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.

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!

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.

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!

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.

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!

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!

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.

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.

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!

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!

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.

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

The Tuition Gap

If you've read any of my previous posts on college tuition, you'd probably get the sense that I'm a little frustrated with the current state of higher education.  Granted, some institutions provide a great product in the form of an expanded mind, but the cost is astronomically high.  It's almost a crime in how public and private higher education can mark up their tuition so high.

I was recently re-vindicated with this article from Business Insider which talks about the gap between tuition inflation, and the decreasing earnings college grads can expect.  I've attached the graph below.



There was once a time when someone graduating with a college degree could expect to increase their lifetime earnings more than what they had paid for.  If the above graph is any indication, you can see that the returns from a college degree are not what they used to be.  So what's causing these problems.  Well, the most glaring culprit is the increased availability of financial aid.  By proclaiming college to be within reach of a student's future income, more applications have been flowing through universities.  What's the best way for colleges to narrow their applicant pool?...increase tuition.  And so you now have a vicious cycle of higher costs wheres the economy and future job prospects have been flat at best.

The scariest part about student loans is that they never go away.  Unlike a mortgage in which you can walk away at any time and declare bankruptcy, student loans are unforgivable.  Even if you die, they get passed to your next of kin.  So be careful out there and assess your college options wisely.  Alternatively, why not apply for a trade school or two?  You would be making a great salary and could even own your own business.

Wonderful Moment of the Day: Seeing a rough looking guy on the Subway hold the door open for a young guy who clearly had a disability and needed a cane.  Situations like these make me think there's still hope for humanity.

The Rent Creep

If you have ever had an apartment or pay for rent, then you may know of this phenomenon I like to call the "rent creep".  To give you a little background, I'll use a legitimate story from my own experience.  Awhile back, I too was renting my own little apartment of sheer bliss.  Things were going great, and I had locked in a pretty decent rent for 1 year.  The rent I was paying for a 1 bedroom apartment within walking distance to a grocery store and my employment was $800/month.  A little high, but the cost savings from hardly ever driving more than made up for it. 

After my first year in the apartment, I received a notice from my landlord saying that they were going to increase my rent by $50 citing inflationary expenses.  Being the ever avid cost saver, I decided to do a little research.  It didn't seem right that my rent would be going up by 6.25% just because money became a little less valuable.  Luckily, the Federal Reserve keeps track of this information here, and I was able to quickly discover that inflation only occurs between 2-3% per year.  Armed with my new found knowledge, I quickly set up a meeting with my landlord, showed him my research and demanded that they not increase my rent.  Without much of a fight, they agreed, and I managed to ride out another year.

You see, landlords (like most everyone else), are opportunistic folks, and many of them have a standard policy of increasing your rent by a certain amount each year.  In an apartment building with 100 units, if they can get just half of them to accept the new terms, then they have increased their revenue by $60,000.  Subtracting an inflation rate of 3% and they just achieved a net profit increase of $31,200.  This is what I call the "rent creep", and landlords are hoping you don't put up much of a fight or even care. 

Often times, this type of price increase can occur across many different industries, notably the cable or phone bills.  If armed with the proper information, you too can intelligently make your case and avoid paying unnecessary prices.  A little data can go a long way.

Wonderful Moment of the Day: While playing a board game with my wife, a question came up as to which of the 7 dwarfs would she most be like.  She replied without hesitation "Cheapy"!

Great Self Improvement Resource

If you're like me, then today is the first day back after a nice week-long Thanksgiving holiday.  That means, that it's back to the grind, and time to get things done.  With that in mind, what better way to get yourself motivated than a list of 101 self improvement resources.  The fun folks at Pick Your Brain, have created such a comprehensive list that I encourage you to test out.  Here's my favorites from each category.

Self Improvement:
Dumb Little Man - A nice site that specializes in getting you motivated and making the best out of yourself.

Personal Development:
Life Optimizer - Just like the title indicates, this site produces some nice and concise posts on optimizing your life.

Mentally Stimulating:
Freakonomics Blog - If you liked the book by the same name, then you'll love this blog.  The contributors take a macro-economic look at all things and usually offer a twist.  This is a great way for you to become accustomed with some unfamiliar topics.

