the farmer’s daughter

Once there was a farmer with a beautiful daughter. Men came from miles around to ask her father for her hand in marriage, but he was the old-fashioned type, and wanted to make sure his daughter would have a husband who provided for her – strong, sensible and industrious.

So finally he settled on three likely young men, and told them he would ask them a question to decide which one could woo his daughter.
The three young men nervously waited while he prepared his pipe. Finally, he asked all three of them a single question: “If you are working in the fields and find there’s a stone in your shoe, how long can you work?”

The first young man sprung to his feet. “I can work all day long! I can ignore the stone in my shoe until the sun sets! I am tough and I will endure the pain.”

The farmer nodded and turned to the second young man. “I can do the same, but I’ll even whistle to show I’m not bothered one bit by the stone! I can completely ignore the pain.”

The farmer settled his corn cob pipe and turned to the third young man, who declared, “I can’t work one minute with a stone in my shoe.” The other two young men laughed and congratulated themselves, declaring loudly that one of them would surely be chosen. The third man finished as they laughed, saying “I’ll stop and take the stone out of my shoe and keep on working like I always would. And at the end of the day, my wife won’t have to wash a bloody sock.”

The third young man and the farmer’s daughter were married the next spring.

———-

The moral of the story is that it’s not always about being the toughest or the most driven – sometimes it’s about being smart. This applies almost every day in your work life and in your personal life. Don’t just keep hammering away at a problem to prove you can stick to a task. Know when to quit, reevaluate and begin fresh. And if you don’t know, stop, take a break and start again. The answer will come to you.

(photo by tibchris)

linklings, my ache-y break-y tooth edition

Nothing like trying to prepare a post while dealing with the dull, thudding ache of repaired teeth. I had to have a few (three) fillings removed and replaced today (plus some crown repairs and a small-but-critical preventative procedure that was too technical and boring to explain here).  Other than a few fillings – almost all from my distant past – and a lone root canal four years ago, I’ve had healthy teeth.  But I guess as you drift on into middle age, problems are inevitable.  The fillings, for example, have nothing to do with how I’ve cared for my teeth – simply the product of time.  So the pros and cons of filling replacement:

Pros:

  • My teeth look MUCH better now.  With the new white fillings replaced the old uranium or whatever fillings, my teeth look good as new.
  • Insurance covered about 70% of the cost.
  • The dentist and his assistant did a great job, and other than the discomfort of having to hold my jaws open for two hours I didn’t feel much.

Cons:

  • Anesthetic wears off, and as I write this I’ve got a dull throb going ka-chuk, ka-chuk right about at the gum line – on both sides of my jaw.  Ugh.
  • What the insurance didn’t cover was over $400.  Nice to pay as much as I do for dental insurance and still have to kick in $400.
  • The fillings were far enough back in my head that nobody other than me will notice, most likely.

Off to the links:

Democracy, Incorporated:  I have steered away from politics on this blog for a while – being, once again, disillusioned and nauseous about the whole thing – and things are just likely to get worse.
Why Do You Want To Be Rich?:  Easy question for me to answer – simply to have options.  It would be nice not to sweat the cost of health insurance, for example.
Saving for College – An Exercise in Depression:  Exactly hits on a point I’ve made before.  You will NOT be able to save enough to fund an expensive private college education for your kids.  Your time and effort is better spent on preparing your own retirement, so you won’t be a burden to your children.   If your kids want to go to a private school in 2026, it’s going to cost more than you could ever possibly save.  Be realistic, people.
No More Mondays And Why Everyday Is Friday Now: I like Dan Miller a lot, too – I enjoy his podcast a lot and I’ve started (slowly) getting into 48days.net, the social networking site inspired by his works. More on that in a future post.

how to choose a retirement strategy – or not

Are you the type of person who gets excited about new ventures? Do you like a challenge?  Many people have an ‘ah-ha’ moment when they decide to get out of debt, start living a frugal lifestyle and aim towards financial freedom instead of pursuing the  accumulation of stuff.  One more pitfall exists early on in this process:  over-thinking choices like the Roth or the traditional IRA.

There are differences, of course, and enough has been written about them that I’ll summarize it in one sentence:  the traditional IRA is not taxed, but is taxed when you withdraw it; the Roth IRA is taxed now, but not when you withdraw it; both grow tax free.  There are many subtle differences beyond that simplistic description.  Income limits may alter the favorability of one over the other.  The point most people miss, though, is that your choice doesn’t matter that much until you have a lot more money than most of us have.

