More and more folks have likely heard of the FIRE movement. Lately it seems to be a popular target for potshots from mainstream media personal finance hacks who want the average person to keep reading their recycled bullshit advice and fueling their viewer/reader numbers without ever being able to graduate to something better. And FIRE advocates have “fired” right back. Sorry, it had to be done. FIRE stands for Financial Independence Retire Early. You might be surprised to learn that I am not 100% on board. I had been at one time. But my perspective has evolved a little over the last few years.
I love the FI in FIRE. In the richest society in the history
of the world, we can all aspire to be financially independent if it is a high
enough priority. Sadly, it will never happen for most people because shiny
objects, slick sales pitches, lifestyles they feel obligated to live or
provide, neighbors that have to be kept up with, etc, always seem to be more
important. But for anyone who ever wishes he could say no at work with zero
fear of potential consequences, financial independence would make it possible.
For anyone who wants to go on vacation without planning it months in advance or
having money be a limiting factor, same thing. I could keep going but I think
you get the idea. There is nothing you can buy on this planet that is quite as
satisfying as knowing you will never again have to make a decision based on
such a crass factor as money. Or put another way, if you can think about money
for long enough, you can reach the point where you never need to again. The
FIRE movement is mostly about reaching that day as soon as possible so you can
enjoy the rest of them more.
I think most people can agree that financial independence is
a worthwhile goal. But many seem to object to the RE part. There is even a lot
of disagreement about the exact definition of the term. Some FIRE detractors
say it’s cheating if you work in any way, shape, or form after retiring early.
Others say it’s not worth “living like you’re poor” your whole life just so you
can retire at a young age. My take is that the term can be useful to anyone
regardless of exactly how you choose to define it. If it makes sense, you can
think of it as “retiring” from money being the most important factor in what
you do – or a factor at all, for that matter. I would also say that your living
standard is your choice and no one else’s. If you are happy and you aren’t
hurting anyone, tell them to go pound sand. The FIRE community welcomes people
all along the spectrum, from one extremely disciplined, analytical blogger who
lives on about $7k a year all the way to another rather neurotic one (I mean
that with love, Sam – and yes, it takes one to know one!) who seems to fear that
even the $200k+ his investments earn annually, combined with his incredible
intellect, might somehow not be quite enough.
Bottom line, FIRE can be whatever you want it to be. Unlike
with religion, where it could be considered a little hypocritical to be on the
ala carte plan, this is a very open and welcoming school of thought. Take what
you like and use it to make your life better; ignore what you don’t. I enjoy
hanging out with a local FIRE group and some of them take frugal to a level I
would never want to approach. Others seem to live higher on the hog than a man
of my humble origins is likely to ever want to – although I reserve the right
to change my mind on that point. It doesn’t matter. Everyone brings something
to the table and everyone benefits from both building relationships with
similar minded people and from being exposed to a wide range of ideas and
What is my personal FIRE struggle? At some point in your
life, a guidance counselor probably asked you what you would do if money didn’t
matter at all. That’s it for me, right there. Unless I veer pretty far from my
current path, I’ll reach financial independence in the next five to ten years but
I have absolutely no fucking clue what to do with my life when I get there. My
job has its tough moments but it is also incredibly rewarding on many levels.
Should I keep doing it and simply start finding ways to spend more money? I
suppose a mansion or two, a garage full of high end vehicles, or any number of
possible luxuries might grow on me. Or if I didn’t want to spend the unstoppable
excess on myself, I could give it to causes I care about. Altruistic or not,
that could be a great way to maximize the financial value of my life and put
that value into whatever I want to impact most. After all, the argument could
be made that if you can make a lot of money and benefit humanity in some way in
the process, you should. Or maybe I should tell the boss I’m retiring when I’m
roughly twenty years his junior and still younger than the vast majority of
people who do my job in any territory, or at any company for that matter. I don’t
hate the man by a long shot but something inside me wants to correct him and
say “no, I’m not resigning; I’m retiring” and demand a gold watch, or at least
a cake. And of course, there are a few choice people within the company who I
would absolutely love to see turn some shade of green at my party.
But what would I do then? Sure, this is a good problem to
have and I am immensely grateful for it. But that doesn’t make it any easier.
Sometimes it feels like a personal failing that I have a difficult time
deciding on a way to spend roughly half of my life without money being a
factor. Sure, I could go lay on a beach and drink beer somewhere or I could
travel the world and see all kinds of amazing things. But I have a feeling I
would get bored pretty quickly. And I’m not alone. Studies regularly show that
this can be a problem for lots of people – even at more traditional retirement
ages. One’s sense of purpose tends to get a little wrapped up in something if
you spend half your waking hours doing it year after year. And I think that’s
to be expected. If I had to guess, I’d say that there are probably a lot more
mes out there than there are Elon Musks. And a sense of purpose is an enormous
part of what makes life worth living, no matter who you are.
So I wrestle with that problem all the time and until I get
it figured out, I’d be lying if I said I don’t use it as an excuse to justify
the occasional large expense. After all, there’s no sense rushing to get to a
destination if you don’t know if you will like what you find when you get
there. This was a lot easier when I was in love with someone and genuinely
wanted to spend the rest of my life with her, no matter what we were doing.
Even if I meet someone who means just as much to me somewhere down the line, I
don’t think I can ever put that much stock in another human being again – and that’s
a good thing. But it’s only one more thing I’ve realized does not answer what
will probably ultimately be the most important question of my existence.
But all that said, my general financial philosophy is
currently that as long as I stay on the path to be financially independent by
40 at the latest, I doubt it will lead anywhere bad. I consider staying open
minded, especially about trying new things, to be a crucial investment in my
future. My advice to anyone else is really about the same. I’ll end this post
with an excellent quote from Martin Luther King, Jr: “You don’t have to see the
whole staircase, just take the first step.”
Time for a fun post. This one is going to be long, opinionated, and speculative. But bear with me because I think I’m onto something here. The media won’t let us forget it; millennials are not buying houses at the rate members of other generations have. They have a hundred theories about why – most of which involve student loans, rising real estate prices, stagnant incomes, structural economic shifts, or simple lack of “good old fashioned American gumption.” Of course I don’t know everyone or everything, but as a millennial with an at least above average understanding of business, finance, and economics, I believe I’m as qualified as your average pundit to do some positing of my own on the subject. From my perspective, while each of the issues I mentioned plays a role, they aren’t contributing to a crisis at all. To the contrary, the nonstop hand wringing isn’t necessary and in fact, things are actually moving in a very positive direction.
Who am I? I’m a millennial who went to a consistently highly
ranked public university and graduated right into the heart of the worst
economic crisis the country has seen since the Great Depression – and into a
local economy that was struggling more than most for that matter. Between my
college girlfriend and I, we had a pair of decorated academic records, close to
$100k in debt, and zero jobs to speak of when we walked across the stage in our
gowns and funny hats. Our graduation speaker’s summarizing message was “we’ve
destroyed this once great country, you’re screwed, good luck.” It was about the
most depressing speech I could have imagined and also rather redundant since
our reality more or less already matched it. A little optimism would have been appreciated
and appropriate as well.