Business:
Get Rich Slowly - Get rich quick schemes make little sense and often leave you in tears.  This site takes the logical, and slow willed approach to creating a nice nest egg.  You can even learn a thing or two about personal finance along the way.

Educational:
Today I learned via Reddit - This one is my own addition, but let me tell you that it's great fun learning about all sorts of random facts.  Toady I Learned (or TIL) allows people to post interesting facts (usually references to Wikipedia articles) that will hopefully allow you to be a better conversationist at your next party.

Check out the site and let me know what you think.

Wonderful Moment of the Day: Reminiscing on the fun week I just previously had.

Black Friday Alternatives

It's Black Friday folks, and that means tons of shopping insanity.  Hopefully, with many big retailers keeping their doors open longer the night before, there is not as much craziness going on today.  The name Black Friday comes from the idea that it's the first day in the year to date that retailers finally make a profit (or are in the black).  The remainder of November and December are purely for profit at that point.  Some people really find some good deals today, but let me proprose some alterntives.

1.) Cyber Monday - stay at home, shop online, and have everything delivered to your house.  Pretty laid back if you ask me.

2.) Black Friday Weekend Craigslist shopping - Many people who shop on Black Friday are purchasing replacements for something they already have.  Imagine all the great deals you'll get by searching Craigslist in the coming days.

3.) Find Deals and Donate to Charity - If you purely love the rush of the crazy shopping experience, then why not apply your shopping skills for some good.  You can donate your purchases to charity and even score some nice tax write-offs. 

4.) People Watch -  This is actually kind of what I do on Black Friday.  Go to a mall, sit on a bench, and watch the craziness unfold around you.

5.) Sleep in, and enjoy your day - Relax, sleep in while digesting left-over turkey, and read about the craziness in the paper or online.

Whatever you decide, this day marks the first day in the Christmas season, so get ready for all the singing.

Wonderful Moment of the Day: Great Deals!

Being Thankful

With Thanksgiving tomorrow, I thought it appropriate to highlight some of the things I'm grateful for in my own life:

1.) My Wife who has been my biggest fan
2.) My Family who has supported me throughout my life
3.) Friends
4.) My Church and faith
5.) The determination, financial means, and understanding to manage my diabetes.
6.) My goofy cats
7.) Living in an age with so many great and interesting technilogical advances
8.) Being a citizen in the greatest country in the world (admittedly biassed opinion)
9.) Great neighbors
10.) Being considered one of the richest 3% of the world (literally, if your family makes more than $30,000/year, you are in this category too)
11.) My education which has enriched my life
12.) My job which gives me the flexibility to enjoy my life
13.) Just to be safe, my Wife again...she reads this thing :-)

What are you thankful for in your own life.  It often helps to make a list.

Wondeful Moment of the Day: Having like 9 members of my family stay the week.

The Power of Metrics when Buying a Car

Buying a new car is never an easy experience.  Your filled with all sorts of conflicting emotions ranging from anxiety, to sheer excitement.  During this rare lifetime event, you may even be persuaded to spend more than you originally thought.  After it's all over, you come out with a large monthly payment and maybe some regrets, but I'm here to tell you it doesn't have to be that way.  My secret weapon when shopping for a new car is the use of metrics, and I'll highlight one here that may be useful to you.

I cannot tell you the importance of metrics when comparing two complicated purchases.  Think about all the variables that go into purchasing a new or used car; how many miles does it have, will it have a warranty, what are the extended features, etc...  Depending on your resolve, you could end up with all sorts of prices.  My first step when purchasing a car is to determine what make and model I want to purchase.  This is sort of the pre-work that you must do before you even get to the dealership.  Research online whether the car you want has good reviews, talk to other people that may have this car, and see if you can "test drive" a friend's car.  This type of pre-work will help you build some resolve and get through the dealer experience unscathed.

Now that you are at the dealership and know what kind of car you wish to buy, the next step is to determine which car is the better value.  Below is an example of 3 Toyota Prius' (I believe Priora is the plural), each with different manufacturer years and different mileage.  To best compare these vehicles, I created a metric called $/Life (or how many $ per mile left in the car I will have to pay).  The basic formula is (Price/(200,000-current mileage)).  I figure 200,000 is a good mileage for the life of a car.  If you're a frugal person like myself, then you're going to drive your car until it's dead!  If you feel uncomfortable using the 200,000 mile limit, you can switch it to 100,000 miles or whatever else you like.

