Monday, December 31, 2012

Build Your Own Cat Tower

Didn't realize how pudgy my cat was
getting until this picture!
My Wife and I have been throwing the idea around for awhile.  We wanted some cool cat tower, but didn't want to pay the premium prices you see at some of the big name pet stores.  Prices for a decent sized tower range anywhere from $50 for the most basic all the way up to $500 and beyond.  So, what's a good penny wise family to do but build one ourselves.

We started with a vague concept of a 3 tiered system that would be carpeted and have some scratch post abilities.  We also didn't want to spend more than $50.  So, it was off to Home Depot.  Here was how we did:

24' of Carpet = $15.21
2" wood screws = $7.98
Staples = $3.22
Junk Plywood = $1.01
Sisal rope = $27.90
Total Pretax = $55.32
Sales Tax = $4.84
Total = $60.16

Definitely spent more than we intended, but we did only use about half the wood screws, 1/10th of the staples, and also had a good 3' of carpet left over which conveniently became a new area rug in our entry-way.  Overall, it wasn't too bad of a deal, and hopefully our cat Ziggy will like the end result.  I think what messed us up the most in our budget process was the Sisal rope.  If we were able to find a cheaper bulk option for cheaper, we would have been set.  Oh well, it was a good learning experience and I'm pretty proud of the end result.

Wonderful Moment of the Day: Working with the neighbors to dig us out of more snow.

Friday, December 28, 2012

Blizzard Survival

Living in the Northeast US has its advantages and disadvantages: yesterday was one of those disadvantage days.  I'm referring to the huge snowstorm that came through town and dumped about 10 inches on my house over the course of about 12 hours.  Armed with just 1 shovel, my wife and I were ready to tackle the job.  Needless to say, here's a recollection of our successes and failures through this event, and some tips for your own snow adventure.

1.) Do some prep work ahead of time.  The night before the storm, I did a real quick shovel job just to make the job a little easier in the morning.  It probably only reduced the amount of snow I had to shovel by 2 inches.  Multiplying that by hundreds of square fee of sidewalk and driveway, and you've literally saved your morning from lifting another ton of snow.

2.) Give yourself plenty of time:  I woke up at 5:30am and was out shoveling by 6:00am which was good thinking since it took me about 45 minutes just to clear out our little city path.  I still had plenty of time to get to work.

3.) City dwellers don't need a snow plow.  I grew up in the country where you had 500 foot driveways, so a snow plow makes sense if you want the job done in less then an hour.  Living in the city, I can shovel a foot of snow from every piece of concrete in less that time, so a snow plow definitely does not seem worth it.  When you also figure in the cost, how may times you actually use it per year, and the fact that I would not be able to park my car in the garage if we put it in, and you can see why I don't have one.  I'm also healthy enough to deal with the exercise, and find it to be kind of relaxing.

4.) Good neighbors.  I did say we had one failure and that was my wife was not able to get our car onto the road since the plows didn't come through yet.  She had to call in to work, but our neighbors helped us dig her car out and for that we are most grateful.  Make sure to stay friendly with the people who are going through the same experiences.

5.) The wonders of public transportation.  I did make it to work fine since we are walking distance to my local subway station.  There were no problems on my commute and far less stress.

6.) Know when to call it quits.  Don't be stubborn and think you or your car are invincible.  As in my wife's case, the car wasn't going anywhere so it was better to be safe then risk it.

Buying a snow plow is one of those decisions that people just jump to the conclusion on.  They figure that everyone needs to own one.  This is my second winter in my new house, and I haven't had any problems with just a shovel.  Just think; $500 you would have spent on a snow plow invested in a security that returns on average a 4% inflation adjusted return will net you $1,559 over the course of 30 years.  That snow just got a whole lot more expensive!

Wonderful Moment of the Day: Snow man!

Wednesday, December 26, 2012

Post Christmas Savings

Well, you did it.  You made it through the Christmas season in one piece, and hopefully it was a fun, family filled occasion.  You can now relax, and enjoy all the fun memories replaying in your head.  Hopefully your kids (if you have them) also had a good Christmas, and that they are now enjoying their many presents.  If your kids are anything like I was as a kid, then they might have gotten some cash from a relative as a Christmas gift.  Instead of just letting them spend all of their money, why not try to teach them a little something about investing and save for something even better.

