Nov 16 2011

Whatever Wednesday: Golddiggers and Stupid Committees

By |November 16th, 2011|Blog, Life|14 Comments|

Every now and then I need some inspiration for an article. I could write the 8,243,412nd article about “10 ways to reduce spending”, but I know my readers don’t want that. If they wanted bland, generic articles, they’d go to CNN or somewhere else equally lame.

So instead of throwing my brain into overdrive and figuring out what my readers might like me to write about, I made it a lot easier on myself. I asked my twitter and facebook followers what they want. Here’s what I got:

Whatever WednesdayI find it interesting that three out of the four responses are at least vaguely related to relationships (“boobs” is a stretch, but I’m going with it). Maybe I’ve become a relationship/money expert after my most recent music video. Get me a TV show! I’ll be the financial Dr. Phil!

I do really like this idea of engaging with my readers and writing about whatever they want. And since I’m a fan of alliteration, I’m declaring Wednesday to be Whatever Wednesday from now on (until I change my mind).

On Tuesday nights from now on, I will ask for topic ideas on my twitter and facebook pages. I will always write about the first response from both Twitter and Facebook (so make sure to be the first!), and I’ll also pick anything else that sounds interesting. Sound good? Great. Let’s go.

Welcome to Whatever Wednesday!

Money Issues are the #1 cause of Divorce

I’ve heard this before, and I have two theories that I can’t support with any data.

Theory #1 – In low or moderate income couples, I believe a lack of money makes people unhappy in general. Then I think this general unhappiness can cause divorce. I’ve been dirt poor earlier in life, and I’m currently doing pretty well financially. I can tell you with a great deal of certainty that having money to pay the bills makes life easier. So if you don’t want money to break up your marriage, make sure you have enough of it that you can pay your bills comfortably.

Theory #2 – How people spend money is a reflection of their priorities. When you are single, your spending reflect only upon yourself. When you are married, your spending reflects upon you and your spouse as a couple. When two people who have very different personalities or interests get married, it can spell trouble.

For example, sometime people disagree on how much to spend on a sick pet. The key to ensuring money doesn’t become an issue in a relationship is to make sure husband and wife agree on most priorities and have discussions about where they differ BEFORE marriage or keep separate accounts during marriage.

Boobs

These things can be huge money savers for women! They help ladies avoid cover charges and/or earn free drinks at a bar. When used properly, they can get a lot more out of a guy than just a few drinks (see the golddigger section below). And most importantly, they are a natural way to avoid buying baby formula!

On the down side financially, ladies have to buy bras. They also might want to “enhance” their chest, which costs thousands of buckaroos. And women have the unfortunate distinction of a much higher probability of getting breast cancer than men.

Overall, I can’t decide if boobs are a financial positive or negative. But I have decided that I’m glad they’re there.

Golddiggers

Speaking of boobs and using them to get money, some women make their living on doing just that. And call me crazy, but I say more power to them.

gold diggerLet’s be honest; there are no “undercover” golddiggers. When a female decides money and gifts are the most important thing in a relationship, she makes sure men know it. No woman starts at “Let’s just eat Ramen Noodles to save some money” and changes to “WHAT!? Only a 6 ct. diamond ring? Unacceptable!”

A golddigger is looking for a rich man to spoil here, and some rich men are looking for women to spoil.

If a man is with a golddigger, it’s because he decided to be. I’d never personally date a golddigger (and I know for sure a golddigger would never date me) and don’t really understand why any man would, but if two people decide to be in a relationship and both are forthcoming about their expectations, then who am I to judge?

The Debt Reduction Super Committee

Stewart thinks this committee is “horrible” in his own words. I think it’s laughable.

They are supposed to find $1.2 trillion in savings against the budget over the next 10 years.

So we have a national debt of $15 trillion dollars (100% of our GDP), and annual deficits of well over $1 trillion from 2009-2011. The deficit in 2012 is projected to be over $1 trillion, and the only reason projections say the deficit will reduce to around $700 billion in 2013 is because estimates are expecting a huge economic recovery and increased tax revenues. I’d say we’re realistically looking at between $7 and $10 trillion in deficit spending over the next 10 years.

And this commission is only trying to find $1.2 trillion over that time frame? Is there a point to this?

Does anyone really think there’s a practical difference between $7-10 trillion or $6-9 trillion of deficit spending over a decade? If you do, you might want your head examined.

We need to make a decision as a country. We could go full communist, start taxing everyone 50% and balance the budget with massive spending and taxes. Or we could go the way our founding fathers intended and reduce the size of the federal government, giving power back to the states, and cutting spending while people keep more of the money they earn. I prefer the latter.

But to think that the government can spend like communists while the citizens are taxed like a free market society is completely and utterly insane.

EDIT: For a real plan to reduce the size and scope of the federal government, including $1 trillion in cuts in ONE YEAR, check out Ron Paul’s Plan to Restore America.

This Super Committee is more like a Stupid Committee.

Happy Whatever Wednesday!

