It is my plan to change all that.

While I don’t think I’ll be able to pick back up to posting several times a week, I do plan on pumping out a couple of posts a month – which should help keep me honest with our finances and process some of the different decisions that my family is going to be making.

But before we get all into the here and now, I have about 10 months of history to update.

What’s Been Happening

Our savings are pretty much gone.  We have lived for around 10 months, bought a van, and paid for 2 semester of graduate school with the money that we had saved up.  All this spending with small earnings has meant that our savings are now mostly gone .  We still have somewhere around $5000 hidden in the electronic coffers of financial institutions deemed to big to fail, but that seems really low to us now.  Going from over $30,000 in savings to this number  has given us an appreciation for the cushion and freedom that having that type of cash available provides.

We still have about 2 months of living expenses left, which we understand is a huge blessing to have - but we are certainly used to have much more in reserve.

We have substantially increased our online income, but not enough to live off of.   The plan in making the move to Louisville was not to get another ‘real’ job right away but to put time into getting adjusted to our new life and to focus on earning money online.  While I have not yet been able to earn the ~$1800 each month we need to live, I have broken $1000 a month a few times.

The plan for now is to take all the money that we are earning from our online endeavors and pump it back into our business until we have a revenue equal to or greater than our personal expenses.   It may take us a few more months to get there, but that is the plan.  In the mean time, I have tried to find other ways to make some money.

I am once again gainfully employed.  I got a job with a major telecommunications provider working in a call center.  I’ll be making enough to cover expenses (or at least that is what I project) so we will be able to save lots of money once we stop pumping our online income back into the business.

I’ll be working a 2nd shift so I can still get classes in during the morning – but it does look like I might be slowed down at least for a semester or two until I can get back into a groove balancing school work, family responsibilities, and the job.

Where Do We Go From Here?

I don’t really know what the next several months are going to hold for me and my family, but it certainly does feel like an exciting time for us.  It feels kind of strange going from a season in life where we had very little income and were draining our reserves to being at a place where we will be making at least 50% more than we need to live.

The question that we are going to be asking ourselves over the next few weeks is this: how are we going to be using our newfound wealth to make the world a better place?

• My Family Is Moving!
• What To Do With All My Cash?
• 2008 Financial Goal Recap
• 2009 Family Financial Goals
• Did I Make the Right Credit Card Choice?

1. It will give us a chance to spend some extended time with my wife’s family who lives on the East Coast
2. A friend of mine is getting married in July on the East Coast, and it doesn’t seem practical to go from San Diego, then to the East Coast, and then back to San Diego, and then back to Kentucky to go to school all in one month’s time
3. It will give me some time to focus very seriously on making money online - which is going to be really important since I am quiting my cushy job to become a student again and my family will still need to eat, have a place to sleep, and not running around naked.  And I want to do it all debt free to boot!

Moving is an exciting proposition for us.  We’ll be far from both of our families (hours by plane from one and hours by car from the other) and will need to make new friends in a new area.  Most of the people we expect to be somewhat in the same circumstances of life as we are so that should lend itself to forming easy friendships.  We also plan to live on campus for the first year (if we can get into campus housing), so that should help too.

There are still a lot of finance related things that I have to get done before we move and get into the thick of school, like:

