Category Archives: advice

Pay Debt Away But Keep New Debt At Bay

Posted on by
8

One of the things I love most about being a personal finance blogger is reading stories about other people who have reduced or eliminated their debt.

Our debt is pretty simple:

  • A mortgage – We re-financed our original 30 year mortgage (set to pay off in 2037) with a 15-year mortgage in late 2011.  This will put us on pace to pay that off in 2026.
  • A student loan – My wife has one outstanding student loan.  It is a private loan with a rate lock of just over 2% and a payment under $100 per month.  It’d be nice to pay this off early but we’re not changing our current strategy to do so.  Additional cash flow would have to open up.
  • Credit cards – None.  We use credit cards simply to earn cash back rewards
  • Car – None. We have two cars, both fully paid off.

It’s great as I see a lot of bloggers write about paying down debt, paying off debt, or discussing their personal debt payment strategies.  For the most part, they’re usually pretty good.

However, there is one thing that I usually see left off, and that’s to have a ‘No New Debt’ provision, and a plan to reach it.

If you start off with $100,000 in debt, work hard, and pay off half of it, that’s awesome!  What if you have $10,000 in debt, and you pay it all off.  That’s great, too!

And, with most debt payment stories, that’s often the ‘end’, so to speak.

What it doesn’t address is to make sure that number never goes higher.  In other words, if you pay off half of that $100,000 debt, you should make sure to do everything possible to avoid having that number go higher.

If you pay your debt off, congrats, but resist the urge to go splurge, financing a new car, vacation, boat, or whatever that’s going to get you right back in debt.

In other words, here’s my debt payment plan that you should adjust every month.

  1. Calculate your starting debt
  2. Make your payments
  3. Calculate your new debt total (it should be lower now)
  4. Set the new debt total as your debt ceiling

That’s right, every month you need to make sure that you set a goal to make your current total your maximum.

What that means, though, is that your debt payment strategy should plan for this.  I have read many articles on whether it’s advisable to save or to have an emergency fund if you are paying off debt.  The answer, based on my advice is: It depends.

How?

Well, if you are in a position where you are risk of emergencies, then yes, you should have an emergency fund.  Do you drive an old car that’s prone to breakdowns?  Do you live in an old house with a furnace or boiler 15 years past it’s expected date?  If these or something like these are in place, then you need an emergency fund.  If you live in an apartment and drive a bike to work, you might not need this as much.

Same goes with savings goals.  If you buy a house and you know you’ll need a new roof in 5-10 years, then start saving along with paying debt.  Otherwise, when that roof goes and you’ve paid every dollar toward debt, you’re going to have nothing left to pay for that new roof.  As good as it is to have paid off more debt, you’ll be violating your debt ceiling’ rule.

That’s not good.

So, make sure your strategy is complete, and if you focus 100% on paying debt, you have the best of intentions but you’re leaving a blind spot, and just like with driving, those can lead to peril in the blink of an eye.

Readers, what is your strategy to pay away and keep new debt at bay?

Copyright 2013 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Is Flipping A Charity Auction Item Going Too Far?

Posted on by
33

Our son’s preschool has run a charity auction for a number of years, I believe this was the 12th year.  Being that this is his first year, and our first year involved with the school, we were excited to see what it was all about.

The goal was to raise $5,000 toward the school.  This helps keep the costs relatively low, as well as the fact that it’s a co-op, so they have less staff being that the parents participate.

The auction consisted of two different elements, one was buying tickets, and then putting them in buckets corresponding to certain prize draws.  Some of the items included:

  • A package of Disney DVDs, games, figurines, and other assorted goods
  • A basket of wine, liquor, and other assorted ‘adult’ goodies
  • Gift cards to Target, Kroger, or other big stores
  • Gift cards to local restaurants
  • A box of Twinkies

So, you can see that the prizes were far ranging.  All were in great fun.

The second item was a silent auction.  Here, about 75 items, all donated by local businesses or friends of the school, were available where you could write your name next to a line on a sheet of paper.  The person who got the highest bid won.  In many cases, the ‘value’ of the item was listed, as it would be the value of the item if it were sold at regular price.

