Best (Financial) Book Ever (that I've read)!

Lately I've been spending my time doing a lot of reading. I've read 'You're Broke Because You Want To Be' by Larry Winget, which talks about all the stupid ways we keep ourselves out of money. This book talks less about the 'advanced' topics of investing but is good in its own right. His 'in your face' writing style calls you out on all your irresponsible character flaws and is either funny or disturbing, depending on how you look at it. I thought it was funny with a twinge of painful personal truth.

I've read Dave Ramsey's Total Money Makeover (with workbook), where there was more of the same (really good advice about wise vehicle buying philosophies), helping you see the benefit of doing things smarter so that you can pay down debt and use that newly freed up money to begin investing. Very motivating.

But better than both of them is a book called I Will Teach You To Be Rich by Ramit Sethi. This book picks up where Dave Ramsey's book leaves off. It's geared towards twenty and early thirty-somethings who want their cake and eat it too. You won't find a bunch of frugality-preaching here; he tells you to pick a few areas you can get some Big Wins in (think areas to revamp which will allow you to spend less/make more) freeing up money for investing over the long term. Not to mention Ramit has a funny, smart-alec writing style that keeps you engaged and laughing.

Personally, my investment history is abysmal. I've never really actively invested; I had a financial advisor, who helped me with my 401K which I rolled over into an IRA, and I had another investment account (some kind of IRA) that my stepfather had set up for me. I cashed them both in around the same time due to cash shortages for bill paying. Before that, I'd never even been able to contribute to the IRAs, or chosen to, my priorities being elsewhere. I've never bought stocks and never learned anything about it, only absorbing what others have said about investing (which is fraught with misinformation, lack of information and horror stories of loss stemming from poor investment decisions), which of course scared me away.

Ramit explains things in such a way that it is easy to understand. Even if you are a high school student, you can understand this. Combined with the successful actions of investors such as Warren Buffet, and David Swenson (who has milked a 16.5% return rate from the market and has doubled Yale University's money every 4.5 years since 1985), and recommended courses of actions by Ramit Himself, this book gives you NO EXCUSE for making your plan to save and invest your way to retirement.

He tells you:

Basic term definitions
Why you should NOT get a financial advisor
Why Index Funds are a much better choice than mutual funds
Why people who say investing is risky say this and why not to listen to them
How you can invest (safely for retirement) even if you are Lazy and are Not Interested in learning about investing
A pie chart used by Warren Buffet giving the types of investments and quantities of each, as a guide
on how to diversify (invest over several categories to spread out chances for gain and reducing chances for loss in any one area)
Step by step how to on choosing 401K investments
How to choose funds and actually buy them for your Roth IRA
Pitfalls (and successful actions) of considering your home/Real Estate an investment
How to (tools, equations etc) choose funds that have lower fees
How to choose (tools etc) funds for a diverse asset allocation (how to choose a nice balanced portfolio)
And did I mention the ONE type of FUND to buy (based on your current age) if all this makes your eyes glaze over and likely to continue not investing?! (spoiler alert: it's a Lifecycle Fund aka Target Date Fund)

Ramit has made me SO EXCITED* that I've opened an online high interest savings account** so that I can save up enough to get one of these funds. I checked out his book at the Round Rock Public Library but so far have taken about twenty pages of notes. I should just buy the book and highlight and mark it up, but I'm going to save my money instead! (it's only 7.88 on Amazon.com)

Please check it out here: Your future self put you on this webpage for a reason...it's because he/she wants you to take the steps now so he/she can be happy later.

*I am a tiny bit sad that I can't start actually acting on Ramit's extremely sexy investment advice right away; instead we are working simultaneously on our debt repayment (we don't have any really high interest debts) and an emergency fund of $1000, and after that we will keep socking money away. We recognize that our next savings goal should probably be to save three months' worth of living expenses which would amount to about $6,900. But it will be very hard not to raid that prematurely to open up a Lifecycle Fund.....we'll see what happens!!

**The reason I opened an online savings account is so that it won't be linked to my checking and me or my husband's present-day selves cannot easily transfer money OUT of it to cover shortages, thus saddening our future selves. It gives 1% APY/interest (better than a brick and mortar bank due to not having cost of maintaining buildings and more employees etc) and yet we would still be able to get access to our funds (keeping them liquid) within three days if a true emergency came up, unlike a CD/certificate of deposit.