• Get a new bank account – After my run in with Chase’s fraud protection I am still unable to get into my online banking with them. This is completely unacceptable and has really hurt my ability to keep track of my families finances over the past several months, that and the fact that I have just been lax recently. I have called Chase customer support and I have gone into the branch and talked to Chase representatives but no one seems to be able, or willing, to fix my problem for me. So I will be taking my money elsewhere.  Both a checking account and a savings account or certificates of deposit will be in order.
• Get another new bank account -My ability to make money online is steadily improving and I am going to need to claim some of the income that I end up making.  Heck, I may even end up starting by own business – with a company name and everything if profits turn out to be good enough and doing so would be to my benefit.  Getting a new checking account will be the first step in that process and help me better manage the money that my online efforts make me.
• Find health insurance – This is a pretty big deal.  With a 6 month old son and a wife to take car of, making sure that they have access to affordable health care is really important.  Jr. will need shots and regular appointments to make sure he is growing and staying strong.  There is also the option of us having another child (or two) while we are at school.  Even though natural child birth is significantly less expensive than medically assisted child birth, it still can cost a few thousand dollars over the course of an entire pregnancy.
• Find life insurance – If something terrible were to happen to me or my wife where we were to die while our family is in Kentucky than the survivor would have to pay lots of money for various things, not to mention need to re-examine what they should be doing with their life now that their “other” has died.  We don’t want to make each other have to worry about money in this situation, so life insurance is the way to go.
• Find a car – Our 1995 Toyota Corolla has served us well, but I fear that it will not make the arduous cross country trip very well.  Rather than ship it, we are just going to buy a new or new-to-us car while we are with the in-laws on the East Coast.  I’ve never purchased a car before, so the whole process seems a little daunting – especially give with how much I suck at shopping.
• Buy a laptop - This is kind of business related, kind of school related, and kind of family dynamics related.  We could definitely use a second laptop so that each of us could be working on the computer at the exact same time, especially when Jr. is asleep or when we both have a lot to do on the computer.  I have a feeling that this will only intensify once school starts as I will need the computer most of the time to earn money, study, write papers, and take notes – leaving my wife with no computer, not even to check her bloggity blogs.  I think that we will increase productivity by close to 100% with two laptops.  This is good.  It also means that I will need to fork out $400-$800 for a laptop.
• Make more money online - Arguable the most important thing because it will impact all of our existence in our new home.  Without money we will not eat and without eating we will not live.  Not good.  I am pretty confident that we will continue to eat and that we will be able to make enough online to get by, I just need to put in the work.  If I don’t put in the work, my family doesn’t eat.  That would just suck.

There is plenty of work to be done around here. Its time to get my family moved.

• My Family’s Money Is Back
• What To Do With All My Cash?
• 2009 Family Financial Goals
• Can I Make Money Online?
• February Budget: Keep On Keeping On

There is also this notion floating around that people should really spend more money to help keep us all from falling into the terrible, gawd awful abyss of not buying cappuccinos, not going out to the movies, not buying the latest doodad or gadget, and not buying new cars.

Some countries (Finland) are even using a public ad campaign to encourage spending.

To be honest, this talk does make a lot of sense to a certain way of thinking.  If an economy relies heavily on  consumer spending then it is the worst thing in the known universe for individual consumers to stop spending.  It would be like all the oil wells of the earth suddenly drying up.

But here is the kicker – I won’t be spending more to get us out of this mess.  Not one penny.  In fact, I think that I suck for the economy.  Why do I suck?  Here are my top five reasons:

Reason #5 – I don’t buy things I don’t need.

Consumer economies depend upon people buying crap that they don’t need to make their lives better, happier, more fulfilling, more comfortable, etc.  The underlying assumption here is that crap you don’t need makes your life better, happier, more fulfilling, more comfortable, etc.  I beg to differ.  That is why I don’t do it.

This means that I don’t create jobs in Starbucks because I don’t buy coffee.  I don’t create jobs in the auto industry because I don’t buy their cars.  I don’t keep McDonald’s in the black because I don’t eat fast food.  This is bad for the economy because I don’t create any demand.  Companies produce and produce expecting to meet the demand of the buying public.  I don’t buy so I don’t create demand.

This means that companies don’t make profits because they can’t sell to people like me.  Because they don’t make profits they have to fire employees who in turn can no longer keep up with their lifestyle of buying crap they don’t need.  This creates even less demand which hurts company profits even more which makes them lay off more workers.  It is a vicious cycle if you ask an economist.  I suck for the economy.

Reason #4 – I horde cash like Scrooge McDuck.

Sweet, sweet swimming holes of gold.  Three little nephews with a broke ass father.  Time machines and adventures galore.  Who wouldn’t want to be Scrooge McDuck?  Not very many people if you ask me.