Based on the metric, you can see that the 2008 model prius is the best deal given the current mileage and price.  Now this should not be the end all, be all in your buying decision.  Understand that each car has different features and model years could be very different from each other.  Where this type of comparison comes in real handy is if you are comparing the same model year and make between dealerships. 

Next time you have to buy a car, give this a shot or create your own metric.

Wonderful Moment of the Day: 3 days until Thanksgiving!

Steps Towards Investing

Awhile back I wrote about the Heirarchy of Wealth in response to some questions around where you should be putting your money.  If you recall, it consisted of a pyramid where you worry about making money and paying off debt all the way up to maximizing your return through private stocks.  I wanted to revisit this topic and make it a little more simplified while only focusing on the investment portion.  I think many people tend to jump right in to owning personal securities (stock) before they've efficiently maximized there other options.  Allow me to elaborate.

Say you have some extra money lying around and you currently don't invest any of it.  If your business/corporation/company offers a matching 401k plan, then you need to take advantage of it immediately and at least contribute enough funds to meet the maximimum corporate contribution.  This is free money and will already get you on a good footing. 

After reaching your minimum 401k match, you now have a little more freedom and it is time to set up an IRA.  I'll get into the topic of an IRA or Roth IRA in the future, but my experience tends to favor a traditional IRA over a Roth.  The nice thing about an IRA is that you can basically invest in anything and receive tax benefits.  For 2013, you can contribute up to $5,500 to your own personal IRA tax free.  You'll have to pay taxes when you withdraw at retirement, but this is a great opportunity to lower your taxable income while you are still early in your career. 

Only when you have contributed the maximum $5,500 to your IRA can you go back to your 401k and maximize your contribution there.  In 2013, you can contribute up to $17,500.  When all is said and done, you will have contributed at least $23,000 towards retirement before you even start playing around with your own personal taxable brokerage account.  At this point, you will be on a better track than most people in the world and can afford to take a little risk.

I'll devulge more strategies in the future, but at least this will get you on a good footing.

Wonderful Moment of the Day: Cold day, but no wind...the wind here can be brutal.

Walking Off the "Cliff"

With all this talk about a "Fiscal Cliff", I'm sure many of you are wondering exactly what this might be all about.  Given the attention its garnered in the news recently, I thought it appropriate to discuss it and its potential impacts on the market.

So what is the fiscal cliff?  In short, it' a confluence of expiring tax reductions and government spending that when combined together could create enough of an impact to potentially send the US back into a recession.  In a little more detail, it is composed of the following:

1.) Income taxes will go up
2.) The capital gains tax rate will increase to 20%
3.) Dividend income will be taxed as normal income
4.) The estate tax will revert to a top tax rate of 55% with an exemption amount of $1 million
5.) The payroll tax cuts expire
6.) Automatic defense spending cuts kick in January 1st
7.) The US federal debt ceiling will need to be increased
8.) Other miscellaneous tax cuts will expire

So what does this mean to me?  Well, in the short run, expect your taxes to increase slightly (probably around 2%).  The sad thing about this is that the 2% increase coupled with about a 3% increase in the inflation rate means that if you don't get at least a 5% raise this year, then you will not be taking home as much money as you did the year before.  The other issues pretty much only involve you if your company has some connection with the federal government or if you trade a significant amount of money in stocks or other dividend related incomes. 

With that sad, not all is bad.  No politician wants this whole thing to erupt into a deep recession on their watch, so I suspect that many of them will put together some sort of comprise on the issues.  However, expect the markets to fluctuate significantly over the next month or two.  For long term investors like ourselves, this probably won't mean too much, but if you have some cash on the sidelines, it will definitely be a good time to buy some great stocks or mutual funds at bargain prices. 

Nobody is looking forward to another recession, but keep your eyes out for the diamonds in the rough.

Wonderful Moment of the Day: Turtle Truffle Pie!

Remembering Our Veterans

Flanders Fields

If you live in the United States, chances are you may have the day off today (especially if you work for the government or the financial industry) in order to take the time and remember our veterans.  The actual holiday was yesterday, but our nation has decided that we will still get a day off to celebrate the many sacrifices these soldiers and families have made.