As a child, I was a big saver.  I would almost exclusively ask for cash for any holiday or birthday, and I would but anywhere from 80-90% of it away in a savings account. Back in those days, savings accounts earned anywhere from 4-6% interest so it wasn't too bad of an investment.  Now, imagine doing this from the age of about 6 until the age of 17.  Over those 11 years, I accumulated enough cash to purchase a car!  Not to shabby if you ask me.

Personal savings rates are tough thing to instill in a child, especially if the parents have a hard time doing it themselves.  According to the St. Louis Federal Reserve, the current personal savings rate is at 3.6% of disposable income in the month of November.  That's including any sort of retirement plan such as a 401k or pension.  This is pretty awful if you ask me.  Saving at 3.6% will make you work for the rest of your life, and you won't have much to live off of when you eventually retire.  At minimum, a person should be saving at least 10% of their disposable income in order to build some sort of safety net for the future.

Personal savings accounts are no longer the way to go for kids if you want to teach them anything these days.  With interest rates around 0.25%, they'll be losing money due to inflation if left in the bank.  Instead, use your brokerage account (hopefully you have one set up through your bank), and put your child's money in some stocks or mutual funds.  Every few months or so, give them a little review of what their money has been doing and what your strategy for investing entails.  Often times, parents will buy stock in a company like Disney since their kids already take an active interest in it.  It actually makes the whole investing process more fun.  A world of lessons for a child awaits if a parent is willing to take this route.

In the end, do your kids a favor and convince them to invest their money.  They and you may learn a thing or two along the way.

Wonderful Moment of the Day: Still eating many Christmas cookies from family and friends.

Monday, December 24, 2012

Merry Christmas

Being that it's Christmas Eve, I felt like writing a blog post would probably diminish the point of spending time with your family.  Instead, here are a few Christmas gift ideas for your kids that will help them learn the benefits of savings and finances early on in life.
1.) Piggy Bank - What better way to start learning how to save then with a piggy bank.  I can remember my own Fisher Price savings bank as a kid and how much I looked forward to filling it up.

2.) Monopoly - The game itself is a great way to teach kids how to use money and what the purposes of a bank are.  I even used to use the monopoly money as currency for other games I created.

3.) Toy Wallet - This can of gift has a two fold benefit of educating your kids on how to handle money while also making them feel like they have something an adult would have.

4.) Cold hard cash -  Most bank branches have special money envelopes they'll give you for free.  I find these to be perfect for giving cash presents to my nieces and nephews.

But that's enough of this blog for the day.  Go spend some time with your family and have a wonderful Merry Christmas!

Wonderful Moment of the Day: Christmas Eve!

