20 
32 | § ¶Pantry Challenge- March 2006
-- End of Month Results
Earlier this month I mentioned we where on a plan to live out of our pantry – as much as we could – during the month of March 2006. This was our Pantry Challenge experiment. Even Imelda said they may take the challenge.
Frugal for Life, who is the host of the Festival of Frugality this week writes that on her household they spend less than $70 per person on food each month. We live in shameful excess if we compare to the way an expert frugalogist makes the budget go a long way. In my household we do not breakdown food vs. toiletries vs. cleaning supplies vs. wine, etc. I do know that it is common to spend $400 in supermarket each month for the two of us and the occasional guest – we do not eat organic, and we do favor special prices, but we do buy some expensive food items (sometimes unnecessarily). She wins us on frugality!
We did the experiment for several reasons:
Continue Reading The Article... 24 34 | § ¶Two Months Salary?
-- DeBeers Got You?
If you are considering proposing marriage to your girl, you should read NYC Money’s article, where they detail how we have fallen prey of marketing ploys.
Just to add to the discussion, I do not believe in the “Two Months Salary” thing. Still, when I purchased a ring for my now-wife I did used the “Two Months Salary” rule, in my own way. I used a “Two NET Months Salary” after taxes, 401k contributions, Roth IRA contributions, ESPP contributions, Car Replacement Fund contributions, and Emergency Savings Fund contributions. In other words, I made sure the ring was not purchased above my living standards.
Continue Reading The Article... 21 20 | § ¶Should I Get Into Debt For Education
-- Consider Value and Alternatives
(Financial Baby Steps is hosting the Carnival of Personal Finance this week. They inspired this article with their discussions about students and money. It is being jointly published in Money and Investing and Find New Job).
Some people say “Education is Priceless”. Other more realistically minded people often say “Think education is expensive? Try ignorance.” This article is not to prove or disprove the value of education, but rather to help decide how deep into debt should a college-bound kid should get for the career they want.
In education, as with many things in life, you may get what you pay for. Also, as with many things in life, you must be sure that you are paying for what you really find important. Expensive colleges may be cost that much for numerous reasons including prestige, potential career networking, uniqueness of programs, admission requirements, state or college finances, and quality of education.
Continue Reading The Article... 22 28 | § ¶Brown Bag Lunch
-- Is it worth my time and effort?
(Free Money Finance is hosting this week’s Festival of Frugality. I was inspired to write this article by reading his advice)
I believe it is, but faith is not enough on money matters. There are many aspects to be considered about bringing your lunch to work. Here I list some of the reasons.
We do it for our Health
My wife and I don’t require as many calories as you can find on your typical Big Mac Combo (970 calories). When we pack food for lunch we use the same carefully planned and balanced meals we eat at dinner. We also pack it in sensibly sized reusable plastic containers (Rubbermaid / Tupperware type). By limiting the amount of food on the container we avoid overeating and maintain a healthy weight.
Although we could potentially find healthier alternatives to the McPoison combo, or decide to double up our gym routine to compensate for it, it would mean extra trouble for us. Finding an everyday priced healthy lunch is difficult or takes a lot of driving.
We save money!
Continue Reading The Article... 24 19 | § ¶Google vs. Yahoo
-- As Finance Tools
(Personal Finance Advice is hosting this week’s Carnival of Debt Reduction. This article is inspired by a related one posted there.)
Google (GOOG) just launched their own financial portal to rival Yahoo’s Finance (YHOO) portal. I took a good look at it, but it essentially offers a portfolio tracker, quote and chart generator, and news. I must establish that everything was tastefully designed, and usability was always kept in mind: charts dynamically change on mouse-over and have sliders to adjust charts without having to repopulate a form.
The Google portal is still on its infancy, and I am sure Google will eventually provide more. They need to, if they want to match the familiar features that serious investors find in Yahoo Finance, like:
- Stock Screens
- Analyst Expectations
- Currencies
- Original Content – articles
- OEM Services, like credit reports, credit cards, etc.
For now, I will keep using the Yahoo Finance site and keep a close watch on Google Finance.
