Uncommon Cents

Dr. Randy Pausch passed away a few days ago, a brilliant mind leaving us at a way-too-young age with so much to share. His Last Lecture video presentation was a total Internet sensation and is well worth watching (or listening to, which is what I did). For most of the way it’s a very good talk, but the last few minutes elevate it to great status. He has another presentation that’s also online on time management which is in my opinion better than the Last Lecture (who better to figure out how to manage time than someone who knows very clearly how little of it he has left?). PowerPoint slides of both the Last Lecture and the time management presentation are available for download (and view fine in Keynote as well although admittedly I didn’t do much other than view the slides individually).

I thought I’d bring to the forefront some key lessons I got from The Last Lecture–there are so many there’s likely to be a part two to this soon–and share these with you. Dr. Pausch said during his session that he’s always been taught to share, so in his honor, here we go:

We Cannot Change the Cards We’ve Been Dealt, Only How We Play the Hand: Not much attention is given to this line (which is very early on) with our presenter referring to his terminal diagnosis, but it really shows wisdom. I cannot change where I was born, who I was born to, where I grew up, or how much money I had in my savings account yesterday, but I certainly can make an impact on the future by making changes in the way I deal with things starting today.

Brick Walls are There for a Reason–They Let Us Prove How Badly we Want Things and They Let Us Show Our Dedication: There are going to be lots of obstacles to overcome no matter what we choose to do in life; when they pop up it’s not a sign for us to give up but rather a signal that we need to figure out how important this is to us and what we’re willing to do to get around them or over them.

Practice Without the Football: There are 22 players on a football field at any given time and 21 of them don’t have the football, yet everyone wants to be the one with it (and some question why they’re even practicing if they’re not the ones with it). The point is that fundamentals are important no matter if you’re the one with the ball or not and that hard work in honing these is as important as anything. Also that if people criticize you, fear not–at least they care enough -to- criticize you!

Experience is What You Get When You Didn’t Get What You Wanted: Things that I’ve failed at aren’t really failures–they’re learning experiences. A 41 year old bachelor doesn’t necessarily like hearing those words (again) but it’s true–we learn something, or hopefully learn something, whenever we get less than what we want.

There are many, many more bits of wisdom in this presentation. I suggest you watch it–there’s also an audiobook which I haven’t yet heard but put a request in to the library for the CD. It’s currently in cataloging, meaning it’s not actually available for loan yet, and I was already number 34 in line, so I’m sure it’ll be a hit!

Success! Well, mostly. My trip to Kansas City for KansasFest 19 (basically a summer camp for computing Geeks centered around but not exclusive to the Apple II) had no delayed flights and no lost luggage and I successfully announced (but have not yet released) a new software product and won a programming contest as well as had my usual way too exhaustive fun time. My long time roommate Kirk and I did again do the opposite of winning the door sign contest; I think I’ve won every single contest and gotten every possible recognition there except for the door sign. In the meantime, I was also able to maintain our daily posting schedule, thanks in large part to a timely contribution from Kyle over at Rather-Be-Shopping.

I did, however, apparently manage to misplace my earbuds on the way home and not get in much of any exercise while I was gone. I’ll work harder.

I’m off from my day job for another week so I’ll work on catching up in many ways, including cleaning up around here (which is likely going to take way more time than this), doing some thank yous and get wells, checking my P.O. box, and doing work on the blog.

Some blog specific notes:

A review of the (I’m sure) horrible portfolio performance of June is coming, even though it’s almost August. In fact, I’m sure a July one will also be done.

The 5% Plan updates have stopped because I had to replace my truck’s battery which reset my mileage counters, following being out of town for a week. The updates will resume, probably in about two weeks.

I have to do a few more blog changes, including adding a badge for referral from a top referral source. Behind the scenes, I need to automate billing for advertisers too.

Finally, I have a bunch more ING Direct and Virtual Bank referrals; if you’re interested in opening a new account and getting more bucks, just let me know!

While working on yesterday’s post on Costco coupons, I was eating lunch at work sitting next to one of my friends who asked me if I was making a list for a Costco run.

“Not really, but kind of,” I replied.

“How often do you make shopping lists?” she asked.

“All the time.”

“Do you follow them?”

“Yes, definitely.”

“How often?”

“100% of the time.”

“Really? I’ve tried to follow them, but I never can, so I stopped making them.”

Just like a budget or a spending log, a shopping is only a tool; a plan, if you will. It’s a hack, a trick, a way to get you to limit your spending by only getting you to purchase certain things. It can be a great, highly effective trick, but that’s what it is: a trick.