That is why I have taken it upon myself to save as much as I possibly can.  My short term motivation: get through graduate school without incurring any debt and still feed my wife and son.  That means aggressive saving now so that I can eat later.

It also means that all my liquid assets don’t provide the economy with much liquid to grease its dirty clogs.  I don’t take risks.  I don’t invest in new entrepreneurial endeavors.  I don’t fund commercial or government projects.  I horde my cash like a good Scrooge.

What happens when there isn’t capital for these things?  Business stop expanding and governments are not able to hire as many people.  This creates less demand for needless goods and services and causes the economy to tank.  I suck for the economy.

Reason #3 – I think the concept of ‘money’ is really weird.

Have you ever had a nice little sit down with yourself and pondered money?  It is really weird when you begin to think about it.  We have all come to rely upon it to get the things that we need to live: food, water, shelter, clothing.  We exchange our labor for the money we use to get these necessities.  We sit in offices all day long and type on computers, producing words, or images, or codes, or God knows what else and someone else gives us money to do it.

Where did this money come from?  Someone magically created it.  Why does it have value between you and I?  Someone magically said that this was how it should be used.  Sure, the principles behind money have a long tradition dating back thousands of years and it is a useful bit of technology, but its only as valuable as the person your trading it to believes it to be.

I personally think that it is kind of scary that our economy is built on magical paper (especially when that magical paper is so removed from the production of things that are truly valuable).  As a result I don’t do the things with my money that would be good for the economy because I just don’t get it. My not getting money sucks for the economy.

Reason #2 – I don’t produce anything truly valuable.

That doesn’t mean that I don’t work.  It just means that what I do at my job is really pointless.  It does meet a perceived need – the need of my employer.  They need me to do x because they have a customer who likes having access to what x gives them.  But when we all sit down and think about it, x is really just a trite convenience that someone could do themselves if they wanted to.

My job has subjective value, but not objective value.  It isn’t valuable in and of itself.  I don’t save lives.  I don’t make something that improves the condition of humanity at large.  I don’t advance human knowledge.  So in absolute terms I would have to say I suck for the economy.

Reason #1 – I want to retire early.

I would quit my job and live off of $6,000 a year if I had the accumulated capital to do so.  Like right now.  That means I would be leaving close to a 100 perfectly good years on the table (if I live to 125 as I expect!).  I wouldn’t stop adding objective value to the world, but I sure wouldn’t be good for a consumer economy.

If I can achieve the goal of early retirement I will accomplish two things that suck for the economy:

1. I would effectively relegate myself to a lifetime of under consumption
2. I would keep all my demand (capital) pent up until I absolutely had to use it to buy necessities

I wouldn’t spend money on lattes and designer jeans.  I wouldn’t buy books when I could check them out of the library for free.  I wouldn’t buy new cars when a bicycle or used car will do just fine.  I would be so removed from a consumer culture of buying stuff for stuff’s sake that I would be an almost imperceptible spec on the economy’s radar.

And because I don’t buy things the whole cycle of businesses not making profits and firing employees who now can’t add to the collective demand is going to perpetuate itself for as long as I am alive.

I suck for the economy, do you?

• Why I Suck At Shopping
• How to Make Your Child A Millionaire!
• Net Worth for February 2008: Growth is Slowing, the End is Near
• Simplify Your Savings
• I’m a Grower

I always assumed that it was superior in terms of cost incurred compared to both riding the bus and driving – but I had never really put any effort into crunching the numbers on it.

