Jan 10 2013

Don’t Let Honey Boo Boo’s Mom Show You Up

By |January 10th, 2013|Blog, Personal Finance Tips|12 Comments|

We are just over a week into 2013 and tomorrow might be your first paycheck of the new year.

If you didn’t get a raise then it might be smaller than you are used to because taxes have gone up. That’s what happens when you live in a country that believes the government should continue to grow and it should be funded through income taxes, inflation, and debt.

But if you did get a raise for 2013, your paycheck might be a little bigger in 2013 than it was in 2012. Or maybe you didn’t get a raise but you did get a nice Christmas or New Year’s bonus.

For anyone that earned a bonus or a raise, what are you going to do with your money? Are you going to be like Honey Boo Boo’s mom, or are you going to be irresponsible?

Wait… what?

Honey Boo Boo’s Mom is Financially Wise

If you aren’t familiar with Honey Boo Boo, she is a young girl who lives somewhere in the deep south with her mother, father, and three sisters. The family has a reality TV show on TLC and they are paid around $15,000 PER EPISODE.

mrs shannon

photo credit: twicsy

Here’s my completely politically incorrect description of the show for those who haven’t seen it: TLC found an uneducated, overweight family with a crass little girl so people can laugh at an overweight and uneducated family. It allows viewers to think “At least my family isn’t as stupid and trashy as those people.”

Well anyone who wants to judge this family for being “stupid” might want to take a closer look.

Many reality TV stars spend the money faster than it comes in because 1.) they aren’t very smart and 2.) they think they will be famous and make money forever.

June Shannon (Honey Boo Boo’s mom) is smart enough to know that her 15 minutes of fame won’t last forever and she is putting every penny she earns from the show into trust funds for her four daughters.

Every. Single. Penny.

She’s not buying a new house with some and saving a little on the side. According to an interview with TMZ, Mrs. Shannon says:

TLC puts the money into the girls’ trust accounts for me and then I get an email telling me how much everyone gets.

The article states that they are making at least $15,000 an episode. They had 10 episodes last year and have another whole season dialed up for 2013. They probably earned less money for the first episodes before the show was popular, but I think it’s fair to say that the family will earn at least a few hundred thousand dollars even if the money dries up after the 3rd season.

This “stupid” family is saving every penny of the hundreds of thousands of TV money and continuing to live off the modest salary the father earns as a contractor.

Who’s stupid now?

What Are You Doing With Your Raise?

Maybe you got a raise or bonus for the new year. Maybe you are working hard and will get a promotion (and a raise) sometime in the near future.

What are you going to do with that money?

Are you going to raise your standard of living so that you spend every penny, or are you going to maintain your standard of living and invest the money in something like my favorite 2013 investment silver.

Don’t let a reality TV star show you up on being responsible with money. There’s nothing wrong with spending money as long as it’s within your means, but your “means” don’t have to increase every time you come into some extra money.

I’ll admit that my standard of living has increased a bit as I have gone from a college student to a newly-hired college graduate and then earned two more promotions. However, my first priority has always been financial responsibility and I’ve saved enough over those 4.5 years to go from $30,000 in student loan debt to being debt free and having a net worth over $70,000.

As the financially-wise mother of Honey Boo Boo once said:

You’re never gonna see me drive a Range Rover or a Mercedes. I’ll drive one if someone else pays for it. Never gonna live above my means.

What about you?

Readers: The last time you got a raise, did you increase your standard of living, increase your savings/debt repayment, or both?

Jan 7 2013

2013 Stock Pick for Thousandaires

By |January 7th, 2013|Blog, Personal Finance Tips|7 Comments|

I have one stock picks for 2013 that I believe is both the safest bets you’ll find in the market and has the most upside for serious growth.

But before I get into those picks let’s look back at my 2012 picks. As an official member of the Money Pros financial blogger group, I participated in the Money Pros stock picking contest.

All of the “Money Pros”, which includes 7 personal finance bloggers and another 28 other bloggers and/or blog readers, entered the contest with three stock picks.

There were 35 people picking stocks. I got 2nd place. (if the link above shows me somewhere other than 2nd place, keep in mind that the stocks are still being updated in that sheet every day. I was definitely in second place on Jan 1)

My 3 Stock Picks for 2012

My three choices of Citigroup (C), Sprint (S), and Pizza Inn (PZZI) gave me a return of 51.68% last year. Pretty good huh?

I felt Citigroup was going to have a comeback year specifically because I knew the government wasn’t going to let a bank that big fail and that it’s price was severely beaten down compared to it’s book value and competitors. Today’s price is around $42.43 and I think that’s a pretty fair price. If I were a stock market expert I’d rate Citi as a hold, hoping they will be able to re-institute a solid dividend payment in the coming year.

