Nov 11 2011

Credit Card Rewards Justify Things I Don’t Need

By |November 11th, 2011|Blog, Personal Finance Tips|15 Comments|

I want a tablet.

Not just any tablet either. I want the ASUS Transformer Prime. I’ve been waiting for this thing for months! They officially “launched” the tablet on November 9th, but still haven’t set a release date. I’m told it will be available in December though, and I will preorder this baby as soon as I can.

From a geek perspective (aka hardware) it is superior to the most popular tablet, the iPad2, in every way. I also very much prefer the Android operating system over iOS, so this thing is basically all I could ever want.

Gimmie Gimmie GIMMIE!!!! I want! So bad!

But I don’t need a tablet. Specifically, I don’t need a $500 tablet.

I really couldn’t justify spending $500 on something I don’t need. But I can justify spending $500 worth of credit card rewards on something I really really want!

Treat Yourself With Credit Card Rewards

The problem with credit card rewards is that I can’t use them to pay bills. I can’t buy groceries with them and I can’t pay rent with them. They are useless from a responsible personal finance perspective!

I’m basically limited to gift cards from Best Buy, Sears, and a whole bunch of restaurants or other places I don’t shop. So if I can’t do something “responsible” with my rewards, then I may as well do something fun!

And yes, I’m sure I could have scoured the website and found items of gift cards that I would have purchased eventually, and I probably would have if I were struggling through debt.

But I’ve worked hard to put myself in a position to buy things I want, and I’ve been responsible enough to get over $500 of free money by using credit cards responsibly.

IT WILL BE MINE!!!!

What would you buy if you had $500 worth of credit card rewards?

P.S. Happy Veterans’ Day to all the veterans out there. Thank you for serving America proudly!

Nov 10 2011

Herman Cain Hates Frugal Savers

By |November 10th, 2011|Blog, Economics / Politics|36 Comments|

Herman Cain hates savvy personal finance savers.

I’m actually really surprised that I haven’t seen anyone point out this fact earlier. I was going to write this article weeks ago, but then just assumed someone else would jump on it. Unfortunately that hasn’t happened and I can’t ignore it any longer.

Republican presidential candidate Herman Cain wants to punish people for saving money.

That’s what a new sales tax does, like the one he’s proposing in his 999 plan. Think about every dollar you have in your bank account, and then realize that if Herman Cain implements his 999 plan, you have to give the government 9% of all that saved money.

Well I guess that’s only if you spend that money. If you want to burn it or make paper airplanes out of it, then you don’t have to give them 9%. But I have a feeling most people expect to spend the money they earn. Or they expect their kids or grandkids to spend it. Eventually, it will get spent and it will be taxed 9%.

Haven’t We Been Taxed Enough Already?

When you include Social Security, Medicare and Federal taxes, I paid a 22% tax rate in 2010. If any of that money has been saved and I hold it until 9-9-9 is in place, add another 9%. It’s pretty simple. 22% of income tax plus 9% of a sales tax is a total tax rate of 31%!!!

Herman Cain Hates SaversNow let’s compare me to my theoretical identical twin. He made the exact same amount as me and he was taxed at 22% in 2010. Except he wasted his money on booze and video games and parties. He didn’t save a penny. Well Herman Cain might shake this guy’s hand and say “Congratulations! You were irresponsible enough to spend every penny. We won’t tax you extra.”

Do you see how absurd this policy is? I don’t actually think the point is to penalize savers, but you can’t ignore the fact that it does.

If you want to implement a national sales tax, there should be a provision to ensure current assets are not taxed under both the old system and the new system. Herman Cain has no such provision. I actually find it quite humorous that his website claims:

It taxes everything once and nothing twice.

Yes, it taxes everything earned after the program is implemented once, but it taxes everything earned before implementation twice. As someone with thousands of dollars in savings, I don’t consider that “nothing”.

Implementing This Plan Would Cause a HUGE Market Imbalance

Imagine trying to implement the 999 tax plan. Let’s pretend the 9% sales tax goes into effect on May 1st, 2012. After this day, everything is going to be 9% more expensive because it will have a 9% federal tax on it.

Imagine how many people would go to the store on April 30th and buy as many things as possible to preempt the 9% price hike. Food. Electronics. Clothing. Maybe even Christmas presents. Buying something in April that you would have bought in the future is a guaranteed 9% return on your investment!

Now imagine the economic lull in that would start in May and last for who knows how long. People aren’t going to be buying anything because they spent all of April loading up on everything they need.

Herman Cain’s 999 Plan Is Terrible!

Herman Cain’s tax plan penalizes savers and it will create a huge temporary market imbalance. It is not a good plan for America, and it’s especially terrible for responsible people who have saved up a lot of money thinking it won’t be taxed again.

What do you think about Herman Cain’s Plan?

Nov 9 2011

A Sick Pet Can Be Very Expensive

By |November 9th, 2011|Blog, Personal Finance Tips|34 Comments|

I was at my girlfriend Tag’s house last night, and her mom was telling me about how one of their cats has bladder stones. Poor kitty!