Friday, December 21, 2012

Getting and MBA for Almost Nothing

I’ve written a number of times about the ever increasing cost of education (here, here, and here), and it’s getting to the point of “bubble” classification.  In light of such news, going back to school to achieve an MBA or some other form of higher education can seem downright daunting.  There is hope for you frugally minded and career driven folks.  Many employers today encourage worthy workers to go back and get their degrees and they’ll often times shell out some cash in the process.  Below is a recount of my tale and how I spent only $1,950 to achieve and MBA.
The first question you need to ask yourself is whether going back to school is even right for you?  Some issues that I weighed while making this decision were the following: would I have time to do well? Should I do a part time or full time program?  Will this degree from X school help me in my career?  What were my financial constraints?  For the purposes of this particular article, we’ll assume that you’ve already made the choice to go back to school and achieve an advanced degree.  Now, let’s discuss how you’re going to fund your new-found educational experience.
Pick a Part-Time Program over a Full-Time Program
When going back to school, you could decide to quit your job, go back to work full-time, and finish your degree in about 2 years depending on the program.  Whereas this experience might save a year of your life, the downsides in my opinion far outweigh any benefits that extra year could provide.  You will not get any potential employer subsidies, you will not be earning a salary and have to pay tuition, and these 2 years of not working don’t really count towards your employment experience.  Instead, consider a part-time program.  Mine was 3 years, 2 full courses and 1 mini course a semester (with 1 summer course), employer subsidized, and those 3 years working to get my degree count as 3 years of real work experience.  If your 30 years old at the end of your part-time schooling, you would have 8 years of real work experience (graduated undergrad at the age of 22), whereas you would only have 6 years of experience in a full-time program.
How to Go Back to School for Almost Nothing
This is ultimately what you came here to read about, and it’s not some hidden secret.  The answer…get your employer to pay for your education.  Easier said than done, right?  Well, even if going back to school and getting an advanced degree is a goal 5 years done the road, this next step needs to be in the back of your head now.  If you are currently searching for employment, make sure to inquire about your potential employer’s tuition reimbursement plan.  If you’re lucky like I was, then they already have something set up for those worthy enough to get approved.  This question can also be a good topic to discuss in your interview as it shows that you are a driven candidate and that you have goals to improve yourself.
If you are currently employed and happy with your employer, then research to see if your company has some sort of tuition reimbursement policy.  You might have to talk to your HR rep as these things are not always conveniently published.
What do you do if your company currently doesn’t have a tuition reimbursement policy?  The first thing you need to do is set up an appointment with your manager, discuss your goals, and see if something can be worked out.  Often times these types of situations occur in small companies with the owner overseeing everything.  I had a friend in my program who worked for a small custom door manufacturer.  He asked his boss if he would cover his education in exchange for working there at least another 5 years, and they agreed.  If you’re company does not offer tuition reimbursement, and they never plan on doing it, then it might be a good idea to start looking elsewhere. 
Proving to Your Employer that You are Worth it
The last tactic to achieve tuition reimbursement from your employer is to prove that you are worth it.  This comes from your everyday behavior in your place of work.  Be responsible, prove yourself valuable, and excel in what you do.  Have semi-frequent conversations with your manager about you career and self-improvement goals.  Eventually, you will need to have the conversation about how an MBA will help you in the workplace, but make sure you tell them how it will help your employer as well.  This is the final secret I have to offer.  They are essentially investing in you and you have to prove that their investment is worth the expense. 
My own reimbursement strategy was organized through me showing my grades to my HR department.  For every A or A-, I was reimbursed 100%, B was 80% and C was 50%.  The only reason I had to pay $1,950 throughout my 3 years was because my employer would only reimburse me at the 50% mark for pass/fail classes (otherwise known as mini 1 credit courses).  These cost me $650, and I had to take 6 of them.  I survived 3 job movements throughout my MBA program and had over 4 managers throughout the process, but as long as you prove your worth you should be fine.  Another arrangement to my reimbursement was that I would have to pay back a pro-rated amount of my reimbursed tuition if I were to leave the company before 2 years after my last payment disbursement.  A fair arrangement if you ask me.
An MBA can be a great advantage on your resume, and can offer a world of opportunities.  Even more beneficial is all the knowledge that came in the form of understanding the underlying issues at stake in most business decisions.  You too can go back to school for almost nothing.  You just have to ask the right questions and do your homework.
Wonderful Moment of the Day: Received half of the parts in my new PC-build…a post about this to come soon.

Wednesday, December 19, 2012

How Much "Home" Can I Afford?