In case you were wondering how Veterans' Day started, you can read up on it here.  In short, Veterans' Day was commemorated on November 11, 1919 to celebrate the end of WWI.  At the time, it was known as Armistice Day, but would soon enough be changed to "Veterans Day" as another world war rocked the world.

Besides getting a "free" day off from work, I encourage you to take the time and call up a friend or family member who may have or is currently serving in the armed services and thank them for all the sacrifices they have made.  For those of us who have never experienced combat, like myself, I can only imagine the things these young men and women have seen.

In commemoration of Veterans' Day, I leave you with the poem "In Flanders Fields" written by Canadian Lieutenant Colonel John McCrae:

In Flanders Fields the poppies blow
Between the crosses row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.

We are the dead.  Short days ago
We lived, felt dawn, saw sunset glow,
Loved, and were loved, and now we lie
In Flanders Fields

Take up our quarrel with the foe;
To you from failing hands we throw
The torch; Be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders Fields

And so, with that I wish all the Veterans a wonderful and blessed holiday and praise you for the many sacrifices you and your family have made.

Wonderful Moment of the Day:  Celebrating the freedoms in which other men and women have fought and died for.

The Continued Benefits of Ting.com

Back in September, I wrote about our new phone plan search.  The Wife and I were longtime fans and users of Verizon, but our contract was expiring, and we just felt that we were getting charged way too much and that getting smart phones through them would cost and arm and a leg.  Since the writing of the last article, we bit the bullet, dropped Verizon and moved our numbers and plans onto the startup Ting.com which is owned by a domain provider called Tucows.

If you recall from my previous article, Ting seemed to make the most sense for what I was looking for in a phone provider; cheap bills, nationwide service, no prepaid minutes, and a reliable customer service experience.  With Verizon, my wife and I had to LG feature phones with texting disabled which cost us around $78/month.  All that is after you deduct 20% of the bill due to a corporate discount my company has with Verizon.  This seemed way too much money for what we were getting.  Sure, the phone service was great and I hardly ever had a dropped call, but we were living in the 90's and wanted to make the jump into at least 2005.

We signed up for Ting through their simple online form which basically consisted of telling them my old Verizon account numbers and our old phone numbers.  In a matter of a week, we got our first two LG Optimus' (Optimi?) and were on our way.  The setup was rather simple too, however there were a few problems along the way.  Since we were buying refurbished phones, mine didn't have any sound and my wife's broke down after about a week of use.  No worries, Ting has a year warranty on all phones, and so we promptly received two more at no cost.  They even supplied a return box which to send the old phones.  Ting does have better phones, but once a cheap guy always a cheap guy.  The initial purchase of the phones were only $68 a piece which is far from the top of the line models you see out there now.

Now the good news.  As the image at the top of the blog suggests, my new monthly payment was $46.79 netting me a savings of at least $30/month.  Ting has a graduated payment plan which means you pay for what you use on a step basis.  This first month, I used a bunch of minutes since I was downloading apps and playing around.  I expect this to go down drastically and will probably only be paying about $35-$40 per month.  Doing a little math, and I find out that in a little over 4 months, I have saved enough money to pay for the purchase of the two new smart phones, and over two years (which would have been signing onto a new contract) I will have saved $720.  Think of all the stuff you could use $720 for.  If you're not happy with your current phone plan or company, considering switching today.

Wonderful Moment of the Day: Had a delicious ham, salami, and capricola ham sub for dinner!

Dollar Shave Club Update

It's been a couple months since my adoption of Dollar Shave Club, and you may have read my first article  back then.  A couple of developments have occurred in the last few weeks, and it seems that the company is getting some further media recognition, so I thought it would be a good time to update everyone on my experience thus far.  

Recently, Wired wrote an article about a recent infusion of investment dollars into Dollar Shave Club.  If you recall, their business model revolves around providing no-name cheap razors delivered to your doorstep each month without any hassle.  It appears that going forward, Dollar Shave Club has some more robust ambition in pursuing even more products in a man's personal care.  Expect to see soon shaving cream and the likes in your medicine cabinet in the near future.  