(Jointly and simultaneously posted on Money And Inversting and Stocks For Me)
16 17 | § ¶When to Start Giving an Allowance to Kids?
-- Never
(AllThingsFinancial is hosting the Carnival of Personal Finance this week. He also inspired this article with a similar one he published not long ago) Never. That is my position. Kids should learn the value of money all right, but they should also learn that money doesn’t come for free – at least not to responsible people.
I believe kids should be able to earn money and learn how to spend it. Kids should be able to learn that this is a world of limited resources and that you can probably have anything you want but not everything you want. Kids should also be allowed to make some small financial mistakes while they are Kids, so that they learn to avoid them when they are grownups.
I suggest parents give kids the opportunity to earn money. They should have plenty of opportunities so that they can choose which ones to try – or to try them all. They should also be plenty enough to cover for normal things that kids want – you do not want them to discourage them. Some suggestions: Continue Reading The Article...
27 18 | § ¶The value of a vacation week
-- Career shift considerations
(Joint and simultaneous posting in Money and Investing and Find New Job)
I advocate for moving from one employer to another if your career is stalled or if there is more to be made elsewhere. Some of our biggest salary increases come from changing jobs, and with a reason: how else do you entice a person to move from a stable job into the uncertain? With a 10, 15%, or 20% salary increase that is.
However, when moving jobs you have to take into account more than salary levels. Some employers give extra vacation days or weeks for those employees with certain seniority. Moving to a new company may result in reduced vacation days (if any at all). How do you factor these extra vacation days into the picture? Different people do it in different ways, but what is most important is that you take it into account in some way.
Lost money method Continue Reading The Article...
18 25 | § ¶Success?
-- What is success?
Different people define success in different ways. Some people define success as getting loads of money! Some others equal success to fame, culture, material possessions, land, family size, family achievements, publications, or even number of sexual partners (hey! It is a free country and people pursue their happiness in any way they want).
Success is different to every one of us. Also, success is not eternal, for as soon as you achieve what you once considered success, you will consider yourself successful for a brief moment before setting the bar even higher.
First of all, since success is not eternal, I like to see it as a journey, not a destination.
I personally define success as: not having to depend on others, or better stated in journey terms: continuously reduce my dependence in others.We depend on many people. We depend on: Continue Reading The Article...
20 20 | § ¶What Kind of House for $300K
-- A Townhouse
A few other financial bloggers are telling what kind of house can be found in your area for $300,000. Here in Marlborough, MA you can get a townhouse like the one on the picture. Around 2500 square feet, 1 car garage, 2 bedrooms, 2 1/2 bathrooms, and finished loft and basement. We already have it, but we do not live there.
That property used to be mine. Now it is my wife's. I sold it to her before I bought the house I have right now. She rents it to a nice lady and her daughter. And the best part of it: I want to retire in such townhome. My favorite property so far.
My inmediate retirement plan (the plan to use if I am ever fired from my job) is to sell my current house, put the money in dividend paying stocks and live in that townhome -- paying my wife rent like she pays to me now. I have cash reserves to help me through the transition.
17 24 | § ¶When Should I Use a 40 Year Mortgage?
-- 67 – Age = Maximum Mortgage Years
For a primary residence, in my opinion, you should only opt for a 40 year mortgage when you are in your 20’s. Any other age would be adding a lot of risk to your real estate investment. There will be a time when we will not want to, or would not be able to work anymore. A paid off primary residence is one of the easier ways of securing a prosperous retirement.
A house paid off essentially cuts your housing expenses in half or more. That means you will be able to live with less income. That miserable Social Security check will go a longer way in covering your basic needs, and the money you have saved and invested on Individual Retirement Accounts (IRA), 401k, pension plans, and annuities will be used to pay for a better life rather than to feed the fat cats at the bank (for the record I invest a considerable amount of my money in bank stocks).
The problem is that a 40 Year Mortgage can delay retirement. Most people like to retire in their late 60’s. Probably they do so because that is when the Social Security and Medicare benefits kick in. Or maybe it is because at approximately that age people start to become tired of the daily grind. No matter the reason for such retirement age, lets assume we will retire at that age and we want a paid off house by then. That means that a 40 year person should not take a 40 year mortgage – working hard to pay it off way until 40 years old could be depressive. I believe that unless you are in your 20’s you should avoid them.