“A house is not a home unless it contains food and fire for the mind as well as the body”
                                ~Benjamin Franklin
No doubt that whenever the topic of personal finances is to be approached, one cannot simple dismiss the potentially largest expense a person will ever had…their home.  Whether you’re paying rent for an apartment or a mortgage on a home, you’ve probably asked the question “How much home can I afford”?  This simple question has caused many people to live in financial straits and is usually “solved” through a trial and error process throughout your life.  Well, here’s my own two cents that may help you avoid some of the lessons at the school of hard knocks.
To cut to the chase, generally speaking your total rent/mortgage should not exceed 50% of your after tax net income.  This is a mantra I’ve always strived to live by (although with varying degrees of success throughout my life), and it will do your wallet some good to strive for this too.  Consider the salary of someone making $50,000/year.  This is a very good salary and you should commend yourself for making more than the average family of 4 in the United States.  Assuming taxes take up about 30% of your gross income, you are no left with $35,000/year.  If you divide that by twelve, you get $2,916/month, and half of that is $1,458.  This is your absolute highest expense you should pay for living in your dwelling, and most cities will easily accommodate a 1 bedroom apartment for this price.
When it comes to home ownership, make sure you take into consideration the hidden costs of upkeep into your monthly expense mix.  Say you have a $1,458 mortgage that includes your property taxes and home owner’s insurance, and now you have to replace your roof (a $15,000 job).  How are you going to fund this?  For home owner’s, that $1,458 should a monthly savings that you put away for home repairs and maintenance.  It might even be good for you to create a savings account specifically for home repairs that automatically links to your pay check through a direct deposit.  Thinking ahead like this will save you big time in the future.
You might be new to a city or starting out on your own.  Financial lessons such as “How much can I afford or should I spend on housing” are usually only learned the hard way.  I know, I’ve been there.  If you think about your income and do a little math, chances are you will be much better off than most people who first start out on their own. 
Wonderful Moment of the Day: Got my first A1C test back from being diagnosed a type 1 diabetic in October.  I got a 7.2% down from 11.5% two months prior (normal is below 7%).  On my way to living a healthy life!

Monday, December 17, 2012

Maximizing your Use of Zillow

My home value courtesy of Zillow.
You can see when I bought it back at the end of 2011.
If you own a home or are thinking about owning a home, then you've probably heard of the property value estimation site called Zillow.  For the uninitiated, this site does a great job at tracking your property value and  allowing you to see recent homes for sale, the price of recent sales, and whole bunch more information.  Since most of this information is public knowledge, Zillow has just used this information to create a more user-friendly database.

One of the most interesting features of Zillow is that you can take ownership of your own property estimations and make sure they are incredibly accurate.  Since Zillow bases most of its property value estimations on larger scope characteristics such as number of bedrooms and bathrooms, actually going into my own property and indicating things such as plaster walls and 2 fireplaces allows for a much more robust estimation.  If you are ever planning to sell your home, keeping your Zillow information updated and accurate will provide you with a good start on where to price your home.

Another benefit to keeping your home value current is if you ever have to challenge your home assessment for tax purposes.  With the housing crisis destroying approximately $20 trillion in home wealth back in 2008, many home values have never reached back to where they were prior to the crash.  It might be a good time to challenge your assessment now.  When I moved into my home back over a year ago, it was assessed at $211,000 for which I paid $136,000.  The assessment board comprised with me and lowered my house to $145,000 which translated into a $100/month savings on my mortgage payment (I have it escrowed so it includes property taxes).

Here's the part about Zillow I love the most; it allows you to set a "Make me move" price.  The theory being that if someone was shopping for a house and fell in love with yours (even if it is not for sale), then that person could offer you the "Make me move" price and you'd probably accept it.  I encourage everyone to set a "Make me move" price even if you never plan on leaving, and here's why.  If everyone in your neighborhood started listing prices 10-20% higher then the Zillow value, then people wanting to move into the neighborhood will more likely just assume that this is the price to live there and property values will start increasing as more homes are sold close to the "Make me Move" price.  Now this is just a theory I have as most people don't bother setting there price, and therefore I'm not able to test it.  You'll notice for my own house, I have it set at $200,000 even though I don't plan on moving.  Now if I could only convince my neighbors.

Go out and set your own "Make me Move" price today, and hopefully you'll start seeing results.

Wonderful Moment of the Day: Watching my cat wake up in the morning.  He's not a morning cat and it usually involves 5 minutes of squinty eyes, stretching, and rolling around...actually quite comical!

Friday, December 14, 2012

Finances and Marriage (5 Tricks to Get it Right)

It's no doubt that one of the chief challenges of maintaining a successful marriage is organizing your finances.  While the "I do" portion of the marriage contract seems simple enough, merging two very different sets of finances and potential financial behavior can cause problems if not handled in an open and amicable way.  My wife and I have been married for over 3 years now, and I believe I our financial health remains strong.  Here are 5 tricks we employed to encourage a successful financial marriage.