I also really liked Sprint because AT&T has miserable customer service in some of my experiences and Verizon seems to be very overpriced. There is a big opportunity in the mobile service provider space and Sprint has stepped up to fill that void well in 2012, even if they are still running in 3rd place behind the two giants. I still think Sprint has some room to grow but it’s not one of my top picks for 2013. I’d call it a buy right now, but not a strong buy.

Pizza Inn actually lost me quite a bit of money even though I still really like the business model of their new Pie 5 restaurants. They make custom-made personal pan pizzas right in front of your face. Think Chipotle but for pizza; you pick your crust (thin or thick), sauce (4 or 5 options), and all the toppings you want, all for about 6 bucks. The Pie 5 store near my office is always packed during lunch and I think this is a great business model that will be successful in the future. I would strongly recommend Pizza Inn if they put more focus on expanding on and advertising for Pie 5, but as it stands today I’m lukewarm on their future prospects.

Now that you’ve seen my 2012 picks and I might have convinced you that I have some idea of what I’m doing, here are my two favorite stock picks for 2013.

Silver ETF – NYSE: SLV

It’s no secret that I am a huge fan of silver. Silver is valuable for three reasons: it is used in jewelry, it is a precious metal that has value for investors trying to avoid fiat currencies, and it has some incredible applications in industry.

Did you know that silver is “the best thermal and electrical conductor of all the metals”? There is a lot of great information about silver’s uses in this article at geology.com.

silver coins from canada

photo credit: sirqitous

Silver is being used in computers and cell phone electronics. It’s being used in many of the latest solar panel technologies. It can be used to make mirrors. Heck, it’s even used in socks to cure stinky feet because of its antibacterial properties.

There isn’t a single raw material that I think will be more valuable in the coming years for all these reasons, and I think silver is the most important stock and/or physical precious metal for anyone. I already own both physical silver and some SLV.

Peter Schiff is a highly successful investor who predicted the housing crash years before it happened, and his recommendation in 2013 is the following:

You want to avoid the dollar; you want to avoid bonds; you want to be in precious metals; you want to be in resources; you want to invest abroad.

By investing in silver, you’re hitting two of the three categories. You get precious metals and resources at the same time.

If you want to read the rest of the Peter Schiff interview it’s a great read and it can be found here. Thanks to my buddy Len Penzo for posting a link in his Black Coffee article over the weekend.

I have one investing recommendation in 2013, and it’s silver.

Readers: What are your investment strategies for 2013?

Dec 19 2012

Home Renovation Projects – Double Cost Estimates and Triple Time Estimates

By |December 19th, 2012|Blog, Personal Finance Tips|9 Comments|

As a brand new home owner, I had a few projects to get done before my fiancee and I moved in. It seemed simple: get rid of popcorn ceilings, paint the walls, and put down new floors.

Piece of cake!

I was told that the rule of thumb is that whatever I think it will cost: triple it. However long I think it will take: triple it.

Baloney! I’m not an overly optimistic person. I understand how to take realistic estimates of how long things will take and I am definitely shrewd enough financially not to underestimate.

At least that’s what I thought.

Double Your Cost Estimate to be Safe

If you have a rough idea in your mind about how much money you expect to spend on a project, I suggest you double that estimate to be safe.

Unless you are a very experienced handy man then you should expect to overlook some details.

For example, I pulled up the carpet and will be putting down bamboo floors. I knew I’d have to pay for the floors, the underlayment, some glue for the stairs, and a few tools.

bamboo flooring

photo credit: ninahale

It didn’t occur to me that I would either have to repaint the baseboards I pulled up or buy new ones altogether. Nor did I think about the fact that I might have to level some of the floors and spend time and money doing that.

Those are just my extra flooring costs I know of now, and I haven’t even started flooring yet!

Once you actually know everything you need to do and price everything out, I still suggest to give yourself a little buffer room for additional materials.

For example, we bought 4 rolls of painters tape at the beginning of the project. We’ve now gone through 7 and have plenty more taping to do.

If you double your original cost estimate then you will hopefully keep yourself on budget. There’s nothing worse than getting halfway through a project and running out of money. Unfinished projects drive me crazy!

Triple Your Time Estimate

It has been much easier for us to keep costs in line than it has been for us to get stuff done on time. Again, this is a product of us being first time home owners and not really understanding every piece of a job.

I’ll use floors as an example again. In my mind the steps were 1.) Pull up carpet; 2.) Put down underlayment; 3.) Put down floors.

Pulling up carpet sounds easy enough. Just grip it and rip it right? Well I did that and then…

I realized I had tackboards all over the house and it took a long time to pull them up as well…

Then I realized that I had to get rid of 1600 square feet of carpet and underlayment and my city trash service wouldn’t pick it up…

Then I realized that there are some places where the drywall is so close to the ground that the bamboo won’t fit underneath, so I’ll have to cut off half an inch of drywall in places…

Again, I haven’t even started flooring yet because I’m still not done painting and I’m still not done with all the prep work yet.