Time For a New Job!

No, I didn't get fired, not exactly. I've worked for myself since 2006 watching kiddos as a Listed Family Home. I've ooched away from watching babies and toddlers full time and just doing after-school carpool and care for the last year though. The ten grand paycut has sort of sucked, though, and it's time to start getting serious about some more income. Because of the kids, its just not ideal to go work for someone else because the hours are wonky (really, charter school, do the kids HAVE to get out of school at 1 p.m. every Wednesday?!), not to mention having to call in to work every time they get sick. With no formal education, even working full time, afterschool care would severely cut into the profits, and having to purchase summer care for two kids would make me spend MORE than I'd make.

So, I needed another self-employment gig.

I seem to get wrangled into helping certain family members with cleaning, decluttering and organizing on a fairly regular basis, and it's something I take deep satisfaction in doing. I love to see a space uncluttered, functional, clean, beautiful. And I love it when I can be of help to people, so I decided to put an ad out offering my services as a personal organizing assistant.

Today I got a bite, and we have set up an appointment for this weekend. I very much look forward to helping this nice lady get settled into her apartment and make it seem more like home for her. I think I will also offer services to the elderly for grocery shopping, light cleaning, transportation and housework. Things are looking up!

Breaking The Cycle

...for the next generation. I was reading this in bed with my daughter next to me and she was reading it aloud as I read quietly. She was really getting into it! I had to get up to go do some stuff and she kept right on, all the way up to lights out. Maybe her financial life will be different than mine up to this point....

Tax Refund Time! Help Us Get the Most Bang for Our Bucks

Each year we get around $2,200 back around tax time. I would love to hear some comments on what you think the smartest way to use our tax refund.

So far, we need to pay about $1,100 back to our family for generously loaning us the money to purchase a used car in excellent condition except for the fact that it needed a new motor (they fronted the money for the motor too). So that leaves a balance of about $1,100.

Options:

Could pay off my iphone balance of $366 and bring my cell phone portion of the montly bill to around $15 instead of the current $38. This would bring the total bill down which would make me feel better. But not as good as if the husband would worm his way out of his current iphone 6 lease deal with Sprint and go with Republic Wireless, for a total savings of $145/month. But I digress.

We could pay for the year's car insurance, thus bringing down our monthly expenses by $136 each month.

We could pay for two months' worth of rent, freeing up that money to get ahead a month or two on other bills.

We could pay for one full months' expenses all at once, putting us using the current month's income for next month's bills, like the YNAB budgeting software wants to get us to, which would be very nice.

We could put it towards any one of these three debts:

Motorhome (we might not do this since it's an interest free loan anyways)
Student loan debt (of 5,000)
Home Depot (760 balance, with six months interest free)

What would YOU do? Please post in the comments, come on! Don't be shy!!

Helping Others Save Money

My favorite person (well one of them) always said, "Sweetie, I believe we are put on this Earth to help people."

One of the most effective ways to feel worth as a human being is when I've helped someone. I asked the other day on Freecycle what everybody else paid for their internet. One user commented that she'd like to know my results, as she is also on a low budget and trying to help put on her her kids through college. I gladly shared my results with her, shared my philosophy* and also linked to my blog.  Her response was one of excitement and gratitude. You're welcome, and Thanks to you too 'lala!'

A friend of mine who is a single mom with three kids struggles to get by. If she could only have enough extra to invest in herself, she could take this class and earn more. I told her that if she could get 50 people to pitch in $30, she would be there! So she created a fundraiser. This is just one example (sharing a viewpoint or an idea) of how to help others. **

Each one of us has a skill set or knowledge base that if put into the right hands/audience, can really help others out (one of mine is horse training and behavior modification, and also decluttering/simplifying/organizing households. If you're in my area (Austin, TX), drop me a line!!). Also, a person, regardless of their age/circumstance, might not know MORE than someone else, but might have different knowledge that can help others. So always be open to learning from whomever it may be.

So put yourself out there and help others, and also be ready to be helped. If people just know about what you need, they do care and want to help!

*part of my response to her: "You are welcome! Remember, a company has to earn your business, and if they are not catering to their customer, it is up to the customer to fire them for bad behavior. Otherwise we are going to end up, as a country, as people who are dependent/beholden to the companies that provide services to us. We have to be willing to fire them and do without in order to make them see that they can't push us around. Good luck!!"