It’s easy to defeat the trick by simply walking around the store more and picking random things up, or grabbing that pack of gum or gift card as you’re in the checkout line. It’s just as easy to go outside your budget or not use your spending log; all of these things are just ways to help you get a better handle on your finances, but in the end, you must have the discipline to follow your budget, use your spending log, and buy only what’s on your list. The tricks may help you build the discipline, but you will absolutely need that discipline in order to get your finances in order. I can’t speak for everyone, but I will use every trick in the book to spend less, and that includes the shopping list. I couldn’t go to the store without it!

CNNMoney has a story on a family who lost their home in the mortgage crisis. A grandmother who bought her first house and was getting rent money from her two daughters who “unexpectedly” saw her mortgage payments shoot up hundreds of dollars a month.

No more house.

Yes, I feel horrible that someone who had bought a home–their first home–might lose it to foreclosure. Especially someone who at least had saved a sizable amount–$20,000–as a down payment

But read the story more closely: the house she bought cost $489,000. Her yearly income is $25,000.

Time out!

There’s lots of responsibility to go around on this one. Borrowing $489,000 on a salary of $25,000 a year is totally out of line with reality. And loaning someone with a $25,000 a year salary $489,000 is incredibly irresponsible. There’s no way someone with that kind of salary to reasonably have a mortgage of that size, meaning that not only did the borrower need to know beforehand she couldn’t afford it, the lender needed to let the borrower know that–and there’s no way a lender couldn’t have known that it wasn’t a workable loan. This was doomed from the start, a marriage of a borrower who didn’t know what they were getting into and a lender who wanted to make a loan–and some dollars–in a bad way.

All of that said, while I feel horrible for this lady and her family, I just can’t support a taxpayer bailout of folks who have gotten themselves in deep with mortgages they can’t pay. These are the biggest investments almost all of us will ever make in our lives and we owe it to ourselves–and each other–to do our homework and not get ourselves into situations where we’re in over our heads. We’re not talking about a situation where someone lost their job or had a catastrophic illness or accident; we’re talking about a situation that was 100% preventable beforehand. Yes, I feel horrible, but no, I can’t say bailing them out is the best use of taxpayer dollars.

If you’re wondering where our buddy Kyle of Rather-Be-Shopping and his regular column is, he’s taking a little break (which is more than just a little deserved). He’ll be back in a short while, so stay tuned for some of our usual Uncommon Cents goodness in the meantime!

266.4 miles. My total for the past seven days driving was close to my baseline use, which means that it was another one of those weeks where I drove into the main area of Honolulu (or to work) every day. As it appears I’ve maximized all of my other areas of maximizing mileage, it’s very clear to me that the only way for me to use less gas short of purchasing a new vehicle is to actually drive less.

Interestingly, my mileage per gallon was the worst it’s been since starting this experiment. I estimate that I used 11.89 gallons of gas, far beyond what I would have expected, for 22.4 miles per gallon. I did run into more traffic than usual, but the approximately 10% worse mileage seems excessive. This pushed my total numbers to be short of my goal: in terms of miles driven, the difference is minimal (248.65 miles per week actually driven with a goal of 247.7) but the difference in terms of miles per gallon (24.29 vs. 24.82) is showing more of a gap than I’d like.

I’ll watch the mileage closely this week and see how it all goes. Declining mileage can be a sign of a mechanical issue with the vehicle. But overall, the answer is clear: for me to use less gas, I have to drive less–no question about it.

My sport of choice is bicycling; I was a cyclist as an undergrad in college and into graduate school, and after a long time (and a lot of pounds added) I decided that it would be a big part of the way I would get my health in order. I went from 265 pounds in 2002 (my doctor’s note says 272, but I think that’s more about their scale and my being in full work clothes rather than just underwear weighing myself at home) to 185 pounds today. I picked up a used Cannondale road bike from a friend of mine I worked with for $200 about three years ago and outfitted it mostly with leftover parts from the early 1990s when I was totally into the sport. It’s a mishmash of components from Shimano (which is like the Microsoft of bicycling), Campagnolo, Suntour, Mavic, and some unnamed Chinese and Taiwanese manufacturers. It’s also a relic by modern standards–cycling technology changes fast, and like cars, there are new models with new features every year. And like with cars, it’s far behind the cutting edge and falls farther and farther every year.

Yes, I am tempted every time I run by the local bicycle store to get myself a new bike.

But I don’t.