Many items sold at or near their value.  Some sold way below.  We actually got a four-pack of tickets to a Detroit Pistons game, and two activity centers for children for $25, where this probably would have cost over $100.

Again, the items here were all over the map in terms of pricing.  The two highest ‘valued’ items were the ones that caught my eye.

  1. A bundle consisting of a brand new Wii U, a controller, a game, and some other accessories
  2. A four pack of park hopper tickets to Disney World.

Both had assigned values right around $500.  And both caught my eye, not because I wanted them, but because I thought that they could be valuable.

I even whipped out my smartphone to look and see what these types of items were selling for on eBay.  The Wii U pack was selling for around $400 on eBay.  It ended up selling for $410, so it was around the correct value.

The Disney tickets were selling for around $100 per ticket.  The ‘retail value’ was $124 per ticket, so anything less than $400 was a potential opportunity.

I mentioned it to my wife, and she was aghast.  She didn’t think that it was right to make money off of a charity auction.  I pointed out that the school didn’t pay for the items, and that if I bid for them, they would actually get more money, since I would be bidding higher than the person who had won them.

Really, would the school care what the use of the tickets was or were they interested in the proceeds of those tickets?  I guess there might be some element of both.

My wife ended up looking at the name on the list, and noting that the person with the highest bid (who ended up winning) was actually planning on using them for their family.  She prohibited me from writing my name, and kept a watchful eye.

Since the names of the winners (but not the final bid) were announced, I realized later that this could have reflected poorly on us.  If other members saw that we had purchased them, but then found out we never used them, they could have figured out that we flipped the tickets.  Since my wife didn’t think much of the practice, it’s certainly possible that others might not have as well.

In the end, it was an idea that I merely considered, but when my wife said no, I didn’t fight back at all.  Given the fact that it was for our son’s preschool and that it could have reflected poorly on our family, I’m glad I didn’t.

However, it brings to mind if this is an opportunity elsewhere.  After all, this was an event that was technically open to the public.  What if Joe Blow off the street had come in and done exactly what I had considered.  Joe would have had no affiliation to the school and therefore would never have been judged by other members.  Would he have been doing anything wrong if he had come in, outbid those who had placed bids, and gotten the tickets?  Technically, no, not at all.

So, maybe those charity auctions you see, maybe there’s an opportunity or two there.  Or does it still make it unscrupulous even if you aren’t affiliated with the actual organization throwing the charity?

Just curious what your thoughts were.  Is this crossing the line into being a vulture or completely within bounds?

And for the record, the package of tickets was listed at $270 moments before the auction closed, so they definitely went for below market price.

Copyright 2013 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

How Much Would Bail Cost?

Posted on by
10

I found out some shocking news earlier in the week about someone that I used to consider a very close friend.  We have fallen out of touch over the last few years (a situation that’s worthy of its own future post), but I found out that he was charged with embezzling almost $400,000 from a trust fund that he was managing.  It’s shocking and you can bet that I’ll be watching with great interest.  I’m torn because as a former friend, you want to believe he isn’t capable of something so ghastly, but some of the things that went into him becoming a ‘former’ friend were tied to character issues.

In any case, one of the things that came to mind was how he would be handled prior to the eventual trial I’m sure will happen (unless he strikes a plea deal) and specifically how he would be processed for bail.  I received some great information from Expert Bail that was timely and informative.

Getting arrested may be one of the worst things a person can go through, especially when you have never been in the back seat of a police car. The ride downtown to the station, the booking by the police, fingerprinting for the records… everything is scary when you experience it for the first time.

Then there is the matter of bail money. If you do not know how the bail system works, it can be confusing at first until you realize a few simple truths about the way things go.

First-time offenders realize this every year. The number of first arrests every year is not easily known, because a lot of states don’t release these crime figures.

For an example on how the bail process works, let us say you had dinner with a friend in a city in California, and you met other friends later on and had another few drinks afterwards. You might not be in a good condition to drive, but you did anyway, and you rear-ended another car at an intersection.

