The Working Dollar

What Would You Do?

noreply@blogger.com (Todd) — Wed, 14 May 2008 15:35:00 +0000

I know its been a very long time since I posted an article. In fact, I probably have no more readers for this blog at all. However, I wanted to throw a question out there and see what type of responses I get.

If you were working in a place that was making you absolutely miserable, to the point of where it was becoming unhealthy mentally and physically, but you had no other job to go to, what would you do? Would you quit and run attempt to look for another job? Would you stick it out and suffer while looking for another job? What would you do?

This issue has been coming up quite frequently in conversations I have had, life situations, etc. I know what I would do, but I am curious as to what everyone reading this would actually do. I know these circumstances are brief, and you can add your own conditions in your response (i.e. If I had money saved I would . . ., etc.) How would you handle this type of situation?

Welcome GRS Readers!

noreply@blogger.com (Todd) — Wed, 23 Apr 2008 05:05:00 +0000

To those of you who are "Get Rich Slowly" blog readers, let me welcome you to my blog. Feel free to browse around the site and look in the archives area for various articles.

I have posted a series on how my wife and I actually paid off $97,028 in various debts instead of filing for bankruptcy. The series begins here, and continues here, here, and here.

I also have a series on getting the most out of your 401(k) plan which you can find in the January archives.

I am currntly licensed as a retirement specialist and work for one of the largest Investment Firms in the country. You can read more about my background and who I am in the "Allow Me to Introduce Myself" section. My current job has me undergoing another licensing program so I have been unable to post as much as I would like to, but still manage to get a post or two out during a typical week (or two).

Once again, feel free to browse around . . . I hope you enjoy, and welcome!

Unexpected Expenses and Saving Money

noreply@blogger.com (Todd) — Tue, 15 Apr 2008 15:50:00 +0000

Over the weekend my sister came into to town. I have seen my sister twice in two years. She lives in Minnesota so it can be tough for us to travel to her, or for her to travel to us. So seeing her is always special since I do not get to very often.

We met with my Dad and one of his friends and business associates for lunch at a place called Houston's in North Dallas. Houston's can be pretty pricy. I paid $14.00 for a club sandwich (even though they have the best club sandwhiches I have ever eaten). So I covered my sister, my wife and my meal and the total for this was $63.00 after tips. To me, this is a pretty pricy lunch.

Moreover, every paycheck I receive, I put 7% of it into my 401(k) plan and 10% in my high interest savings account at HSBC, for a total of 17%. I get paid weekly, so this amount tends to cut my paycheck down quite low.

I do not have an "unexpected" expense savings, other than my emergency savings, which technically is used for emergencies. So I had to use my budget money to pay for our meal with really sets me back on my expenses (i.e. being able to cover all my bills).

My budget is set so that every other week my bills get paid, and every other opposite week, those checks are open to either save from or use as "left over" to add to the next week's pay (if all that makes sense). This past week was a week where I had to cover bills so my "left over" was simply not there. This really puts me into financial "worry mode." So I was forced to pull out of my emergency fund to cover the costs.

There were other unexpected expenses that were included in this week that I have not mentioned here, so keep in mind that this one eating out event was not that detrimental, it was the other unexpected expenses added to this one that put me over the top. Space and time simply does not allow me to post all the extra expenses.

This makes me wonder if I should start a small savings for "unexpected" expenses, at least until I have several other credit cards paid off giving me more breating room in my budget.

Does anyone out there have any thoughts on this idea? Has anyone ever tried this? Please let me know your thoughts.

Forced to Slow Down

noreply@blogger.com (Todd) — Thu, 10 Apr 2008 03:45:00 +0000

I hate to say this, but my work has actually demanded more from me which causes me to have less time to blog. Therefore, my post frequency will be very eratic and sparse from this point forth until on or around June the 18th.

I will continue to try and post articles as much as possible, but the daily posts will be reduced to a few posts here and there. Feel free to continue to subscribe - for those of you who do, and I'll continue to try to post as much as I can over the next three months.

I enjoy posting, blogging and being able to share my knowledge, so I refuse to give up the blog. Things should pick up by June if not earlier. Thanks for hanging in there with me and I wish everyone financial success.

Family Fights Bank to Keep Their Home

noreply@blogger.com (Todd) — Tue, 08 Apr 2008 05:15:00 +0000

Here is a video story about a family who was promised a particular mortgage and at closing was pressured into a completely different mortgage agreement which ultimately put them into forclosure. So instead of allowing the bank to take advantage of them, they fought back . . . and won!

This link will take you to the video - http://cosmos.bcst.yahoo.com/up/player/popup/?cl=7264243

It is rare for a family to win in a situation like this, but this couple did, and rightly so, considering how they were treated by the Process Server and the banking violations committed by their bank.

Notice the statistics at the beginning of the clip - 3 million mortgages will go into default and 2 million homeowners will lose their home (source on this stat is Moody's Economy). These numbers are staggering.

I do not doubt the stats since the majority of my work days over the past few months have been talking to people who are attempting to keep their mortgages from foreclosing and they are having to take from their retirement plans to do so.

With the impending possibility of a recession, and news from the Fed that they are worried that this may be a deeper and longer recession than anticipated, it is so crucial that we as consumers protect ourselves financially with emergency funds, less spending, more saving, and make wise financial decisions.