What about extra interest payments? Continue Reading The Article...
18 29 | § ¶Netflix: Savings or Latte Factor
-- $19/month, $228/year
I am a big fan of Netflix. For a fixed fee I get as many movie (DVD) rentals as my eyes and the fairly efficient postal service can tolerate. I do not happen to watch too much television. My wife insists on basic cable for $14/month ($168/year) so that her family can watch TV when they visit us. In 2005, and so far in 2006 I didn’t watched a single hour of in-home television programming.
I do, however, like to spend time in front of the tube. I love to watch a movie after dinner. What I do not like is to be restricted by schedules or limited offerings. I also don’t like to get up and drive to the video club, spend half an hour deciding what to watch, and then after watching the movie driving it back to the video club, on time, to avoid late fees. Netflix puts entertainment at my fingertips, and it arrives and goes out of my house with little effort from me.
Am I getting a good deal or am I paying a hefty fee for the convenience? Lets take a glance at my Netflix movie watching over the years: Continue Reading The Article...
23 25 | § ¶Saving Money By Paying Someone?
-- To do House Work
(NYC Money inspired this article with a similar one.)
For the last couple of weeks we have been taking turns watching workers repair one of our rental townhouses. The repairs carry a significant cost, mostly paid by insurance. What the insurance doesn’t pay is for us to watch them (we can’t really leave the tenant’s personal property unattended with strange people).If it wasn’t a tenant occupied property I would have done the work myself. If I have to watch over workers, I might as well do the work myself – I have two able hands that can insulate, put drywall, and paint just as well as they can. Same thing with having someone clean my house: if I have to hide all valuables and things I don’t want people to touch, and I have to watch over the cleaners, I might as well do the cleaning myself – with some background music it may even be a space for meditation.
There are some things I have paid people to do, mostly successfully. Anything done on the exterior of the house like gutter cleaning, lawn mowing, seal coating is fair game – if the price is right. No need to supervise them and it is easy to verify if they did the work and send a check. I also gladly pay for those things that are very complex to do and very easy to mess up (at least from my point of view), like installing my central air conditioner, or complex plumbing work.
My time is valuable, but only to the extent I invest it in something valuable.If I have to take unpaid time off from work to do a chore that someone else can do without requiring my presence: that is money saved. (Assuming that person’s hourly rate is lower than mine) Things that can be done as weekend projects only produce savings if by contracting the work you do something else with your time: like take a short vacation/trip. If I just watch TV while people do the work – I better value the TV program a lot!
Be sure you calculate your use of the time when contracting someone to do work.
For what housework you pay money, and why?
31 32 | § ¶Try Cash Only
-- Or Debit Only
(No Credit Needed inspired this article by posting a similar one, and is hosting this week’s Carnival of Debt Reduction).
Credit cards give us a false sense of economic power. Citibank ( C ) tells us to “live richly”. VISA tells us that “life takes risks”. The reality is that if you live richer than your income allows, you are taking the risk of getting yourself into a miserable situation. When expenses consistently exceed income debt will grow exponentially, until it can become unmanageable.
When credit card balances are spiraling up: Continue Reading The Article...
21 25 | § ¶Hobby Income
-- Your hobby could be more than a cash sink
(PF Advice inspired this article by posting a similar one, and is hosting this week’s Carnival of Personal Finance).
Hobbies are primarily for enjoyment. That doesn’t mean they have to be a cash sink. Income generated from a hobby could be reutilized in the hobby itself, making it more enjoyable. They may even be a way to get a few more bucks to balance a budget.
Think about ways you can make a hobby pay for itself or even pay a bit more than what you spend on it. Some ideas: Continue Reading The Article...
20 18 | § ¶Want to Increase The Value of Your Home?
-- With Little Money?