The accident caused minor injuries, but in taking a breathalyzer test the police determine you did have a bit too much and you are legally intoxicated. You are arrested for first-offender DUI and taken by police to their nearest station, where you will be booked and fingerprinted. Since this is a DUI with minor injuries and you are a first-time offender, according to the website duifighters.com expect your first-time bail to be $2,000. This could vary in other states.

It should be noted that average bail amounts go up from here, depending on what type of crime it is. Most smaller crimes don’t have any bail or the party is released on their own recognizance, which means they acknowledge the charges and will appear in court. Bail can go up to $10,000-$25,000 for personal destruction of property and can surpass six figures for more violent crimes (assault, murder, rape, etc) or in the case of my friend, embezzlement. Bail can be denied altogether if the party is deemed too much of a risk.

Should you need to go higher than a small amount of money, this is where a bail bondsman comes in. If none are available in your area, a national service may be needed. You may have heard about Expert Bail, a national network of bail bondsmen that are authorized to operate in all states where bail is an option. They will know what to do when it comes to posting a bond. You can get your money back if you post a cash bond, but a surety bond will be cashed minus any fees and premiums owed to the police or sheriff’s department.

You should note that you do not have to pay the entire amount. In the case of your first-time DUI, all you will need to pay is $200 to be released. An arraignment date is then scheduled. You will want to retain counsel at this point, so you may think about hiring an attorney. Your attorney will take it from here, scheduling a hearing with the Department of Motor Vehicles and making sure you are all set when it comes to the arraignment. By the end of the process, you will likely wish you had not stepped behind the wheel, but it is happening.

The best thing to do is just walk away if you sense a situation where a crime might be the best way out, but if it happens anyways, considering your bail options is one thing you’ll have to do.

Copyright 2013 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Today Is The Day To Stop Making Excuses

Posted on by
29

Take a look at the following and see if you can answer what they all have in common.

  • Members of the City Council of Detroit blaming the state of Michigan for revenue shortfalls that have left the city with several hundred million dollars of budget deficits.
  • The Republicans in Congress blaming their Democratic counterparts across the aisle (or in the Oval Office) for having waited until the last minute to avert the end-of-year Fiscal Cliff disaster which, as I predicted, would drag out until the very last minute.
  • A girl (or guy) who seems to date only losers blaming their ex’s for their failed dating life.
  • A person with massive amounts of debt blaming the institutions which provided them the debt.

In all of these cases, I hope that the common theme is this: Excuses.

The problems aren’t actually being addressed, but instead the people involved are pointing fingers, assigning blame, and making excuses.

What aren’t they doing?  Well, they aren’t taking the responsibility for the problems in question at all.  They are shouldering none of the blame for the predicament that they’re in.

The political excuse merry-go-round

The City of Detroit is seen as an absolute mess by just about everybody.  While there are some great things going on in the city, and there are a few who are pouring millions of dollars into the revitalization of key areas, the fact is that most of the world, and even us folks close to the city still see a big lack of progress, and for those closer, it’s perfectly obvious that the lack of progress has to do mostly with a city council who points their fingers at the mayor and the state, a mayor who blames the city council and the state, and a state government who pretty much is afraid to get anywhere near the rat’s nest, but at some point will have no choice.

All the while things make no progress toward getting things resolved.  Streetlights stay out, people keep getting murdered, houses keep burning down, and once proud neighborhoods fall into further decline every single day.  The fundamental truth is that these things happen because nobody accepts responsibility, but instead just plays blame.  The great things that are happening downtown and in parts of the city will continue to be dwarfed by the problems until such time as someone accepts the responsibility at which time they will become more empowered and more engaged to take action!

It sounds so simple, yet the blame game gets worse and worse every year, it seems.

How frustrating!

The bad-luck dating friend

Everybody who is at or recently part of the ‘dating scene’ has a friend who does nothing but complain about the problems that they’ve had with their dating life.  From dating loser after loser to not being able to get past a good first date, or getting no calls back from people that they thought they hit it off with, everybody knows one of these people, right?

(Hint: If you’re single and you don’t know one of these people, there’s a good chance you might just be that person!)