Here’s why, besides the obvious issue of frugality: a new bicycle is not going to make me a better cyclist.

Even if a new bicycle is five pounds lighter with 6 more gears than the one I’ve been riding the last three years, those are not going to make a huge difference in my cycling. Yes, they would be welcome, but they’re not going to make me faster or able to ride longer. The gearing might make a small amount of difference, but I can get that without buying a new bike (I’d just need a new cassette and hub for my rear wheel if I was willing to rebuild it, or a new cassette and rear wheel if not). I’d also be far better off losing five pounds off of my ample waistline rather than losing five pounds off my bike. That wouldn’t just help my cycling, it would help my occasional back and joint pain.

None of this means that my current ride is better than a newer one; far from it, at least technically. But my old stead is still working and working well enough for me to be going for a third straight year of the Honolulu Advertiser Century Ride. It carried me through a metric century (62 miles) earlier this year, and it’ll take me through a 65 mile ride in the morning, weather permitting. It fits me pretty well (and actually a lot better than an off the shelf new bike is likely to, as I’ve made so many adjustments and added a different stem and bars than would come with one of this size, since I have somewhat odd body geometry). The ride is nice, stiff, and as comfortable as I’d expect a road bike to be.

Would I like to get a new bike? Sure. Just as I’d like to get a new computer or a new truck or a new house. But what I have will get me through, and while a new computer might help me become somewhat of a better programmer (speed and capacity does count for something), a new truck might (but I doubt will) get me better gas mileage than my nearly seven year old Tacoma, and a new house might need a bit less maintenance than the one I live in now, a new bike doesn’t offer enough advantages for me to spring the dollars for it, and no matter what, it really won’t make me a faster cyclist with more endurance. The only thing that will is training, and I have a bike more than adequate for that purpose.

Your Link Payday for July 5, 2008 will be rescheduled for… it looks like July 6, 2008 (there’s a reason for this, but I can’t share it for a few days).

The summer here has been hot, hot, hot, and, fortunately for me, my snowflaking efforts have also been hot. Blog efforts in June netted its highest ever total: $142.12 (so well I doubt I can do quite that much in July, but I can certainly hope!). In addition, I received $4.55 in payment for an article (a really piece of an article, actually) I wrote, $10.37 from recycling, and $60 in a Discover Card “Cashback Bonus”. I was hesitant to call the money from Discover snowflakes since it was money I got back largely from a very large purchase via ShopDiscover (which I will cover at some point in the future, because it can be a great way to build Discover Cashback Bonuses), but since it wasn’t money I had coming in as any other form of income, I’m counting it.

So we’re looking at $217.04 in snowflakes in June! That’s the most since I started tracking this a few months ago by far, and added to my previous efforts of $293.83, it’s rapidly becoming “real money”: $510.87. If I was still saving for the MacBook, that would be close to 1/2 what I needed! Since I’m not saving for that, but instead to replenish some of the funds already used, I’ll take whatever I can get.

While I seriously doubt that I can match my June efforts in July, I will certainly give it the best shot I can. The power of small amounts is really showing over time, and hopefully I can keep the heat up on continuing to improve my finances this way the rest of the summer!

If you are wondering where the incredible Kyle of Rather-Be-Shopping and his regular feature is today, he’s taking a few days off to enjoy the July 4th holiday and do stuff with his family. He’ll be back next week!

I’m continuing to work on reducing my gasoline use. As you may recall, my goal–5% less gasoline use from my baseline of 10.5 gallons per week–means keeping my consumption at or below 9.98 gallons from Sunday through Saturday. Given the 24.8 miles per gallon that I calculated during my “baseline week”, I estimate that I need to drive 247.7 miles per less each week in order to meet that goal.

This past week my total mileage was 225.7, well (8.9%) below the 247.7 mile goal. My per gallon mileage appeared a bit worse, at 24.27 miles per gallon, so I estimate my total gas used for this week as 9.3 gallons, meaning for the second time in five weeks I’ve been able to meet my goal.

Averaging out the five weeks, I’ve driven 245.1 miles per week, using approximately 9.91 gallons of gas for a calculated 24.74 miles per gallon; that means that while I’ve met my goal only 40% of the weeks I’ve monitored it, my average for all of the weeks is meeting my 5% target.

It’s clear that the only way for me to make even this small dent in my gasoline use is to drive less. All of the other tips–keeping tires inflated properly, not idling for large periods of time, maximizing right turns, finding the most efficient routes, and driving the speed limit–were things I was already doing. So I’m down to the most drastic, but most efficient tactic: just drive less.