Death By Blogging

noreply@blogger.com (Todd) — Tue, 08 Apr 2008 05:15:00 +0000

While I enjoy blogging and do it out of love for writing and certainly not for the money, blogging one self to death is certainly not worth it, and I would quit before it ever came to that extreme. Below is a very interesting story pertaining to "blogging oneself to death." Read on for further details.

In Web World of 24/7 Stress, Writers Blog Till They Drop
By MATT RICHTEL
Published: April 6, 2008

SAN FRANCISCO — They work long hours, often to exhaustion. Many are paid by the piece — not garments, but blog posts. This is the digital-era sweatshop. You may know it by a different name: home.

A growing work force of home-office laborers and entrepreneurs, armed with computers and smartphones and wired to the hilt, are toiling under great physical and emotional stress created by the around-the-clock Internet economy that demands a constant stream of news and comment.

Of course, the bloggers can work elsewhere, and they profess a love of the nonstop action and perhaps the chance to create a global media outlet without a major up-front investment. At the same time, some are starting to wonder if something has gone very wrong. In the last few months, two among their ranks have died suddenly.

To read the rest of the article continue here.

When I was Born

noreply@blogger.com (Todd) — Mon, 07 Apr 2008 05:15:00 +0000

A few years ago at Christmas my mother-in-law gave me a Remember When . . . A Nostalgic Look Back in Time booklet for the year of my birth. Perhaps you have seen these before. They are pretty fun to look through. I was going through some old boxes this weekend in an attempt to spring clean and found it.

Each booklet details the main events which occurred in whatever year the booklet is written about. It shows pictures of original ads from magazines, it details items that were popular, interesting facts such as who was president, who won the Nobel Prize that year, NCAA Basketball champs, etc.

In the middle of the booklet there is a section called (Whatever Year) Cost of Living - for instance, I was born in 1965, so this page is titled 1965 Cost of Living. This is the section that really blows my mind, to be able to compare the difference between today's cost of living, and the cost of living back then. There is a fairly large difference—the result is, of course, inflation.

Here is how the cost of living breaks down for the year of my birth:

New House—$13,600 (Sheeesh! I could by three houses in one year and still have money left over if that were the cost of house today)

Average Income—$6,469 (Does this seem pretty high compared to the price of a home? I guess not since that breaks down to $539.08 per month)

New Car—$2,614

Average Rent—$118.00 per month

Tuition to Harvard University—$1,760.00 per year (Boy has this changed quite a bit compared to today's cost)

Movie Ticket—$1.25

Gasoline—.31 cents per gallon (I can remember my grandfather, who used to run a gas station back in the 60's, telling my brother in the 70's that if you pay more than one dollar for a gallon of gas you are getting ripped off - he must be spinning in his grave at today's gas price)

United States Postage Stamp—.05 cents each

It amazes me at how big a difference there is between the cost of living back then—43 years ago—and today. I'm amazed how inflation has grown so rapidly since then. This certainly makes me re-think my retirement and what inflation might be like when I'm 65 or 70. What will the cost of living be like then?

BTW—I was born in the same year as Charlie Sheen, Will Smith, and Robert Downey Jr.; I bet they are not nearly as concerned about this inflation issue as I am. :-)

Frugal Friday: Back to the Basics

noreply@blogger.com (Todd) — Fri, 04 Apr 2008 15:00:00 +0000

What is frugality? Why is it important? How does it help? If we cannot answer these basic questions with a good understanding of the answers, then we might end up in financial trouble.

My older brother was always frugal, from as far back as I can remember, he saved his money. Moreover, whenever he made a purchase, he researched what he was purchasing, considered the cost, shopped around to get the best price, and then made his decision. This drove me nuts. I was just the opposite. I emphasize ‘was’ since as of late (the past 6 years) I am trying to change my spending habits.

I have no idea where he got this frugality from since my mother, who was single, and raising three kids, was forced into frugality, but never taught us to be frugal. In fact my mother’s parents, and my mother, never saved their money, so where did my brother learn this?

A few months back my brother and I were on a road trip to our hometown and I asked him how he developed this habit. “What caused you to want to save your money?” He told me when we were kids, there was something he wanted really badly, but he could not buy it because he did not have the money. So he saved all his money when he either earned it, or when he was given money as a gift. He told me that alone gave him an understanding of how to manage his money, and taught him to save until he could afford what he wanted. Later in life, he told me, this actually helped him to realize that it was better to save money and spend what you had instead of spend what you did not have and get into debt. I wished I could have learned that lesson sooner.

We were never taught that growing up. We were never taught that in school, neither my mother, nor my dad ever told me anything like that. In fact, looking back on my formative years, I was never taught anything about money. So frugality was a foreign concept. But the basic keys to being frugal are so important to everyone. In fact, the largest ingredient to wealth, for self made millionaires, is frugality—as is demonstrated in the book titled The Millionaire Next Door.

So what are the basic keys to frugality? There are four frugality keys, they are quite simple, and everyone can master them quite easily.

First, know the basics of your budget. How much do you make (what comes in) how much do you spend (what goes out). That’s it, plain and simple.

Second, get out of debt if you are in debt, or avoid debt if at all possible. How many times have we heard this in the personal finance blogsphere? But many of us are knee deep in debt. Why? Avoid debt!

Third, increase your savings. Save more money than you spend. Save a little here and a little there. No matter how you do it, just save money!

Fourth, live within your means. Do not spend more than you have. Only use what you have, when that is used—STOP!