As you may have read in my first article, I started my experience with Dollar Shave Club by ordering the 4x. This was a very sturdy and nice 4 bladed razor that came into my house on a monthly basis with 4 razor blades at a total cost of $6/month.  At the time I started this purchase, the simple twin razors were not available, and so I anxiously waited.  About a month went bye, and I received a notification that they simple twins were now available, and I diligently subscribed.  I received the package, opened it up, and found the razor blade in complete shambles.  Everything had been destroyed.  Chalking this up to just bad luck, I wrote Dollar Shave Club and email, and in about a week, they sent me another handle.  Sure enough, the whole handle was completely destroyed again.  Make no mistake, the simple twin is a piece of crap.  If the handle cannot even survive the mailing, how is it going to survive multiple uses.  Plus, the simple twin costs $3/month ($1 for the blades, and $2 for shipping and handling).  Realizing that I had made a terrible mistake, I went back to the 4x, and have been satisfied ever since.  It should also be said that the company did send me 2 simple twin handles in the mail again, but at this point I had it with that product and have moved on.  

It short, I do think Dollar Shave Club has a good business model and is evident by their excitement in funding, but I would stay clear of the simple twin.  

Happy Shaving!

Wonderful Moment of the Day: Sausage and fennel stew...yum!

We are Not in a Recession

Recession is a popular term in this day and age, and many people point to it as an accurate definition of what  the current state of the US economy is in.  I can't tell you how many times people have told me "recession this" and "recession that", as it is almost some sort of explanation for all their problems.  In fact, they even go out of their way to use some of the media bites they often hear and call the current market "the great recession".  These views are all incorrect.  In fact, we have been out of a recession since the 2nd quarter of 2009.

A recession by definition is two consecutive quarters of negative GDP growth.  As demonstrated by the chart to the right, the US has had positive GDP growth since 2009.  That said, it should also be noted that the US economy is not very robust and is only currently growing at about 2-4% per year.  

Alternatively, the economy has affected many individuals differently than others.  One of the most striking metrics for showing how the recent economy has affected others differently is the unemployment rate by education level.  Currently, those who have a 4 year college degree have an unemployment rate hovering anywhere between 4.5 and 6.8%.  Higher than the historical average, but pretty good overall.  The real situation comes with those who only have a high school degree.  For them, the unemployment rate is approximately 24%.  That seems almost absurd to think that 1 in 4 people without a college degree are unemployed.  Now if you take into consideration all the people who consider themselves underemployed (not working enough), and you have a far more significant problem.  

It's no wonder why many people consider the current economy to be in recession.  With unemployment high and affecting certain groups more adversely  people tend to find catchy words to classify the current state of things.  Instead of using recession, consider using the word "stagnation".  For example, "boy things are pretty bad in this stagnant economy".  Not only are your accurately describing the situation, but you might even wow some of your friends.

Wonderful Moment of the Day: Don't forget to vote tomorrow!

Worst College Majors for your Career

Keeping with the college theme this week (don't ask me how these themes come to me), I've found another article on the 10 worst college majors here.  As you may know, I've recently become a fan of Kiplinger's personal finance magazine and website, and I think they are chalk full of useful information.  To rate their list of majors, Kiplinger's looked at 6 metrics from average median salary to the likelihood of working in retail after acquiring said degree.  With that sad, here is the short list from least to worst:

1.) English
2.) Sociology
3.) Drama and Theater Arts
4.) Liberal Arts
5.) Studio Arts
6.) Graphic Design
7.) Philosophy and Religious Studies
8.) Film and Photography
9.) Fine Arts
10.) Anthropology

As someone who graduated with a liberal arts degree, I can tell you that it's not all bad.  In fact, your career is what you make of it, and the amount of time and effort you put forth.  I'm actually quite proud of the fact that I can quote Enlightenment philosophes and discuss a plethora of subjects when I'm at a social setting.  This skill is much more difficult to learn than most jobs.  In fact, I learned pretty much everything for my current job while doing it.  Plus, you can always go to graduate school to learn a more specialized trade.

I am a little surprised that graphic design is on the list.  There has been a number of times where having a good graphic designer would have definitely come in handy, especially with the look and feel of this blog.  That said, if you are a graphic designer and can help make this site look better, feel free to contribute and I'll publicize your name to all that I tough.

Wonderful Moment of the Day:  Got to use the word "philosophe" in a sentence.