Well, I have finally put together a spreadsheet that helps me analyze the costs of bike commuting as compared to both driving a car and riding the bus. I made some basic assumptions in this cost analysis that definitely need to be mentioned:

• I valued my free time to my wage at work. This means that one hour spent idle is worth $16.467. This is per Benjamin Franklin’s (and other’s) assertion that time is money.
• Things that I would pay to do are worth the value of my time plus the value per hour of the thing which I pay to do. If I spend $4 to rent a movie I want to watch and the movie lasts 1.5 hours then the value of the movie would be $19.13 per hour ($16.467 + $4/1.5 = $19.13). This is considered value added and will be considered as a credit when I calculate the cost of any single mode of commuting. So, if I were able to watch a 1.5 hour movie for free on every bus ride home – it would count as a credit of $19.13 when I total the cost of commuting by bus. If this isn’t clear now, hopefully it will be in my analysis below.
• All costs are red, all credits are black.  This will help visually distinguish between things that cost money and things that I count as adding value to my life.
• The time horizon for the analysis will be 5 years. This will enable the up front purchase price of items like the car and the bike to be distributed over a period of 60 months. I think that this is certainly reasonable.

The Cost of Driving

With these assumption in mind, let us examine the cost of driving to and from work. Here are the basic costs of driving and the costs associated with them:

• Vehicle – $33.33 per month – I imagine that the value of my current vehicle is ~ $2000 (Kelly Blue book agrees) so that is the monthly cost to use my car if it were to last an additional 5 years. With 165,000 miles on it right now, this might be a very generous assumption – but for the sake of this analysis I am going to make this assumption.
• Vehicle Maintenance – $25.33 per month – This includes 4 oil changes a year, $90 for tires a year, and $15o for miscellaneous repairs and fixes a year. I honestly don’t know if this number is accurate or reasonable, but it seems like it is.
• Gas – $35.12 per month – This is from a 25.8 mile daily, round trip commute where I average 30 miles per gallon.  It also assumes a gas price of $2 a gallon. This is the value of gas today, but in the past year gas prices have been as high as $4.50 per gallon. I’ll include a table with different driving totals for a variety of gas costs at the bottom of this section.
• Insurance – $87.99 per month – This was the cost to insure me as the 25 year old sole driver of a 1995 Toyota Corolla with Farmer’s auto insurance.
• Time Costs – $336.20 per month – I would spend an average of 20.42 hours a month on the road if I were driving. That is about an hour per working day per month.

Total Monthly Costs: $517.97

Gas Price Affect on the Cost of Commuting

The Cost of Bus Commuting

With no start up costs, bus commuting probably has the fewest cost categories to deal with. They are:

• Bus Fare – $64 per month – This is the standard fare for a monthly pass on the bus that I would ride if I were commuting by bus. Chances are it will change over the course of 5 years, but I don’t want to deal with inflation in this example so I am not going to do it.
• Time Costs – $1008.60 per month – Commuting by bus would eat up about 3 hours of my day, for an average of about 61.25 hours per month. About 100 minutes of this would be time spent on the bus and about 80 of it spent walking from the closest bus stop to my office.
• Reading Credit – $356.62 per month – While riding the bus I would have about 1 hour of reading time per day. I mostly read free books from the library or material from the internet, so there are no additional costs here. Also, since I value my time reading slightly higher than I value my time working I have put the monetary value on reading at $17.47, a dollar more per hour than my work time.
• Exercise Credit – $346.41 per month – I like to walk and it is decent exercise for my body. I do spend time walking on my own as a way to relax both my body and my mind from a day of work. It gives me time to think, which I do value. This activity has a value of $16.97 (my base time value plus $0.50).

Total Monthly Costs: $369.50

The Cost of Bike Commuting

Bike commuting is my current mode of transportation to and from work. Its costs are as follows:

• Bike – $2.67 per month – My current ride cost me $160 cash money from a nice deaf man in La Jolla.  It is old (probably from the 70s or 80s), but it rides well enough to make me think it will last for 5 more years – easy.
• Bike Maintenance – $20 per month – I really haven’t spent this much so far on maintenance, but I don’t really know the costs that I could incur in the future because I haven’t learned to properly maintain my bike.  I think $1200 over the course of 5 years will definitely be more than enough to cover any of fixes that might crop up, seeing as how it is 7.5 times the cost of my bike.
• Cycling Apparel – $5 per month – I haven’t bought anything in terms of cycling apparel, but I do keep thinking about buying shoes for my clipless pedals – I just can’t seem to get up the gusto to check them out and fork over the dough.
• Time Costs – $558.09 per month -  This assumes 1 hour and 40 minutes in the saddle each day, or two 50 minute one way trips.  That comes out to about 33.9 hours a month, on average.  It also means that I travel about 13.4 miles per hour on my rides home – which isn’t very fast.
• Exercise Credit – $591.99 per month – The exercise value of cycling is very high.  It is great cardiovascular activity, promotes flexibility (even though I am terribly inflexible), and strengthens the core.  For the sake of this analysis I have valued my time cycling at $17.47 an hour.