Time after time, you hear these people complain, and I know you burn on the inside, wanting to scream:

“It’s YOU! You’re the one that keeps dating the same losers.  You keep turning away the nice people and dating the bad boy/girl, so what do you expect?!?”

Sound familiar?  Again, it’s a case of the person not taking responsibility for the position that they’re in.  They prefer to make excuses and deflect the problems onto someone else.

Making excuses instead of money

Making excuses happens all the time in government and in relationships, but it also happens way too often when it comes to your money.  Any of the following sound familiar:

  • I’m in debt because my credit card companies kept raising my limit.
  • I am not saving enough because I didn’t get a raise last year
  • I lost money in the market because my adviser told me to buy this fund that later tanked

I’m sure there are a million of them.

The truth is that, again, they boil down to the idea that people are willing to blame others and make excuses for problems that they have with their financial situation.  Whether it’s getting a handle on their debt, or not making money that they feel they want, having a strong investment portfolio, all too often people are willing to deflect the blame.  This in turn, leads to a huge problem.

Nobody else cares.  See, the number one problem that making excuses leads to is that nobody else but you really gives a darn about the problems you have.  Sure, close family and maybe really close friends will care, but even then, nobody cares as much as you do.  In many cases, people that you complain to, they don’t care at all!

Which leads to inaction.  Making excuses and placing blame leads to inaction, and since nobody else cares as much as you do about your money, progress is stalled.

Only you can do something about it.  The only person that can truly make changes to your finances is you.  As it should be!  After all, you’re the one that cares the most about your money.  Not your boss.  Not your friends.  Not your financial adviser.  Not even your family. You and you alone have the most at stakes when it comes to your money.  It’s time to realize this!

Take action! 

Kick yourself in the pants!  Once you’ve accepted that you are the one who cares (or should care) the most about your finances, this should excite you to get going. Give yourself a kick in the rear and get going!

Take stock.  Many times, people don’t want to know where they’re at.  They go through day by day watching their credit card balance creep up but they figure by not knowing, they can put off the problem.  That ends today!  You have to take a baseline of where you are and only then can you start making progress.

Accept responsibility.  No matter what happened or who you might think helped you along to your money issues, wipe it aside.  Take responsibility.  Take ownership.

Make a plan.  After you spend some time understanding where your money problems stand, it’s time to put together a plan on what you want to do about it.   The bad news is that you might never have done this before.  The good news is that’s OK!  You don’t have to create a full plan.  Even if your plan is just a couple of steps of things you can do and changes you can make, that’s perfectly fine! In fact, if you are really just getting started for the first time, this is actually preferable.

Celebrate achievements.  If you make a small milestones, celebrate them.

Keep planning.  After you hit a couple of your small achievements, plan the next ones.  This time, you might find that you can look further ahead.  Keep repeating this and guess what?  It will get easier.  You’ll find that you’ll make progress.  You’ll get a clear head.  You’ll put more effort into tackling your issues simply because you now have taken full ownership.

You’ll get things under control!

All because you stopped making excuses and took control!

Copyright 2013 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Should You Send Thank You Notes For Gifts?

Posted on by
22

I went to college with a guy that has been a fairly good friend for quite a number of years.  We keep in touch regularly.  He played in the fantasy football league that I ran for eight years.  He lives pretty close by.  We met his girlfriend, who later became his wife, and we felt like we might have the option of developing a good friendship with this couple.  They were fun and friendly, and when they started their family not too long after ours, it seemed even more of a potential match since having the kids play together is always a good catalyst for family friendships.

Unfortunately it hasn’t really worked out as we might have thought.

We still get together with them and see them socially, but that closer friendship hasn’t really developed.  And, it’s all because of the habits coming down to the couple saying thank you.

Or rather, the fact that they don’t.

We’ve given several gifts to their young child, one time when they came over to our house for dinner and we were introduced to the baby for the first time, and another at his first birthday, and neither time did we receive any sort of thank you note.

