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What I Should Have Considered Before Buying

I’m a big advocate of home ownership. Not because I think it’s a right but because I think it makes people appreciate where they live and the structure they live in. Homeowners are the anchors for a strong community. But home ownership does have its trade-offs. The following are four examples of things I should have considered before I bought my last home.

1. More Space = More Maintenance. My home isn’t huge by any stretch of the imagination. But it did come with 3 acres and an extra room over a very large garage. It’s amazing how dirty a space can get even though I only passed through it for about 30 seconds each day.

Did you know that trees don’t prune themselves? That they can split and create a week’s worth of cleanup work? That bad trees and shrubs grow twice as fast as the good ones?

98% of the property was easily maintainable. It was that last 2% that gave me the most grief. In the future, I would definitely consider buying less acreage. Especially here in the south where yearly growth is measured in feet rather than inches.

2. My Lack of Skills. I’m the first to admit that my house maintaining skills are on the severely lacking side of the scale. My wife would agree. Fixing a toilet? What’s that about? Climbing into a dank crawl space with nothing but a flashlight to fix a heater duct? Now that’s what I call learning on the job!

I certainly know more now than I did four years ago. But the process was painful sometimes and an inconvenience every time.

3. Winter Utility Costs. I only have one word—propane. I burned through nearly $700 of propane in two months. That didn’t include the cost of electricity to run the heater. That was in the winter of 2006. The last time it had been that cold for that long was in 1988, nearly 20 years prior.

I was cursed. My business was sinking while I was sinking more money into heating a house. I adjusted quickly after cutting and burning a cord of fire wood. Then replaced the wood stove with a pellet stove. I didn’t keep count but I probably spent $5,000+ on propane, wood, and stove replacements that first year.

4. Lack of Internet Access. When my wife and I first moved in, we both worked from home. We also both assumed we could get Internet access. We had specifically asked if Internet was available. “Oh, sure!” came the reply. What I didn’t realize was that my question wasn’t specific enough with what type of Internet access I’d be able to get. Internet access is Internet access, right? Apparently, dial-up still works fine for some people.

I ended up using satellite Internet service for a year—or what I affectionately referred to as “high speed dial-up”. After spending $500 to have it installed and paying $80/month for a year, I was ready to move on. And after having to clean off the dish receiver as a result of a greater than average snowfall that first winter, I was desperate. Luckily, by that point, cellular data service had become ubiquitous so my wife bought a data card for her laptop and I cruised the local coffee shops.

However bad I may have perceived these things at the time, they pale in comparison to the good memories we made. I miss that place—except for the mice of course. So, if you’re in the home buying mood, examine your motives. Look at all the pieces and parts. And set your expectations accordignly. If everything checks out, then go for it!

How Panhandlers use Free Credit Cards

Have you ever been reluctant to give money to a homeless person? I know I’ve been reluctant on several occasions. But why? My gut reaction is to think they’ll just use it for booze or drugs. But a recent test of that theory gets debunked…sort of.

In a story published by the Toronto Star in August the author, Jim Rankin, decided to see for himself how the homeless would use a credit card if given the chance.

Over the past two weeks, I wandered Toronto’s downtown core with five prepaid Visa and MasterCard gift cards, in $50 and $75 denominations, waiting for people to ask for money.

I think this is important. He waited until someone asked first. I know I’d be suspicious if someone walked up to me with a “free” credit card. Yeah right.

So, what happened when someone did ask for money?

When they did, I asked them what they needed. A meal at a restaurant, groceries, a new pair of pants, they said. I handed out the cards and asked that they give them back when they’d finished shopping.

He didn’t follow them around. He extended money but, more importantly, he extended trust. Even though it was part of his experiment, I think it lends an aire of dignity to the story.

How was his invitation received?

Some were unbelieving at first. All were grateful. Some declined the offer. Some who accepted didn’t come back, but those that did had stories to tell.

He then proceeds to hand out the card to four people. A 28 year old man. Another man sitting on a suitcase (no age given). Marc, another man who looked to be in his early 30s. And Joanne, aged 60, and mother and grandmother.

They each have their own story about what they did, or did not, buy with the card (click through to read this amazing story).

But before you do. I wanted to share what I got out of this story.

Number one: I’ve been amazingly blessed my entire life. I’ve always had a roof over my head, cash in the bank, and a job (or business). I’ve never missed a meal because I didn’t have anything to eat.

Number two: I have an incredibly supportive family that would do anything for me. Joanne’s plight is what got me thinking the most. Here’s a 60 year old woman. She has a daughter and a granddaughter. Where are they? Are they themselves barely making it? I think of my own mother and my heart breaks. I don’t have a good relationship with my father but I would let him live with me rather than the street. But, that’s another story that will probably never be told.