Total Monthly Costs: $6.23

Cost Analysis Conclusions

It appears that commuting by car is the most expensive at $517.97 per month, bus commuting is next at $369.50 per month, and bike commuting is the least expensive (and actually “pays” me) at $6.23.  Now I know that not everyone will value their time the same exact way that I did or count exercise and reading as credits, so I have included a table of the cost as I demonstrated above, without including time and credits, and without considering the credits I gave biking or bus riding.

In the end analysis, bike commuting appears to be the most cost effective mode of transportation given my assumptions and predicted costs. I have certainly left things out, like the difference in lifetime health care costs, but I think that this is a fair and accurate analysis.

Update:  Thanks to all the individuals who left useful and insightful comments.  I have appreciated them and they have helped me think about this topic with more clarity than I was previously able.  I also wanted to thank Free Money Finance for hosting the Carnival of Personal Finance and including me as an editor’s pick.  Apparently I did something useful with an article about commuting costs.

• Bike Commuting and Frugality: An Update
• 1000 Miles Bike Commuting Celebration
• Bike Commuting Begins
• Bike Commuting: Is it for me?
• The Cost of Bike Commuting

There are 10^11 stars in the galaxy. That used to be a huge number. But it’s only a hundred billion. It’s less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers.

$900 Billion is approximately 9 times the number of stars in our galaxy, the Milky Way.  Now that is a lot of dollars.  It is still relatively small in comparison to the estimated 70,000,000,000,000,000,000,000 stars in the galaxy – I hope we never start issuing stimuli that big for the economy!

I have to be honest, I really don’t get how modern economies work.  It’s not like currency is backed by anything with objective value so to me, a $9 Billion stimulus might as well be a $70 Sextillion stimulus.  Money is only as good as the slaves it creates so if the the number and quality of people that are enslaved by our government’s stimulus is the same, what does it matter the dollar value?  Money is the new form of slavery.

The more I think about money and culture the more I am baffled by our complex, organic, and evolving economic system.

Carnivals

On a totally unrelated note, there were several carnivals this week that contained articles written here. They were:

• Carnival of Personal Finance at Funny About Money
• Carnival of Money Stories at Dividend Tree
• Carnival of Financial Goals at Pimp Your Finances

Feel free to check them and visit some of the posts that seem to interest you the most.

Random Something

I am completely addicted to Dawn of War 2.  I know I probably don’t really have the time to be playing video games, but I really enjoy the strategy element in games like this and pitting my skills agains other players on the internet.  Right now it is free to play (it is still in beta) so it doesn’t cost me anything, but I might just buy it – it is that much fun.

• Carnivals Are Up
• Poverty and Blog Action Day 2008
• Carnival of 20 Something Finances: Gummi Bears Edition
• My Investment Portfolio
• Hump Day Humor

Unfortunately, I don’t think that this will ever happen.  When I ran the numbers I calculated that my chances of getting every green light on my way home would be 1 in 268,435,456,  which is (1/2)^28.  According to Wikipedia, the chances of my winning the Mega Millions is much, much better (Mega Millions chances are 1 in 175,711,536).  So if I ever get home on my bike without hitting a red light, I going straight to 7-11 and buying me some lotto tickets!

But seriously, how alive would you feel knowing that you just accomplished something that only happens 1 in two hundred and sixty-eight million, four hundred and thirty-five thousand, four hundred and fifty-six times?  I think I would feel like I was walking on sunshine.