Those are the four basic keys to a frugal life. These keys are so basic that little children can understand them. So why these four basic keys were never taught to us in schools simply blows my mind. But there they are, and its never too late to learn them and thus put them to use.

Simply put, anyone can master these basic keys. However, too many of us find it extremely difficult to do so. I know I did. But all that has changed now. Being frugal is getting much easier.

Are You Stressed?

noreply@blogger.com (Todd) — Thu, 03 Apr 2008 15:00:00 +0000

Have you noticed that finding the time to get away and take a vacation is not as easy as one might think? Do ever go 90 miles per hour on a daily basis and wish you could find some time to slow down and relax? I know I do.

Finding time is not the key to relaxation, making time is. My wife and I took a mini vacation during this past spring break and to be perfectly honest, it did me no good. We spent far too much time walking around, seeing things, doing things, and not enough of what I call "down time." For me, down time is necessary. This is the time when I do nothing but read, watch a movie, lay around, sit outside and enjoy the breezes, sunshine, etc. This is relaxation for me.

Too often we take vacations and they are so packed full of things to do that we are really not "vacating." At least I know that's the case for me. While it is fun to go places and not have to "work", it is actually work to go places and pack my entire day with activities while I'm away.

Don't misunderstand me, I enjoy a fun packed day with lots of activities, but down time is necessary as well. That being the case, here are a few things I have done for my down time to help me relieve the stress of my day.

Take a walk. Not a fast walk like your trying to exercise, just a simple stroll in the park. Take a relaxing walk, away from all the hustle and bustle. If I am able I know several places around my hometown where I can walk and there is no one around for miles. This is a nice walk for me.
Start a journal. I have several journals that I have written in since 1995. This helps me to take my mind of the business of everyday life and reflect.
Rent a very funny movie. Laughter is good medicine, so find a funny movie, sit down with some snacks, relax, kick back, and laugh!
Time travel. Believe it or not we can do this. Get all your old photos out and take a few hours and slowly look through them. When I do this it takes me back. I'll spend time looking at the pictures and remembering the past, the good times I once had.
Take a bath. This can be very relaxing, especially if you take a hot bath when the weather outside is cold. Sit back and soak in the hot water.
Volunteer. This is the one activity that is an exception to my "down time" activities. However, I must confess that when I am helping other people, it is down time for me because it makes me forget about ME and causes me to focus on others. By doing this, I forget about what has caused me stress, and the stress goes away.
Listen to music. This is one of the most relaxing things I do. I will go into my office, put up the 'do not disturb' sign on the door, and listen to music for several hours while I read, write, or simply sit back, listen, and relax.

So what do you do to relax. What "down time" activities do you participate in? Above are a few that have worked for me. The important thing is that we make time to relax. Realxation is crucial in this life. Also, if you will notice, all the activities for relaxation above are free!

Simplify

noreply@blogger.com (Todd) — Wed, 02 Apr 2008 15:15:00 +0000

If I were to collectively take all the years I have worked in the corporate world and add them up the total years would be around 12. Going a step further, if I were to collectively take all the jobs I have ever done which I did not enjoy and add them up . . . well, I can only think of three jobs I have ever done that I really enjoyed.

My point is that in my life I have failed to find work that I love and it has really worn me out. A job, which was really not a job to me, that I enjoyed most, was being a business owner. I actually owned a collectible record (turn table record – music) shop from 1985 to 1988. I loved this experience, it was great fun! This is the way a job should be. The movie High Fidelity, a movie I thoroughly enjoy, reminds me of when I owned Backtracks (the name of my shop).

Life is way too short to not enjoy work. Especially since work is 8 to 10 hours of our day 5 to 6 (for some 7) days a week. That being the case, I have been working toward simplification.

I have spent the last few years really evaluating my life, my possessions, what I need and what I do not need. Building a “spreadsheet” in my mind of what I can do without that I currently have, how I can best get my money back for it, and how I can best invest that money when I get it. My intent in doing all this is to escape the corporate world. That’s right, I want out! I am working toward saving enough to exit stage left and move on to something more enjoyable. Simplify!

My wife really wants us to start a business, and I have been saving toward that end. But more importantly I want to simplify. Make things less financially complicated in my life. Eliminate all my debt (including mortgage) and have only the essential bills such utilities, minimal cable, and phone, along with necessary insurance. Simplify!

I do not want to commute an hour one way to work and an hour back, as I currently do. I do not want to have to worry about whether I am going to get my debt paid in a timely fashion, or wonder if I am going to have to work over time to make ends meet. Simplify. I’m tired of the rat race.

I have already decided, and believe me this was a very tough decision, to actually sell half my library collection. I have about 3000 to 3500 books in my current collection. However, the fact that this decision was so difficult is not necessarily good. It is reminiscent of Edward Norton’s line from the movie Fight Club, “The things you own end up owning you.” I should not be owned by my possessions.

So being able to “let go” of possessions is something I am currently working on in my life to help me simply. Evaluating questions such as “What do I really need?” or “Do I really have to have this thing?” These are things that are forefront in my mind. I want to make life less cluttered. I want to simplify.

Using the Emergency Fund

noreply@blogger.com (Todd) — Tue, 01 Apr 2008 13:45:00 +0000

The other day one of our cars broke down and we had to tap into our emergency fund. This was so difficult for me to do. Between puting money into a high interest savings, putting money into my 401(k), and putting money into my emergency fund, it has made saving at the rate I want to save much slower.