**If you'd like to contribute to her fund, please go here!!
http://www.gofundme.com/kfytrg

Brighten Your Life and Lighten Your Spending

Yesterday I was at Home Depot getting Weatherstripping (see yesterday's post), and I had been thinking about replacing a few light bulbs. I am not crazy about CFLs because of their mercury content and we have some dimmable fixtures in our house, so I hadn't really moved away from incandescents.

My money guru Mr. Money Mustache got me thinking about how much money I'm frittering away, so back to my Home Depot trip. I passed by a display with LED bulbs, a two pack for $14. I got two packs, took them home and began contemplating which fixtures are used the most per day. You know how bathrooms have those strip fixtures with four bulbs each? We already only used half the bulbs, but I unscrewed all but one incandscent in the master bath, and in addition I put an LED bulb (of the same wattage: 60 watts). When my husband got home, he said, "It looks brighter in here." Test passed! I put the other three in commonly used locations, also unscrewing extra incandescent bulbs. So we have the same amount of useable light and will pay six times less on lighting costs, according to this article. And, per this article, one LED bulb lasts 11 years, which is a whopping 50 times longer than an incandescent!*

I called my sister to share this exciting news (well she called me but that's neither here nor there), and she said, "Yeah, my husband's been saying we need to go energy efficient too, but he can't get over the up front costs of a more expensive bulb." She said she'd have to drop $49 (at least) to do the lights in her house, and he'd definitely notice that.

So I said, "Here's what you do. Instead of going to Wal-Mart and buying pants (off the cuff example), get a two pack of LEDs instead. Replace them slowly over a few paychecks and he'll never feel it, and he'll be saving SIX TIMES what he's currently paying on lighting costs."  (So even if a kid breaks on once in a while because she has young kids and open fixtures, they'd still come out ahead.) She liked that idea. I think he will too, once he notices the decrease in his electricity bill.

*See that on the lower left of the pic? That says 'estimated energy cost $1.20 per year'!! For my kwh rate it would be $1.35. The same use of an incandescent 60 watt bulb (using my area's price per kwh) is $8.08! My brother in law will want me to figure in the actual purchase price of the bulb, so I spent the last agonizing thirty minutes trying to figure that one out. The LED bulb costs the same amount for one year as running the incandescent if you figure in the purchase price of the bulb, THEN you save $6.73 per bulb per year for the life of the bulb, which is 11 or more years. :)

Do You Have Drafty Doors?

We moved into this house two and a half years ago, almost three, actually. At some point a plastic thing was hanging off the door so I ripped it off. It was broken anyways and I figured I could just get some of that sticky foam weatherstripping that comes on a roll. But I put it off, of course. After three drafty winters (and three summers of probably paying to air condition the neighborhood) I got REAL TIRED of being cold ( and hot/broke).

I dug in earnest in the garage for those blasted rolls of weatherstripping and did my almighty best to stick as much of it as I could while still being able to close the door. Which was difficult. And, I could STILL feel drafts and see daylight!!!

I called my infinitely wise and experienced father, who lives in Wisconsin (on purpose, I can't figure that one out). I took photos and described to him what I saw. He said, "Honey, there's a groove in the frame of the door where the insulation is installed, and you can pull it out with a needlenose pliers, go to the Home Depot and get a replacement." I didn't believe him. "No Dad the whole door needs to be replaced!" But I went to the garage and got the pliers. I figured I couldn't make the door look any worse than it currently did (I admit I even used a roll of black Gorilla tape to cover the drafts that I couldn't get with the foam roll weatherstripping. It looked HIDEOUS).

I pulled and what do you know, just like he said, there was a replaceable plastic piece. Off to Home Depot I went. I happily paid ten bucks for two 100 inch pieces of the stuff (the back door is also very drafty). Went home, installed it and I am still on a high. I am downright giddy. I can't help but go open the door and run my fingers down the gloriously springy white vinyl-covered foam, knowing my source of near-constant irritation is GONE with the wind....(couldn't help myself).

Time Warner Internet Ridiculousness

I remember the good old days a few years ago, when our Time Warner Cable bill was about $45/month. It has slowly creeped up to where it is now $86/month!!! We have been loyal customers for, oh I don't know, ten years now, and I feel like we deserve better treatment.

