Real World Finance$

Can you believe it’s May already?  My how time flies.  I was pretty busy yesterday at work and had my first night of a new class (Managerial Accounting this time), so I didn’t have much extra time to wander through here.  I did see some really good links and stories posted in my blog reader this morning though and thought I would share:

JLP over at All Financial Matters posted a great Interview with Larry Winget.  I’m not familiar with the guy, but I like the way he thinks!

Five Cent Nickel has a short, but sweet post on the idea of the Gas Boycotts.  I had a couple of similar posts over on my other blog here in the last week as well.  Short story even shorter, if you want to save money on gas, don’t drive so much!

Madame X has a great set of links to Today in the News over at My Open Wallet.

I couldn’t resist posting a link to this article on Smart Money:

A 2008 Year in Review a Year In Advance

Of course, they are really just talking about predictions for the next year, but writing it as a Year in Review makes it more fun!  Here are some of the highlights and predictions I found interesting…

Who would have dared to predict during the summer dog days … Or that crude would crash 50% all the way down to $80 a barrel?

Yikes!  Down 50% to $80 a barrel.  That’s a bit scary.  Good thing we have a more fuel efficient car now and that I take the bus to work (run on bio-diesel no less).  In reality, I take that line as a bit of a jab at all those doomsayers crying about how high gas prices are going to go.  I’m not sure what makes some news reporter an expert in oil and gas prices in the future.  Maybe they’ll eventually learn they are always wrong and shut up for once!

Mike Huckabee has already been forced to acknowledge that his campaign pledge “to completely eliminate all federal income and payroll taxes” will require much Christian patience given the political realities.The very notion of a President Huckabee had seemed so far-fetched in June, with Hillary Clinton holding a commanding lead in the polls as the recession deepened and consumer confidence continued to plummet. But Michael Bloomberg’s late entry into the race changed everything, splitting the block of voters who believe in evolution while underscoring the creationist candidate’s god-given homespun charm.

In the end, Huckabee attracted a respectable number of college graduates thanks to the wily choice of Ron Paul as his running mate. Paul’s presence on the ticket caused the August gold crash once the polls began to shift in their favor, though bullion is now back above a grand an ounce following the leak of plans to cut IRS staff in half.

Yep, I admit, the idea of a President Huckabee seems a bit far fetched at present.  Though, as a Republican myself, I don’t see a strong candidate in the party at present and it could really be up for grabs at this point.  I admit that his idea of a national sales tax is interesting, but it’s probably not something this country will ever do instantly.  If we were to take that route, I’m sure there would have to be a phasing out period over time as the sales tax increases and the income tax decreases.  They’d have to be sure to work out the bugs on collecting the sales taxes before they could completely drop the income tax.

As 2009 dawns we can toast the nation’s willingness to address longstanding problems head-on and to forge a new consensus out of adversity. U.S. stocks have never been this cheap relative to the rest of the world. And it’s been a long time since real estate has been this affordable. So go ahead and lift a glass to 2008. After a year like that, we deserve a drink.

From the looks of things now, I can hardly disagree with this sentiment.  Next year does not seem to be a smooth road ahead at this point.  Then again, how did things look at this time last year?  Whatever your take on the coming new year, make it a good one for yourself and forget about all the junk predicted by the media. 

Your life is to be lived for you. 

Your money is to be saved for yourself.

One thing I’ve learned over the past few months since starting this blog and my journey of taking control of our finances to pay off debt is this: It’s a LOT of work!

In the past 3-4 months I have done the following:

• Changed Auto Insurance
• Changed my work health insurance to an HSA plan
• Started using Netflix and Gamefly rather than the video store
• Put together our first family budget
• Started finance and money classes with the family
• Opened 2 new savings accounts
• Opened 2 new checking accounts
• Purchased a New Car

In addition, the following is also underway:

• Have application in process to refinance the mortgage
• Moving my prior employers 401(k) plan to a rollover IRA

The biggest frustration in all this is that almost none of this activity is directly related to paying down our debt. This was all things that needed to be done in order to organize us properly. I never realized how out of control we really were until I started to try and control things. When I took the time to actually analyze where our money was going it was eye opening.

I had always thought of myself as rather savvy financially (despite many setbacks, we’ve always manage to keep good credit and stay out of major trouble), but now I know better. We’ve always lived by the paycheck and making the move to my current job as a contractor (from being an actual employee) has forced me to plan further ahead and save more for contingencies.