I had got the emergency fund to around $960.00 in about 4 months simply by putting a little bit in at a time on a weekly basis. The car cost us $543.00 to fix - it had overheated due to the radiator, the coolant system, and they had to completely flush and clean everything out. Basically the heater stopped working and the car overheated.

So I relunctantly gave the mechanic the money I had saved and realized this was going to set us back in our emergency fund by more than half. Aaarrgg!!!

In reality I should have been happy that I had the money and that I did not have to put the car repairs on a credit card. Something we have done way too often in the past. So we are back to square one, well, back to square one and a half since we did not use the entire amount, in our emergency fund. :-)

Lessoned learned: having the emergency fund was crucial. An emergency came up, we needed the money, we did not get further into debt to cover the repair of the car, and over a bit of time we can replace what we spent.

Working All Day Thing

noreply@blogger.com (Todd) — Tue, 01 Apr 2008 04:00:00 +0000

One of my fellow co-workers who sits directly behind me toward the end of work tonight turned to me and made a very funny remark. She declared in a loud sarcastic tone, "This whole working all day thing is really overrated."

It had been a very long day and I could not help but laugh. That was a nice tension breaker and I really needed the laugh!

Conditioned to Buy

noreply@blogger.com (Todd) — Sun, 30 Mar 2008 05:05:00 +0000

If someone called you a “lab rat” you would probably either find the comment very bizarre or be insulted. However, in the test marketing world the consumer is a type of “lab rat.” Like scientists in a lab doing experiments on rats, we are being tested by the various companies trying to sell us their product. I know this because I used to be a test market representative for AT&T.

The way test marketing works is a three step process. First, the company finds a product or an idea it wants to sell. Second, it tests the product or idea in various markets, or areas of the country to see how we respond. This testing finds out what we like, what we do not like, our comments about the new product, whether we are willing to purchase or grab hold of the idea, and how the company can most effectively make us want to purchase the product. Third, after a certain time frame of testing, the product is launched. When it is launched the company’s marketing department builds advertising campaigns to make us believe we need this product; to "brand" it not only in the market but in our minds.

Through all this, we are conditioned to buy. This conditioning is performed or better yet instilled in the consumer mind in a very subtle fashion to get the consumer to think they need the product. If you think I’m exaggerating, just think about this. 25 years ago, computers were not present in households, cell phones were not common at all, and microwave ovens were just entering into the average home. Did we really need these things back then? Do we need them now? We survived just fine without them, 25 years ago.

Certainly these things may make life a little easier or more convenient, but do we really need them? We think we do because we are conditioned to think that we need them. Once we buy them based on this "need", and we continue to use them, we really do need them. That is how marketing works. Create a product to sell and market it in such a way as to make the consumer think he/she needs it.

I do not say this to say that we should not own cell phones, computers, or microwave ovens. I’m not trying to debunk these things, I’m simply trying to prove a point that market departments in all the major companies (and even the smaller ones for that matter) are in the mode of "condition the customer to buy.” This is done by making us think we need their product.

When we are conditioned to buy and we do not have money this is when we get into unnecessary debt. The need is there but the funds are not, so the credit card companies have latched hold of this and told us that we can have all these things in life because “Life Takes Visa.” So if you do not have the money, that’s alright, you can still get the things you need, just pay for it little by little (with interest, of course).

What we tend to lack as consumers is self control. Lack of self control coupled with the marketing message that we need certain items equals consumer debt. This is how many of us have put ourselves in such large credit card debt. We are bombarded with advertising telling us we need this new thing or that new thing, and if we do not have the cash to buy all these new things, then we can certainly put it on our credit card.

According to Yankelovich, a marketing research company, “The average urban dwelling American sees up to 5,000 advertising ‘messages’—from T-shirts to billboards—every day. That compares with 2,000 thirty years ago.” Up to 5000 ads per day are telling us what we need. This is an overwhelming number of ads on a daily basis. This is how we are “conditioned to buy.” And this is done from the time we are born to the time we die.

It is a trend that has been going on for years. Notice Yankelovich declared that thirty years ago we were seeing up to 2,000 ads. That number is still pretty staggering. However, we can break this cycle. By recognizing and realizing that we are being conditioned to buy, we can fight back. Here are several ways you can break the cycle:

When you are tempted to buy, force yourself to wait at least 24 to 48 hours before you make a purchase. It does not matter if "the sale is going to end soon," wait. The item will go on sale again. If after 24 to 48 hours you still think you “need” the item, then buy it. Often when we wait this does several things. First, it decreases those urges to impulse buy, and second it gets us to think about what we are doing and not do something based on our emotional response. The emotional response is what the marketing people are wanting to capitalize upon, so wait.

Ask yourself out loud, “Do I really need this?” Be honest with yourself. In all reality, most of what we have we really do not need. In fact, the only things in this life we really need are clothes, food, shelter and transportation. So stop and ask yourself if you really need this item. If you do not think you do, then wait 24 to 48 hours to purchase. Give yourself some time to think it over.

Another thing you can do, and I have done thing before, is simply walk away from the item. Peel yourself away. As soon as you get out of sight from the item, after a while, you should eventually stop thinking about it. You can also make sure someone is with you to actually pull you away from the item. My wife has done this for me several times. At first it’s annoying, but once I’m away from the item I realize it was best to get away.