• Bike Commuting: Is it for me?
• 1000 Miles Bike Commuting Celebration
• The Cost of Bike Commuting
• Bike Commuting and Frugality: An Update
• Save to Buy … If You Buy At All

Also, I have been hard at work on a series that I am labeling Budgeting Basics.  I have already written the intro post at Budgeting Basics: Budgets Matter and I have about 5-10 more posts in the works, several of which I am working on figuring out video instructions for.  I’ll definitely need some feedback on these videos since I have a feeling that my first attempts will have some kinks that some constructive criticism will work out in the end.

In fact, if you could head on over to Budgeting Basics: Income Tracker and check out the video I would greatly appreciate it.  Let me know what you think about it in the comments section or fill out the contact form on my about page if you don’t want to make fun of me in front of everybody on the internet .  I will greatly appreciate any feedback you are willing to give.

On social networking¹ news, I have joined the ranks of twitter.  You can join me at http://twitter.com/MyFamilysMoney and become my follower.

And finally, the 162nd edition of the Festival of Frugality was published this week over at Gather Little By Little.  Head on over and check it out.

1. Social Network = waste time at work

• Online Savings Account or Budgeting Series – Which Should I Write?
• Budgeting Basics: Income Tracker
• The New Blog Is Up And Running
• National Debt, Economic Stimulus, Quotes, and Carnivals
• Welcome Gather Little By Little Readers

I think the real issue is making sure that you have the double focus when you work on and implement your budget because both really, really matter to your long term financial situation.

Where Does My Money Come From?

This is the first question that you need to ask yourself when beginning to get your financial house in order.  Luckily, this is generally a very easy question for us to answer.  Most people know exactly how often they get paid – biweekly, semimonthly, monthly, or on a irregular basis – and probably also know how much they are going to get paid – unless they have variable hours, worked a lot of overtime, or just received a raise.

This predictability is very good for you and your family.  It all boils down to the fundamental personal finance equation I talked about in Budgeting Basics: Budgets Matter -

Money Earned – Money Spent = Money Saved + Money Given

Predictability in the Money Earned variable in this equation means that by manipulating the Money Spent variable you can increase the sum of the equation.  A quick example – if I know that I make $100 a month, I know that I have to keep my spending under $100 if I am going to be able to save or give any money away.  Without this relative consistency, I can become uncertain about the future and miss out on opportunities to save or give.  Knowing my income helps give me a framework within which to create spending, saving, and giving goals that are meaningful and actionable.

After all, it is really hard to see where your money is going to go if you don’t know anything about how much money you have.

How To Create An Income Tracking Spreadsheet

I recommend watching the video in HD

In the video I explain all the steps that I have outlined below.  If you like to see examples, watch the video.  If you just want the gist, read my outline.

1. Open your spreadsheet application of choice.  For most this means Microsoft Excel – but for those cheapskates out there (like me) you can get free productivity software that includes a spreadsheet editor from Open Office or Lotus Symphony.  I use Open Office but am interested in checking Lotus out.
2. Title your sheet “Income”.  In Excel you do this by double clicking on the sheet tab on the bottom of the window.  In Open Office you need to right click on the sheet tab.
3. Create a title for the table you are about to create. I like to give my tables some space from the top of the spreadsheet. Enter your title in B4. Bold the title and make it a larger font so that it stands out. I like size 14 font.
4. Give your table some meaningful headings.  I like to use the following headers for my columns.  These aren’t necessary, but I find them useful:
   • Date – This is the date that the funds were handed over to your family
   • Source – Who did the handing over of the funds
   • Amount – The amount of money that was handed over to your family
   • Who Earned It – Who in your family earned the money
   • Type – If you only have one source of income, this really isn’t that important.  But if you want to track things like interest income, second job income, internet income, dividends, rental income, etc than this column could be a source of some pretty useful information.

   You really only need as many columns as the information that you want to track. In my family’s case, I wanted to see the breakdown between my wife’s and my income because we had a goal to be saving the entire sum of her paycheck when she was working. You could have two columns or you could have fifty. Do what feels best for you.