Habit Forming

As a kid, it was instilled into me at a pretty early age that I should send a thank you note for a gift that I received.  After receiving gifts for Christmas or my birthday, at some point in the following several weeks, I was expected to sit down and write a small note thanking my aunt or grandma or whoever for the nice gift.

I realize now that it wasn’t so much about sending the gift or writing the right words as it was about my parents teaching me proper manners.

My wife must have learned the same habits because she naturally writes out thank you notes any time that the kids get a present.  Little Boy Beagle, who is three and a half, even ‘writes’ his name on them now, and the thought is that when they get old enough, they’ll be expected to write them and send them out themselves.

But, the couple in question has never sent a thank you note.  I would even accept something on Facebook or an e-mail.  In one case, the birthday party, they had it at a facility where the kids could play in bounce houses, and because of the short window, they didn’t even open the gifts in front of their guests.  I don’t have a problem with the fact that they didn’t open the gifts, but you would think that they would provide some sort of acknowledgement of having received the gift.

I’m trying to think of reasons on why they might not send out a gift.

They didn’t know?  My father-in-law suggested that, if neither of them were raised to send out thank you notes, maybe they see it as perfectly normal to collect gifts without writing thank you notes.  In fairness, they did send out thank you notes for the wedding gift that we gave them, but I know wedding thank yous are a little more known.

I don’t know if I necessarily see this as an excuse but I’ll ask readers, is this one that maybe should be given a little more consideration or should they have learned by now to send out thank you notes.

They didn’t like the gift?  For the gift that we gave them when we first met the baby, my wife created something she’s given out multiple times, a personalized frame with the baby’s birth details.  It’s a new thing that everybody else we’ve given it to has gushed over, but maybe it didn’t fit their style or they didn’t think much of it.

Even if they didn’t like the gift, is that an excuse to negate sending a thank you card?  I always thought that you were thanking the person for the thought that they put into the gift as much as you are the gift itself.

Are we expecting something that we shouldn’t? Maybe the issue is on us. Maybe receiving a thank you note is something beyond what we should be expecting.

I just don’t believe this though.  We know a lot of friends, many of whom have had babies that we’ve exchanged gifts with either as newborns, for first birthdays, or the like.  In every other case, we’ve received thank you notes after having given a gift.

It got lost in the mail?  Maybe they did send a thank you and we never received it.  I could see this happening maybe once, but twice?  I think it’s probably a fair assumption that it never got sent.  Now, we do have a friend in common, and I’ve been tempted to ask whether they received a thank you, but I never have simply because I don’t want to even bring the chance of it getting back to the couple.  That’s not our goal.

What’s the big deal?

I don’t want to drop these people as friends, and I don’t want to make a mountain out of a mole hill, so I wonder, are we overreacting?  Or does it speak to something about the type of friends that we want to have (and that we want our kids to have) by getting bothered by this?  Our thought is that we will continue to be social with them but as far as trying to develop a friendship where we see each other outside of birthday parties or the like, it’s not as high on our agenda as it might have been a while back.

I don’t know all their is to know about manners and ettiquite, nor do I want to. I’ve never considered myself a person who would describe themselves as ‘proper’ but at the same time, when someone goes out of their way to do something for me or my family, whether it be by offering their time, their money, or a gift, I try to express my gratitude and thanks.  I’m sure that I’ve failed to do so at times, but when it becomes a regular thing, it seems hard to blame it on an oversight.

Readers, what do you think of our thoughts on this matter? Do you notice if you don’t receive a thank you note or some expression of gratitude after a gift is given?

Copyright 2013 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.

Have We Lost Our Ability To Be Open Minded?

Posted on by
24

I’ve noticed that in so many areas these days, people have their minds made up.  About what?  Well, pretty much everything.  The thing is, I can’t decide if this happened as I’ve gotten older, meaning that people have gotten more decisive, or because I’ve gotten older, where maybe people have been this way all along, but I never really noticed it until now?

I’ve always said that you shouldn’t talk about politics or religion at social gatherings, work, or even within family, because it’s likely you’re going to stir up the pot.  This is very true.  It seems in both of those realms, people have their mind made up, so is a meaningful, thought provoking discussion really possible?