You can find similar situations all over the place.  Should I invest with HSBC or ING?  What’s the best brokerage?  Should I have 3, 6, or 12 months of emergency funds?  What your decision is seldom matters as much as when you make it. I recently took the advice of a well-known semi-personal-finance blogger and opened up an interest-bearing checking account.  I resolved to switch all of our checking from a large bailout bank to this interest-bearing checking account, chasing 1.5% interest on our cash.  What happened?  After 6 months of inconvenience, confusion and frustration I shut down the interest-bearing account.  The effort to move the money, change all of the direct deposits, automatic payments and so on simply wasn’t worth it compared with a return of less than $75 per year. We have kept a low balance in our checking account for years, choosing to move excess cash to an interest-bearing online savings account.  The 1.5% – which sounded so much better than 0% – simply wasn’t worth it.

I worried that I was leaving money on the table, and consequently took time away from other, more important matters to chase $75. Spending time worrying about your retirement strategy can be almost as ridiculous.   You’ll see a lot of advertisements for brokerages advertising the lowest fees on trades, for example.  If you’re just starting out, find a low-fee brokerage and go with it.  But if you opened one up years ago (as I did) that charges $8.99 per trade, don’t bother to switch to a lower-cost brokerage.  As long as you aren’t a day-trader, you’ll be fine.

Much like the moment in The Matrix when Neo suddenly becomes aware of the ‘real world,’ many people have a moment of ‘financial awakening‘ that suddenly makes the world look like a little green-neon-streaming series of percentages and dollars and cents. The important thing is to learn to see beyond the numbers and realize that chasing more money is not, and never has been, the goal.  What we are really chasing is time.  Anyone can use time to accumulate money; the real trick is using your money to buy back time.  Agonizing over strategy rather than taking the offensive is a good way to lose the game.

photo by IcE MaN Photography

linklings, payoffs and hedonic treadmills, oh my! edition

Ever since I first read about it I’ve been fascinated by the hedonic treadmill. In short, it’s the idea that people generally increase their happiness level when they achieve a goal, buy something, or otherwise improve their lives, but that the increase in happiness soon “resets” and requires that person to achieve yet another goal, buy something better, etc.  You buy a BMW and briefly you’re happy, but soon you wonder why YOU can’t own a Mercedes.

But I’ve tried to use my self-knowledge of the hedonic treadmill over the past few years to analyze whether some action or purchase is going to permanently increase my state of happiness or just give me a junkie’s quick boost. For the past couple of years, on this principle, we’ve only owned two small TVs – one old CRT 21″ and a 19″ LCD, which was our main TV, as it was the only one hooked up to (basic) cable.

So Bubelah and I finally decided to get a new 40″ TV – not huge by today’s standards, but big enough.  It was amazing for a few days – I could finally see the screen from across the room.  Football was vastly more fun to watch.

Where am I headed with this? I realized last night I already barely notice the big screen.  Not that I’m UNhappy with it – I simply noticed that the “happiness burst” I got when we purchased it is fading noticeably.  Worth remembering…

Plus, the payoff:  moving twice in a year (from Jersey to Florida, then from a rental to a home we own) has been quite hard, and we still are unpacking and organizing.  It’s been tougher being further away from family.  But yesterday it was in the low 70s and sunny and while the majority of the nation was shivering I was walking in shirtsleeves in the sunshine.  I’m quite dependent on the sun – I probably have seasonal affective disorder or something – so that makes me happy.  At least for now.

Links:

why I moved my money to a credit union:  I’ve heard about this movement over the past few days, and while I support it wholeheartedly and intend to do it in the future, I’m not doing it now.  We have so many automatic payments and linked checks and direct deposits that the idea of moving from MegaBank to a smaller bank makes me exhausted before I even do it.  But I am setting up business checking, and maybe I’ll go that route for the business account.

Score Free Stuff on Your Birthday:  Clever little list!

How to Save Money on Heating this Winter:  Just including this for all you cold weather folks!

AT&T Lowers Monthly Cost For Unlimited Talk And Data.:  I have to believe someday we’ll just pay a flat rate for phone service.   I’d just like to see free incoming calls like the entire planet outside of America gets…

Saving With Purpose: Short Term Goals:  $50,000 saved sounds like a medium-term goal for most people, but I agree – saving for retirement, college and so on is great but nothing lets you sleep at night like a big go-to-hell fund.

Other links:

photo by arturodonate

is life fair?

Can citizens in western societies strive for wealth at the same time society tries to be ‘fair’? Let me give you a few situations, and in each case think whether society is being ‘fair.’  Fair is a loaded word, but just assume for the time being it means that all people have equal outcomes for similar actions.

