Enjoy the holiday weekend!

Other good reading:

Bank of America $25 Bonus for Using Online Bill Pay
12 Tasks for Your Mid Year Financial Checkup
Save Your Money By Paying Yourself Last
The Price You Pay for Pride and Prejudice
Planning To Declare Financial Independence
Book Review and Giveaway: Happier
Happy Financial Independence Day
Wealth Creation: Is it a Myth?
The Pros and Cons of Joining a Local Food Co-op
Rule #3: Stop Wasting Time.
Detroit & the Recession: An Inside Look Part II

linklings, our land edition

One of the things I come back to again and again in my conversations with family, friends and colleagues is that there is no way to waste money on good health. Organic food can be pricey. A gym membership can be expensive compared to working out at home. Vitamins or medications can be burdensome. But if you can spend your money on one thing in this life, don’t let it be education, or your family, or your belongings. Spend it on health.

Warren Buffet is 78 and the second richest man on this blue dot. Do you think he’d be getting the accolades for wealth and investing acumen if he had died at 42? Maybe. Many rich people have died young. Many poor people have died old (and unlamented). Wealth and health have long been completely unrelated. I’m sure every one of us knows old poor people and young rich people, and the opposite, and many variations. But age has long been seen as a virtue, at least as valuable as wealth.

But the key question is: would you rather be old and moderately well to do, or die fabulously wealthy at a young age? I doubt many of us would wish to live a highroller lifestyle and die at 40 versus living a moderate middle-class lifestyle and dying at 80. Health is, in a sense, the ultimate prize.

If you consider a long life a valuable thing to pursue, it’s doubly amazing that so many people don’t bother. I pursued my career at the expense of my health for the best part of my twenties. I wasn’t thinking about life in my sixties – it was my money and I wanted it now. How many times have you told yourself that you’re just too busy at work to take some time to exercise?

I don’t exercise as much as I should. Four years ago I was running competitively, lifting weights 3-4 times per week and eating a 90% vegetarian diet – I was in the best shape of my life. But work, kids and life got in the way and I slid waaaaay back on the health scale. It’s easy to do, and if you’ve ever gotten in shape you know how simple it is to slide back. But that’s no excuse. Your health is the only thing – other than your mind – that you can control in this life.

Don’t neglect your health. I lost 100 pounds (actually a bit more) and it’s possible for anyone. Remember that your health is worth more than all the money in the world. Just ask someone who’s not healthy, and you’ll get a straight answer.

Photo by ~ggvic~

there is no cost to good health

If I was going to search deep within my (financial) soul I’d admit that most of my money decisions are based on fear. Fear’s a negative word, and I don’t think that in this case my decision making is always a negative process.  I am often quite happy with the result.  A great example has been my investing philosophy.  A little more than a year ago I got nervous about the direction the market was headed.  I took about a third of my retirement accounts’ total out of the market and put it into cash.  Good fear, right?  That chunk of my retirement savings would have been wiped out.

But after a year, I’ve only redeployed about a quarter of that third. You could make the argument – and I do, to myself – that holding onto cash is a defensive position.  Nothing about the current propped-up-through-stimulus-and-bailout money situation of the US economy should encourage a reasonable investor to get back in…should it?  Yet again and again we’ve seen these market drops come back.  So some of my reluctance is fear-based.

I’ve written about the reasons why I don’t talk about real estate investing. I said I don’t like “investing” in a primary residence, I don’t much about real estate or the business of real estate, and that the New York market – where I lived until recently – was too competitive.  I should have added that it usually seems like BIG chunks of money are needed for real estate investing.  Fear of investing in big chunks keeps me diversified in the stock market (index funds, right?) and keeps me afraid of real estate.

Fear of wasting money is good, certainly – but at least as far as investing goes, some fear and uncertainty are necessary to have any sort of reward. I’ve always dreaded a doomsday that seems unlikely to come – a final day with money and then a penniless dawn.  It could happen, of course – but with the ability to make more money (which I have) and good health (which I hope to continue to have) and a supportive family, it seems that I won’t face that doomsday.  So the fear is something more than trivial but also less than a doomsday event.