There are two ways to potentially cure the animal. The first is to put it on a special diet and hope they go away. If that doesn’t work, the only other option is surgery.

Pet Surgery is Not Cheap

As soon as Tag’s mom mentioned surgery, I cringed. According to this website, feline bladder stone surgery costs just under $1,000! And while nobody likes to think about it, the third option is to put the animal down if surgery is too expensive. The question in my mind became, “How much should you pay to fix your pet?”

cat

photo credit: flickr.com/kneva/

This is a hard question to answer because there are so many different types of illnesses and at many different costs. Is the animal going to need repeated, expensive treatment, or will one large expense fix him or her forever?

Then there’s the question of the financial situation of the pet owners. If you have money saved up and it would make you happy to fix your pet, then go for it. If you’re in debt, and you’re only going to go deeper by paying for your cat’s surgery, well, that’s something I personally would never do. In fact, I think it’s financially pretty stupid to have a pet in the first place if you’re deep in debt; taking care of an animal properly can cost a lot of money.

Pet Insurance?

There’s also the option to get pet insurance, but it sounds like a big fat scam to me. This website offers pet insurance starting at $12 a month, but it also says their plans have deductibles up to $1,000. To get a plan with a reasonable deductible, who knows how much it’s going to cost? Then if you have multiple animals, are you going to insure all of them? You could easily be talking $100 a month in PET INSURANCE! That’s insane!

Watch Out For Your Relationship!

One of the biggest issues I encountered with Tag last night was the discussion we had later about the surgery. I came at it from the “you can always adopt a new cat” perspective, and she used the “a pet owner has a responsibility to that animal!” line. After a little discussion, we found some common ground with the decision being a combination of price, how much longer the animal could potentially live, quality of life, financial situation, and other things.

But I want to be clear, this had the potential to be a serious disaster! Here are a few tips to ensure your relationship can survive a fight over spending hundreds or even thousands of dollars on pet surgery.

  1. Don’t have a pet (easiest solution)
  2. Be stinkin’, filthy rich so that a thousand bucks or two doesn’t matter
  3. Be willing to compromise. Your girl will seriously hate you if she blames you for her dead cat.

What’s Your Pet Surgery Limit?

If I had a pet, and I didn’t have a girlfriend to influence my decision, I think my pet surgery limit for a sickness (not getting spade, neutered, or declawed) would be:

  • $750 for a pet from ages 3-8
  • $0 for a pet 0-2 (because if you already need surgery at that age, I feel like you’re gonna just keep costing boatloads of money over the next 10ish years)
  • $250 for a pet 9+ (because you’ve lived a good life at that point).

This also assumes I have a positive net worth and a handle on my finances. If I’m broke, then I’d send a sick pet to the pound. Not because I don’t want the animal to survive, but I want myself to survive more.

And of course, if I were married and my wife had a different idea, I’m sure these would change.

What’s your limit? Does your limit change based on your significant other?

Nov 8 2011

Quick Money Tip: Splurge at the Grocery Store

By |November 8th, 2011|Blog, Personal Finance Tips|13 Comments|

When I go grocery shopping, I’m always on the lookout for good deals. If it’s not on sale, I probably won’t buy it. I feel like I’m saving money that way.

Except I’m pretty sure it ends up costing me money in the long run. For example:

supermarket

photo credit: flickr.com/james_lumb/

My favorite ice cream is Blue Bell Coffee Ice Cream. It’s delicious! But if it’s not on sale, it costs about $7. “No Way!” says grocery store Kevin. “That’s way too expensive.”

So what do I do when I want dessert? I hop in the car and drive to a frozen yogurt place where I spend $4.75 for one serving of dessert.

So I’m giving up roughly 8 servings of ice cream at less than a buck a serving, and exchanging it for frozen yogurt at almost five bucks a serving. How stupid. It just takes two trips to the froyo store to be more expensive than a whole carton of ice cream.

The Grocery Store is Almost Always Cheaper than Eating Out

That was just one example, but it works for almost anything. Regular priced food at the grocery store is almost always cheaper than eating out, so don’t feel bad when you buy the good stuff at the grocery store.

Splurge a little bit. Personally, knowing that I can buy anything I want at the grocery store raises the excitement level of the supermarket from mind numbing to tolerable. Maybe it’ll work for you as well.

So get out there and do your own Supermarket Sweep next time your fridge is empty!

Nov 7 2011

Saving Money For the Future Doesn’t Matter if You’re Dead

By |November 7th, 2011|Blog, Personal Finance Tips|24 Comments|

How bad would it suck to be financially responsible all your life, diligently saving money all your life for retirement only to find out that you have cancer and only have a few months to live?

It would suck harder than an a capella Black Eyed Peas concert.

That’s why a big part of being financially responsible is being health conscious. You have to survive until retirement for any of your retirement savings to matter.

So how do you increase your chances of living past 60? I’m so glad you asked.