1.) Talk about finances and spending habits before you get married.
This first step is the most simple and seemingly obvious, but you would be surprised how many people just avoid the subject.  You should know going into a marriage whether your two financial philosophies will mesh well together.  If one person is a saver and the other a spender, I guarantee that you will have problems in the future.  These so called "red flags" should at least be maid public before even embarking on your road to bliss.

2.) Maintain 1 checking account and joint credit cards.
I think some people would disagree with this statement, but let's just review what's going on here.  You have just entered a marriage in which you must merge to different sets of philosophies and lifestyles.  If you maintain separate checking accounts and credit cards, then you aren't truly in a marriage.  You should be able to trust your spouse whole-heartily which most certainly includes your finances.

3.) Appoint a "CFO" of the household.
Notice how I said CFO and not dictator.  Generally speaking, it's good to have one spouse be the chief payer of the bills, balancing the checking account, and keeping track of the budget.  It should be pretty obvious in your relationship who this person should be, but it makes it easy to get things done if someone is just in charge of this task by default.

4.) Give monthly financial reports to your spouse.
This doesn't have to be anything formal, but I literally sit my wife down in front of the computer at least once a month and show her the balances in our accounts, and how much each of us has been spending.  This could be a stressful time for some, but speak in calming terms.  You don't want to be blaming the other spouse if they are spending too much.  You need to show them what is exactly going on.  Often times, they might have not realized the grand scheme of the cash inflows and outflows.

5.) Keep the lines of communication open.
This is your primary tool to keep a happy and financially sound household.  Money should not be a taboo or stressful topic in your marriage.  Instead, make sure you regularly talk about your finances.  Usually, I'll just mention in passing to my wife at least once a week how much is in our checking account.  Sometimes she'll ask me questions on the fly and I'll explain in full detail.  There's no point in hiding this information, because you're both in this together.

The only downside I can think of to this whole arrangement is when it comes time to buy each other Christmas gifts or any sort of holiday presents.  Since my wife and I primarily use the credit card, and I can see every transaction, it makes it difficult to create a surprise.  Luckily, the Mrs. has a pretty elaborate spy network of family to still keep things a surprise.

Finances are usually the top reason for marriages to have problems.  These simple steps will go a long way to maintain a happy and healthy life together.

Wonderful Moment of the Day: Realizing that my wife does in fact have a covert network of family members able to purchase gifts for me in her name.

Wednesday, December 12, 2012

Obtaining Contentment

I present to you this question: Is being content an appropriate goal in life?

To explore this question, we have to delve a little into the meaning of the word "content".  The dictionary classifies content as "satisfied with what one is or has; not wanting more or anything else".  True contentment in this sense is the utter and complete satisfaction in all that one has.  Let's set aside for the moment the immediate needs for survival such as food and shelter.  These type of needs will never be satisfied in that you will always need more of them.  So, let's look at it from a different lens; we'll examine the idea of being content through financial, material, and career aspirations.

The fact that you are not content is what got you to where you are in the first place.  If one were content in their position at work, they would most likely only put in a normal amount of effort and never really advance. Likewise, a content person financially, would never save or earn more than the inflation rate.  Finally, a content person would probably not buy anymore "things" other than what they current have and need to replace.  I would argue that even those who admit contentment are not truly content if they are saving for a future, striving to work hard at work, or purchase even some small material goods not necessary for survival.

So with that out of the way, let's look to see if being content is a good thing.  Moralistic, religious, and societal norms teach us that hubris or humility are admired and desired traits.  I do believe this as well, as these are the chief modes of obtaining true happiness.  Being content means that you have achieved every one of your lifetime goals and you are currently coasting through life.  Generally speaking, this should be a good thing, however I would argue that pure contentment would drive a person into depression as they no longer have any life goals.  These goals don't need to be extravagant; may something as simple as dropping your swing count a few points your next game of golf.  Instead of pure contentment which is some sort of idealized fictional state, I suggest a more realistic hybrid lifestyle.