Does Warren Buffet fear loss? Probably not at this point – he’s old enough and seemingly content enough to be free of financial fear.  Does Bernie Madoff?  I guess now he will face his own doomsday now, and learn whether that fear should have been stronger.  How do you control fear of money?  Here are the things I try to do:

1. Remember that money is infinite. YOU may not have infinite amounts of money, but there is a lot of it out there, if you can just figure out how to get it.
2. You cannot anticipate every disaster, but you only need to anticipate one success. If you invest in a property, a billion things can go wrong – title problems, a fire, a sewage plant groundbreaking the day after you close, etc. etc.  You can’t prepare for everything.  Try to aim for success, not dodge failure.
3. Fear comes from you. Fear is not an externally-caused reaction.  Sure, we all get a jolt of adrenaline when we’re jumped by a cave bear, but you can control fear.  It’s not like being poked with a stick, where you have a reaction determined by nerves and muscle reflexes.  Fear is neurons firing off in your brain, and you can control your thoughts – they are the only thing in the world you CAN control.
4. Doomsday may come, true… but let fear of that day go. I do sometimes worry about all of my index funds and various other investments going to zero… but as I’ve often told my friends and family, if my retirement portfolio, invested in index funds that span the US market, goes to nil we’ve got bigger problems that worrying about retirement.  We’ll be reverting to a currency based on canned foods and shotgun shells.  Worry about your 401(k)’s fees, or your consumer debt with 21% interest rates – things you can do something about.  Don’t worry about the end of the world.  If the aliens come, you’re not prepared anyway.

Fear of money – worrying about its scarcity, or its disappearance – can cripple you from making more and even more importantly from enjoying life.

Photo by DownTown Pictures

fear of money

Poor Money Choices Ruined My Parents’ Life:  Yikes.  Not much positive here, except that she overcame her parents’ poor choices.

Start A Side Business in the Lazy Days of Summer:  Some excellent advice on starting a side hustle…and Why Everybody Needs A Side Hustle

• Worst Case Scenario – How Long Will Your Savings Last?
• Student Loan Rates Will Drop to All Time Low
• Interview With Mr. Credit Card On Personal Finance and Silicon Valley
• What Can You Expect to See on Your Credit Reports?
• This Seems Like a Bad Idea to Me
• Reader Question: I Don’t Have Much Savings So Can I Use Unused Credit as an Emergency Fund?

And a few interesting links from some blogs I haven’t linked to as often…

• What’s Wrong with The Millionaire Next Door:  Interesting take on a book I like, a lot.  I agree that it’s dry and drifts off into uninteresting areas – too much time wasted on the question of cars, for example.  Yet I find it’s a good book in terms of thinking about what a millionaire looks like, rather than what we might THINK a millionaire looks like.
• Emergency: This Book Could Save Your Life (Neil Strauss) – Review
• Two More Virtues of Owning a DogI’m not a dog person, but I’m always willing to listen to someone else’s opinion… I wouldn’t own a dog since that, on top of two toddlers, would seem like a terrible burden, but I understand why other people might enjoy having a dog.
• 3 Things that Could Cost You Your Dream House: It never hurts to be vigilant. Pay attention to the details.
• DIY: Getting Dirty with Square Foot Gardening: I aspire to gardening but we got to Florida a bit too late for planting anything this year, unfortunately.

Photo by Alan Light

linklings, michael jackson passed away edition

One of the things that you can – quite selfishly – enjoy about writing a blog is that it serves as an online diary for your own thoughts, hopes, opinions and ideas over time. When I started writing this blog two years ago (June 29, 2007, to be exact) I had no idea that the market was going to go belly-up for a while, that we would manage to sell our house for a (small) profit in the worst real estate environment in decades, and that I was going to be living in Florida with not one but two children.

Some of my articles about life in Jersey are strange to go back and look at:

• why I will not live in the northeast forever
• why is it called the Garden State?
• why my public library is not much of a money-saver

I have kept a journal, on and off, for about 13 years now. I can learn a lot about myself today by going back and looking at what was important to me years ago.  The blog serves the same purpose.  Emails do, too.  Writing freezes a minute in time, and by helping us understand where we came from it can often tell us where we are going.  Even pictures and videos capture your thoughts – what you took pictures of can tell a lot about what you were thinking.