Over the next few months, both of us scratched, clawed, and
begged our way into the workforce. We each started out as underemployed temps
(so no guarantee of tomorrow much less benefits or work that was in any way
challenging or meaningful) serving in office drone functions making roughly
$30k a year each and well aware that we were lucky to be that well off. It
wasn’t an easy time but we were determined to get through it. Mortified by our
pile of debt, we made a plan to pay it off in a maximum of five years and stuck
to it, no matter how lean our life together had to be. We lived in a small one
bedroom apartment and drove one car together to work since our jobs happened to
be in the same direction. Luxuries like eating at restaurants were kept to a
minimum. Over the next few years, things gradually got better. We each
differentiated ourselves at work and got hired full time with small raises. My
girlfriend became my fiancé and my fiancé became my wife. And yes, it was a
relatively modest wedding – although a wonderful one as well. We both upgraded
jobs a couple of times and suddenly things looked much different. We bought a
pair of new cars – no luxury hood ornaments, but all the nicer features like
leather, fancy rims, touch screens, etc. We upgraded our living arrangements from
small one bedroom apartment to two bedroom condo style apartment to three
bedroom duplex. We did all of this while remaining on schedule with our five
year student loan repayment plan. A house might have been the next big step but
we were not about to consider that until our student loans were 100% eradicated.
But that never quite transpired. We had married too young
and while we had accomplished some impressive things together and grown
immensely as people, that growth had taken us in separate directions. We
divorced fairly abruptly, parted ways, and have never spoken again. Almost
simultaneously, I got my current job and my income doubled overnight and
continued from there. I worked hard and learned a lot and after a couple of
years, a significantly more desirable territory opened up. I lobbied for it
with all my might and got it and today I’m in Houston – over a thousand miles
away from the part of the world that never managed to feel like home in over
two decades of my living there. It has taken some time to develop this new
territory and that is still a work in progress but my income has increased
significantly since coming here. Plus my investments have continued to grow and
I’ve started a profitable side business as well.
While my post college life (and pre as well) started out
relatively bleak when compared to previous generations, I consider that an
advantage as I look back on it. I learned to separate wants from needs early on
– and significantly, I learned that before I had developed a taste for a more
expensive lifestyle than the bare bones existence of a student from a low
socioeconomic background. Gradually, in spite of the dismal economic
conditions, I was able to grind my way into a successful career path. And today,
well under a decade after setting out on that journey, my income has cleared
the 90th percentile. I’ve developed a taste for the finer things in
life but it has happened gradually and with the lessons of the past ever
present in the back of my mind, I am unwilling to spend more than half of what
I earn regardless of the circumstances.
Why the mini financial biography? I think the background of
my basic experience helps to illustrate the point I’m going to make. By my age,
most people in previous generations had a house and kids. I have neither.
However, my net worth is substantially higher than that of almost anyone of
previous generations at this point in their lives – adjusted for inflation, of
course. Barring a total disaster, it will be in the seven figures less than ten
years from now. At that point, I may or may not own a residence. But once again
barring a total disaster, there will be no kids. I think extremely logically
and have almost completely divorced myself from emotion when it comes to making
financial decisions. Kids made sense when each one repaid the parental
investment in full and then some, often in the form of free labor on a farm or
in the family business. Today, a kid will cost roughly a quarter million
dollars if you are a capable enough parent to prepare him or her to leave the
nest by eighteen – otherwise more. This is one of the most important financial
decisions anyone can make. Any argument in favor of having kids is 100% emotion
based and thus, irrelevant to me. No, I am not a robot. But I am willing and
able to override my feelings in order to put not just surviving, but thriving,
squarely in the number one spot.
Obviously I am not a typical millennial. But I believe that
more than members of any other generation, millennials reflect my way of
thinking on at least some level. For example, the rate of reproduction has
plummeted – in almost a perfectly inverse correlation with education level
attained. Millennials aren’t ruining everything; in many cases we’re ruining
bad things and making room for better ones. Motorcycles are about the most
dangerous form of transportation imaginable and guess what – very few of us are
buying them. Harley Davidson motorcycles are easily the worst possible variety
of motorcycles. They are big, ugly, egregiously loud, and they have zero of the
motorcycle’s three actual advantages – ridiculous speed, low cost, and great
gas mileage. Here again, millennials seem to have it right; Harley is on track
to be bankrupt in less than a decade because we simply do not buy their products.
How about beer? Entire generations drank nothing but piss water and apparently
it never occurred to them to ask for anything better. Millennials didn’t ask.
We demanded. And today, quality beer is widely available while the mass
producers of swill fight for dwindling market share with sort of clever
commercials as they quietly buy up every craft beer brand they can.
On to home ownership – the foundation of the mighty American
economic legacy. It’s true. We aren’t buying them in very high numbers. And
yes, all of the problems I mentioned are playing a role. But I fought through
all of them and could now buy a house without financing if I wanted to. Most
millennials aren’t quite there, but plenty are succeeding in fighting their way
through. The American economic engine has been finding creative ways to make
things affordable for people who can’t actually afford them for a very long
time – since before the Great Depression, in fact. I really don’t buy the
general argument that millennials have just gotten such a raw economic deal
that it can’t be done yet again. I think the biggest issue at play here is
choice. Just like crappy, obnoxious, overpriced death machines (yes, I hate
Harley and can’t wait to see everything related to the company relegated to
Pawn Stars and similar shows) or piss water at any price, we are not buying
houses because we do not want what is available.
Back to the example of my life since it’s what I know best. Yes, I am “throwing my money away” on rent from the conventional perspective. But am I really? I spend just shy of $1200 a month on a very luxurious arrangement. Sure, it’s only a 700 square foot, one bedroom apartment. But that is plenty of space for me, the few possessions I chose to keep when I came here, and the even fewer I have acquired since. It was built in 2013 and has granite countertops, hardwood floors, ten foot ceilings, beautiful track lighting, and a balcony overlooking a resort style pool complete with gas grills all around (the view from my balcony tonight is the featured picture for this post). In addition to the pool areas (yes, there are more than one), the complex has gated entrances, security guards on patrol, a serviceable gym (and I’m pretty picky about them), a clubhouse with a very nice pool table, coffee, and light refreshments, a computer room, several lounges that can be used whenever or even reserved for private events, a yoga studio, trash pickup at your door, about a hundred huge tvs everywhere you go that anyone can turn to any channel they like, and I’m probably leaving a bunch of stuff out. And by the way, I left out the best feature of all – portability. This area hasn’t turned out to be for me so in a little over a month, I’m moving to an even newer complex with even better amenities and in an area I think will be a better fit. And it will cost me roughly the same. If I were offered a better job in a different city, I could make a similar choice without having to worry about selling a house. Anyway, my current complex also happens to be located in an area where you’d be hard pressed to find a piece of real estate priced below half a million dollars. My new one will be in a somewhat more affordable market – if you consider $300k+ affordable when the median household income is around $60k a year. For the record, I do not.
And even if you were willing to spend that kind of money,
you literally couldn’t buy what I’m renting because it doesn’t exist. The
average American house has been growing consistently and today, it is around
2600 square feet. That would have been excessive when the average family was
twice the size it is today. Every one of those square feet has a cost –
mortgage interest, property taxes, time spent cleaning and maintaining,
utilities to heat/cool, more money spent on accumulating and maintaining
clutter, and more. The palaces people think they own are actually financial
prisons and worse, they take up tons of their time as well. This is
unsustainable. It was unsustainable in 2006 and society had a great opportunity
to learn that. But somehow that didn’t happen, just like it hasn’t in so many
other past opportunities, and the average house has only continued to grow.