You need to set goals for yourself and obtain them.

If you are trying to obtain financial independence, or achieve a certain position at your employment  then you are not content with your life and that's OK.  If everyone were content at a certain point, many great things would not be achieved in this world.  The risk comes when you let obsession and greed take hold of you and your goals get ever further reaching.  You should know personally what your career, financial, and material goals are.  Maybe, you would like to be in your dream position, or maybe you are trying to achieve $1 million to retire, or maybe you've always dreamed of owning your own pool.  Whatever it is, set a goal, and achieve it.  It's OK to set future goals, but realize that you have achieved your lifetime goal and now are in a state of relative contentment.  With that in mind, focus on the things that make you happy and dedicate your life to a cause.

Wonderful Moment of the Day: Having an avenue to record my philosophical ramblings.

Monday, December 10, 2012

Save Some Money: Take Care of Your Teeth

This past Friday, I had to go back to my dentist and fix a chipped tooth that looked a little worse for the  are, and I have to admit I was a little worried on how the procedure would go.  I sat in the dental chair, relaxed as I usually did, and was reassured by my dentist that the procedure was rather simple and would only take about 20 minutes.  Events progressed, saliva and tooth particles flew out as the slight drilling progressed, and before I knew it, my tooth was fixed.  It was actually a pretty interesting process, because the catalyst used to make the tooth clay harden was a little wand that emitted ultraviolet light.  He even gave me a demonstration on how it works which was also pretty neat.  

So, what's my point and what am I trying to demonstrate here.  Well, this whole experience got me thinking about dental hygiene and personal finances.  I've always been avid about my tooth care, and have only had 1 cavity in my adult life, so the thought of not taking care of my teeth was never there.  That said, one can save a bunch of money if you do the normal preventative maintenance associated with dental care. 

A quick search around the Internet lead me to discover that the average root canal costs anywhere between $500-$900 if you don't have dental insurance.  Much of this medical treatment is entirely avoidable if you take the time to brush your teeth at least twice per day, floss at least once per day, and use mouth wash at least once per day.  Not only will those preventative maintenance steps save you from future financial distress, but it will definitely save you from physical and emotional sense.  Also, let's not forget the good breath, and general good health that comes from regular maintenance.  If you have bad breath or some other oral problem, you are essentially breathing in all that harmful bacteria and gunk every time you take a breath. Your chances for pneumonia, and getting sick shoot up much higher if you don't take care of yourself.

Finally, if the option presents itself, I would highly encourage you to purchase dental insurance from your employer or even on the open market.  This is something you will use at least twice per year for your regular cleanings, and it can go a long way to keep you a healthy individual.  Generally, dental insurance is also very cheap.

Wonderful Moment of the Day: Sweet, sweet Nutella sandwich!

Friday, December 7, 2012

Understanding the Lotto - $1,000/week for life

No doubt, if you have a pulse, you've seen the local lottery games demonstrating a chance to win $1,000/week for life.  To many, this seems like an enormous amount of money that simply cannot be beat.  Before we go into the real value of this money, let's first understand a little bit more on the probability of the lotto.

A wise friend once told me that playing the lotto was a game for people who didn't know how to do math.  Whereas this is a little harsh, I tend to agree.  You see, in the world of probability, the lotto simply does not warrant an investment.  To explain it a little more clearly, consider the formula of expected value (Ev=xp where x = an event and p is the probability of it occurring).  If the payout to a local lottery is $40,000,000 and the probability of winning is 1:1,000,000,000 then the expected value is $0.04 which is 25 times more expensive then the innocent looking $1 lottery ticket you just purchased.  So next time you purchase a lottery ticket, consider the expected value of the transaction.