And don’t forget all the clean up as well. Every one of these steps makes and mess that needs to be cleaned up.

I can’t stress this enough: if you have an idea of how long something will take but you haven’t done it before, TRIPLE YOUR ESTIMATE!!!

Home Ownership is Work but it’s Worth It

If I could do it all over again, I probably would have stayed one extra month in my current apartment so I had plenty of time to get all the work done before moving in.

Instead I’ll be living and working in a construction zone for a while. (Right now my mattress is sitting on some plastic sheeting, which is sitting on bare concrete floors in a completely empty bedroom.)

Despite all the costs, time, and frustrations there are three really great things about this renovation work.

First, Tag and I are going to have a really awesome house with beautiful paint and great floors that we can admire.

Second, we should at least make our money back and hopefully even turn a profit when we do eventually resell the home.

And finally, if Tag doesn’t leave me before we are done (I have unfortunately been kind of a jerk at times because the frustrations have been weighing on me) then I know our relationship will be stronger than ever. If we can make it through this then I feel great about us being able to weather any storm that comes our way.

Readers: What’s the last home renovation project you did (even if it wasn’t in your own home)? Did you go over budget? Did it take longer than you expected?

Dec 18 2012

Savings Ideas for January

By |December 18th, 2012|General Personal Finance|Comments Off|

New Year’s Resolutions are just around the corner and we can all probably do something to make our lives better.

Some people want to lose weight. Others want to eat healthy or read a certain number of books. Those resolutions are good for some people, but not for everyone.

However, I think we can all agree that we’d like a little more money.

Wouldn’t starting a savings account make a great New Year’s Resolution? Whether you are saving for a house, a new car, retirement, or maybe even just having a few bucks for a rainy day, there’s never a bad time to start saving!

If you’re ready to save then the question becomes, “What is the best account for my savings?”

There are a few different options.

Easy Access Savings Accounts

There are some savings accounts that work a lot like a checking account without checks. Money can be deposited or withdrawn at any time whenever you need to access your funds.

These accounts are great for money that could need to be accessed in an emergency. If you have a hospital bill or home repair then you’ll want to access your money. Do some research to find the best easy access savings accounts for your personal situation and I think you’ll be happy with earning interest on your money while knowing it can be accessed at any time.

CDs or Fixed Term Savings

If you are pretty confident that you can keep the money in savings for a while then you’re better off considering a CD (Certificate of Deposit),or a fixed term savings as an option. This means that you promise to keep the money in the account for a certain period of time.

You’ll get a better interest rate with this type of account because you are promising not to withdraw the money, meaning the bank can be confident the money will be there and they can make it available to lend to other customers.

It’s important to check the rates before getting this type of account. If the interest is a lot more than you can get in a regular savings account then it could be worth it. If it’s not much more, the flexibility of accessing your money might be better.

The Act of Saving is What’s Important

It really doesn’t matter much which account you choose. A 3% return is better than a 2% return, but none of it matters if you aren’t saving at all.

If you open a BM savings account or any other savings account, the most important thing is to contribute to that account as consistently as possible. It will be worth it in the end when you have a bunch of money saved up and you meet your financial goals!

Dec 10 2012

Lending Club Makes Saving Easier

By |December 10th, 2012|Blog|9 Comments|

I’ve now owned a home for about a week and I spent a lot of money on the down payment, closing costs, and of course all the tools and materials to do renovations in my new home. I pulled money out of my Roth IRA and took a 401k loan for the down payment, and have been using money from my savings account to pay for the renovations.

But there’s one place where I haven’t touched a dime: my Lending Club account.

I haven’t withdrawn anything from my Lending Club account because 1) it’s not easy, and 2) the returns are too good.

Selling Lending Club Notes Takes Time

When you are looking at a Lending Club account, you have two different kinds of assets. You have notes, which represent money owed to you by a borrower. You also have cash, which is a combination of cash you have deposited and cash received from monthly payments on your notes.

The cash is easy to get to; it can be withdrawn at any time via a wire transfer or bank transfer.

The notes can’t be withdrawn because they are not actually money. A note can be turned into cash, but that means it needs to be sold to someone else who is willing to take on the loan.

To sell a note, you need to determine which notes you want to sell, how much you want to sell them for, and then hope there is someone looking to buy notes that finds yours priced appropriately. You might sell a note in a few hours, but it could take days or weeks and a few price adjustments before you get a fair price for your note.

If want an investment that is liquid then Lending Club is not right for you. On the other hand, if you like the idea of making your money hard to access (thus forcing you to save) then Lending Club is a great option.