I want exactly what I have – an appropriate sized residence
with premium, modern features and amenities and as little maintenance as
possible required – or preferably none. Sure, I could find a house or condo
with less than 1000 square feet. But it would probably be old and either
falling apart or shoddily renovated to attract buyers with as minimal an
investment as possible. And that’s because for a long time, we’ve been building
mostly modern mini mansions the average household can’t actually afford and
almost no appropriate sized homes. As a millennial, it certainly seems like far
more of my peers live in households of one or two than in households larger
than that. Even among those who have kids, very, very few have more than one or
two. And like it or not, millennials are now the largest generation in this
country, which is why all of this is so significant. So why do we continue to
build houses that could shelter small armies when almost no one needs more than
2000 square feet and most could get by with considerably less?
In theory, you should be paying more for rent than it would
cost you to own something comparable. That’s the premium you pay for bearing almost
no responsibility. But there are numerous, widespread scenarios where that isn’t
the case and that’s if appropriate properties are even available to buy in a
given area. My situation certainly falls into that category. Find me a property
in my area reasonably close to the size of my apartment that offers even
remotely similar amenities for $1200 or less and I will buy it and pay you
every dollar of equity I build in the first year as a finder’s fee. That’s how
confident I am that it’s not possible here. And I’m serious about that offer by
the way. I could go into an in depth analysis of the numbers and maybe I will
write a post on that one day but for now, suffice it to say that I’m a finance guy,
I look around and run the numbers regularly, and this isn’t even debatable in
I think we’re going to see housing change over time and I
believe the process has already started. We’re already seeing it on the margins
in the form of some extreme concepts like tiny houses, which started off as
media curiosities and today are growing common enough that most people have
heard of them. There is actually a market for those things and my guess is that
if builders were to start building new, modern houses of a slightly more
practical size, they would find that there is a huge market for those. Let me
rephrase that. When they start doing that, they will find that. I think we will
see a dramatic increase in premium featured houses being built in the 1000-1500
square foot range. In fact, if I see a builder doing this, I will seriously
consider investing. In time, I think the average size will drop to 2000, and
maybe even below, while the average age will decrease dramatically as tons of
houses are built to accommodate smaller household sizes and the weight of those
numbers pulls in that direction.
And we will all be better off. We as a country do not
benefit when such a high percentage of people are “house poor” to the point
where they are a few unexpected expenses or a moderate injury or illness away
from foreclosure. I don’t believe it benefits the economy when all factors are
considered and it certainly doesn’t benefit us as a society to have a bunch of
people living in such a terribly stressful situation. It certainly doesn’t
benefit us to have so much of our economy resting on the house of cards that is
the mortgage backed security system. And no, that has not been fixed since the
Great Recession. Just like the several previous times it has collapsed on
itself, some politicians slapped some wrists and introduced some new, “this
time we’re actually serious” sounding legislation that really just towed the
wreck of the Titanic in to port, threw a tarp (no pun intended here) over the
gaping hole in the hull, rearranged a few deck chairs, and sent it right back
out to sea. The problem won’t actually be fixed until we address the real, underlying
cause. But naïve optimist as it may make me sound like, I believe we will do it
– at least to an extent that will make a substantial improvement. I believe we
will “right size” houses and when the dust settles, it is going to be a very
good thing for everyone. The media and society at large loves to rip on my
generation and certainly plenty of it is warranted. However, I believe we have
been brought up in just the set of circumstances necessary to have made us
exactly the people to do what several previous generations have failed to.
Disagree? I would love to hear your reasoning.
Time to save some folks some more money. Since it’s that
time of year for me again, today I’m going to do it by writing about how I play
the internet game. Why didn’t I say the cable/internet game? Because cable is
useless. You can get every show or movie with internet alone and as a bonus,
there are no commercials in most cases. If live sports are your poison, those
are often on over the air tv so you can get your fix in HD with a ten dollar
antenna. They make fancy ones that cost ten times that much but if you read the
reviews, you will likely conclude, as I have, that no one has ever topped the
rabbit ears at any price point. You can even put them in your basement or attic,
as I once did, so you don’t even have to look at them in your living room. If
your live sports are not on over the air tv, you still have plenty of options –
bars, friends’ houses, streaming, etc. In conclusion, no cable needed – and I
didn’t even have to go into how the average person spends way too much time
staring at a screen and should simply be doing it far less in the first place.
Or Kodi for that matter…
Why do I call it the internet game? That’s all that most of
life is. And that is certainly the case with internet service providers (ISPs).
They lure customers in with a relatively reasonable rate, then double it a year
later. The fewer customers fight back or do so successfully, the better the ISP
does in the game. More profit equals winning. But you don’t want to fatten up
an ISP’s profit margin and you don’t have to. Now in the internet game, there
are only two basic scenarios – one easy and one slightly more difficult. But
not to worry. I’ve experienced them both and both are beatable. You have
scenario one if you live in a major metro area with more than one viable
internet option. In other words, child’s play. Scenario two is when you have
only one. And no, satellite and the like don’t count as options. Remember, we
do not inconvenience ourselves in the name of saving money; we simply save
If you have options, as I do here in Houston, the game is
already over the minute you show up. First, sign up for your “promotional rate”
internet with AT&T. Bonus points if you negotiate an extra hundred dollar gift
card out of them as I did last time to negate the unnecessary “installation fee”
they charge for a technician to pay you an unnecessary visit. Remember, you are
in the driver’s seat because there is competition. When they raise your rate a
year later, look at what Comcast, or whatever other option you have, is
offering. In this case, I’m about to save some money because they’re offering
internet in my area for $30 instead of the $40 I’m paying now. Yay for me. Next,
you call your current provider and tell them to cancel your account. When they
ask why, simply tell them the truth; they jacked your rate up and there is a
cheaper option available to you – so bye. They will probably transfer you to
their retention department but that’s why you’ve done your homework. Stick to
your guns unless they can beat your other option. There really is no more to it
than that since your next call is actually going to be to your other option,
which does exist. However, in this scenario, the retention department just
might actually work hard to win your business because they know that. Going
into the call, I know I’m going to save a minimum of $10 a month, but possibly
more if their numbers are down and they’re feeling especially motivated today.
If you don’t have options, you can still win, but you have
to be a little more creative. The game starts off the same way as above, but
when your year is up, it changes. You can try negotiating with the retention
department if you want to but again, they know the local market. So if you don’t
have any better options, they are pretty unlikely to be in deal mode. But that’s
ok. If you don’t get anywhere with them, simply cancel. Next, have your significant
other call them and set up new service at the address. Don’t have one? Invent
one. If they require a social security number or something over the top like
that, have a friend call and return the favor for him or her. You get the
point. This is war, people, so band together against the common enemy, which is
anyone trying to rip you off. Once your alternate account name’s year is up,
you can typically call and set up your own service again at the “promotional
rate” since most ISPs purge your information from their system after six months.
That is the main game but here are a few other pointers.