Breaking the buy cycle (the cycle of being conditioned to buy) was very hard for me but after six years of being in debt up to my eye-balls it has become so much easier; until it is now a habit to walk away, or be able to put down the item and realize I simply do not need it. It took a lot of effort and hard work, but it is well worth being able to say, “You know, I really do not need that right now.”

Frugal Friday: Date Night and Saving Money

noreply@blogger.com (Todd) — Fri, 28 Mar 2008 13:55:00 +0000

After twelve years of marriage, my wife and I still have a weekly date night. Date night is a time for us to be creative. We have gone to sporting events, out to eat, theatre productions, walked around downtown Fort Worth, and even traveled for that one day.

When it comes to date night, because of our previous debt of $97,028, we have learned how to be frugal. This is especially true when we go to a restaurant. We have learned how to save money when we go out to eat, mainly because we were forced to while we were at the height of our debt.

Whenever we would go out and eat for date night here are the things we would do to save money:

Order water instead of tea or soda

Split or share a single large meal (my wife does not eat a lot so it is easy for us to do this)

Order the meal for take out, bring it home and eat it while watching a movie (this saves on having to tip)

Do not order dessert, eat something later at the house.

Take leftovers home and turn one meal into two.

Eat at less expensive places or places where you do not have to tip.

This is how we have saved money by eating out during date night. Even though we do not have to use these frugal actions any longer, we still do, and I'm glad we do since it is a good habit to get into.

How do you save money when you eat at a restaurant? Share some of your ideas here.

Know Your 401(k)

noreply@blogger.com (Todd) — Thu, 27 Mar 2008 14:10:00 +0000

If your company offers you a 401(k) plan and you decide to participate - which you really should if they offer one - make sure you have a good understanding of the rules of the plan, the investment options that are available for you, and how much you are able to contribute to the 401(k) plan. So many people I talk to on a daily basis who are getting enrolled into their 401(k) tell me they have no idea "how this thing works."

401(k) plans really are not rocket science. They may look complicated, and they may seem daunting, but there are only a few things anyone really needs to know to be a knowledgeable participant.

First, make sure you understand the rules of the plan. Understand the simple rules like hardships availability if you are in a financial emergency. What are the contribution limits for each year you participate in the plan, how do you change your address if you move, what options are available for you if you leave your current company and want to move your 401(k) plan to your new company's plan, etc.

As for the actual plan rules, your company must discolse those to you. That being the case, you can either get those rules through your company - they should provide you with a 401(k) enrollment kit or guide - or you can get this information from the financial institution that record keeps the plan.

Second, understand your investment options. If you are going to be putting thousands upon thousands of dollars into your 401(k) plan, then it is extremely beneficial for you as an investor to gain a fairly good grasp of what to invest in within the family of funds provided.

There are several ways you can investigate your availalbe funds. First, find out from the financial institution who record keeps the plan if they have a web site you can go to in order to research the funds available in your 401(k) plan. Second, if they do not have a web site detailing all the funds, then ask them to send you a prospectus on every fund that is available in the 401(k) plan.

If you have to go the prospectus route, make sure you take to the time to read the necessary information provided in each prospectus. Reading prospectuses is not too complicated even though when you get them they look like a foreign language text book.

Third, examine your budget to determine how much you are able to contribute. Suprisingly, this percentage will be larger than you think since the contributions you make are pre-tax. Because 401(k) plans are pre-tax investment vehicles, this means that the money you contribute will really not cut into your paycheck as much as you might think.

Other important features of your 401(k) plan you will want to investigate include company match. How much, if at all, does your company match your contributions. Also, while I myself am opposed to this option, sometimes it can be necessary so make sure you find out if loan options are available.

Basically, the more you understand your 401(k) plan, the better it will be able to work for you. I am convinced that most people are simply too lazy to take the time to find out how their plan works, or perhaps they are too scared or daunted by the plan. If you are going to contribute your hard earned money and intend to have enough at the time you retire, then taking responsibility to find out a few basic features about your 401(k) plan can only benefit you in the long run.

Around the Traps

noreply@blogger.com (Todd) — Wed, 26 Mar 2008 14:45:00 +0000

There is quite a bit going on in the personal finance blogsphere. Here are a few of the better articles I have read in the last few days.

Jeremy at Generastion X Finance has an article titled Is Generation X Responsible for the Real Estate and Mortgage Problems? He is responding to an article he read at ABC News that discusses the current housing crisis and how it effects various types of families.

Millionaire Mommy Next Door has a good article titled How I Make Money Following the Herd: The Trend is My Friend. She discusses her views of "the Herd" with respect to investing, and lays out various types of investing strategies such as market timing, buy and hold, index investing, etc.

The Digerati Life has a familiar article titled Survive a Recession, Think Long Term (sound familiar?) This is a good article on how to ride out a recession. There are a few more details than my article below on what to do with your investments during a recession and what type of attitude we should have during a recession.

At My Monet Blog there is a great "ask the readers" question posted. The question is Can A Pet Cost Too Much To Keep Alive? This actually hits home with me since I have had several pets that cost me an arm and a leg toward the end of their lives.

Frugal Dad has a good article titled The Difference in Being Frugal, and Being Cheap. "What is the first word that comes to mind when I say the word frugal. Cheap? If so, you are not alone."