During the past few years home prices increased in double digit percentages by just sitting tight in your living room. I do believe that over the long run, home prices will keep increasing: but I also believe that over the next few years, home buyers will be more discerning about the properties they will buy. During a seller's market, people are in a “take it or leave it” situation. I saw many houses with major defects being bought within a few days of being posted on the market. That is what will not happen over the next few years.
My advice: Even if you do not plan to sell your home right now, keep it in top shape. Keep your home in a “sellable” condition.Home values carry a sentimental component. A house may go up or down in price up to 20% just on the combination of curb appeal and interior appeal. What may be an otherwise solid house with no structural damage may be called a 'fixer upper' to others – and seen as an opportunity to buy something at a discounted price, rather than at its fair value. And what would otherwise been seen as a regular home, may be called a “luxury property” just because of the appearance and condition of the trim and accents you add to the house.
Keeping a house in pristine conditions can make it hold its value easier, and if enough effort is created it can increase the value over similar properties in the market.Simple things can make a big difference. I will try to list a few: Continue Reading The Article...
29 29 | § ¶Pantry Challenge
-- Reduce Waste
We where amazed at how much food we have in our pantry. Some of it close to its expiration date (useless if not consumed soon), and some other may go the same path if we leave it there, unused, for as long as we have left the soon to expire. It has happened before and I am sure it has happened to other people as well.
Unused food may become waste. Waste is wasted money and resources that could have been used for more fruitful and/or enjoyable endeavors. We decided to stop waste and at the same time we may be able to help the balance in our common expenses account stay at a healthy level.
For the month of March we will subsist on what is on the panty / fridge only, with very few exceptions: dairy and fish for Lenten Fridays.Continue Reading The Article...
23 26 | § ¶Saving Enough?
-- When Enough Is Enough?
I believe that you have saved enough only when you can be sure that you will be able to maintain your current standard of living forever or at least until you are a hundred years old. You must make sure you can do it without working, as there will be moments in your life when working will not be an option due to sickness, age, family situations, or the pure and plain fact that you don’t want to.
If you believe you can sustain yourself at your current level forever by working at your current job / profession or performing some other active income generating activity, you are deceiving yourself.Continue Reading The Article...
20 20 | § ¶Cash Flow or Nest Egg
-- Do Both. Enjoy the Best of Both Worlds
(Canadian Capitalist, the host of this week’s Carnival of Personal Finance inspired me to write this article with a one he posted on the same topic).
There is always the debate of should you go for prioritize Cash Flow or should you concentrate on building a good Nest Egg. As you may have expected from reading some of my other articles, the answer is both.
First, let’s define what we mean with each term:
- Positive Cash Flow - Receive money periodically from passive sources (money that you receive with a minimal effort from your part). Examples are: bank interests, bond interests, rental properties, royalties from books/music, annuities, and stock dividends.
- Nest Egg or Capital Appreciation- Generate a big cash-equivalent amount of assets. You just follow the old principle of buy low, sell high (or any of its derivatives like short selling which is sell high, buy low). Examples of this are fast growing stocks, fast appreciating real estate property, options and futures, art collections, and venture capital investments.
11 24 | § ¶2005: Money and Investing Article Index
-- Links to the articles
All of the Money and Investing articles published in 2005, easily indexed for your convenience.
Continue Reading The Article... 21 29 | § ¶Who Looks at Your Credit Report?
-- It is more than just banks.
A Credit Report is more than just a tool for banks. A credit report and its associated FICO score (credit score) is being used for more than approving you loaning you money. In addition to the traditional uses of a credit report and score like: Car loans, House Mortgages, Personal Loans, and Credit Cards, other entities are pulling out your credit report.
Here is a list of other entities that may be pulling out your credit report:
- A potential landlord – He/She wants to know if you will make your rent payments on time. We do look at potential tenant’s credit reports.
- Your insurance agent – Responsible and cautious behavior reduces the chance of an accident. Positive behavior is also reflected in your credit report – at least according the actuaries of insurance agencies. Allstate is an example of an insurance company who uses credit reports.
- A potential employer – If you aren’t careful with your finances or responsible with yourself, how can they trust you to be responsible at work and to take care of the company interests – at least that’s what some employers think. More on this topic: Liz Pulliam Weston of MSN Money.