1. If there is any kind of a modem/router rental fee
charged, don’t pay it. You can usually buy a compatible setup for no more than
$50-100 and they usually last at least a few years if not longer. Given that
you’re avoiding a $10-15 a month rental fee plus taxes and fees being charged
on top of it, this small “investment” pays for itself in less than a year.
2. Like all businesses, your ISP wants to make as much
profit as possible. Its cost is whatever it takes to provide your service and
its revenue is whatever it can get you to pay. Here’s the dirty secret: most of
the cost is in setting up and maintaining the network. In other words, there is
very little marginal cost between different speeds. And here’s another secret:
most people need no more than 10-20 mbps – usually around the bottom rung of
service that is offered. When they ask what you use the internet for, they’re
listening for that magic phrase – streaming. That’s when they’ll say you need
some ridiculous speed like 50 or even 100 mbps (depending on how gullible they’ve
decided you are) and attempt to upsell you. If you let them fool you, you can
quickly wind up paying way too much for internet. Go with the lowest speed that
is offered and when they try to play the upselling game, tell them you use the
internet exclusively for email and web browsing. At this point, they may try
any number of low brow sales tactics and of course they would; the more they
get you to pay, the more they get paid. Once again, stick to your guns. I
promise the world will not end over this decision, no matter what they tell
3. Another note on speed is that sometimes the best deal isn’t advertised. When I was in Wisconsin, Time Warner (later acquired by Spectrum) used to offer a “budget plan” of maybe 3 or 5 mbps for $15. The next highest speed was about three times the price. As a bonus, it was somehow exempt from the “promotional rate” bullshit. I was able to keep it for years. I still fondly remember the day a sales woman from some company or other came to the door and asked what I was paying. I told her what I paid for internet and that I don’t pay for cable under any circumstances and she literally did an about face and headed for the next house without another word. Good times. But this plan wasn’t advertised on the Time Warner website. I happened to have heard about it from someone so I called and asked for it. After listening to a few minutes of the inside sales rep insisting I wouldn’t be able to do anything with my internet if I went with this horribly inadequate plan and ignoring it all, I was in business. And guess what. ISPs can’t perfectly control the speed you get. So even though 3-5mbps would have been adequate anyway, I often got double or triple the speed I was paying for – most likely a regression towards the mean situation. If you want to find out how much speed you are getting, you can find tons of online options by googling “speed test.” But in any case, it certainly doesn’t cost anything to try the slowest available speed and switch if it doesn’t work. Assuming it won’t work very well may cost you something. Assuming can do that in tons of different situations in life.
That should about cover it. If you’re paying more than
$40-50 a month, you’re paying too much. By employing these three methods, you
should be able to prevent that from ever happening. Adios for now.
It is no secret among those who know me that I have struggled with depression for most of my life. While it seems counterintuitive, there does appear to be a strong correlation between the prevalence of this problem and the unprecedented and continuing economic success our country has enjoyed. So if you struggle with it, there is absolutely nothing wrong with you. Most of us do, at least some of the time, and our circumstances in life really don’t seem to have a significant effect on that. As difficult as depression symptoms are to deal with, the sheer persistence of the disease in the face of long term, consistent efforts to eradicate it, has been the most frustrating aspect for me.
However, there is plenty to be hopeful about. Several months
ago, I started making a more focused effort than ever to get my depression
under control. First I had to accept, once and for all, that depression is a
part of me and probably always will be. Acceptance is so important! As I
understand it, suffering isn’t a direct result of circumstances, but rather,
the result of the difference between those circumstances and one’s expectations.
So in other words, anyone can be unhappy if he isn’t willing to accept reality.
This is a large part of the explanation for miserable billionaires and happy
people who don’t know where their next meals are coming from.
Accepting the reality that I will always have depression to contend
with was a huge help. The next big step was taking responsibility for my own
mental health. Too often in my life I’ve leaned on mental health professionals,
thinking that if I invested enough time and money, I would have to see results.
But just like with anything else, that isn’t enough. Simply going through the
motions didn’t work for me. I wasted thousands of dollars in copays and
hundreds of hours because I went in with the wrong mindset. The correct
mindset, as in any situation, is to take responsibility – not for making the
investment, but for attaining the RESULTS. When I finally did that around the
middle of last year, I naturally started putting in the focused work that was
necessary and everything changed.
What were my tactics? For one thing, I started reading with
the specific purpose of defeating depression. Some of the books that really
helped me include: The 7 Habits of Highly Effective People by Stephen Covey,
Man’s Search for Meaning by Viktor Frankl, The Four Agreements by Miguel Ruiz,
Feeling Good: The New Mood Therapy by David Burns, Self-Compassion: The Power
of Being Kind to Yourself by Kristin Neff, Resilience: Hard-Won Wisdom for
Living a Better Life by Eric Greitens, Extreme Ownership: How U.S. Navy SEALS
Lead and Win by Jocko Willink and Leif Babin, and Mind Over Mood: Change How
You Feel By Changing the Way You Think by Dennis Greenberger, Christine
Padesky, and Aaron Beck. But beyond just reading, I started actively working on
changing my thought process. There are hundreds of very worthwhile exercises
and things to think about in just the books I listed and I highly recommend
working through them all to find the ones that help you.
But reading books takes time. Today I want to challenge you
to start with one simple, but incredibly powerful concept: gratitude. This isn’t
the first time I’ve mentioned it in this young blog and that is no accident.
Why is it so important? If you can change the way you think and start looking
for positives instead of negatives, a few things will happen. Biologically, you
will literally change your physical brain as you force it to work in different
ways. That means that thinking positively will become easier with practice just
like lifting weights does as your muscles get stronger. You will likely notice
that your happiness level increases fairly quickly. But maybe the most exciting
thing that will happen when you make it a priority to be thankful for the good
things in your life is that you will get more of them. That’s right; changing
the way you think will literally change your circumstances in life.
This isn’t some silly gimmick or pseudo-science. I’m not
talking about thinking about things you want and the universe magically
manifesting them for you. What I’m talking about is real. How does it work?
When you start focusing on positive things in your life and being thankful for
them, you will start to see more of them. This is human nature; you tend to
find what you’re looking for and miss a lot of what you aren’t. When you start
seeing more positive things, you start feeling better. When that happens, you start
acting differently. You make an extra sales call. You meet a smoking hot girl
and ask her out on the spot. Or maybe you just simply hold the door for
someone. When you change your actions, your results start to change. Each of
the examples I just listed can lead to something good happening for you and if
you make enough changes like them, they certainly will. The first step to
success is simply showing up and doing something. Success has a way of
snowballing really quickly so literally all you have to do is start the process
and ride the momentum from there and things will improve.
So how am I going to challenge you today? I want you to
focus on making gratitude a part of your life. Immediately. In order for this
to be as effective as possible, it needs to be obnoxious. Start keeping a notebook
around or taking notes in your phone or whatever works for you. Every hour you’re
awake, write down something you’re thankful for. Every single hour. I guarantee
you can think of something. It can be as big as getting a promotion at work or
as small as a conversation you had that you enjoyed. Still can’t find
something? I bet you aren’t dying of cancer right now. I’ll bet even more that
a tsunami didn’t just destroy your house and all your belongings. Try not to
lean on the “it could always be worse” crutch too often but you can use it when
you have to.