We’ll continue to monitor this and see if I can figure out any other ways to get my gasoline use down!

While this is being listed under “Basics”, it may surprise some that the argument between which to do first: save for goals (retirement, a home purchase, college education, or other long term goals) or pay off debt.

The answer I have for this argument is a bit complicated, and includes a little of both, but the short version is: both are important.

When you’re at the point of dealing with this saving vs. debt reduction argument, it’s pretty much a necessity you’ve examined your baseline budget and gotten a handle on your cash flow. If you’ve not done these, do so first! Once you’ve got your cash flow positive from month to month, let’s go ahead and work on what to do with those positive dollars.

First off, start with an emergency fund. Consider a money market or high yield savings account (possibly with ATM card and check writing, like at Capital One Direct) for this money. How large of an emergency fund? We’ve discussed this before, but if you’re considering this choice, I’d suggest having at least $1,000 in there (if, however, you’re at the point that you’ve paid off all of your unsecured debt–basically everything but a mortgage–you’ll want to bump up that emergency fund to something between three and six months of your earnings). So the first part of this answer is, “save–for a $1,000 emergency fund”.

Second, consider your time horizon: if you are less than five years away from retirement, you will want to make saving a priority over debt reduction; however, if you’re on the opposite end of that timeline, debt reduction–and hopefully debt elimination–is certainly a priority.

Third, you are likely to want to do a bit of both at the same time, the question is how much of each you do. If you’ve decided debt reduction is your priority, make a plan and stick to it. Put the majority of your positive cash flow into paying down–and paying off–that debt. Consider the Debt Snowball or some of the other options we’ve written about previously. If you’ve chosen to concentrate on savings, put the majority of your positive cash flow into that (we will discuss some thoughts on how to put your savings dollars to best use at a later date). No matter which you’ve chosen, though, make sure you pay at least the minimums on your debt promptly–late charges and possible hikes in interest fees for paying late or insufficient amounts will make it even harder to overcome these debts.

Finally, keep at it! Persistence and perseverance are the keys to your eventual financial success. There will be many difficult moments along the way, but the sooner you start–and the more diligently you follow your plan–the quicker this will all happen. A journey of 1,000 miles begins with one step–so take the step of figuring out which to work on as your first priority: debt reduction or savings.

One of my fellow personal finance bloggers, LuLuGal over at How I Save Money, is having a drawing for a gas card for bloggers who, among other requirements, blog about how escalating gasoline prices have effected them. Below is my story:

Yes, like lots of other things with rising prices, there’s no question I’ve had to make changes in my life due to the price of gas. Those of you who have been following my quest to use 5% less gasoline have seen how difficult it is to actually do, at least for me. For others who may be speeding, not keeping their tires inflated, or driving in substantial traffic, they may have more opportunities to cut into their gas usage, but since I was already driving pretty conservatively with regularly inflated tires and without much traffic, it was much more difficult for me to make much headroom there (although I did experiment with different routes).

In the end, what using less gas came down to was driving less, and given that I live in a location that’s a mile from the bus line (which for me is impractical for work given my two jobs), it’s really come down to making changes in my weekend and holiday activities. I clearly have to choose what social or family events I can go to in order to make much headway on gasoline consumption. I’m doing more than that, but I think the effect of those efforts are minimal: planning ahead to group together what would be separate trips to eliminate unnecessary driving–I will commonly park in a central place and walk to the various points I need to reach from there (for instance, I will park at a shopping center near me and go to the Long’s and First Hawaiian Bank in that shopping center, go across the street to the larger mall for their 99 cent store, and cross another street to reach the post office where I would previously have driven across at least one of those streets previously). I’m also keeping very close track of my mileage, the same way I have with my spending for years–writing down where I go on what day and how many miles I’ve traveled. Finally, I’m researching which gas stations seem to have lower prices without going out of my way and trying to maximize my use of my 5% reward on gasoline purchase credit cards to try to get any discount possible. In fact, that maximizing is going on in a way today; I typically fill up on Sunday, even though the tank’s close to 1/2 full; this week I’m waiting until Tuesday. Why? My credit card statement closes on Wednesday, and the gas station I go to regularly typically takes two days to process my charge and have it end up on my statement, so I’ll be able to avoid coming up with the cash to pay for that gas for another month!

So while I’ve at best been able to make a rather minor dent in my gasoline use and bill with these steps, I’ve managed to make some progress–but more clearly, the gasoline price hikes have definitely had an effect on me and my behavior.