  1. A college graduate, well-educated about personal finance and the economy, decides to burn through everything they earn right now, saying “Why save for later? I’ll have fun now and hell with consequences.” Should society be responsible for his medical care and living expenses when he is 70 and can no longer work or care for himself adequately?  If someone chooses to smoke and doesn’t insure himself, does society owe him health care?
  2. A child is born with 50 different health problems (heart, congenital diseases, you name it). The cost of keeping that child alive is monumental, exceeding even the most generous insurance benefits. The cost of keeping that child alive cripples not only the family but put a strain on the local doctors, etc. who effectively donate their time to treat her. What if the cost of keeping that child alive until she’s 25 will be astronomical, and that cost could immunize or treat hundreds or thousands of children who need it? What obligation does society have to help this child at the expense of others?
  3. Taxes on earned income in America (wages, etc.) are significantly higher for the middle class than for someone in the lower class (more than 40 percent of the US population pays no income taxes). Many people feel that is unfair (depending on your political and economic perspective). However, someone who lives off earnings from investments may pay 15% or less on their earnings, significantly less than a middle-class married couple who work as employees. Is it fair that employees – most of the middle class – pay a disproportionate share? And would it be fair to tax investors (“the rich”) more, but not tax the poor and middle class more?

Those are just a few examples of how a wealth-building society can be unfair. You have your own reactions to the scenarios above. Here are mine:

  1. I detest this attitude. His attitude will take money out of my pocket when he is older. But in western society, particularly in the US, the care and treatment of the elderly, the ill and those simply unfit to care for themselves  are often left to the state. Should we have means testing for these people? “You didn’t get a decent job with good health insurance and keep your health up in your younger years, so to hell with you now that you’re old and have heart trouble? Live on the street because you didn’t save up.”  As much as we might growl that in a moment of anger, I doubt anyone is prepared to see these people sleeping on the streets.
  2. I knew a child like this. She was a lovely, happy and intelligent child who suffered from an incurable genetic condition that meant her chances of living to be a teenager – much less an adult – were minimal. I knew her years and years ago and I have no idea what happened to her. The logical line to take would be to say “no, society has to follow the principles of the herd and Darwin and the devil take the hindmost” or “the needs of the many outweigh the needs of the few, or the one,” but unless you are a serial killer, devoid of emotion, it is impossible to meet children like her and not imagine society moving heaven and earth to care for her. Even if the chances of her living to be an adult are slim, she deserves her chance at whatever life she can have. My higher insurance premiums that may have resulted from that? Please.
  3. I am routinely infuriated by taxes. I am, however, not an adherent to the “no taxes” philosophy; a society that provides public services like police, postal services, libraries and a military has to raise revenues. They may not be spent wisely, but I can’t throw out the $800 screwdrivers with the public libraries – there will be good and bad. But I do realize that the unfairness in the system – the loopholes, the imbalance in taxation which favors investing income over wage income – may not benefit me now but it will when I am financially free. I plan to be one of the people living off my investments, earning no wage income and avoiding my fair share of taxes. So if I want to build wealth, why should I rail against this system? I intend for it to benefit me in the end. So I throw myself into battle against my 1040 again this year, struggling forward in anticipation of crossing the financial finish line. If I finish it – against the relatively daunting odds, considering I have no singing talent, ball-shooting ability or parents named Hilton – will I become a “raise my taxes to even things out activist”? Er, no.

Fairness is an overused (and misused) word. There is no fairness in a free, capitalist society, nor – when you stop to consider it – does anyone want complete fairness. Inequalities in the system are what allow wealth to be built, or care to be given to the exceptional, or even to allow for the occasional idiot. A fair society would not allow elderly poverty, but it would not allow for financial freedom, either – it would demand equality of outcomes. It would not have plastic surgery for starlets, but it would also not have medical treatment for children dying of expensive incurable diseases. A fair society would increase the burden of taxation on everyone without increasing benefits for the most needy. Human society being what it is, the concept of fairness will always remain just that – a concept. And maybe that’s not such a bad thing.

photo by Clearly Ambiguous

the two-income myth

My wife is an intelligent woman who decided to quit her professional career as a management-tracked analyst with a huge investment bank in order to be a stay-at-home parent when our son arrived, and to remain home even longer when our daughter arrived. I would have willingly stayed home in her place but being older and further along in my career I was making twice as much as she so it would not have made sense. She has now been at home for more than four years and I have noticed that there is a subtle campaign against her choice, and it makes me angry. Despite all of the talk about mothers making the ‘tough choice’ to go back to work, I think the tough choice is staying home.