At the end of each day, review your list and pick out your
favorites. Think about them as you lay in bed and go to sleep. There is no
better way to start a night of restful sleep. Look back over previous days’
lists whenever you’re starting to feel down and remind yourself of some of the
blessings in your life until the mood passes.
This exercise isn’t going to cure anyone’s depression. Much
like alcoholism, I am not sure there is a cure. I think you just have to
acknowledge that it exists and commit to fighting it every day. Do my gratitude
challenge for a week or two and see how you feel. See if it is easier to come
up with an item to add to the list than it was when you started. You are already
going to notice progress and that is a money back guarantee! Obviously this
doesn’t end your war. But it puts one battle in the win column. Next, pick out
something else to try. Remember, big victories are made up of many little ones.
If anyone decides to complete my challenge, I would love to hear about the
results. So leave a comment or email me at email@example.com and
let me know how it worked for you.
While combing through a friend’s finances with him in search
of savings opportunities recently, we struck gold with his car insurance. He is
going to save hundreds of dollars over the next year as a result of making one
minor change and at this point in his life, that will go a long way for him. In
the process, I realized that car insurance is probably a large potential
savings opportunity for a lot of people and I was inspired to write a post on
the basics. Please note that I am no insurance expert and none of this, or
anything in any other post for that matter, is intended as legal advice. But I
do know a fair bit and I may be able to help point you in a direction that will
save you some cash.
The first thing I tell anyone about insurance in general is
that in many cases, loyalty counts for nothing. In my experience, the only
reward for staying with a company long term is a consistent premium increase.
This doesn’t necessarily apply to all companies but it also doesn’t cost you
anything to get a few quotes to make sure your existing company is still
competitive. I recommend doing so every couple of years or so. Companies seem
to make fairly regular changes to the way they rate drivers, vehicles, etc, and
the only way to find out about them is to shop around and see who is offering
you the best deal today. Don’t assume that anything will be consistent from
person to person or even from year to year for the same person. Numerous
variables go into what premium is charged. Some agents seem to be very willing
to shop around for you as a new customer but very reluctant to do so when you
are already on the books. This has to do with their business model. However, just
as with almost any other service, if you are less valuable as an existing
customer than you were as a new one, become a new one again – for someone else.
Another important thing to look at with car insurance is
your coverage itself. Liability coverage is required in most states now and is
required by common sense and basic human decency everywhere. Sometimes the
legal minimums are lower but I recommend at least 100/300 for bodily injury and
100 for property damage – and 200/400/200 wouldn’t be overkill either.
Remember, if you run out of insurance coverage, you’re on the hook from that
point on. And things can get expensive very quickly whether you’re paying to repair
cars or people so skimping on this to save a few bucks on premiums could be a
very painful decision in the long run. Liability coverage also benefits you in
the form of uninsured/underinsured motorist coverage. There are simply far too
many irresponsible people out there and as usual, people who make one bad
decision, such as not having car insurance, tend to make others as well. In my
relatively young life, I’ve already been rear ended by not one, but two
uninsured drivers while stopped behind lines of cars at stoplights. It doesn’t
get any more “not at fault” than that. In both cases, I was very glad to be
covered by my own insurance company even though the drivers who hit me hadn’t
had the decency to get coverage of their own.
So where can you save money on coverage? In the physical
damage section. For this part, you need to consider both the car you’re driving
and your financial situation. First of all, if your car is worth less than
$5000, you may want to consider passing on collision coverage altogether. Of
course, this means if you are in an at fault accident, you have to pay to repair
the damage to your car. But most accidents are minor ones that involve little
more than replacing a bumper, which is usually around $1000. Plus, if your car
is worth that little, chances are you’re not going to repair minor damage
anyway. So by not having the collision coverage, you’re really betting that you
either won’t get in an at fault accident or that if you do, it will be a minor
one. I like those odds. That said, if you don’t have a reasonable emergency
fund of at least $5000, you may want to think twice about this.
Please note that if there is a lien on your car (in other
words, if you have yet to pay it off), you cannot do this because it will put
your loan in default status. You probably don’t want a visit from the friendly
repo man anytime soon – even if your lender is likely to call and threaten you
for a while before they go to that extreme.
If you want to follow a more minor version of the no
collision coverage strategy that doesn’t put an auto loan in default, you can
raise the deductible. Going from $500 to $1000 usually makes a decent
difference in the premium. I have never seen going higher than $1000 do much of
anything so I leave it there. This should pretty well confirm what I said above
about most accidents amounting to a $1000 bumper replacement; insurance
companies literally bet on it with their pricing.
Aside from coverage changes, there are a few other more traditional methods of lowering your car insurance premium. You can pay for six months at a time or annually if your insurance company offers that option. This usually saves you a little and offers the bonuses of both a head start on any credit cards you may be churning and locking in the premium for the full term you’re paying for. For example, I will only do a full year here in Houston since premiums are rising very quickly as insurers work to recoup their Harvey related losses. You can also get a discount for getting your car insurance from the same company as your homeowners/renters policy. You can talk to your agent to make sure you’re getting all the discounts you may be eligible for (good student, membership in certain associations, completed safety classes, etc). In the case of many insurers, you can also get a discount for letting them use a gps to monitor your driving habits. However, as a safe driver, but one who also likes to get where I’m going in a timely fashion, I’m always going to pass on that offer.
This obviously isn’t exhaustive of every possibility but
hopefully it will give you an idea or two to try out. Good luck and safe
travels out there!
Happy weekend to you! A while back, I wrote a post about exactly how I use credit cards to make an extra $2k a year of tax free income. If you haven’t read it already, I recommend doing so now because parts of this post are going to build on it. I have a couple of minor changes to tell you about that are going to make things just a little bit better. This is a great example of a procedure I engage in periodically – redoing my research to make sure I am still getting the best deals available in every area of life.
The Bank of America Cash card recently prompted me to do
this when it introduced a small upgrade. Now, instead of paying 3% on gas purchases,
it will pay 3% on your choice of a handful of categories – gas, dining, travel,
and some others. You can even change your selection as often as once a month.
So if you have a vacation coming up, for example, simply switch your selection
and boom – you’re now getting 3% on travel! The card will still pay 2% on
Costco purchases. Please note that I’m sticking with the format of my last post
in only listing the optimal bullet points. For example, I didn’t mention the 1%
this card offers on the “all other” purchases category since the Citi Double
Cash card already pays 2% there. In my case, of the new options, I was leaning
towards rotating between dining and travel depending on how much travel I had
planned for any given month. However, the situation suddenly became more
complicated – in a good way.
Since as part of this I wouldn’t be earning 3% on gas purchases anymore, I decided to do a quick check to find out if there are any current offers that beat my default 2% for gas. The first stop on this search was www.doctorofcredit.com. This is an excellent financial hacker type blog that does a far better and more thorough job of covering credit cards, in particular, than I’ve seen anyone else do. And today the good doctor had some good news for me; there is a newcomer on the scene that will put a little extra money in my pocket!
The Wells Fargo Propel card, which apparently came out last
year, has two claims to fame. First off, it appears to offer the largest sign
up bonus (30k points/$300) of any credit card available that doesn’t charge an
annual fee. Second, it pays 3% on a nice range of categories – travel, gas,
dining, and streaming services. This is an excellent no fee card and it’s going
to have a place in my wallet as soon as the snail mail can get it to me.