To Worry or Not To Worry: Recession

noreply@blogger.com (Todd) — Mon, 24 Mar 2008 14:35:00 +0000

We are not in a recession, yet. Do not let the media scare you into thinking recession is already here. The media simply needs something to talk about; so all the hype and cry of recession is just them spinning their wheels.

So what is recession and when does it occur? Periods of economic expansion are historically followed by periods of economic decline (or what economists call contractions). This pattern is actually known as the business cycle and it goes through four stages: expansion, peak, contraction, and trough then repeat.

Downturns in the business cycle tend to be characterized by higher consumer debt; a rising number of bankruptcies (i.e. the current housing market), bearish stock markets (markets that fall), money loses its buying power, and increased unemployment. Of course there are other smaller factors such as rising inventory, which means that retail places are in a downturn from buyers not buying, decreasing gross domestic product (GDP), etc.

Looking at the above list, it certainly seems like we are in a recession. However, one of the strongest factors, along with a bearish market, decrease in dollar value, and high number of bankruptcies, is that unemployment must be increasing for at least two complete quarters (6 months). The unemployment rate increased for the first time in a long time the last quarter of 2007. This means that we have to wait until the end of the first quarter of 2008 (the beginning of April) to find out if it is still increasing. According to current trends, this actually seems like it will be the case.

Even if unemployment rises this first quarter of 2008 and we move into a recession, should we be worried and what can we do to protect ourselves? Keep in mind that recessions typically (or better yet, historically) occur every 5 to 7 years. The interesting thing about a possible recession this time around is that we have not had one in just over 7 years. Many economists have been declaring that recession is eminent for the last three years, and we never entered into one. They were basing their claims upon historical data and trends.

The strength of a recession is probably the most important thing to consider, with regard to recessions. We are nowhere near the type of recession that occurred in the late 70’s, when the dollar value plummeted, unemployment was in the double digits, and the energy crisis was on causing people to rush to the local gas station with news that our oil and gas supply would be gone in a matter of months (more media hype and spin). This was a strong recession and it lasted a few years.

Therefore, if we enter into a recession, that does not necessarily mean we should panic. Avoid listening to the media frenzy; once again, they just need something to talk about. So how can we prepare for recession? Well, as consumers, to protect ourselves there are several simple things we can do on a personal level.

First, save more money. I know the President, Congress, and the Fed wants us to get out there and spend, since they want to stimulate the economy (thus the stimulus checks we will be getting; and the activity with banks going on via the Fed, etc.), but saving is always good for consumers. We do not save enough, that is part of the reason why we are in the mess we are in. When consumers have money in savings, they tend to get into less debt. When consumers have no money saved, they tend to get into debt since they have no money to spend.

Second, keep your current job. Unless you have a new job already secured, then staying put is best in a recession. Keep in mind that one of the larger factors of recession is higher unemployment. Recession usually causes business to tighten up which can sometimes cause a decrease in the job market (job availability/lay-offs). So unless you have a secure position somewhere else, stay put.

Third, pay off your credit debt. Whether we are in a recession or not, this is always a good idea. But doing this while or before we enter into a recession is a good thing on a personal level and a national level. Decreases in consumer debt cause recession to be short lived. Keep in mind it is one of the factors of a downturn in the economy. Moreover, it frees us up financially for emergencies and other financial necessities when we have less or no debt.

Fourth, avoid making large purchases . . . unless. The reason I say this is that large purchases (automobiles, houses, etc.) tend to put the consumer into debt. However, I should point out that now is best time to buy a house, especially if you are a first time home buyer. Seems like a contradiction to 'do not make large purchases', but if the deal is right, take advantage – but consider the cost. In other words, with now being the best time to buy a home, make sure you are able to handle the purchase.

Find out how saving on little things can add up to a lot of cash

noreply@blogger.com (Todd) — Sat, 22 Mar 2008 05:05:00 +0000

Can you find extra money in your budget? This is a great video on saving. Much of what is discussed is true of many families here in the U.S. The experts in this video say that everyone can find some way to save money each month by watching eating habits, banking costs, home entertainment, etc.

Think of saving as a marathon and not a quick race. Over a long period of time the savings will compound, grow, and eventually bring wealth. See what ideas they have for you to save some extra money from month to month.

You can see the video clip here.

Frugal Friday: AT&T Gone, $50.00 Per Month Saved

noreply@blogger.com (Todd) — Fri, 21 Mar 2008 13:45:00 +0000

Well, I'm back in business and due to AT&T's major mistake on my account, I no longer use them for services on anything. I actually waited ten days for AT&T to fix their own error and they never could, so I ended up cancelling all their services (including the phone service) and went with Time Warner.

With internet, cable, and telephone service through Time Warner I now save just over $50.00 per month, and this was all due to a mistake on the part of AT&T. Hmmmm. Moreover, I get better service, have HD channels, and they supplied me with a DVR box. How is it that I never looked into Time Warner before.

We actually watched LOST last night in high definition. That's the first time I have ever seen a regular network program in high definition - it has always been too expensive to get high definition via AT&T or via Directv (the service we had prior to AT&T). During almost every commercial break I kept saying to my wife, "I can't believe we are watching this show in high definition and saving money on the service."

I do not think I would have shopped around if it were not for AT&T's mistake. Moral: Shop around for services it can often times pay off!