As frustrating as this has been, it’s also refreshing to know that everything should be done by the end of the year (or at least final decisions made). That means next year will be the real test of our fortitude to stick with our plan and make real progress. I look forward to next year, but the rest of this one still has some work to be done!

If you are ready to take control of your own finances, don’t be discouraged, the upfront work like this takes some time, but (hopefully) once I get in the swing of things we’ll hit our stride and start seeing some real progress.

This weekend was quite hectic for me. After getting my braces adjusted on Friday afternoon, I didn’t get much good sleep the rest of the weekend. Not only was I trying to get used to the new wires and the tightness, but I was also given some headgear to move things along faster. Trying to learn to sleep on my back has taken it’s toll the last few days. So, while I try to get back in the swing of things, I thought I would share some of my favorite posts from the past week or so. Hope you enjoy.

• Free Money Finance expands a comment of mine in Make Extra Income Teaching What You Know.
• JLP at All Financial Matters gives us some help with How Much Mortgage Can You Realistically Afford?
• Jim at Blueprint for Financial Prosperity gives us 7 Responsible Ways to Spend Your Holiday Bonus.
• Five Cent Nickel gives help to a reader in Flexible Spending Account (FSA) Overspending.
• JD at Get Rich Slowly gives us The Pros and Cons of Sharebuilder.
• Mighty Bargain Hunter asks Worried About Paying for College? Then Don’t!
• Mrs. Micah suggest you Wear Clothes When You Work at Home
• No Credit Needed gives us his $48,000 Goal Update: 11 Months and 1 Van Later

Yes, I’m back and ready to get back at this. I spent about an hour or so last night catching up with our expenses and bank accounts that had no attention for the last week and a half. All in all we did pretty well for our vacation expense wise. I don’t have the final number yet, but I’m sure we didn’t stray far from our typical $1,000 we plan on spending.

Oh, and we didn’t use any credit cards while we were out. That’s a big plus. I did get the rest of the bills scheduled to pay for next month last night as well. Even though I will be missing a full week of pay when I get my next paycheck next week, it looks like we will still have the cash available to pay bills without having to dip into the small savings we have.

That’s very good news from what I can see. We’ve got a couple of repairs that need to be done to the house before winter sets in, so our savings will probably be going down a bit next month to help pay for those. The good news is that I will also start teaching again next month, so I will also have some additional income by the end of November.

I’m looking forward to seeing the full picture for October by the end of the week. I’m also most of the way through our proposed budget for next year. I’ll write a post soon about some more ways we are looking to save some money this coming year.

I’ve been out of the loop for a few days as we left for vacation this past weekend. We’re staying down in Florida in our every other year time share. We chose to buy this time share a few years ago because this is a place we want to go on vacation. We weren’t expecting this to be some big investment or money making scheme by renting it out.

Of course, every time we come they are always trying to sell us more. They try to get us to upgrade to larger units, or every year. Yet, all the benefits they tout to us with having more options just don’t appeal to us. We like only coming here every other year and going else where at other times. We like having a fixed week this time of year. We homeschool so we don’t need to schedule around school. It also helps to have a fixed week so you don’t have to think so much about when you go on vacation.

I don’t know about you, but vacation is a very important thing for my family and I. It is an important time to get away and spend time together without the stresses of day to day life. However, trying to decide when to do it is the most difficult part. Knowing we will always be here on odd numbered years for week 42 is great. Of course, someday when we are finally out of debt, we might like to be able to do this more often, but for now, things are just perfect the way they are.

Plus, they offered to upgrade us to an every year package and the additional price was only $7,000. I went online after we got back and found an every other even year the same week as ours in the same complex for resell at $3,500. They do offer financing here at only 14.99 % now, what a bargain huh! Okay, not really.

I really enjoy having this place. The full kitchen allows us to bring food and not have to spend money eating out every meal. Adding in the taxes and maintenance fees for years we come is still cheaper than a standard hotel room for a week as well. So, that annual savings on hotel and food will eventually add up to make up for the cost we paid for our unit, though knowing what know now I would buy in the resell market.

Here is the link to the latest Carnival of Personal Finance via the e-mail I received notifying me of my inclusion. The host is quite creative with his use of Dr. Suess type rhymes. Enjoy!