I find one aspect of writing reassuring above all else. If I look back on my writing and journals and all of these records, several themes emerged (and again, I’m going back maybe 13 years in total).  A few of them were:

• I didn’t like – and don’t – working the 9 to 5 corporate employee lifestyle.
• I used to love, but grew sick of, business travel and travel in general.  Some joy disappeared after September 11th.
• I was tired of cold weather, long commutes and high costs of living – life in the Northeast.  I dreamed almost constantly of warmer weather – for health, for the sun, for the lifestyle.
• Success and increasing salary (in my corporate life) and rising consulting fees (in my contracting life) didn’t make me feel happier or that life was getting easier.
• I like reading, a lot, and have not done enough of it.  As the internet grew, my real reading dropped off.
• Getting married was a big change for someone like me who had clung to bachelorhood, but it was a minor change compared to having children.  People without children get sick of hearing this – I know I did – but everything about how I perceived the world changed when I had kids.  Not always positively, either – dangers that you hadn’t considered before you had children creep into your thoughts.

I made changes in all of these areas. I can see how I led myself there.  That’s a neat thing to see. If you don’t write, get started.  Even if you just keep a day planner, try to put some thoughts down every day (or three).  Nobody will ever understand you as well as you understand yourself, and keeping a record of how your thoughts evolve over time will become more and more fascinating the longer you write them down.

time travel writing

Have you ever bought a lottery ticket? Have you ever used a coupon? Have you ever incurred non-mortgage debt? If you haven’t ever, will you ever, just to try it? Just to see where it takes you?

I have some financial behavior that is set in stone. You do, too, I bet.  Me?  I hate debt of any sort. I can’t stand seeing money spent on “fancy” cars, even though I’ve owned several nice new mid-range cars. On the other hand, I am careless about spending money on eating out. I can spend money on big-ticket items if I think they benefit health or quality of living, but I agonize over spending smaller amounts on items I might not “need” – think “new shoes”, for example.

Most behavior is learned. Some is not. I know where I got the idea that money spent on “going out” was money well spent. I know where I got the idea that any money spent on books was money well spent, too. I also know why I think ANY debt is awful, and why I get antsy about buying expensive (but hopefully good quality clothes). Most of these behaviors were learned at a young age, and they fit in with the world view I developed as an adolescent and voila – now these money behaviors are part of what define me.

I often wonder if I will ever apply for a $300,000 small business loan, or splash out on a BMW. It’s easier to imagine the loan than the car, I guess. I drive an almost 10-year-old Pontiac because I just don’t care about cars. It has an air conditioner and a CD player, and it makes – for an old car – acceptable mileage. The loan? If I was suddenly struck by inspiration to start a coffee shop or a hardware store or something like that, maybe… but it would be so out of my normal financial behavior that even writing that seems odd to me.

Without being too specific, I spent some time a few days ago listening to a radio show from a political commentator whose political views were 180 degrees from my own. I was stunned by what I perceived as the commentator’s completely insane view of reality. Imagine trying to listen to someone try to convince you that the sky is pink. I wondered whether there was some truth in what he said, and whether I could ever pull some of that truth out and live with it. I doubt I could, in the same way that I can’t imagine suddenly strolling into an Audi dealership, ready to buy. Some behaviors and thought patterns are hard to change – for better or for worse.

photo by Q U E E F

when financial behavior becomes set in stone

One of the best things about moving is that it thins out your possessions. Our neighbors had a yard sale and asked if we needed to sell anything. After moving, not really! Almost everything we didn’t need any longer already went to charity, friends, family, was sold or (unfortunately) was thrown out. We’ve found that even after shedding all those things we still have more than enough stuff. Toys, particularly.

Is the 401(k) Broken? I’m Not So Sure: The 401(k) is not really broken, in and of itself – it’s simply the whole system that’s struggling. The move from defined benefit to defined contribution savings was good for employers but a disaster for employees.

SEP IRA: Self-Employed Retirement Plans: And on the same topic, SEP IRAs – something I know very little about but should probably study, since I’d be eligible for one now.

What’s Your Excuse?: Amusing, but oh too familiar…

Retired at 31: An Early Retirement Story: Always interesting to read about other people’s paths to retirement.

The Path To Contentment: I had similar feelings about flying after 9/11. Not fear, per se, but the experience went from tedious to downright tortuous. I lost any enjoyment for business travel I had after 9/11.

Did TurboTax Mis-calculate My Recovery Rebate Credit?: Disturbing question about TurboTax. Those of us who use it count on it to calculate numbers correctly.

Who Should Know How Much a Pastor Makes?: I would imagine if I donated money to a pastor’s salary I’d like to get that information if I asked for it, but I don’t think it would need to be a matter of public record.

