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Wednesday, August 20, 2008

The Really, Really, Really, Really, Really Stupid Things I Have Done with Money

The currThe Really, Really, Really, Really, Really Stupid Things I Have Done with Moneyent financial situation of my family -- me, my wife and our two young boys -- is so tight that stupid decisions we make about money really cost us. It wasn't always the case. Back when we could still use our credit cards and my wife was working for a nice paying corporation that would eventually lay her off about a month before our second son was born, we had enough financial wriggle room to be boneheads. Which we were. Repeatedly. I have kept a mental list of some of the most egregious of our mistakes.

-- My family kept one of those grocery store carpet machines out for a about a week and half. We used the machine for maybe two hours and then didn't return it due to sheer laziness. That Hall of Shame moment cost us $325 dollars.

-- We've racked up $50 in Blockbuster late fees. Maybe more. I joke to my wife that one day they're going to put us in Blockbuster jail. We're a funny family, but we're also idiots.

-- Sorry, this one is directly on my wife. It's late at night, the kids are finally in bed and she picks out a movie that she'd like to watch on Pay Per View. I order it, see how much we're going to pay, the credits roll and the next sound I hear is her snoring.

-- We've paid for swimming lessons we've given up on. Gym memberships that went moldering. Fat and broke, that's how we roll.

-- I've agreed to those extended car warranties even when I knew I they were a rip off.

-- We bought a sandbox for our two boys. Two bags of play sand costs about $8 at Home Depot. In the world of expenses for kids, that is nothing. But when you keep leaving the top of the sand box off and it rains and ruins the sand and then you GO BACK to Home Depot again and again to fill up the sandbox, well, you're entering some higher plain of stupidity.

-- Back then, every once in a while, we'd make these grand shows of getting serious about our finances. We'd go to great lengths combing through the paper and cutting out grocery store coupons -- which, of course, we would leave at home each and every time.

I'd like to say that making this list makes me feel better. But really the only thing that would do that is if we start saving money. And we aren't there yet, but our circumstances are forcing us to try harder and hopefully one day be smarter.

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Tuesday, April 29, 2008

What A Little Effort Can Do For Debt Reduction

There are many, many things I love about my life here in the beautiful mesas of the Chihuahuan Desert. Among those are the contrasts, the juxtapositioning of old and new ways of living.

While I make use of the remarkable technologies of today as I write this now, I spent some time this morning as the indigenous women of this region did for thousands of years -- making tortillas. And, while I was working, I was thinking about a couple things related to cooking at home -- far less expensive and far more healthy overall.

I could buy tortillas. They run about a dollar a
dozen. In the photos (always clickable for a larger view), I am mixing up a batch of about 40 for less than a dollar... and, if I do say so myself, my home-made, fresh tortillas are far better than those mass produced in the factory and bagged up. Everyone here has said so, too.

In the big pot next to my wanna-be comal -- I have no proper comal for tortilla making, so I make do with a well-seasoned iron skillet -- are about 5 pounds of pinto beans. I'm feeding 9
people with hearty appetites. I'll be smashing and
frying a good portion of those beans with some
spices for tacos tonight, which is why I made
tortillas this morning. The rest of the beans will be used tomorrow by my sister to make her awesome chili.

The dried beans are pretty inexpensive, about 2 dollars for 4 pounds. Canned beans are easily double and often triple the price. It seems kind of silly to pay that when cooking dry beans is so easy. If I wanted to, I could buy canned refried beans for my tacos, though that would also be much more expensive, and I'd still have to add spices to make them palatable. Furthermore, they'd be less nutritious from the can, and probably have MSG and be high in sodium.

My point, over all, is that many people spend a lot of money on prepared foods, convenience foods, and drive-through foods, when by investing a little effort they could save a considerable amount on their food bill by cooking at home. Furthermore, most of those quick foods are price heavy and nutrition light. The benefits of eating fresh, whole foods are innumerable, but if we stick to the financial aspect for a moment, improved health leads to less money spent on costly health care.

There are many things in day-to-day life that are similar. For those looking to reduce debt and decrease spending (leaving more money for saving or more time for something other than working to pay the bills), learning to do basic repair tasks around the home and on the auto really isn't all that difficult. Being less dependent on others to meet your needs is a very good thing, particularly in today's economic climate.