Now back to the $1,000/week per life.  Ignoring the probability of winning, we'll just assume that you have already won.  Now, there are significant taxes involved with winning the lottery, but for arguments sake, let's just say they are 30% of your winnings.  So right off the bat, you are now making just $700/week for life.  Now let's take into consideration the yearly decreasing value of currency we like to call inflation.  If every year, your money's value decreases by 3% and your total money does not increase, then eventually over time, your money will become essentially worthless.  So if in one year you earn an after-tax winnings of $36,400 ($700 x 52), then dividing this number of 3% will give you the total lifetime value of your winnings in today's dollars (or $1,213,333).  This is no small amount of money, but it's hardly the same earnings other lottery opportunities would provide.  If we did the math further and subtracted the total future value of the money you invested over time in buying lottery tickets and it's opportunity costs, your total earnings would be much smaller.  This also doesn't take into consideration your own lifespan.

In the end, everyone knows that playing the lottery is not a profitable way of making money, and you're probably just throwing money down the drain.  The real value, however, is if the amount of fun you get from playing the "what-if" game is more then the financial cost.  Only then would I warrant a play.  As some of the slogans go "Hey you never know".

Wonderful Moment of the Day: TGIF!

Wednesday, December 5, 2012

Consider a "Stay-cation"

When we think of taking a holiday from work, people often start contemplating what fancy destination they will visit next.  Warm beaches, fancy fruity drinks, and the hot sun are the idealized visions of vacation dreamers.  This contemporary view of vacations seems all nice and dandy, but let's talk about some of the bad sides.  First, vacations are a lot of work; planning the event, making arrangements for your pets or other types of home care while you're away, the act of traveling, and actually getting to your destination take up a significant amount of time.  All this in the name of finally getting to relax.  The next problem with traditional vacations is that they can be very stressful.  With today's flight security, going through the TSA can be very stressful if not mentally prepared.  Additional stresses can come if your vacation involves seeing family.  Whereas you are happy to see them, you can sometimes be reminded why you only see them a couple times per year.  Traveling can also have a considerable toll on the environment with all the wasted energy in transporting you to your final destination.  Finally, and what I consider most importantly, traveling can be downright expensive.  According to one study, the average American family spends $1,180 per person on a summer vacation.  For a family of 4, you're paying $4,720!  If you had instead used that money and invested it in a inflation adjusted 4% return over the course of 30 years, you would have spent over $19,000 in today's dollars.  Is your vacation worth $19,000?

Allow me to suggest an alternative, the staycation.  Basically, a staycation is using your precious vacation time to stay at home.  Now hear me out before you out-right dismiss me.  The benefits of a staycation include decreased stress, potentially supporting your local economy, finding more family activities to do, and most importantly cost.  For just a few hundred dollars, you can go out to a nice restaurant, see a local attraction, and do a couple other fun things with your whole family.

Don't get me wrong, traveling on your vacation is a fine thing to do, but I just want you to be aware of the cost.  If early retirement or financial independence is not your goal, then by all means, spend your money however which way you like.  If instead, you are like me, then these world trips are far and few between, and you prefer to explore your regional domain.  Try a staycation once and awhile; you just might enjoy it.

Wonderful Moment of the Day: Late fall and still 50 degrees outside.  Awesome weather for this climate and time of year.

Monday, December 3, 2012

The MBA Salary Bump

We all know that higher education can add certain benefits depending on the degree you so happen to be pursuing.  Today, I'll examine the impact of the all American MBA and it's salary ramifications.  First, take a look at this article and the below chart.

The article essentially boils down to post graduate MBA's will see on average their pre-MBA's increase by 81% after they achieve their MBA.  I find this incredibly unlikely given my current place of employment as a case example.  With educational standards increasing throughout the country, obtaining an MBA is almost entry-level stuff now.  For example, someone with an MBA entering our finance division will make between $45-$50, which is incredibly far off from the $120k average their claiming in the article.

Some of you may also know that I'm a about 5 months away from completing my own part time MBA, and I can tell you right now that I don't expect my post MBA salary to increase by 53%.  I can also definitely confirm that I'm not making a high salary to begin with, so I think the article is a little over-zealous.

In the end, getting an MBA is definitely worth the cost, but don't have too big dollar signs in your eyes, as I think these salaries are more of a function of which MBA you attend and not just achieving the degree.

Wonderful Moment of the Day: Borrowing my parents car, because my wife had to use our car, and going 100 mph down main street.....kidding Mom and Dad