There’s my first Whatever Wednesday and I had a lot of fun with it. I’m definitely doing it again next week, so make sure to keep an eye on twitter and facebook next Tuesday and tell me what to write about!

Nov 15 2011

Why You Should Buy Junk Silver

By |November 15th, 2011|Blog, Personal Finance Tips|20 Comments|

Last week I invested almost $2,500 in a bag of American coins with a face value of $100. Sounds pretty stupid right?

Well, when the coins are 90% silver, it’s a good deal.

Dimes, quarters, half dollars and dollar coins made in 1964 and consist of 90% silver and 10% copper. These coins are commonly referred to as junk silver. Yes, I spent about $2.5k on junk!

Don’t let the name fool you though; the “junk” designation just means the coins aren’t rare or collectable. They don’t have value as collectors items, but they do have value because of the silver content in the coins.

Why Do I Need Junk Silver?

junk silverYou might think I’m crazy for spending a few thousand bucks on silver coins. I think you’re crazy if you don’t.

Many Financial Advisors Recommend having 10% of Your Portfolio in Precious Metals – This is an easy one. Buying precious metals like gold and silver increases the diversification of your portfolio. There’s nothing ground breaking here; it’s just a smart, responsible financial decision.

For most people, investing in silver (or any precious metal) stops right there. And that’s great; diversification is important and is a good enough reason to invest in precious metals.

But if the economy starts getting really ugly and the world starts going a little crazy, you’ll be very glad you have junk silver stored safely in your home. Here are a few reasons why you might need junk silver in the future.

Prepare for the Worst

The Fed Won’t Stop Printing Money – The Federal Reserve prints money every day, which means every dollar you own becomes less valuable over time. Silver and other precious metals are a good hedge against inflation. It’s simple; for every new dollar that’s printed the dollars in your bank account are less valuable and your junk silver is more valuable.

America has about $15 Trillion in Debt and it’s Growing! – As of today, the United States federal government is in debt to the tune of about $15 trillion dollars, and that number grows every day. The only politician who has a serious plan to cut spending and balance the budget within a reasonable time frame of a few years (Ron Paul) is polling around 10% in the Republican primary. If he doesn’t win the presidency (which sadly seems unlikely), you can be sure American debt will grow more and more every year.

At some point, the government might start printing money to pay our debts, which would cause hyperinflation and the dollar could lose so much value it would become almost worthless. And if a dollar is worthless, many experts believe people will start bartering with junk silver due to its inherent value as a precious metal and the widespread existence of junk silver coins.

I know this sounds insane, but just take a look at Europe’s current debt crisis and you’ll see that this isn’t so far fetched. And speaking of Europe…

Europe Could Send the World into a Depression – Maybe you don’t believe America will cause a huge financial meltdown, but we still might be the victim of one coming out of Europe. Right now Italy is struggling to pay their bills and, as the eighth largest economy in the world, could send all of Europe and the rest of the world into a depression if they can’t get their act together.

In times of economic uncertainty, people turn to precious metals. At the very least your precious metals will increase in value dramatically. At worst, junk silver becomes the default barter currency in a global financial market failure and you are one of the few people to have any.

Nuclear War and/or the 2012 Doomsday Scenarios – The Middle East is a dangerous place right now and Iran is trying to develop nuclear weapons. Nuclear war between Israel and any of their neighbors (Iran [if they develop the weapons] or Pakistan) would not only have a devastating impact on human life and the planet, but would definitely send the world economy into a free fall.

Maybe Mitt Romney is elected president and follows through on his “bully China” rhetoric and starts a war with them. Maybe terrorists get a nuclear weapon. Maybe North Korea decides to bomb South Korea. It could all happen and precious metals will be extremely valuable in any of these cases.

And maybe you believe in the Mayan calendar or any of those other crazy things. In any situation where the world goes crazy, precious metals are the safest place to be.

It’s Better to be Safe than Sorry

Look, I’m not predicting the end of the world. I hope all countries figure out their debt problems and there’s never another nuclear war. I hope the federal reserve gets audited and eventually ended. I hope there is never another war on this planet, much less a nuclear war.

But if something, anything, sends the world economy into a tailspin, you’re going to want precious metals. And you won’t want a gold or silver ETF either; you’ll want that stuff in your house.

And best case scenario, nothing bad happens and you’ve just diversified your portfolio with some precious metals. It’s a win-win.

If you want to buy junk silver, you’ll want to do some research. Mine started here at Free Money Finance in this interview with expert Doug Eberhardt. That article and some independent research led me to buy my junk silver at APMEX. I did cost comparisons among a number of sites, and APMEX had the best price on a $100 face value bag of 90% junk silver.

Other forms of silver, like silver bars and coins, are also offered as investments. Companies like U.S. Money Reserve Inc have gold and silver investments available, depending on which type of metal you choose.

As soon as my silver is delivered, I will talk about where to keep your valuables to ensure they are safe in the event of a fire, robbery, or oblivious kid looking for quarters for the gumball machine.

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!