But here is the rub. The Bank of America Cash card, which
prompted me to redo my research in the first place, is suddenly looking
irrelevant. For those following along at home, the Wells Fargo Propel card
covers each of the most valuable Bank of America Cash categories – except that
instead of paying 3% on one of them at a time, it does so on all of them. So is
the Bank of America Cash card facing the cruel fate of offering an upgrade and
being rewarded with a “do not pass go, do not collect $200” style trip through
Not so fast. Bank of America offers a 10% bonus if you redeem your rewards into one of their checking or savings accounts. So for every $100 I earn on the Bank of America Cash card, I get $110 if I put it into the savings account I already use to maximize the rewards of my Bank of America Better Balance Rewards card. There is also the Bank of America Preferred Rewards program that could give you bigger bonuses than that. But I am strictly a low effort level hacker so I will have to refer you to www.doctorofcredit.com if you want to learn more about that angle. In any case, that 10% bonus, plus the 2% paid on Costco purchases (the Wells Fargo Propel card is an Amex and Costco only accepts Visa right now), means the Bank of America Cash card will narrowly avoid the shredder although now it will only be used for whatever category I’ve chosen to pay 3% in any given month.
Keen observers of big business will probably note that the proximate
timing of these two events is almost certainly no coincidence. This is how things
work. So when one company does something of note, you should automatically be
watching its competition because more likely than not, there will be a response
and it may just benefit you.
So there you have it. One opportunity begets another. In
this case the gain will be $300 this year plus a modest amount in the low
hundreds in subsequent years. But given that applying for the Wells Fargo
Propel card took me no more than five minutes and switching my Bank of America
Cash category selection here and there will take me no more than that over the
course of an entire year, this is still a more than worthwhile maneuver.
Reading is a very rewarding aspect of my life. I believe
that the day a person stops learning, he begins to lose relevance. Of course
there are plenty of ways to learn but with reading, you can expand your
knowledge in a very focused manner. You can then integrate this new knowledge into
your life in all sorts of ways which will make you a more interesting and capable
person. This will translate into a more successful and fulfilling life. Plus,
reading a book while you drink coffee in the morning is a wonderful way to get
your day off to a great start. Every now and again I will post a quick review
of a book I really enjoyed and here is the first one.
The Consuming Instinct by Gad Saad (2011)
Gad Saad has made a name for himself by applying his study
of the young, but revolutionary field of evolutionary psychology, to marketing.
He also happens to be very adept at explaining very complex concepts so that
even someone who is not naturally very scientifically inclined, such as the
author of this post, can not only understand them, but feel them come alive. In
this book, Saad examines the relationship between consumption and the sum of
what we have all had bred into us over the course of human history. The kicker
is that he defines consumption very broadly so in the course of the book, he
ends up covering a wide range of human behaviors.
This book helped me to understand a lot of what doesn’t
appear to make logical sense about the world. For example, junk food exists. It
is literally garbage that makes us less healthy and we all know that. And yet
we pay our hard earned money to buy it and put it in our bodies, often in
ridiculous quantities. If this were a purely logical world, junk food would not
be produced at all because there would be no market for it. Once you’ve read
this book, you will understand why it happens anyway along with so many other
things. Saad also delves into the recently socially dangerous, but ever
relevant topic of the differences between the way males and females think and
act. Once again, he has very valuable insight and suddenly a whole bevy of
behaviors I have observed but never fully understood are starting to make more
This is a book that will really get you thinking and that’s
what makes it so valuable. Plenty of scientists could undoubtedly write a book
full of concepts that would be worthwhile to learn but difficult for a
layperson to understand. This particular book accomplishes the former but
bypasses the latter in favor of being very engaging. Simply put, this book is a
great teacher and if you read it, you will come away richer for the experience.
Normally I’m lucky if I see a movie a month. But since my weekends right now involve being as inactive as possible for a while so my ankle can heal, here are my thoughts on the movies that have been part of the bright side of this situation thus far. Oh. And also from this weekend; as a guy who is STILL bitter about the 09 Vikings loss to them in the NFC Championship, the Saints got screwed.
Deadpool 2 (2018)
I went into Deadpool 2 not knowing what to expect. Would it
fall short of recapturing the lightning in a bottle its predecessor did as so
many sequels of surprisingly excellent movies do? It was a very different time
in my life when I watched the first one. Could I have changed so much since
then that I would feel differently about the entire concept now even if it were
executed very well again? I’m happy to say that those concerns were unfounded
whether evaluating the movie relatively or on its own merits. Everything that
made the first Deadpool great is not only preserved, but developed a little
further. One of my favorite elements of the first movie was the juxtaposition
of ridiculously violent scenes and music that just didn’t match them at all.
That has been taken to about its limit in this one and it had me laughing as
hard as I’ve laughed in a long time. The unapologetic irreverence and constant
smart ass quips are still there and the timing and pace are just as good. All
Deadpool’s friends are back (with the exception of Francis obviously) and he
makes some compelling new ones as well. Minor spoiler alert: not all of the new
characters last very long but their quick deaths are about as hilarious as
deaths can be.
But beyond being rolling on the floor funny, the plot is
where this movie really shines. This time it’s more complex than simply “good
guys against bad guys” as not everyone is quite who they seem to be. The
romantic relationship of every man’s dreams is still part of the movie but Mr.
Wilson has to go on another hero’s journey rather than simply being allowed to
enjoy it in peace. Ethical choices are presented and struggled with. Unlikely
alliances are forged, broken, and forged again. An impressive range of emotions
are explored given the nature of the movie. And ultimately, the whole spectacle
This is one franchise I will gladly keep following until it
stops hitting it out of the park and that hasn’t happened yet. It accepts
neither categorization nor convention and instead, it simply entertains without
taking so much as a single breath between jokes, punches, etc. There isn’t a
roller coaster with rapid enough twists and turns to merit being a metaphor for
what this franchise does. I’m not a fan of most superhero movies and I hope the
concept has almost outlived its day as the automatic profit machine of the
industry so we can start seeing a little more variety. But the Deadpool series
is so much more than just another superhero movie. And while it makes liberal
use of jokes about, and references to, other storylines I personally know
nothing about (I think most of them are X-Men related), it never seems to do so
in a way that leaves me feeling on the outside looking in. At the end of the
day, I can’t think of any valid criticism of this movie and I made a pretty
determined effort to do so in the time since I watched it. If you can, I would
be very interested to hear it.
The Usual Suspects (1995)
I know, I know. This is a classic and it’s criminal that
I’ve lived this long without seeing it. But cut me a break; I wasn’t even ten
years old when it originally came out and it has taken me some time to find my
way to it as an adult. I suppose I should give the movie the benefit of the
fact that it is a quarter century old and a lot has happened since then. For
example, today Kevin Spacey is more to some folks than simply an incredibly
gifted actor. But he certainly is that as well and he was awesome in this
movie. The elapsed years have also given me the benefit of having seen a lot of
movies that have likely stood on the shoulders of this one and others like it,
which may explain why I was able to see the ending coming fairly early on.
Usually I don’t have that ability.
