Archive for February 2009

Money and Music

February 26, 2009

When I was about twelve, I joined Columbia and BMG Music clubs to get all the free CDs they offered in exchange for buying a few at full price. BMG had by far the better deal, but that’s not my point.

My point is that I once was willing to spend money on music, and now I’m not. I have probably 200 CDs, and that’s after the great purge of 2001 when I sold half of my CDs.

With music so readily available online, it’s hard for me to spend money on it. I’ve never purchased a song on iTunes because whenever I want to hear a song I can find it for free on youtube, playlist.com, dailymotion, various artist websites, etc.

True, I can’t listen to songs that way in the car, but I don’t mind the radio, and I can always borrow books on CD from the library.

I’m definitely less into music than I once was, but I still find new songs to love here and there. And I need your input to help me in two ways:

1 – Are there other ways to listen to music for free (legal ways)? Do you spend money on music?

2 – What are your favorite songs? Anything I should get to know?

Increase Your Net Worth in Seconds with Creative Accounting

February 22, 2009

Is there anyone in your life that does pretty much anything you tell them to do? Maybe one of your friends, neighbors, relatives, admirers, coworkers, or fans?

If so, you should consider doing as publicly traded companies do in consolidating their financial statements. Parent companies that own or effectively control other companies are required to recognize their affiliates (owned or controlled companies) by creating one set of consolidated financial statements for reporting purposes.

If you have people (let’s call them subsidiaries, or subs for short) who do what you say, you, too, effectively control them and their assets. When heed your advice or requests, like when you suggest they buy you a hamburger, or request they drive you somewhere, they have effectively relinquished control over their own resources to you, their parent company of sorts. In order to be more open and honest (regulators like the word, “transparent”) in presenting your net worth, you may wish to recognize your subs’ assets along with yours.

So go ahead! Give your subs a call to discover their financial positions, and increase your net worth in just minutes! And, hey! There’s no SEC regulation here, so feel free NOT to include any subs with negative net worth. Be discerning, and by extending your network of control, you’ll have a sizeable net worth in no time.

Share your success stories in the comments section!

Return on Material Investments

February 21, 2009

Every once in awhile, I find myself reflecting on past purchases to decide whether they were worth it or not. Yesterday, I discussed the pros and cons of making an investment before-the-transaction (Gym Pass – To Renew or Not to Renew – such a clever title). Today, I take a look at the return I’ve realized after several years of owning two material investments, my TV and my bike.

40″ LCD Flat Panel TV – At the pinnacle of our post-undergrad, pre-grad-school careers, TheFieryOne and I were both working full-time jobs and making more money than we ever had made before. And we were saving most of it!

We had been saving ALL of our excess money (several thousand dollars per month) for some time, and then, out of the blue, I needed to spend money. I NEEDED a new laptop, a bike, a flat panel TV, and new couches for our living room. Stat.

TFO is much less prone to NEED to spend money than I sometimes am was (people can change, right?), and even though we had made great progress in our savings goals – I think we had accomplished all of our goals for the year by May – she still felt uncomfortable with most of my sudden, spend-crazy ideas.

The TV was the first of our purchases, and was a pretty quick decision. I came across an unheard of deal at work, called TFO to discuss, and she agreed that we could buy it because my birthday was coming up and she could tell it meant a lot to me.

In a way, it did mean a lot to me at the time. I was more excited about the purchase than I had been about anything for a good while. But I soon got over that excitement, and though I still think it’s a pretty awesome TV, it doesn’t mean a lot to me. We don’t watch TV (no cable, dish, or even an antenna) unless it’s on DVD (House, Lost, 24, Alias, that type of thing). Even then, we rarely watch more than a couple of episodes per week, and we’ve never used our 1080p resolution capacity because we aren’t into spending several hundred dollars on Blu-Ray or HDVD technology.

What’s more, we had a fairly large (if bulky) TV before – one I had inherited from a cousin/roommate, and it worked just fine. When I compare the LCD TV viewing experience with that of the old, bulbous tradional TV that is now being used by friends, there’s almost no difference in my perceived viewing pleasure. Certainly not $1499.00 worth of difference.

So that was a bad investment, friends. It was an impulse buy, and though we get some use out of it, and probably will for quite some time, I doubt I’ll ever determine it was worth its price.

Our bikes, on the other hand, have stood the test of time in proving their value.