My husband likes to watch TV shows online plus we use Netflix to watch movies from our phones and tablets. I personally watch 0-2 movies a month, so mostly, this is my husband's luxury.

I checked out basic service but they all seem to limit your data. We've never gone below 78 Gigs of data per month. I think for now my husband is not willing to downgrade service, so instead we researched what other companies were offering. We picked one of their offers and I called Time Warner. I told them that I was going to switch unless they could get me the introductory rate of the same service we currently get, which is $44.95/month (before taxes). She put me on hold for a while then said we could get the 200 mbps service for $57.99/month. I said, how much for just the same service we get now? Hold please. Ok ma'am we can give it to you for $23/month less than what you are paying now.

I was so excited that I said yes, when I SHOULD have said, no thanks, we want the intro rate, or we walk. Doh! I'll remember next time :)

Cell Phone Ridiculousness

I can't remember ever not spending a fortune on my cell phone. I got my first cell around 1998 and I can't remember a bill less than a hundred dollars. And we didn't even have mobile data! I didn't start texting till after 2007, when I had a fancy slide out keyboard. I still miss that thing, I hate the smart phone text keyboards. I got my first smartphone in 2012. Now that I have experienced the smart phone convenience, can I ever go back to not having it? I personally think so since I am rarely anywhere that doesn't have WiFi. And I can always get a dedicated GPS for my car should I need it, but I don't think so since I can just print maps from my home PC.

Right now I have a balance of about $366 on my phone. I pay Sprint $23/month towards my phone. At $23/month paying for my actual phone, it would take me 15.91 months to pay it off (lets round to 16).  I looked up how much I could sell it for, and it's less than what I owe (I could probably sell it for $150). So I need to try to convince my husband about selling it at a loss and then going to buy another phone (a cheaper one) on Republic Wireless, who offers phone plans from $5-40/month (with smart phones ranging from $99-399) in order to save money in the long run. Let's break it down.

I would get the $99 phone (one time fee) and the $10/month plan (unlimited text talk and data over wifi; no 3G). If I sold my current phone for $150 (losing $216), and spent $99 on a new phone on Republic wireless, if I only pay $10/month, it would only take a few months to come out ahead, and then I'd be saving money every month.

 Right now, with Sprint, my phone is an add-on to the plan ($70 plus a $15 fee for each phone on the plan, mine and my husband's). Plus my iphone payments of $23/month. Remember from above, it would take me about 16 months to pay it off. So during that time in non-phone fees, I'll pay $15/month towards my service.  16 months of paying for only phone service (so not counting my $23 monthly payment for my current iphone) would cost $240. With the phone payment, I'll spend $606. But with Republic Wireless (counting the phone) over 16 months I'd pay only $259. That's a savings of $347.  Minus the iphone money difference loss by selling the phone at a loss (of $216), I'd still save $131 over the course of 16 months.

 Let's pretend the iphone's paid for. Phone service for a year for my phone only would cost 180/year. By switching to Republic, I'd pay only 120. Is paying $40 less per year for a phone worth it for me, considering I would lose my 3G data on the go? I'm not sure.

But, if I could get my husband to switch his phone at the end of his lease contract in a year and a half (he pays the per phone fee like I do, plus he pays $30/month to lease his phone, and the two kids' tablets are also $25/month combined, and don't forget the actual plan, in case you're wondering, which is 8 G of data for $70/month plus a $15 per phone fee), and just had the kids's tablets only work on WiFi, we could save a considerable amount of money, even if he went with the higher Republic plan with 3G (which is $25/month instead of $10). Yearly bill for two people would be only $420 (not counting actual phone cost, so add another $200-$400 depending on which phone he chooses...he probably wouldn't pick the $99 model) and we still would come out way on top.

I'll keep you updated as to whether/when any changes will be  made on this front! I have a husband's complexity to consider.