What a Fiasco

noreply@blogger.com (Todd) — Tue, 18 Mar 2008 20:10:00 +0000

Well, if you are wondering why I have not posted in a while, here's the story. I am writing this at our local Public Library. This past Friday I changed my services at AT&T - we use AT&T U-Verse for internet and cable. I downgraded the cable, and upgraded the internet services, and by doing so I saved about $15.00 per month on the bill.

Well, I was told by the AT&T representative that the changes would take place in about 24 to 48 hours. After that time frame, and nothing changed, I called back. Once again, I was told that the changes would take place within 24 to 48 hours. Four days later, things changed. My service was completely shut off. I called back to find out why I had no service at all and during the course of moving up the chain of command, I was told that the most unusual thing had happened.

Whenever the representative who initially took my order process the change, the system put my service in some kind of wierd "loop" and not only did it shut my service down, but it shut down quite a few others. So, if anyone out there is reading this and you have AT&T U-Verse for cable and/or internet and you have recently lost your service - it's not my fault!! ;-)

AT&T is suppose to have a rep back out to my house tomorrow - Wednesday, the 19th. So please be patient. Once they have my service back up I will be right back to my regular posting.

I would have written this earlier but we just got back into town from vacation and all of last week I have been sick, too sick to get up and go to the public library and post this after my serice went down. If AT&T gets this mess fixed, I'll be back online tomorrow and resume posts within the next few days. Cheers!

Do We Really Need 70 to 80 Percent of our Pre-retirement Income with Which to Retire?

noreply@blogger.com (Todd) — Thu, 13 Mar 2008 15:25:00 +0000

In the financial service industry it is quite common to throw around the phrase, “You should really have about 70 to 80 percent of your pre-retirement income for retirement.” In fact it is so common it has become conventional wisdom. However, has anyone ever thought to ask “Why 70 to 80 percent?”

Why is 70 to 80 percent the magic number? And is it really the amount a typical person needs? My answer to the last question is it depends on their circumstances. My answer to the first question is, it might be and it might not be. 70 to 80 percent of a person pre-retirement income may in fact be more than enough for a certain individual, and may not be close to enough for another.

So what determines how much a person really needs for retirement? The answer to this question is a complicated one since there are so many factors that determine the answer. Some of these factors include, how much debt will the person be in when they retire? Will they own their house or will they rent? If they own their house, will the mortgage be paid off? How much money will they have earned prior to retirement? What will inflation be like when they retire and how will that affect what they have saved?

These are just a few of the questions that the answers to actually play an important role in the amount of money an individual will need at the point of retirement. Other factors that should be considered during retirement include health insurance or health costs, how long will an individual live, what area of the country does the person live in or retire to (different areas have different costs of living expenses), will you work at all during your retirement years?, etc.

The point I’m trying to make is that while quoting a certain percentage may sound good, it’s only as good as what it takes into consideration when declared. Retirement is an individual matter, and every individual should consider the cost of what it will take to live on in retirement.

In the book Retire on Less Than You Think, author Fred Brock uses an example that was put forth by Money magazine columnist Jean Sherman Chatzky in the April 2003 issue. Chatzky details a hypothetical twenty-four year old who is earning $35,000 per year and making 10 percent contributions to his 401(k) plan. Chatzky assumes several factors. First, this individual will face a 3% annual inflation rate; second, a 6% annual increase in salary; third, an 8% return on his retirement from the 401(k) during his career; and fourth, a 5% annual return on his retirement from his 401(k) during his retirement years. Considering all the above, this person will be making about $150,000 per year at age 50 and have about $500,000 in his 401(k) plan. By age 59 ½ he will have 1.24 million in his 401(k) plan and be able to withdraw from the plan with no penalty.

Here is where the hypothetical situation becomes interestingly unusual. According to Brock’s description, Chatzky declares that this person will need $177,650 a year to retire. This is based on the typical conventional wisdom that we need 70 percent of our pre-retirement income to retire. This being the case, Chatzky concludes that this person’s money will last until he is 69 years of age. Her conclusion is this person should work longer and save more.

Brock details that he disagrees with Chalky’s conclusions and I agree with Brock. Brock declares that the one factor Chatzky failed to take into consideration was reducing expenses. I would go so far as to say that Chalky’s hypothesis is way to general to conclude in a definitive fashion that based on this person, 70 percent of his pre-retirement income is in fact what is needed. None of the questions I asked above are considered.

Moreover, to be perfectly honest, I could live off the interest of 1.24 million dollars and be quite comfortable doing so. I’m not saying I could do this now, which I could. No, I’m saying I could 25 years from now taking inflation and cost of living into account. This is why I say that for some 70 to 80 percent of their pre-retirement income would be more than enough, and for others it might not even come close.

When it is all said and done, what we need for retirement should be formulated around several factors that are relative to every individual. Meaning, each persons needs are different. These factors will include the answers to the questions above, so when you put pen to paper and calculate your retirement needs, be sure and cover every base. Ask the questions above, crunch the numbers based on the answer to these questions, and then calculate a figure. If that figure happens to be 70 to 80 percent of your pre-retirement income then so be it, if not, that’s ok too.

Service Tips for Your Car

noreply@blogger.com (Todd) — Wed, 12 Mar 2008 18:40:00 +0000

Cars are the worst investment purchases on the planet. At least 98% of all new and used automobiles purchased in the U.S. lose over 12% of their value as soon as we, the consumer, drive them off the lot after a purchase. This is terrible. To compound this problem, when a car reaches a certain age, if by then we have it paid off, it begins to break down and we end up putting money into the car to keep it in working order.