How To Be A Millionaire? Start Thinking Like One!: I’ve written about this many times, and I would like to think I have this mindset, but honestly I’d rather go for a bike ride or watch the waves crash on the beach than hammer away at making millions.  I just haven’t found my perfect work yet.

New Cash Back Program from Bing: I spent 5 minutes on Bing – I don’t have much patience for “the latest innovation from Microsoft”, which hasn’t really innovated since they stole the concept for Windows from Apple – but offering cash back on search might be the only way to beat Google. Might.

Teaching An Old Dog New Tricks: I have to agree with Hunter. I don’t care much for Facebook. I have never visited MySpace except once to register “brip blap” so nobody would swipe it. I would guess that 99% of my “social networking” has taken place on LinkedIn and Twitter.

Do you belong in NYC? Take the test: I loved NYC, but to me that means Manhattan. Once I was living in the burbs and working in NYC, I switched pretty quickly from loving it to hating it. Ask me again in two or three years, but so far moving to a warmer, less expensive, less crowded area on the ocean has been a fantastic upgrade.

but on the other hand, How I Save $8,535 Per Year By Not Having A Car: One of the things I love about the NYC area is public transportation. Being able to avoid car ownership was one of my favorite things about life in Moscow and New York. Cars are – to me, at least – headaches waiting to happen.

On Spending Consciously: That’s a great way to phrase it: spending consciously. I feel that I’ve mastered this to a certain level, but once in a while I do wake up and think “wait a minute – did I just buy THAT?”

Everything You Want To Know About Universal Health Care: From my perspective, a simple solution exists – expand Medicare to anyone who wants in (on a means-tested premium rate), but allow anyone who wants private health care to keep it.

linklings, a brief lack of excess stuff edition

After reading Timothy Ferriss’ book The 4-Hour Workweek I was struck by what I viewed as one of his main concepts: work is something to be avoided. The book explains how to set up a business that (largely) runs itself. His idea is to have a passive (for lack of a better word) income stream and then use that stream to back away from work altogether in favor of visiting new parts of the world, learning new things and enjoying what he calls “mini-retirements.” His point that far too many of us hammer away at difficult jobs with long hours during the best years of our lives simply to grasp at “freedom” once we are too old to enjoy it.

I have written many posts about my desire to generate “passive income” or “alternative income.” After reading Robert Kiyosaki’s “Rich Dad, Poor Dad” I spent years wondering whether I, too, could ever achieve financial freedom. I’ve worked my way through a steady progression of what I’d loosely lump together as “financial freedom” books: Your Money or Your Life is one of the best examples. What Ferriss’ book helped me realize is that based on my recent “mini-retirement,” I am in no way ready for the four hour workweek. If you don’t have a sense of what you want to do with the other 164 hours of the week a mini-retirement can be long and unproductive.

Curmudgeon, a frequent contributor to brip blap, wrote this a year ago:

As young adults, we try on various persona, defined by our behaviors and job roles. Not surprisingly, some fit better than others. Hopefully, we gravitate into the roles that fit, gaining an understanding of our own preferences and character in doing so. In doing so, we’ll likely find that we don’t have a true taste for large and fancy homes, luxury automobiles, fine clothes, and corporate ladder-climbing. But many people engage in these behaviors, perhaps because others around them do so, or because of some ill-conceived notions of the meaning of success and belonging.

link: guest post: who am I?

Focusing on lists and goals and “things we’d like to achieve” can be a trap. You may think that “trekking across the Gobi on camel back” is a more admirable and exciting goal than “re-read the Lord of the Rings at least one more time,” and you may tell others (and yourself) that you want to do the former.  What you really want, though, is to do something else – because that’s who you really are. You need to understand who you are before you can set goals – I didn’t think this in the past but now I do.

Maybe you want a four-hour workweek so you can “play” at writing a book (which is hard work). Maybe you want financial freedom not because you want just enough income to live a moderate existence, but so you can quit your corporate job and concentrate on making “big money” doing something else so you can buy a Mercedes.  Maybe you want financial freedom to sit on a couch and complete watching every episode of Doctor Who ever made. Just be honest about what you want.  I suspect that dreaming about a fancy car means you are really looking for some other sort of meaning in your life, but for all I know some people might be truly passionate about cars – learning about them, driving them and owning them.  I’d like to have an ocean view home – which doesn’t come cheap – but I don’t need that home to be 4000 square feet.