Update: 3/3/15 Things are way worse than I thought. After I found out that just dropping my service from our sprint bill would only save us at the most $38/month (after I finish paying $366 for my iphone and I'd have a useless phone I'd have to sell), I started to look into what would have to happen for us to drop Sprint entirely. I found out that my husband could get out of his lease but that he'd owe the balance of his iphone, which is $334. So that's $700 of a breakup fee which is pretty high. But wait, there's more. Sprint at one time offered us, out of the generosity of their black little hearts, a free tablet (samsung galaxy Tab 3.0) for each of our kids if we purchased the monthly service for a couple years (of 25/month for both tablets). Great, we said, Sign us UP! So the nice lady tells me we'd also have to finish paying (wait, I thought they were free?!) $343.71 for each tablet, bringing our Sprint Breakup Fees to a whopping $1,387.42. We'd still be able to keep and use the tablets on Wifi but that's a hefty price considering we could have gone and bought them ourselves for considerably less than what Sprint is charging us for them!! I MIGHT be able to earn back $400 by selling the iphones so even if we take that off the bottom, we still lose $987.42. How long would it take to earn that back by switching (we'd save $145/month by switching) to Republic Wireless? 6.81 months. Now, should we pull the plug or not?

Birthday on a Budget

It's easy to spend a lot of money on birthdays. You want your kid, and everybody else's, to have a good time. It's fun to get a party package at a bowling alley, Main Event, the skating rink or whatever. But those packages are also pretty spendy.

I got lucky and was able to steer my son into having a big slumber party at the house with all his friends.

We decorated with string lights (aka christmas lights) streamers and balloons, borrowed a movie projector (thanks Mom!), got some popcorn and glowsticks, ordered some pizza, and invited over about seven other kids (I'm a glutton for punishment LOL). It was a blast! Actually the fun is still occuring because this is the morning after and everybody's still here.

For my daughter's party last year (and I think the two previous years...she really likes to swim!) was at a local water park...sort of nicer than a regular pool, but not as spendy as an actual water park. Admission is about four dollars per kid, and we didn't feel guilty asking everyone to pay their own way. Four dollars is reasonable, and if we'd been rich enough to have a party at a place that requires ten or more dollars, we'd pay other people's ways! Anyhow, we brought cake, snacks and drinks to refresh guests and they all got to play with their friends. We like this arrangement and it keeps birthdays affordable and reasonable.

Shhh don't tell the kids, but I always put something in there that says gifts optional, because we don't feel like families should feel financially obligated to spend money on our kid if they can't afford it. Most people bring gifts or money anyways and we always appreciate their kind gestures. I've also put something in there a few times about please only bring a nice used gift in good condition or thrift store find. I would love to steer people in the direction away from conditioned consumerism and towards reusing and redistributing. Kids don't care if a toy is in packaging, they just are excited if it's new to them, interesting and fun.

Well that's my post on how to have a fun birthday with minimal costs. Please post your own ideas below, I'd love some fresh ideas!

Outsource it, or Do It Yourself?

When we moved into our house, my father-in-law (the homeowner) had just had the master bathroom re-tiled. Except the bathroom sink backsplash was never finished, as the contractor was a friend of a friend of a friend who lived in a nearby city (not near enough apparently) did not consider that small space worth the trip of returning. So I've looked at that ugly unfinished backsplash, and missing two false drawer fronts, for the last two and a half years. I've considered many times whether to tackle the job myself, but I lack tile-laying knowledge, and I couldn't figure out how to attach the drawer fronts without screwing it from the front.

At one point I was in Home Depot and saw these sheets of decorative vinyl and I picked one up for $20, thinking I could just cover up the ugly part of the backsplash. I admit, I half-assed it, because I wasn't prepared to remove the mirror, outlet etc. So I stared at ugliness for the next several months. I even called the tile people to see if they could match my tile and considered hiring a handyman to do the short job.

Finally, after becoming inspired by my new friend Mr. Money Mustache, I decided to tackle both jobs once and for all. It was easier than I thought on the backsplash. No mirror removal required. The drawer fronts were harder, but a youtube video gave me the basic principle I needed to get the job done. Here are the results! Now I just need to replace the mirror which the reflective backing is peeling off. But that'll come later, after I have my $1000 saved (and maybe longer, since my stare-at-ugliness muscles are well developed and I can instead focus on the pretty backsplash and drawer fronts. Well, that right one is crooked because my son was holding it for me and he let it sag, but that's quick fix I'll do when my husband can hold it on for me from the front).

Do you have something around the house you've been considering paying money for someone else to do? Can a library book or youtube or wikihow give you the knowledge and confidence you need to do it yourself and save money? Yes it can.