Lending Club Returns are Hard to Pass Up

The other reason I’m not cashing out my Lending Club investments is because I’m making too much money!

The stock market scares the crap out of me (even though I still have a lot of money in the market through my 401k) and I want to get decent returns outside of the stock market.

How does 13.38% sound to you?

Lending Club Returns

In the stock market I never know what’s going to happen and I have no idea what the companies I invest in are really doing with that money.

With my Lending Club investments I am getting a solid 13% return, I know exactly what the money was used for, I’m getting cash payments every month, and for the most part I’m helping my fellow Americans pay off high interest debt (because almost all of my Lending Club notes are debt consolidation notes).

I’m Keeping My Lending Club Investments

I sold every stock I owned (aside from 50% of my 401k) to buy my house, but I didn’t sell one single Lending Club note because I believe in peer to peer lending and the returns speak for themselves.

Let me be clear: if you want a liquid investment then Lending Club is not the place for your money.

But if you are content to buy and hold and enjoy monthly cash payments then Lending Club is as good as it gets as far as I’m concerned.

Readers: Do you have any investments that you aren’t willing to get rid of for any reason (barring emergencies)?

Dec 3 2012

How Much Does Invisalign Cost? For Me, $1,050

By |December 3rd, 2012|Blog, Personal Finance Tips|6 Comments|

Ever since I left college and started working full time, I’ve wanted to get Invisalign.

I want straighter teeth, but I don’t want to have ugly braces on my mouth. Invisalign is really my only option. There’s one big problem with Invisalign that has made me not get it for the last three and a half years.

It’s EXPENSIVE!

According to the Invisalign website, cost of treatment ranges from $3,500 to $8,000, with an average of just about $5,000. I want straighter teeth, but not that badly.

I actually had two free consultations hoping to get a price I could afford, and both times I was told it would be about $6,000 (of which my dental insurance would pay about $3,000). That’s too much for me.

That is, until I found a deal.

I Found Invisalign for $2,800

A local dentist’s office here in Irving was offering full Invisalign treatment for just $2,800. I thought it was too good to be true. I called them to check, and they confirmed the special.

$2,800 is pretty good, but still out of my price range. The next question would make or break the deal: can I use my insurance on this offer?

To be honest, I was fully expecting the answer to be “no”. I had found an Invisalign Groupon before and they said they wouldn’t take insurance.

Good news! This time they were happy to accept my insurance (with some provisions) and I was on my way to getting my teeth straightened.

It Only Cost Me $1,050. Here’s How

Now that I found Invisalign for $2,800, I had to reduce those costs even further to make it fit my price range. Right off the bat I was able to chop it in half thanks to my dental insurance.

Invisalign TraysThere was just one little problem with the insurance. The dentist wanted me to pay in full up front, and have the insurance company reimburse me over the 18 months of treatment.

While I would rather just pay the $1,400 and let the dentist’s office deal with the insurance payments, this was still too good of a deal to pass up. My insurance company will be reimbursing me $233 every three months during the treatment, for a total reimbursement of $1,400. Booyah!

So that brings the cost down to $1,400. I reduced my costs further by using my Health Savings Account. Thanks to my HSA, I have a bunch of savings that have not been taxed. Considering the fact that I’m in the 25% tax bracket, I get 25% more money in my HSA than I would get if I were to let that income be taxed.

That means when I spend $1,400 out of my HSA, it’s the same as spending 25% less, or $1,050 of non-HSA money.

My Cheap Invisalign

Promotional Price: $2,800
Dental Insurance Benefit: $1,400
HSA Savings: $350
Total Cost to Me: $1,050

Now that’s what I call a good deal! I’m like an orthodontic services price hacker!

My Review of Invisalign

I’ve actually had Invisalign for a little over half a year now and I’m not as excited about it as I was when I first ordered it.

First: I hate is stinky breath. I am cleaning these stupid trays constantly but they still smell. I hate it and my fiancee hates it.

Second: I hate removing them for meals. It sounds like a benefit because I can eat whatever I want. Unfortunately, removing them can be difficult and painful (especially in the first few days of a new tray).

Third: It takes so much longer than braces. I was told braces would only take a few months. My full Invisalign treatment is going to last well over a year.

Fourth: It’s not just the trays. To make Invisalign work they will have to put some composite on the outside of your teeth. It’s not noticeable from far away but it looks weird up close and feels very weird for the first week or two.

Overall: If I could do it all over again I would consider regular braces because of the shorter time frame. However, I’m sure there are lots of downsides of braces that I would hate as well. The bottom line: straightening teeth is not a pleasant experience no matter how you do it.

Readers: Have you ever gotten orthodontic treatment? If so, what did you do to reduce your costs as much as possible?