In general, this movie was well acted and the plot very
cleverly crafted. It was entertaining and enjoyable and I can understand why so
many people love it – even in 2019. I will say that it didn’t overwhelm me from
an emotional standpoint. Maybe if it had, my brain would have been distracted
enough to prevent me from figuring out the ending as early as I did. But
regardless, the movie certainly challenged itself and the audience more than
most of the rehashed, formulaic crap we see today. And I believe it conquered
that challenge, even if not in a totally transcendent way.
Bohemian Rhapsody (2018)
I don’t see many biopics and even fewer musical ones but
Queen, or more specifically Freddie Mercury, has always captivated me so I
decided to check this movie out. Freddie Mercury was acted very well, some of
the supporting actors were also pretty solid, and the music was great, of
course. But there is one thing that started gnawing at me early on and only got
worse. For me, a movie of this nature is only the beginning; the first thing I
did when I finished it was to google Queen and Freddie Mercury and start
reading. And at that point, I quickly understood where that disconcerting
feeling had been coming from.
Why? The movie changed a lot of facts for no apparent reason
and based on my reading, it may have done the same with some of the less
quantifiable aspects of who Mercury actually was as well. I didn’t find
anything written about why most of these liberties were taken with the history
of a man and the band that rode his legendary star power from very likely
obscurity to “fame and fortune.” But I can’t help but feel like maybe it has to
do with that old quote about history being written by the winners, applied to
this particular situation on the basis of who is still alive and who is not.
I’m not going to go into all the discrepancies I noticed because I don’t want
to ruin the movie for anyone but there were quite a few if much of what I read
had any credibility at all.
I don’t know how much of a hand the surviving band members
had in making this movie but I understand it had to be made in such a way as to
garner their approval so they would allow the music to be used – obviously an
essential element. And I think that is probably the likeliest explanation of why
the movie almost seemed to be trying to alter the characters involved to make
the balance of the situation appear different. I get it; there were band
members besides Freddie Mercury. To highlight their contributions would have
been fine. But to cast unjustified aspersions on Mercury’s memory in an attempt
to make others appear more significant or more responsible for the band’s otherworldly
success does give off a hint of sour grapes. I would still say the movie is
worth seeing for the combination of some very capable acting and the fun of
seeing the music performed. But the whole thing did leave me with a funny taste
in my mouth and the more I read about the real story the movie was based on,
the more I realized why.
In my bank account basics post, I said you should never use debit cards and I promised to write a follow up post with my reasons. I’m a man of my word so here I am delivering on that promise. I’m following up quickly because this is very important. There is absolutely no reason to have a debit card at all much less use one. I ask banks not to order one when I get a new checking account and if they insist on doing so anyway, I shred it the minute it shows up without ever activating it. This is because as I will explain, debit cards aren’t just useless; they are not safe. I know, they also serve as ATM cards. So plan ahead. Keep whatever cash you might spend in a month in your wallet and replenish it when it runs low. Actually, do people still use cash? I’ve had the same sixty dollars or so in my wallet for as long as I can remember. Anyway…
As a little change of pace, I’m going to try a list format
today. So without further ado, here are my reasons you should never use debit
1. They are dangerous.
With a debit card, any criminal that gets ahold of your card,
or more likely your card information, has direct access to your bank account. The
minute that happens with your debit card, a clock starts. If you report the
situation immediately and no fraudulent charges have been made yet, you aren’t
liable for anything. Of course in many cases your first indication of fraud
will be a fraudulent charge so you aren’t likely to be this lucky. If there are
any fraudulent charges made and you notify the bank within two business days,
you are only liable for the first $50 – still not a disaster, but more than I
want to be paying for some asshole’s actions. If you miss the two business day
mark but you do notify the bank within sixty total days, you’re on the hook for
the first $500. Keep in mind that this is by far the most likely scenario. And
finally, if you fail to notify the bank for a full sixty days, you are liable
for ALL fraudulent charges. Ouch.
Now compare that to what happens with a credit card. You are
liable for up to $50 but the vast majority of banks waive that because being
able to advertise “zero fraud liability” is a bargain at that price. That’s
literally it. You sleep easy knowing that when (yes, that’s WHEN, not IF) your
card information is stolen/hacked/etc, your problem is limited to the
inconvenience of a short conversation with the bank’s fraud department and
waiting a few days for a replacement card to show up.
2. Direct access to your bank account affects more than just
I stay in a lot of hotels and when I check in, I usually see
a sign informing me that if I use a debit card, a hold will be placed for more
than the total expected cost of my stay to cover incidentals. I have no idea
how much more because I don’t use debit cards. But it is enough that they
almost always have a sign and I’m guessing that’s because they get a lot of
complaints otherwise. This hold likely won’t be released until you’ve paid the
final bill upon checking out and that’s at the earliest. I wouldn’t be
surprised if it takes a day or two after that. And keep in mind that with a
debit card, this means you literally don’t have access to this money even if it
is in your bank account. If you’re not maintaining a high enough balance to
account for this, you could literally wind up overdrafting because of it and
no, neither the bank nor the hotel is going to pick up your overdraft fees. I
often see similar signs at gas stations and I’m sure there are plenty of other
businesses that do this too.
3. Debit cards aren’t very “rewarding.”
I’ve already written a post detailing how I get paid back an average of about 3% on anything I am able to pay for using credit cards. That’s not counting the churning, which gets me free flights or cash in $500-700 chunks. You always want to be looking for extra sources of income and simply using credit cards for purchases gives you a nice one that requires almost no effort and is tax free to boot. I believe debit cards do offer very limited rewards but nothing close to the bonanza credit cards do. This is because the transaction fees charged to merchants by the banks are legally limited and thus, there is less kickback money available. So by using debit cards, you are literally costing yourself money.
4. Debit cards do not help you build credit.
You need a credit score for lots of things now and
rightfully so. If you don’t pay your bills on time, that is directly applicable
for a creditor or a landlord but it’s also helpful information for insurance
companies, employers, and many other entities that may be considering doing
some sort of business with you. Why? If you don’t handle your finances
responsibly, there is a strong likelihood that you make similar choices in
other areas of your life. Or put another way, credit reflects character. Yes,
people run into unfortunate circumstances sometimes. But those things happen to
all of us. If you’re handling your finances well, you have built a nice buffer
of resources and you can weather the storm as long as it isn’t something
totally catastrophic. There are certainly cases where people get hit with
something very few could withstand but those are outliers and far more often,
this is simply an irresponsible person making excuses. Long story short, credit
scoring isn’t going anywhere because the concept is sound even if the execution
occasionally isn’t. Debit cards don’t build credit in any way, shape, or form;
credit cards do. P.S. I think I’m going to have to write a post on the ins and outs
of credit scoring. Stay tuned.
5. Debit cards don’t give you an interest free loan.
Don’t misinterpret this; in no way am I advocating carrying
a balance on a credit card. Ever. But when you use a credit card to pay for a
purchase, you are not billed until the statement date. At that point, you have
at least twenty days before your payment is due. This means that depending on
when in a month you make a purchase, you get an interest free loan of anywhere
from 20-50 days. To anyone who understands the time value of money principle
(there’s another post to write), that is a sweet deal! Mind you the bank is
betting you will fail to pay the full statement balance by the due date and
then…well, you know what happens then. Pull your pants down, bend over, and by
the way, they’re fresh out of lube today. But if you’re following the credit
card rules I included in my credit card post, this will never happen to you.