   I would do these on Row 5 starting in Column B.

5. Add some borders to give your eyes focus.  Borders are not necessary, but they do provide some structure to the page and help give your eyes boundaries to look at.  They also help provide a termination point for your table, which is important for step 6 found below.  I like to have a border box around the whole table, the table title, and each column heading (date, source, amount, who earned, type, etc.).  Then I like to have a border separating each column in the table from the other columns.  Add borders as you see fit.
6. Create a Total cell at the bottom of your table.  At the bottom of your Amount column (if you are following my pattern this will be in somewhere in column D) enter a SUM function.  You can do this by:
   • Selecting the cell that you want the sum to appear in
   • Type =sum(
   • Highlighting with your mouse all the cells in the Amount column
   • Typing )
   • Hit the ‘enter’ key

   Then in the cell just to the right of the sum type the words Total. You can bold this text if you want.

When all is said and done, you should have a spreadsheet that looks something like this:

Click Image To Enlarge

If you aren’t feeling adventurous and just want me to give you a spreadsheet to download, you can download the Excel version of the income tracker or you can download the Open Document version of the income tracker.

~0O0~

There are plenty of things that you could do to add a custom feel to your income tracking spreadsheet.  My wife would probably change the font to something “pretty” and might spruce up the screen is some splashes of color.  I prefer the Spartan feel of blank cells and white space on my budgeting spreadsheets, at least on the simple ones like this.  Feel free to modify as you see fit.

If you send me a picture or a copy of the file I’ll be sure to post the picture here for others to see.  Budget on!

• Budget Hack: SUMIF To The Rescue
• Budgeting Basics: An Expense Tracker That Works
• 2008 Goal Update: Challenge-ify or Die
• Budgeting Basics: Budgets Matter
• 2008 Financial Goal Recap

I, however, was not aware of this when at around 9 AM I attempted to log in to my account only to be accosted by the following ambiguous announcement:

Unable to verify identity

Being at work, I was forced to wait until noon to call the customer service number to figure out what the heck was going on. During the call I was asked 50 million verification questions (some of which I couldn’t answer! – like the name of my employer listed on the account).  Having to answer so many questions did make me feel at ease – I pretty much know for a fact that since I couldn’t even answer some of them somebody who wasn’t me had no chance of answering them.

After the fraud representative was sufficiently satisfied with the fact that I was the actual owner of the account, she filled me in on the two log in issue that froze my account.  I do sometimes log in at work and at home (even on the same day) so this was my initial thought about what might have happened.  The rep seemed shocked that I couldn’t remember for certain if this was the case.  “It was only a few days ago,” she said.  Here incredulity cut through the receiver like a dagger aimed at my masculinity.  Luckily, I don’t care that I don’t remember stuff like and the blade bounced safely into oblivion.

To try and rattle my memory she asked me who my internet providers where at the locations that I normally log in at.  “Umm,” I searched frantically in my mind for knowledge I didn’t have.  “I couldn’t tell you who my internet provider at work is.”  My calmness and composure seemed to annoy the rep like honey on the face of a hiker buried up to his neck in sand, an ant hill just a few feet away.  She was well trained, firing back by asking the same question a dozen times with only slight variation in an equally calm and professional tone.

After we danced back and forth for 5 minutes about how I was brain dead for not being able to remember what happened on Tuesday I put an end to the Spanish Inquisition, which I didn’t expect (but who does)  and for which I was grateful for.  “So let’s say that my account was compromised, what do I do?”

She outlined several steps that can be summed up as the following: go to your local branch, they will sort this out for you.  I obeyed and went into my banks brick and mortar establishment.  There, through my ability to look at computer screens and read information, came to understand that the bank had also locked all debits to my accounts made electronically.  Words in all CAPS are easy to read from 4 feet.  This also made me feel safe – my money was in good hands.

The nice man behind the desk opened a new account for me, kept enough cash in my old accounts to handle an outstanding check, and was generally friendly and amenable.  Within 20 minutes the vast majority of my cash was in a new, uncompromised checking account.