[Side note: We didn’t end up getting the couches referred to above (thank goodness). They were the right price, but not exactly what we wanted. We did get the laptop, which turned out to be a great investment (my other laptop died within weeks and this one is still fast and works great for school). So in one month, we purchased the LCD TV, a laptop, and two bikes. Yikes.]

Our goal was to get bikes we could use for local transportation and leisure activity. At first I wanted to get something reasonably expensive – something that would last for many years and be a solid, lightweight, semi-pro type of bike in case I got into riding.

TheFieryOne, in her ever-abundant wisdom, suggested we start small and only go big if we proved to ourselves a more significant investment was necessary. So we drove to our local WalMart to see what was available. I was skeptical that we’d find anything worth our time at WalMart, but I went along to support TFO.

It turned out that WalMart had the perfect entry-level mountain bikes for our needs. They were about $150 each (the 2009 model of mine has since gone up in price to $219), and they’ve been incredibly satisfying investments.

When TFO has the car (we only have one car) I can ride my bike over to the library or the gym, no problem. We’ve both used our bikes to get to work at times, and TFO kept that up for several months when our morning work schedules didn’t align well and I was commuting some distance. She didn’t love it, especially by the end, but her bike made it possible for both of us to get to work at the right time without having to buy a second car, which we considered doing.

Our bikes have cost us nothing in gas, they work our leg muscles in different ways than running does, and thanks to shortcuts, better parking spots, and “optional” traffic rules, we can travel locally just about as quickly and conveniently on our bikes as we can in our car.

Plus, our bikes are a refreshing reminder of simpler times, and TFO and I often go riding just to enjoy each other’s company. And bikes have been a great way to get us outside more, exploring paths and neighborhoods we otherwise wouldn’t ever see.

Unfortunately (or fortunately), not everything we buy turns out to be a great investment. It’s too bad the negative-ROI TV was such a big purchase compared to our positive-ROI bikes. It makes me feel kind of foolish. Then again, that guilt will prompt me to be more discerning in the future.

Gym Pass – To Renew or Not to Renew

February 20, 2009

It’s that time again. It comes around once every year for us, and I always have a very real internal struggle that goes something like this:

Bah! Pre-paid gym expense has run it’s course (get it?). Is it worth it to renew?

Nah. Gym passes are over-rated. You can always run outside and do push-ups and sit-ups at home for free. Why pay for a pass, year after year?

Because I like going to the gym. I like the treadmills, the atmosphere, the tv shows . . .

Really? The tv shows?

No, that was a stretch. The channels are always changed to something dumb. But I do like the convenience of the treadmill timers and distance display for intervals and longer runs.

What about the great outdoors? You’re an accountant. You don’t get out much. Do you really want to exercise in a confined space? Even for the tune of $8 per month?

Wow, that’s not a bad price for a gym pass.

True, but you already have access to your school gym, which is much nicer and bigger than the local rec center.

Yeah, but that’s a pain, and I much prefer changing and showering at home. Ya’ know?

Definitely. We can agree on that point. Dirty locker room floors . . .

Anyway, back to our internal debate. Should we do it? Should we renew?

And so it goes until the very last day and sometimes beyond. I like staying fit and highly value TheFieryOne and my health. I just wish it didn’t cost so much. Aside from the gym pass, we pay for new shoes fairly regularly (like once per year), comfortable exercise clothes, the Perfect Push-up (highly recommend, btw), and that may be it. But it seems like a lot.

TheFieryOne believes that if I exercised as consistently as she does, I wouldn’t hesitate like this, which is probably true. I also run outside every now and then when I’m particularly starved for nature and the weather is nice. So I really do feel like I have a valid substitute, whereas TFO doesn’t like running outside, especially since she prefers running at night and doesn’t feel comfortable being out alone in the dark.

Admittedly, I very much like the flexibility of being able to go the gym, especially on cold or rainy days, or when I’m just not sure how much I can handle. So all things considered, we’ll probably renew our passes next week.

But that doesn’t mean I won’t hesitate, at least a little.

5 Tax Myths

February 19, 2009

I started reading an article about 5 common tax myths on MSN Money and had a hard time continuing when the first myth was “Students are exempt.” Really? Does anybody really think that?

But I read on, and the myths did improve. People do wonder whether or not they can claim their working child as a dependent, they sometimes don’t know if they have to pay taxes on gains from the sales of their home or not, few people know much about sales tax, and filing status, though it’s not generally a problem, can sometimes be confusing.

Go check the article out if you’re unsure of any of these things.