And consequences of irresponsibility should not concern those of us who are
6. Debit cards don’t give you rental car insurance, extended
warranties, price protection, and all sorts of other extra benefits.
This may seem like a minor point until you buy something for
$399 and it’s marked down to $299 two weeks later. If you used a debit card to
make that purchase, tough luck. But if you used one of the many credit cards
that offers price protection, you’re a phone call, a simple form, and some
processing time from getting your hundred bucks back. If you rent a car, most
credit cards include insurance so you can laugh when the agent generously
offers to charge you some exorbitant amount “for your peace of mind.” Make sure
to verify that your card offers this first though. Credit cards offer all kinds
of little goodies like this that debit cards do not.
In closing, I know there are people who use debit cards
because they’re afraid of overspending on credit cards. But the answer to an
alcohol problem is to fix your thinking and habits, not to stop drinking
anything and instead start taking in fluid only through an IV. In another
manner of speaking, don’t try to get rid of your disease by bleeding yourself
like they did in the revolutionary war era. Hurting yourself more is not going
to help. Credit cards are the adult method of paying for things. Basically,
think of them like condoms; they require just a tiny little bit of thinking and
planning ahead but they also protect you from being directly exposed to some
really bad things. The only flaw in that analogy is that condoms turn down the
volume a little whereas credit cards actually enhance the experience of paying
for things. Enough fun for today. Please, shred your debit cards and start
managing your finances like an adult. I promise it is much more rewarding than
making excuses for not doing so.
Happy weekend, everyone! I hope you’re having a great one. The title of this post should be pretty self-explanatory. For whatever reason, a lot of people seem to get tripped up by banks. So I thought I would write a post to make sure no one who reads this blog is getting screwed. I will start with general rules and then move into what I specifically do to illustrate things a little more.
First off, if you are paying any fees, you are doing it
wrong. Almost all checking accounts have monthly fees but almost all of them
also have ways to avoid them being charged. Usually you just have to either run
a minimum monthly amount through with direct deposit or maintain a minimum
balance. I recommend a bank with online bill paying services and there again,
fees being charged equals pass. It’s nice to have physical checks too just in
case and many (although not all) credit unions and some banks throw in a
lifetime’s supply for free. Otherwise you should pay no more than $20-25 and
again, that is for a lifetime’s supply of checks if you’re doing things right. That
is about it for fees aside from the stuff that should be obvious. For example,
reconcile your account on a regular basis so you never overdraft. That can turn
into a slippery slope quickly so just make sure it never happens. That is one
of the reasons I reconcile my accounts weekly.
You should divide your money into three categories –
checking account money, savings account money, and investment money. Checking
account money should only be what you need in order to pay your bills each month
plus a buffer of maybe a thousand or two just in case anything weird happens.
Savings account money should be your emergency fund plus any other cash that
you aren’t using for investments right now. And investment money should not be
with a bank at all since there are far better options regardless of what you’re
investing in. So the remainder of this post will focus on just the first two
I have accounts with several different banks but a lot of
these are holdovers from when personal bank account churning was worthwhile
that I simply haven’t gotten around to closing yet. I guess that’s a “to do
list” item for me. In general, I use three banks for deposit accounts. One is
my primary checking account bank that I pass the money I need for my monthly
bills through, one is my secondary checking account bank (more on that later),
and one is my savings account bank.
My primary bank is almost always a credit union. This is
because as non-profit organizations, credit unions are usually much more
customer friendly than banks. Their fees tend to be fewer and lower and their
rates tend to be more competitive whether you’re paying (auto loans, mortgages,
etc) or being paid (savings accounts, CDs, interest bearing checking accounts).
As I said, I use this account to pass my bill money through. My current credit
union’s checking account pays 7.5% on the first $500 that is kept in it,
meaning I get about $40 a year for using it. Nothing to get too excited about
obviously but it’s free money since I would be passing my monthly bill money
through a checking account somewhere anyway. Many credit unions offer a small
sweetener like this one way or another but watch out for the ones that have
some absurd requirement like completing ten debit card transactions per month.
That reminds me, DO NOT EVER USE DEBIT CARDS. I will explain why in an upcoming
post but for now, if you’re using them, please stop for your own good. Anyway,
if I were going to get an auto loan again, and I might for a very specific set
of reasons (more on that in yet another upcoming post), this credit union would
be my first choice as their rates are excellent.
Your secondary bank can be whatever bank you want although
of course another bank that pays you in some way is the best choice. Why have a
secondary bank at all? Banks aren’t perfect. I once had a bank freeze my
account on a Friday evening because I attempted to make an external transfer to
one of my accounts at a different bank. This happened in spite of the fact that
I had already completed the external account verification process. The friendly,
but incredibly inept call center employees (I spoke to several over what
amounted to about two hours) were unable/unwilling to restore my access even
after I had correctly answered every security question they had. Why did they
bother asking the questions then? I would love to know that myself. Anyway, I
couldn’t touch a dollar of the money in my own account until Monday when I
could go into a local branch, show multiple forms of ID, restore access, and
then obviously withdraw all my money, close the account, salt the earth, etc.
Another time I had $1000 deducted from an account because someone totally
unrelated to me made a transfer using a wrong account number that didn’t exist
and mine was the closest actual number. Seriously, that is the best explanation
I ever got – and I talked to several people and demanded better because that is
obviously bullshit. It took a few days to get that one resolved and my money
returned to my account. These things can happen at any bank and they do. Keep
in mind that the banking industry is not what it once was and today many of the
employees are nothing but glorified cashiers. It’s reality. And that $1000
could just as easily have been $10,000 or any amount at all or my entire
account as in the other situation. If I had needed access to my cash at one of
those moments and I had only the one account, I would have been screwed through
absolutely no fault of my own. The only real way to avoid a situation like that
is to have a backup account at another bank to use when your primary bank does
something idiotic. As a little extra precaution, I keep a reasonable amount of
cash in my safe at home as well. And yes, I also have guns at home and yes,
that home is in the great state of Texas where the law is comfortably on my
side should anyone me an ill-intentioned visit. Enough said.
My third bank is for my online savings account. Why have an online savings account? Aside from friendly little gimmicks like my credit union has, brick and mortar banks don’t pay enough to merit keeping your savings account money with them. Don’t believe me? Go check. You will be hard pressed to find a rate above .2% without the ridiculous debit card shenanigans I mentioned earlier. Meanwhile, my online savings account at CIT Bank is paying 2.45% and I can have that money in hand in a day or two if I need it. Want a bonus? CIT’s customer service is actually very good (we’re talking Americans answering the phone here and acting as if they actually care about you as a customer to boot) and I recently discovered that they send wires for free! Wires typically cost $20 and up to send so this is amazing, particularly for a guy who needs to send them for his side business every now and again. CIT is FDIC insured up to $250k just like any other reputable bank. If you’re looking for an online savings account and you’re not sure, just look for the FDIC (or NCUA which is the same thing but for credit unions) logo. If it isn’t prominently displayed, you will want to find a different bank immediately.
There you have it – my basic bank account guide. Hopefully
it helps you to either save or make at least a little bit of money. And now I
have to go close some accounts and add a few more items to my list of upcoming