financial independence from the MegaCorp life while still living well on less.  
It even included money for several “sinking funds” of savings for the nasty surprises that will happen eventually, but of course -  just not this month.   For example, I will need a new car someday, just not this month.  I will need new glasses that cost about $500, just not this month.     The appliances will someday go ka-put, just not this month.   Hmm…. 
But as smug as I’ve been about building a great budget including savings accounts for the “just not this month” expenses – the last few months of backing away from MegaCorp life have given me the time to examine what’s really happening in my financial life.
Basically, I’ve been fooling myself by woefully under funding those accounts.    What I’ve realized is that at least one of these “just not this month” expenses  seems to happen every month!

For example, during 2015 the “Not This Month” expenses included...

Sunday, July 26, 2015

Jet.com Reviews

Have you used  Jet.com yet?  If so, what did you buy?  How was the process?  Our readers are loving the service so far.   

Amazon's newest rival certainly took off this week.   And according to Forbes Magazine's Pricing Comparison Research, their claims to have lower prices than Amazon or Wal-Mart are holding up. 

In a price comparison of 16,000 items, they were overall 9% lower than Amazon and the best deal by far for pet supplies (12% under).    (See how our reader Linda benefited from this below).

Saturday, July 18, 2015

Pay Off the Mortgage or Not?

Just my opinion, but.... this hotly contested question is really the wrong question to ask.  Which is why there is so much debate about it, perhaps. 
   
The important question to ask is "how much does housing cost me every year?"  And the answer tells you whether or not you can and should pay off the mortgage, or if you should have a big juicy mortgage the rest of your life.   

What?  NOT pay off the mortgage -- ever??? 

The idea of not paying off my mortgage came from Ric Edelman in his book The Truth About Money," 4th edition.
He outlines great reasons to carry a big, long mortgage.  
  • A mortgage is cheap money. 
  • Greater liquidity.  
  • You can sell without selling (get your equity back by refinancing your mortgage). 
  • The list goes on.  Most telling is the story about the widow who had a lovely $500,000 home - paid off.  But had no cash to maintain it, travel, etc.  It's an important read.
Whether you pay off your mortgage or not, you still have monthly maintenance, taxes and insurance.  You'll never be without housing expenses.  And these expenses are subject to inflationary pressures.   Just a few years ago in my state a law was passed that allow insurance companies to charge you up to a 2-3% of the home value as a deductible for damage from a "named storm," i.e., Hurricane.    Hmm..

Wednesday, July 8, 2015

5 More Reasons to Escape the Corporate Cube & How - Money In Real Life Stories

 

6.  You want to be (a little) like Sofia Varga.   

You know, "Gloria" from TV's Modern Family.  In real life she's savvy, hip, wise, and quietly building her own media empire.   Latinas are dropping out of Corporate America and cutting their own paths to financial AND emotional well-being. 

7. You Can Exit the Party Slowly, and Take a Few Cookies With You.   

There is still something to be gained out of your current Corporate Cube Job.  Contacts in the next cube are your potential clients, future collaborators or even your investors. 
  • You are still learning. Money In Real Life (MIRL) Story:  For example, my partner became an seven figure entrepreneur after spending a few years as a CPA.  He learned from every client – what to do, what is realistic, what things cost, how taxes worked.  This knowledge was invaluable for his future as a business owner and real-estate developer.
  • That Guy In IT probably has a side-hustle too and can help you when you need IT expertise and don't have a whole department to call on.