Go to the Doctor When You are Healthy

One of my professors in college told me a story about his brother. I don’t remember his name, so we’ll call him Francisco. That’s a fun name to say. Franciscooooooo.

army medical doctor

photo credit: flickr.com/armymedicine

So Francisco was a healthy young guy, and every year he went to his doctor to get an annual physical. Francisco wasn’t sick; he just wanted the doctor to take a look and make sure he was healthy. One of the most important parts of his annual physical was the bloodwork. Every year, he would have blood drawn and tested.

After many years of healthy check-ups, Francisco went in for another routine physical. They did the bloodwork as usual, and everything came back within the normal range for typical people. However, one of the numbers, while in the normal range for an average person, was pretty high for Francisco compared to his years of previous bloodwork. The doctor did further tests to see if there was anything abnormal causing the spike, and sure enough, he found cancer.

Because the cancer was found so early, Francisco was treated and completely cured relatively easily. If he didn’t have years of bloodwork establishing his own personal “normal” range, then the bloodwork during this visit never would have made the doctor think twice about doing more investigation.

Francisco’s robust history of bloodwork probably saved his life.

Take Advantage of Well Checkups

I literally don’t remember anything about that class expect the story I just told. It stuck with me, and I told myself that I would get a physical with bloodwork every year as soon as I got out of college.

Here I am, three years out of college, and I just finished my fourth annual physical. Four trips to the doctor, and four clean bills of health. Which means I have four years of bloodwork data that can be used if I ever start feeling sick. I’m establishing my own personal “normal range”.

In fact, I even track all my bloodwork in a spreadsheet. Just like all the other spreadsheets I use, I put it on my downloads page and made it available for you to use if you’d like. It not only records all of my bloodwork, but also tells me if any of my new bloodwork is abnormally high or low compared to my previous years. It’s probably the nerdiest thing I’ve ever made. In fact, I showed this spreadsheet to my friend at Harvard Med School, and she called me a supernerd.

But I take my health very seriously.

You can download the spreadsheet here if you want, but that’s only for supernerds. The main point is to get a physical every year.

Get Your Freaking Physical!

I very rarely give blanket advice. When you are talking about someone’s money or their health, it’s always a personal decision. However, if you have health insurance that gives you a free checkup with bloodwork every year, then you need to do it. It would be seriously stupid to ignore it.

And if you don’t have health insurance or your insurance doesn’t cover physicals and bloodwork, I still think you should strongly consider a physical every year. My doctor charges $237.00 for a physical with bloodwork. It sounds like a lot of money, but it can help save you a ton of money by catching a serious disease early. Oh, and it might also save your life, which is probably pretty important too.

So get an annual physical and make sure you live long enough to reap the benefits of your super responsible financial saving habits!

Nov 4 2011

Race to $1 Million – November Update

By |November 4th, 2011|Blog, Life|12 Comments|

The Race to $1 Million is a monthly series where Kevin McKee and The Hoff post net worth updates. The first person to reach $1 million in household net worth wins an undetermined prize.

Can I get a “WOOT!” for the stock market this month.

Holey freaking baloney this month was awesome. I can’t hold back any longer, so here’s the update for November:

Great Race to $1 Million Month

That’s right. Not only did my net worth increase by over six grand, but I also gained close to $900 on The Hoff. Sweeeeeeeeeeet!!!!

How Did I Make So Much Money?!?!?!

How on Earth can I make $6k in one month? Maybe I’m dealing drugs. Or maybe I took out a very large renter’s insurance policy and then had an “accidental fire”.

Nope. I didn’t do anything special at all.

You may remember two months ago when I lost $6,555 in one month. I came up with a highly controversial plan of action; change nothing!

There are some things in life where you need to change directions when it starts going bad. For example, if you’re driving on a very tall mountain and you find yourself off-road going toward the edge. Changing direction would be a very smart thing in that situation.

But with the stock market, if you are investing in good companies with solid fundamentals, a dip in price is just a temporary sale. The company will most likely go back up eventually and you will get your money back. And if you don’t believe me, see Kevin McKee in Sept 2011 and Kevin McKee in Nov 2011.

Now imagine if I had freaked out. I saw my net worth drop over $6k and decided the stock market is too risky for my money. I decided to cash out and put my money under a mattress.

I wouldn’t have made all that money back this month.

Nobody has ever made money in the stock market buying high and selling low. Don’t freak out over temporary market losses. If you hold on long enough, there’s a darn good chance you’re going to get all your money back and then some in the long run.

One Year Net Worth Graphs

Here are the details of my net worth over the last 13 months. If you want to have a super sweet spreadsheet with awesome graphs like this, just download my net worth tracker (free, as always) with instructions here and start doing it yourself!

Student Loan Debt: Just over $15k. I won’t make any serious progress against this until early next year, but I am working very aggressively to save cash and pay these down in large sums.

401k and Roth IRA: Both are still lower than their March/April peak this year, but definitely looking much better than they were in August and September. If they go up, great! If they go down, I get to buy more stock cheap, so great! It’s really a win-win.

Overall: I think an average month in the stock market will put me over $30k for the first time since April. I started the year at $18,847, so if I can finish above $30k, that’s an average gain of about $1,000 per month. I’ll take that.

Click the image for a full size view.

Kevin McKee Net Worth