Reference: http://www.thestar.com/news/gta/article/854018–how-panhandlers-use-free-credit-cards

Consumer Price Index – A Short Tutorial

How to Blow $70,000 in 8 Months

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I don’t think anyone ever intends to torpedo their finances. Nobody wakes up one day and says, “yeah, I think today I’ll flush everything I’ve worked on the last 10 years down the toilet.”

But do the reasons matter after it’s already happened? At some point I became comfortable with the fact (at least on a superficial level) I was becoming nauseatingly deeper in debt. Debt that would have made me revolt with sickness just a few years prior.

Surprisingly, I don’t have expensive addictions. No gambling. No drinking. Zip on Golfing. And I still own the first car I ever bought (going on 14 years). What gives? How could an otherwise sane individual, an individual who avoided any debt for the first ten years out of college, rack up nearly $70,000 in debt in a matter of 8 months? Rather easily actually.
Continue Reading…

Retirement for Young’uns

If you’re under the age of say 45, have you ever stopped to think about what your retirement will look like? With the recent mulling over of raising the Social Security eligibility age (to 70 in case you didn’t know), maybe it’s time to take a reality based look at our golden years.

The good people over at FrugalDad are questioning the typical retirement rules.

As our economy shifts away from manufacturing (something I personally find very sad), and into service, I think people will be more likely to change jobs dozens of times in their lifetime.

I personally have worked for 5 different companies in the span of 10 years—not including the 5 legitimate and as many illogical businesses I started over the same period. To say that I view retirement differently than 99% of the American population is a vast understatement.

So, how does having so many jobs affect retirement?

With all this job-hopping, the emphasis on personal responsibility for your financial future cannot be emphasized enough. Add in the question of social security’s solvency, the disappearance of the corporate pension, and the possibility of state bankruptcies, and you can easily see we are walking a financial tightrope with no safety net.

Just the other day I was speaking with a co-worker (he’ll turn 50 next year and has worked for the same company for nearly 20 years now) about the myriad of businesses I started. One thing he could absolutely not get his head around was how I managed my own benefits. Health. Retirement. The whole lot. For him, it was a scary prospect. For me, it was freedom and control. Two very different mindsets indeed.

Perhaps we should change our definition of retirement.

A short but profound summary. How about you? Have you really looked at retirement, as it’s defined by older generations? Do you agree?

Read the whole article at FrugalDad.

Related article: The End of Retirement as We Know It (theatlantic.com)

Survey is in – HMO Good Congress Bad

Uttering the three letters H-M-O gives me the creeps. Nameless, faceless bodies that tell me which medical specialists I can see and which ones I’ll have to fork out a few extra dollars for. But, HMOs fair much better when compared to another nameless, faceless body…Congress.

In a recent article by Daniel Indiviglio of The Atlantic, he shares the latest results of a confidence survey recently completed by Gallup.

The results? People have more confidence in banks, big business, and their HMOs than in Congress. Here are the full results:

Read the full story at Gallup.

One Skill to Get out of Debt

Budgets. Collection agency agreements. Credit card negotiations. Debt reduction plans. Canceling cable. Eating Ramen Noodles for the rest of your life. These tips are all part of the getting out of debt echo chamber. Forget all that. What if there was one thing you could do to get out of debt? One thing that, if you stuck with it for an extended period, would truly help you get debt free? David Bakke from MoneyCrashers states that, yes, getting out of debt boils down to one principle…

“Understanding the difference between wants and needs with pure objectivity.”

What the heck does that mean? It means that you buy something for two simple reasons: 1) you need it or 2) you want it.

“So if you had to list out you needs, what would they be? I would start off with food, shelter, transportation, electricity, and the list goes on. If you really break down your needs in life—the only thing that you truly need is a roof over your head and food.”

This reeks of simplicity (I already hate it). David even gives us a simple method for going through this process. It’s in asking the question, “Do I really need this?” David explains that asking this question…

“…allowed me to get out of debt at a fairly rapid pace. It wasn’t until I incorporated this question into my everyday life that I fully realized how much unnecessary spending I had in my life.”

I’ve asked myself this question before but it was for larger purchases so the answer was more of a cop out. “Of course I can’t have the iPad.” In reality it was too easy. I would never arbitrarily spend $500 without talking to my wife first. And then the conversation would involve much laughing and a round of “just kidding!”

But I’ve never really asked myself the question when I buy that four $4 coffee or $25 book. But now I will. And I’ll report the results here. And let me know if this is something you’re doing, have done, or would like to do. Should we start a club?

Read David’s post on MoneyCrashers.

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