Granted there are several automobiles which last longer than others and require less maintenance than others, there are several things we can do as car owners to keep our cars in the best condition possible while we own them. The good thing is that we can do many of these things ourselves. However, it is also less expensive in the long run on the maintenance of our car even if we pay someone else to do these things for us.

Every 3,000 to 4,000 miles or 3 to 4 months, whichever comes sooner, make sure you do these things:

Change the engine oil and filter

Lubricate the chassis

Check the fluids and tire pressure

Check all the belts and hoses

Once a year or every 10,000 to 12,000 miles, whichever comes sooner, make sure you do these things:

Replace all the filters, including air and fuel filters

Rotate the tires (this helps save on gas mileage)

Have the breaks checked for wear

Tune up the ignition system, which includes changing the plugs and checking the rotor and rotor cap

Every 2 years or 20,000 miles, whichever comes sooner, make sure you do these things:

Have the brakes bled to renew the fluid and remove bad fluid from wear and tear

Flush and fill the cooling system. You can also add distilled water (the help prevent buildup) and coolant along with corrosion protection. This will help keep the engine running smoothly.

Replace the transmission fluid and filter (have your transmission checked for this service)

Replace the pollution control valve

Along with regular routine check-ups and performing the services above will add life to your car and save you money in the long run. As for the oil change, there are various opinions on this, but there is really no need to change the oil more than every 3000 to 4000 miles despite what the sticker says that is put on your windshield, especially if you are putting mainly highway miles on your car and not in the city miles.

Working on a New Look

noreply@blogger.com (Todd) — Wed, 12 Mar 2008 03:35:00 +0000

As you can see, I've been trying to tweek the "header" on my blog, but I'm too savvy with html code. One of my co-workers was kind enough to make for me an origami collared shirt out of a dollar bill. Thus, the "working dollar." So I have been trying to incorporate it here on the blog.

If anyone has a good knowledge of html code and/or you use blogger for your own blog then please tell me how I can put the the title and the sub-title of this header in the center without the html code actually showing up in the url code as well. I have also tried to make the sub-title type smaller and the actual header title larger (i.e. The Working Dollar) but have had no success.

Please let me know what you think - good or bad, you will not hurt my feeling if you tell me you do not like it. Thanks for your feedback.

CashCrate Really Works

noreply@blogger.com (Todd) — Tue, 11 Mar 2008 18:40:00 +0000

I first learned about CashCrate about two months ago. When I first signed up I had no idea what to think, and to be perfectly honest, I did not think it would actually pay me anything, or that I would spend an enormous amount of time on the site filling out hundreds of surveys and get paid maybe ten dollars.

Well, I was wrong, and it actually cost me in the long run. Let me explain. After about two weeks and somewhere around 17 surveys I had accumulated around $13.00 in my account. Now, granted that CashCrate claimed that their minimum payout was $10.00, I thought that they would probably pay out that minimum after I had filled out hundreds of surveys. Thinking this, I gave up after two weeks.

Just recently CashCrate sent me a check for $13.54. I was surprised to say the least. As I was opening up and reading the check, it dawned on me who it was from, when I saw the amount that confirmed the sender. I suddenly realized I made a silly mistake. Had I actually continued at the rate I was filling out surveys before I gave up, this check would probably be four times more than it was. Lessoned learned, but learned the hard way.

Needless to say I have gone back to CashCrate since receiving my check and I’ve started to fill out surveys again. However, this time I will continue to do so and see what size my next check will be.

If you are interested in making some extra cash then you can certainly do so at CashCrate. Their minimum payout is in fact $10.00 as soon as you reach that point in your account. However, after having filled out the first $10.00 worth of surveys/offers within the first two weeks, I can see how it could be quite easy to get two, three or even four times that amount within a month and not spend too much time doing so.

If, in fact, you are interested in earning some extra easy cash, then here is the link for you:

Going Back on Ebay

noreply@blogger.com (Todd) — Mon, 10 Mar 2008 14:35:00 +0000

I’m about to post a bunch of items on Ebay to help pay off the last portion of our credit card debt. So what I’ve been doing over the last few weeks is researching. It has been about 4 years since I posted anything on Ebay to sell, and I’m sure things have changed in that time.

Over the last few weeks I have been researching how other items which are similar to my own have faired. There are several things I have researched to prepare myself to post my items:

I have checked to find out what type of interest there has been recently on similar items to my own.

I have checked to see how those similar items have been posted, or presented, and how that has affected the sale of the item.

I have looked to see if pictures of the item make a big difference on the sale of the item, and found out that those items that actually have a picture, have sold at better bid prices than those that do not have a picture.

I have researched ways to present my item. I have looked at things such as the title of the auction, the way the item is described, the key words that need to be included in the description to get searcher to the item, the way the auctioned item looks on the listing page with all the other similar items.

Finally, I have looked around to see what starting bids have actually got bidders to take notice and bid. I have noticed that the lower the bid begins, the more likely the item will have bidders. This is the case as opposed to those items which have larger starting bids. I have also discovered that with low starting bids, many of those items ended up selling at a higher price than those items which began at a higher bid price.

I have considered all these things in an effort to get my feet wet again on the bidding and posting process at Ebay. Within the next few weeks I’ll be posting my items and seeing how I fair.

Has anyone out there ever posted items to sell on Ebay? If so, what worked for you?