I often dream of “freedom” – but now that I’ve had freedom for the last half year, I’ve started dreaming more of meaningful or interesting work; for lack of a better word, let’s call this a “purpose.” I have fooled myself for a long time into thinking I want free time to do what I really “want to do” but I don’t want free time – I want my time occupied. I think too many people confuse freedom with indolence and that’s why they can’t achieve it – freedom isn’t achieved by lazy people (unless they have the good fortune to inherit it). Laziness may actually guarantee that you’ll work very hard – you’ll just be working hard at something you don’t want to do. Someone who buys a book with a guy swinging in a hammock (as Ferriss’ book does) hoping to find a shortcut will soon realize that a lot of hard work is needed to get to that hammock. I doubt that Ferriss spends his days watching Flintstones reruns.

Ferriss’ idea of work, or purpose, or whatever you would like to call it would simply be learning and traveling. For someone else it might be accounting, or animal husbandry, or selling custom t-shirts.  Nobody really wants a four-hour workweek.  They want a forty-hour income off four hours of effort, so the other 36 hours can be spent doing what they would do if income was no issue.

photo by Jesse Wagstaff

the four(ty) hour workweek

I’ve appeared on Tess Vigeland’s Marketplace Money show a few times along with Lynnae of being frugal and Jim of Bargaineering for the “bloggers’ roundtable” segment. This was another fun segment to tape with Tess, Lynnae and Jim.

The episode ran today.   This one was particularly fun for me since I had to visit the Jacksonville studio rather than the Manhattan studio.  We covered a lot of ground – even more than you hear on the show, but you’ll get the best parts of what we spoke about. You can listen here.  Chime in here or at the Marketplace site if you liked it!

Additionally you can download the program (hat tip to Jim, who pointed out that our segment starts at 20:57). There is also a transcript of the show.

Previous appearances of the “bloggers’ roundtable” can be found here:

• Third appearance
• Second appearance
• First appearance

Photo by David Jones

fourth marketplace money appearance

I made a bad mistake in yesterday’s post -I should have thought that one out a bit more before posting it.  That’s what you get for writing too quickly, before researching.

Our recent move has been a slight disappointment in one sense – I haven’t found that grocery store prices are much lower than they were in New Jersey. Prices are a little lower here and there, but not enough to reduce our bills any significant amount.  I thought they might have been a bit lower.  That’s really the only negative, so far.  Otherwise, the change in our daily lifestyle – nice weather, pleasant surroundings, good public services (parks and libraries) couldn’t make for a more dramatic change.

Time sensitive contest: » Win a $100 Home Depot Gift Card for Father’s Day!

We’re Moving: Another one of The Money Writers gets ready to flee New Jersey…

How To Do a Mid-Year Financial Checkup – Things to Think About This Summer and Seven Ways to Save Money on Your Summer Family Trip:  I don’t know about everyone else, but I can’t concentrate much on personal finance once summer comes.  I am easily distracted by biking, wandering around outdoors and lazy evenings.  I guess I’ll have to get over that now that I’m in Florida, won’t I?

Alternative Income Streams – June 2009:  As always, interesting to take a peek at other people’s finances…

The Prepaid Funeral: Advantages & Disadvantages:  And yikes, back down to earth.  I have wondered about whether planning your own funeral is something we should do just as seriously as making a will or buying insurance.

Extreme Saving When You Are Young: How Much Is Too Much?:   You have to live your life.  Save 15%, 20% of your income but after that, please, spend.   Just don’t spend it on “stuff” – spend it on a nice house, a life-altering trip overseas, your education, your kids.  Don’t buy an iPhone or a Wii.

The One Thing that Makes a Winning Resume:  I need to update mine.  My resume is not nearly “punchy” enough.  I have a lot of accomplishments in it that are weakly described as “led implementation of…” etc.

Can Stock Trading Software Make You Money? versus Stock Market Technical Analysis – Loads Of Bull Crap And Bear Crap.  If you want to judge for yourself, try 4 FREE Videos for INO TV by clicking here. That’s an affiliate link, by the way. INO’s an interesting site, particularly if you’re a blogger or interested in stock trading.

Readers Share Lending Club Returns:  I have been a proponent of P2P lending for a while and Prosper (where I was a writer for their blog) and Lending Club in particular.  I’m not sure where P2P lending is going, but I think they are a definite investing niche for investors who want to diversify.

And finally, another great article from one of my favorite blogs: How to spend very little money.  I can’t say I always think the same way – I do spend money on things.  I bought a bike trailer for my kids, for example.

linklings, finally, again