Measuring Schools by ROI

I was a little inspired this week from my Monday's post on the coming student debt bubble, and started to  ask myself how someone should assess whether they get the best value for what they are paying for higher education.  I immediately thought of a good old financial ratio called Return on Investment (or ROI).  What this means is that you essentially compare what you pay to go to school versus what you can expect to make in your lifetime.  

Ironically enough, a few weeks back, Payscale actually ranked pretty much every college in the US by ROI and came up with this list.  The top colleges seem to make sense from an annual ROI perspective, but Payscale went even further and incorporated student aid into their calculations.  When I sorted by ROI with financial aid included, there were quite a number of public institutions in the top 20 which is an encouraging thought.

Should someone only think of ROI when picking a college...of course not, but it's not a bad way of looking at things.  Obviously, other criteria need to be considered such as major, location, and campus culture, but I think you get the idea.

I know I had fun looking up my institution and I hope you do too.

Wonderful Moment of the Day: Happy Halloween!

Student Loan Bubble Mimicking the Subprime Mortgage Bubble

If you went to college or some other form of higher education, there is no doubt that you have had or currently have student loan debt.  As I mentioned in a previous post, education costs are skyrocketing.  Prices are increasing so much so, that they are outpacing the healthcare industry.  No doubt that a major factor in this whole mess is the increased availability of student loans.  I came across this article while reading the news the other day, and it sheds some interesting light into how similar the student loan bubble is to the previous subprime mortgage bubble.

Our friends over at the Consumer Financial Protection Bureau (CFPB) have been receiving a number of complaints into predatory student loan practices, and have begun to investigate.  Their conclusion into the similarities with the subprime mortgage market are as follows:

1.) Misplaced Good Intentions - Society has put such a strong need for college and thus more people want to attend.  Since schools can only accept so many students, the easiest way to eliminate people from the applicant pool is to increase the price.

2.) Misleading Interest Rates - Borrowing when you're an adult is hard enough, but if you are a trusting and misinformed student, you could be really confused.  Someone might not know the difference between an adjustable rate, or fixed rate loan.  Even worse, it's often confusing on who you contact to understand how much debt at what interest rates you have.

3.) Lack of Scrutiny - Much like the subprime mortgage market of the early 2000's, there isn't many people looking over the legality and morality of student lending practices.

4.) Government Guarantees - With the implicit and more recently the explicit guarantees of the department of education, most lenders have become rather lax with their student lending practices.

5.) High Pressure Sales Tactics - Student loan originators make their money by having you sign up.  After they make the loan, it's not their problem anymore.  Therefore, any method or tactic to get you to sign up is a plus in their court.  This has lead to some pressure style lending.

And what are the differences to the subprime mortgage bubble:

1.) Size - Whereas the subprime mortgage bubble was approximately $600 billion, the student loan bubble is much smaller at about $20 billion.

2.) Can't Escape the Debt - Unlike a mortgage in which you could just walk away (and ruin your credit), student loans are not forgiven even in bankruptcy court.  Often times, these loans will literally follow you to the grave.

Do I think this bubble bursting will destroy the economy...no, but it will most likely have a significant effect in the near future.  If anything, hopefully some good lending practices come out of the whole foreseeable mess.

Wonderful Moment of the Day: Had an eye exam a couple days back, and there was basically no change in my prescription.

Meaning of Success

The first time I ever really confronted the question about success was at my high school graduation.  Our seventh grade history teacher was giving the final speech and picked the topic of what really defines success. This seemed like a fitting topic given that so many of us were sitting up on that stage with many questions floating in our minds; is going to college successful?, is going into the workforce successful?, is graduating high school successful?  Depending on who you ask, you'll probably receive a different answer, however, I want to make the point that these are all successes.  In my own definition, success is overcoming something difficult.  If high school was easy for you, then it probably wasn't a success.

In the world of personal finance, success for you might be having a balanced budget or maybe paying off your credit card.  These seemingly small instances can have profound effects on your morale and well-being.

In your own personal life, maybe success is going on a date and having it go really well?  Maybe success is finding a place to live in a new unfamiliar city, or even more fundamentally, finding a job.  On a side note, someone once told me that you will have a whole file cabinet full of all the jobs you didn't get, but all you need is the one you did get.  Success is most likely achieving that job.