Good morning! I hope this note finds you all well.
I have some fantabulous news I must tell!
The Carnival’s up! And by luck you are in it!
So please read this now — it will just take a minute.
The link is included right after this note.
(I’m sure you can reach it by places remote.)
Your readers, I’m thinking, would sure like to see it!
And though I am remiss to outright decree it,
It’d be terribly nice if you’d share it with them!
The rhyming is rough, but the posts are a gem!
This part of the note might be called the caboose!
Respectfully written, your friend,

–Dr. Zeuss
http://www.mightybargainhunter.com/2007/10/15/welcome-to-carnival-of-personal-finance-122/

Up until about a week ago, I had never heard of a Blog Carnival (I had to look it up on Wikipedia). Essentially, it is a gathering place where bloggers from all over send in links to their recent posts on a given subject and they are consolidated down to a single post of links. Very cool idea as a place to find tons of information on a topic.

Well, I heard the term in relation to the Carnival of Personal Finance. I submitted a link to my recent post on whether or not to consolidate your debt onto a credit card. I did get a mention in this week’s post (hosted by Ask Mr. Credit Card), but I didn’t make the list of Editor’s Choice.

The post was actually quite fun this week and I think you’ll enjoy it. Lots of information out there, it can keep you reading all day if you like. Hope you enjoy!

We all know that starting savings at a young age and learning how to deal with money then are two things that are very helpful in not ending up overwhelmed by debt later in life. The only kind of financial education I had growing up was learning how to balance a checkbook in 6th grade and that is more than most kids in the US get in school.

I’m now trying to get my family out of the debt cycle and I want to make sure my step-son doesn’t get into it either (he’s 8). Luckily, we are a homeschooling family so we have a huge amount of control over what we teach.

I ran across this article online today form Business Week (Business Courses Give Kids a Leg Up) about the National Foundation for Teaching Entrepreneurship (NFTE) program for teaching high school students how to start their own business. I only wish I had something like this growing up.

From the NFTE website, I found a link to Merrill Lynch Global Philanthropy. There they have complete curriculum for teaching investing and money management to children in elementary, middle and high school. It is free to download in a PDF format as well. I started looking through the level one for elementary (ages 7-10) and it looks pretty simple and to the point. I think I’ll give it a try and see if it’s not something we can do together as our family works through budgeting and controlling our finances.

I’ll say it right now, I’m not interested in being rich. That’s right, it’s not something I’m striving for in my life. Call me un-American if you want.

My dream is to become wealthy, not rich. I’ve always equated being rich with making a lot of money. I know plenty of people who are rich in that sense of the word. I see them around all the time. They are the Doctors, Lawyers, Executive and such. They all share one thing in common… stress. The more money they make, the more stress they put on themselves to make more.

People work and spend their careers to build up their savings for retirement so they can “enjoy life.” But when they get to that point, they’ve worked so hard at work they don’t know how to relax. They go nuts with the free time and don’t know what to do. That’s a major contributor to people working later in life.

I was reading a blog today titled 8 Personal Finance Lessons I Learned From Monopoly. It talks about the basics of learning to create “passive” income. I’ve always had a hard time with passive income. It seems to imply that you do nothing and get it. That couldn’t be further from the truth. I agree with the concepts that it describes, but the phrasing is quite off the mark in my opinion.

To have so called passive income, you first must have assets or wealth. This is a concept taught by many best selling finance books such as “Rich Dad, Poor Dad.” The concept is really about investing your money so that you earn income from your money rather than from a 9 to 5. This includes everything from financial investments in stocks and/or bonds to real estate holdings.

My way to get there is business ownership. No one really wants to just sit at home and do nothing all the time. At least, not forever. You are going to get bored at some point. By being a business owner you could well become rich. The great thing is, you build your wealth at the same time.

As you work hard to earn your living at your own business, you are also creating an asset that will be of value later in life. Now you will have the chance of a lifetime. By building your successful business, you will have a “job” as long as you want one. When are ready to slow down, you can cut your income and hire others to do more day to day work. This frees up your time and still gives you some income from the business profits (though less than if you were doing it all yourself). If you are really ready to be done, you now have a business that has a value to be sold to new ownership.

The same can be said of owning rental properties. You can collect rent and pay the bills for the place, making very little money the first few years until rents increase with the same mortgage payment. Once the mortgage is paid off, you have lots of rent and no mortgage. Not to mention a nice retirement nest egg in house value all withou a small down payment and some extra time landlording.

I’ve been working on this post for a while and had it in draft stage. I was inspired to go ahead and post it by a recent post on Free Money Finance: How to Get Rich: Start Your Own Business