I've been following the recent news about food shortages, skyrocketing prices, and the rationing of some food items throughout the world with a blend of fascination and horror. This is exactly the scenario that inspired me to remove my family from the city. I, geek that I am, have strange hobbies. Global economics is one of those hobbies and I've been watching trends for a few years now. To me, as well as to many financial experts, it looks like times are sure to be fiscally challenging in the near future and for a significant period of time thereafter. The financial markets are going to have to go through their spasms of correction and we're all going to have to go along for the ride.

During the Great Depression, while those in rural areas did experience severe poverty, they did have a significant advantage over those living in urban areas -- the ability to grow and hunt for their food. During World War II, the Victory Garden was an important supplement to households throughout the nation, including urban neighborhoods, as common, daily-use foods were rationed by the government. Looking at our situation today, it seems that learning to develop a bit of food self-sufficiency -- whether by cooking more, creating urban patio or fire escape gardens in containers, or larger suburban or rural gardens --is not just good economics in terms of a debt reduction plan or strategy for reducing overall expenses, but also simply good old-fashioned common sense.

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Monday, July 31, 2006

FICO Credit Score Gets A 6 Point Raise: Now @ 727

Folks, in my opinion, the system works. Pay all your bills on time, spend your money wisely, shred all documents that contain any sensitive information, and your credit score will rise. Being responsible in matters of money lets the banks know that you "get it," and they respond by offering you the best deals on loans, credit cards, etc. It's really that simple.

Just checked my FICO® credit score to find a new record high: 727. I managed to squeeze out a $700+ payment on one of my Citibank consumer credit cards earlier this month, bringing the balance on that particular card down to zero. So now I am down to one consumer card with a balance, and I plan on transferring that balance to another account in the near future, as there are still plenty of top-notch 0% balance transfer offers out there.

Instinctual Budgeting

I'm going to coin a new phrase, people, right here, right now: "Instinctual Budgeting." That's what I rely on, and it works quite well for me. Some of my friends use complex budgeting systems in order to stay on track with their finances. I respect their discipline, but it's not for me: I simply don't have the time for that. Even if I were to use a sophisticated software program that made budgeting both very easy and very efficient, it would still take up too much of my precious time!

Basically, I know exactly how much my life costs on a daily basis. Rent, phone, cable, cell, Internet, food, energy, etc. Very easy to calculate, since my bills don't vary that much. I also know how much I make on a typical day. Every month, I deposit between $1,500 and $2,000 into my savings account. If for some reason I am not able to deposit at least $1,500 in a particular month, then I cut back on the number of meals I eat outside my apartment, and make up for the lost ground by depositing more than $2,000 the following month.

That's it, really. Sometimes, when I'm at Wal-Mart picking up something I need like deodorant or plastic cups, I get the urge to do a little impulse spending, like pickup a cool gadget or an extra, high velocity fan (it's been very hot this week!) When I get the urge, a little alarm bell goes off in my head, and the urge is almost always defeated after the frugal side of my brain asks the spendthrift side, "Do you really need that item?"

Yep, it's all about sticking to what you need, and spending on what you want on rare occasions.

Here's some advice for anyone who's having trouble controlling their spending: every time you want to buy something, ask yourself if the item or service you are about to spend your hard-earned money on has real value to you. I've saved myself from countless impulse purchases by asking that question whenever I get the itch.

Of course, I'm a guy, so it's relatively easy for me to be thrifty. I shave my own head every two weeks (my hair grows fast.) I have a one pair or sandals--which I wear way too often, one pair of athletic shoes and one pair of black dress shoes. I go clothes shopping every 3-5 years, though I do pickup a new underwear, undershirts and socks every 6-9 months or so. I spend more on my baby girl than I do on myself, and that's the way it should be, IMO.

My plan is to get to a point where I can comfortably deposit between $3,500 and $5,000 into my savings account each and every month. The only obstacles preventing me from doing that right now are my credit card debts and my student loans debts. If all goes well, I should be able to deposit at least $3,500 per month by this time next year. Wish me luck!

Here's the latest screen shot image of my charted FICO credit score:

Updated Chart of my FICO Credit Score - August, 2006: 727

That's it for now. Hopefully my FICO score will experience another increase at the end of August. I'll share the numbers as soon as I get them. Thanks much for reading.

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