My Online Banking Takeaway

It is very useful that a bank puts a serious kibosh on fund transfers once they think an account has been compromised.  I think this is fantastic and it makes me feel like my money is safe.

Remembering things about your life is harder than I thought, especially when I don’t really think too much about odd details.

It is totally time to get a new online savings account.  My banks rates were already pretty crappy (1.5% APY) and now that I don’t have the account anymore I need to find another place for ~$28,000 in cash.

I am completely impervious and highly in tune to the veiled barbs of customer service reps.  This skill has to be useful in some type of money making sort of way.  Maybe I could become some sort of consultant or something.

~o0o~

I wrote a few notes on Twitter documenting my experience.

• Online Savings Account or Budgeting Series – Which Should I Write?
• My Hard Selling Indian Friend
• Can I Make Money Online?
• Dollar Cost Averaging Criticism: High Transaction Costs
• My Family Is Moving!

Money Earned – Money Spent = Money Saved + Money Given

Everything about personal finance boils down to this.  All the talk about debt, credit cards, 401(k)s, IRAs, investing, stocks, bonds, asset allocation, mutual funds, frugality, simple living, DIY, budgeting, high-yield savings accounts, and additional income has as its goal the enlargement of this sum.  It is an unavoidable necessity.

Some of these topics attempt to generate more money - like investing – while others seek to reduce expenses - like frugality.  I think both are incredibly useful, but it is my belief that those who can reduce the amount of money that they spend have a long term advantage over those that simply focus on earning more and more money.

A case in point: eating.  Once you learn to eat on under $2  a day (reduce expenses) you experience a cost reduction that can be life long.  A reduction of food costs from $4 to $2 a day will reduce the lifetime expense on food for a 26 year old male by $54,020.¹   I would need to earn an average of $1350.50 more over each year of my working life (up to age 66) to make up the difference.

Alternatively,  if I were to cut the costs from $4 to $2 a day and I were to earn that additional $1350.50 each year I would see an net swing in my available cash of $2810.50 (the $1460 saved on food expenses plus the $1350.50 earned).  Over a 40 year period of doing this I would see a nice tidy sum of $218,272.73 – assume a 3% rate of return per year. This sum would feed 299 people for a single year!  Obviously earning more and cutting costs is much, much better than just doing one or the other.

To me, budgeting is a way to give yourself this “both, and” perspective that is so important to the financial equation of our lives.  We need to focus on both our income and our expenses so that we can maximize savings and the amount of things we can do to improve the collective condition of humanity.

Budgets only really matter because they help us maximize the use of our money.  Budgeting for budgeting’s sake will never satisfy you or make tracking your income and expenses anything other than a chore that you want to avoid.  It is only when we see budgeting as a tool that helps us do something great will we ever take budgeting seriously.

Increasing earnings and reducing spending is good for you and good for others.  This is a mighty bold claim – but I really, really believe it. ²  A life that primarily seeks the earn more to spend more (consumerism) is an empty and shallow life by any serious/coherent worldview.  Instead, we³ should view our ability to create wealth for adding little-to-no objective value to the universe as a great privileged by which we can add real, objective value to the universe by alleviating suffering and promoting social justice.

Budgets, though simple and extremely personal, can have a large impact on the common good.  Budgeting is not the only financial tool that can be used to acheive the ends of greater savings and greater giving, but it is a useful tool for many people who want to become much more concious of their financial habits.

1. Assuming a life expectancy of 100 years and relatively constant food prices – this is assuming a lot!
2. Just because I believe it doesn’t make it necessarily true, I am just saying it because I want readers to know that I don’t just think it but I order my life and my actions that way.  I do it imperfectly, but I do do it.
3. We – meaning the vast majority of Americans who make lots of money doing silly things like marketing, entertaining, pencil pushing, silly widget making, politicking, etc

• Budgeting: A Guide to Sanity and Wisdom
• Budgeting Basics: Income Tracker
• 2008 Financial Goal Recap
• My Family’s Money Is Back
• October 2008 Budget: Back in the Black