“Can’t Buy Me Love”

February 18, 2009

I found a list of questions about money on Jenny Blake’s blog, Life After College. All are good questions that made me think about my relationship with money. Here’s my answer to question #1:

What is important to you about money?

With money, TheFieryOne and I have access to life’s basic necessities, such as food, shelter, chocolate, etc. Because the world is what it is, without money we’d either have to rely on wilderness survival skills (which is admittedly lacking at that level of self-sufficiency) or charity. Neither is a great option, so we need money.

In addition to basic necessities, money also provides access to some of the things we love, however unnecessary they may be. Many frugal types forego traveling because it costs a good amount of money. But we’re willing to sacrifice other things for the adventure, the learning, and the eye-opening experiences we have whenever we travel. I’ve never regretted spending money on a vacation, especially when family has been involved.

Back to the idea of charity — Rather than require charity from others, TheFieryOne and I want to be able to be charitable with our money, time, and service. We have been blessed with health and a reasonable understanding of, and respect for, money, and it’s only right that we do our best to add value to the economy in the form of work and service in exchange for money and satisfaction, respectively.

On the flipside, I hope we’d be humble enough to accept charity if we needed it.

Money isn’t everything. It’s a means to an end. It doesn’t, in itself, represent anything desireable. It only allows us to purchase goods and services, which are necessary and sometimes highly valued, but still not the end-goal.

My end-goals include: family togetherness, friendship, happiness, learning, and good memories. Money can’t buy any of these things directly. But it’s important because it can help support these things if used wisely.

The Beatles sang it well:

Can’t buy me love, love
Can’t buy me love

I’ll buy you a diamond ring my friend if it makes you feel alright
I’ll get you anything my friend if it makes you feel alright
‘Cause I don’t care too much for money, money can’t buy me love

I’ll give you all I got to give if you say you love me too
I may not have a lot to give but what I got I’ll give to you
I don’t care too much for money, money can’t buy me love

Can’t buy me love, everybody tells me so
Can’t buy me love, no no no, no

Say you don’t need no diamond ring and I’ll be satisfied
Tell me that you want the kind of thing that money just can’t buy
I don’t care too much for money, money can’t buy me love

Raising Frugal Children

February 17, 2009

TheFieryOne and I do not yet have children. But we have many friends and family members with children, we were once children, and we plan to have children in the future. So we often talk about the types of methods and principles we intend to use in raising our own, future children.

So far, we have established two money-related parenting strategies we believe will help our children become frugal and money-wise:

Savings Rule #1: TheFieryOne’s parents had a rule that she and her siblings, when they earned money, would save 50% of it. Always. As their bank account balances increased, they learned the excitement of saving, something I failed to experience until the last few years. They also learned about interest. TFO still gets a gleam in her eye when she talks about monitoring her savings account when she was young to see how much interest she had earned.

During her teenage years, TFO worked part-time and 50% of her money always went directly to savings. She could have purchased a car with cash, but held off because she had developed a healthy respect for what it took to get her life savings to that level. Plus, her parents allowed her to use their cars, and eventually bought an old, beat-up sedan for her teenage enjoyment.

I don’t regret having purchased my own cars using bank loans because my parents were not willing to buy me a car and I was particularly independent during high school. I explained my reasons for not saving money during my youth here. But TFO and I think we’ll be able and willing to provide at least one car for our kids who can drive so they won’t have to spend all of their money on transportation.

Savings Rule#2: Much like the defined contribution pension plans I mentioned earlier, we have a plan to match our children’s contributions to their savings. I can’t remember if we ironed out the exact details, because I’m a little hazy on whether we plan to match the required 50% or not, but we’ll definitely match anything above and beyond that, dollar for dollar.

Early withdrawal penalties will definitely apply lest our kids try to get the match and then withdraw right away. They won’t be fully vested until they turn 18, so if they withdraw any principal before then it’s penalized dollar for dollar, meaning we’ll take our contributions back for that amount (we probably won’t bother with interest).

Our goal is ultimately to help our children be patient in saving and spending. We want them to develop a healthy respect for money and an appreciation for investing and earning interest. We also want them to refrain from buying too many unnecessary things. TFO and I could afford a vacation to Hawaii if I suddenly received all the money I spent on candy and entertainment as a kid (granted, my family was not well off, so I pretty much had to pay my own way for any extras, including new clothes, but that’s a post for another day).

What do you think? Do you have other plans or have other ideas worked for you?