If a hardcore liberal and an ultra conservative person get together and start talking politics, what do you think the chances are that they will find common ground?  Probably not.  But, this element has always been there.  What’s different now is how far reaching this has gone.  Now, one of those people could be talking to someone who’s squarely in the middle, and there is still a big possibility of an argument.  Because, in many cases these days, the person who is so steadfast in their beliefs not only looks down upon those who have opposing beliefs, but they look down on anyone who doesn’t unequivocally share their beliefs altogether.   So, before, you could have two people talking about government health care, and the only real chance an argument would break out would be between those who favored versus those who opposed it.  Now, you’d have either one of those people getting in the faces of someone who just wasn’t sure or who didn’t have a strong opinion either way.

That’s kind of sad.

How did we get there?

Instant information.  I think that access to information at the tip of your fingers is great, but it also means that there are many more informational sources, and most of them are going to give you much more than just the information.  Think about how something like Obamacare would have been presented fifty years ago.  There were three TV networks, and chances are you had one or two local newspapers, and together these sources would be the source of most peoples knowledge.

This meant that people could focus more on the subject.

Now, think about all the sources of information you could use to gather information on the topic.  You have a couple of dozen TV channels that can provide information in one fashion or another.  You have Facebook, Twitter and other social media.  You have online news sites, many of which claim to be news sites, but are more ‘opinion columns’.  You have blogs, which number in the millions.

All of these things together offer many times the amount of information you used to get. So, how can this be a bad thing?

Because we allow this information to form our thinking.  Fifty years ago, with just a couple of networks and a couple of papers, people did not have the wealth of knowledge and certainly not the amount of opinion behind those things.  What this forced people to do was form opinions on their own.  They didn’t have the luxury of finding out, at a moments notice, what 5,000,000 other Americans thought about the subject.  In many cases, if the media source presented the information in a neutral fashion, you had no choice but to form an opinion on a basis of the facts available.

Talking things over.  Back in the old days, in addition to the limited media information that you had available, you also had another way to gather information and form opinions: Talking with other people.   After you read about the change in the newspaper or saw Walter Cronkite talking about it on TV for a couple of minutes, you had to go and gather the information on your own.

You could talk to your friends.  You could talk to your neighbors.  You could hear what they think, and because you only had limited information and you didn’t have people screaming at you how you should think, it kept your mind open so that discussions could actually lead to opinions being formed.

Can this happen in our information saturated world today?

I’m not naive enough to think that fifty years ago, every person walked around with an open mind on every topic, and you could have an engaging discussion about anything with anyone.  I’m sure that’s far from the truth.  There are close-minded people and people who have formed their opinions, and there always have been.

I just think that there were fewer of them back then.

I also think that back then, even if you had formed an opinion on something, you could often have a conversation about a topic with someone who didn’t see things your way, and still end up having an engaging discussion.

Nowadays, I go to Facebook and I see people with left-leaning tendencies start a post talking about ‘those idiot Republicans’ or vice versa.  Regardless of how I feel either way, that type of wording is problematic because it shuts down any and all possibility of a meaningful dialogue.

People think they’re right.  The opportunities that social media have created are endless.  It allows you to connect with people you might not interact with on a day to day basis.  It allows you to gather information in a moments notice that you might not otherwise even know existed.  But, it also gives everybody a voice.  It makes everybody think that their voice needs to be heard, especially if it’s a topic on which they feel strongly about.

The fact is that just because you feel strongly about something doesn’t make you an expert and it certainly doesn’t make you right.  Unfortunately, this is a point largely lost these days where being given a platform makes people automatically assume that they’re right and anyone else who doesn’t see things exactly as they do is wrong.

I wish people would subscribe more to the old adage that it’s better to listen than to speak.  The world would be a better place for it.

Readers, do you see the same thing I see here or has it been this way all along and I’m just seeing things with a different perspective as I get older?

Copyright 2013 Original content authorized only to appear on Money Beagle. Please subscribe via RSS, follow me on Twitter, Facebook, or receive e-mail updates. Thank you for reading.