Traditionally, success has been about having that mcmansion on that dead-end street, having a few kids, and a happy spouse.  This ideal, while being rather nice, is simply too naive when it comes to the notion of success.  Success is struggling to achieve something, putting in the time, and then finally reaching that goal.  It's that feeling of knowing you have finally accomplished something that seemed so distant when you started.

For me....well, earlier this week, I found that I most likely have type 1 diabetes, and success is going to just be maintaining healthy blood sugar levels.  If I can do that, I'll be successful.

Wonderful Moment of the Day: Having a wonderful wife!

Credit Card Roulette

I'm pretty sure most of you know about the dangers of credit card debit and signing up for a new card only to use it to pay off another.  This sort of "bad credit card Roulette" is not what today's topic is about.  Instead, I've discovered (or at least been made aware of) a "Good Credit Card Roulette" that can be accomplished through some savvy personal finance.

Just to set the story right, I in no way recommend what I'm about to describe, but I just wanted to make you aware of this tactic.  I tend to think of myself as risk neutral when it comes to personal finance and investing, so this type of strategy will definitely not fly with me.  So what am I talking about?

The inspiration for this post came from this blog.  The author found a way to make a couple extra grand each year by opening up credit card accounts (max of about 10), snapping up their bonus offers whether it be free cash or rewards, and closing them out once the reward was met.  I was a little skeptical about this when I first heard about it, but then I asked a friend of mine who is a credit card product manager.  He said that he does the same thing and rakes in at least $1,000/year.  My next question pertained to how this might effect a person's credit (FICO) score.  He confirmed that his only dipped about 10 points with all the applications and closures.

This sounds like a fun idea, but bare in mind the risks.  You have to make sure you know what you are doing.  When you find a card to take advantage of, make sure you read the fine print in the contract section. Next, make a list of the benefits and terms to meet in order to acquire said benefits.  Maybe a simple Excel grid would do.  Record the date you sign up, and the date you plan to leave (this is important!).  Start spending like normal (do not spend more just to meet some petty reward), and make sure to record or keep track of how much you are spending.  Once you've met your reward, look at your contract conditions again and exit.  Some people say they can reap an extra $1-3 thousand dollars a year.  To them I say God Bless You, because this arrangement is simply too much work and too risky for my tastes.  Spending too much, getting charged some hidden fee, or somehow messing up my hard earned credit score are just too much to trade off.

But, if you feel like you are dying for some financial adventure, then credit card roulette might be the right thing for you.

Wonderful Moment of the Day: Looking with comfort at my measly single credit card...with cash back!

Maximizing your Time in Life

All of us have struggled with the thought of our own mortality at some point in our lives.  Just the simple fact that at some point in the future, you will no longer be here is enough to unnerve some people.  At the moment right before you are about to put the final sentence in the book of life, you might want to ponder all the memories and things you've done.  1 of two choices happens at this occurrence; you look back at your life with great pleasure because you achieved all your goals and lived life to the fullest, or you look back at all the things you could have done or the experiences you missed out of.  If you're the latter case, I'm here to tell you that there are options and you still have time!

The topic for this blog came from this post on Reddit.  The contributor basically ponders the question as to what interesting skill you can learn with very little expense.  Here is the condensed list the author described:

1.) Play an instrument

2.) Lock picking

3.) Programming

4.) Graphic Design

5.) Sketching & Drawing

6.) 3D modeling

7.) Improve your penmanship

8.) Read

9.) Working out and getting fit

10.) Expand your music appreciation

11.) Try composing

12.) Improve your singing

13.) Meditate

14.) Pick up sports

15.) Learn to swim

16.) Biking

17.) Learn a new language

18.) Learn to dance

As you can see, there are plenty of things you can learn to do in your spare time that will lead to a full and rewarding life.  This list is by no means a complete summary of things to learn, but let me suggest another: Learn to fix things.  As a home owner, I can't tell you how helpful it is to have some basic knowledge on plumbing, mechanics, or carpentry.  Not only do these skills save you a ton of money, but it can become an interesting hobby not to mention making my house look great.

Some call it a bucket list, but whatever it is you call it, think of the things you want to learn or do before your time is up.  Write the items down, and figure out how you are going to accomplish these goals.  As I wrote about precision leadership a long time ago, having a list will help you stay motivated and accomplish all you want to do.

Wonderful Moment of the Day: Watching a friend complete a multi-national marathon!