First of all, before I’m jumped upon…I know there are single mothers and poorer families who have no choice. I would maintain this is a small proportion of the population, though. Single mothers definitely have no choice as the primary breadwinner, of course. Some families may have special circumstances that require both parents to work – health care costs spring to mind. I wonder, though, how many times the choice to work is the choice to support owning a second television, or keeping the premium movie channels, owning the house with the extra two rooms, or leasing a nice car – versus staying home with a child.

My family took a big hit to our finances when my wife quit work. We went from two people living in a two-bedroom apartment on two salaries to three people living in a three-bedroom house on one salary. We did it by making huge changes in our spending, and after a couple of years those changes have – surprise – become fairly routine. We understood that we could not afford as many luxury vacations or idle purchases of gadgets and jewelry and so on. The reward was that our children have been able to stay at home with their mother and be in a safe, healthy, fun environment.

This setup has not come without cost.
My wife misses adult companionship and the sense of validation that you get from a professional position. We miss having the second salary, which for a while was all being plowed into savings and made for a relatively large down payment on our home. And of course my wife worries about her future job prospects once both of the kids are in school and don’t need a stay-at-home mom. But the worst thing in the past were the assaults on her decision by other women.

Bubelah relayed conversations to me from her friends and ex-colleagues and so on where the subject was inevitably “when are you going to get back to work?” Aside from the obvious insult that caring for a child is not “work”, this had a very negative effect on her state of mind. She usually laughed it off, but the simple fact is that she doesn’t really interact on a daily basis with anyone but me who supports her decision to make child care a full-time job – although since we’ve moved to Florida the support has been a bit warmer. We never felt that the trade-off of getting another salary was worth having our kids in day-care 10 hours a day before they were two years old, but that’s what we felt was expected, sometimes.

Do we need the money? We may not be able to spend freely like our friends do (particularly since we also don’t take on any debt) but we really don’t NEED any more money to meet our current expenses. I understand that sometimes both parents want to work. That is fine, but just be honest about that choice. Many people claim to be “forced” to work two jobs to make ends meet, but is it really “making ends meet” when you drive a new car and have premium movie channels and take a vacation to Aruba every year?

linklings, if it’s not one thing, it’s another edition

In case it hasn’t been obvious, I fell slightly behind on both the Wednesday link roundups (“the linklings”) and the blog in general. No one particular event caused it, but over the past week or so in the Blap household we:

  • …lost our high-speed internet connection for four days, unbearable in this day and age. Love ya, Comcast. Three separate long calls with customer service, in which they profusely promised that my system would come back on (1) “within 30 minutes” (2) “within an hour” and (3) “within a couple of hours” – all in succession – were are revealed to be lies. Even the advice that my Comcast-provided cable box was dead was false, and made me spend a couple of hours running around to buy a new one for $75 (which I will keep, to avoid paying the $5 per month “rent” on the Comcast cable modem). When the service tech guy came out to our house he said that each time I had called the customer service person simply noted “problem solved” in the case. They just put me off each time by telling me it was a bad modem. It wasn’t.
  • …watched my laptop lock up – for good. Thanks, Vista. After I did some research, it turns out Vista gets confused trying to launch an infrared driver and locks up the system. Funny thing is, I don’t have any infrared on my PC. Why that driver is there, and trying to launch, I don’t know. Fortunately frequent backups of all of the files on my laptop to my standalone hard drive made this more of an annoyance than a tragedy. But spending what little free time I have reinstalling Vista and then reinstalling everything – wireless drivers, software, hardware drivers, etc. – would have been bad enough, but I didn’t have access to the internet at home to get all of that stuff.
  • …kept unpacking, like Sisyphus. I believe (not joking) that we’ll still have unpacking to do for the rest of 2010. In a new house you have, at any given time, 50 things to do.
  • …got Roku. I had wanted one of these for a while and finally decided to splurge and see if it takes us one step closer to freedom from our cable provider (see item 1, above). It does. I hate to go all fanboy here, but the Roku is fantastic – simple to operate, minimal in controls and tiny. I had it up and running in less than 5 minutes. And it’s not just movies – we’ve enjoyed having Pandora stream through our TV and I even have Mediafly (my non-Apple iTunes equivalent) linked up so I can scan through my synched-up podcast list at any time. All that having been said, wasted some time on that.  Did I say some?  Netflix increases the quality of TV viewing (you watch what you WANT to watch) but if you aren’t careful it can increase the quantity, too.  And trust me, I appreciate the irony of buying a Roku after my last post…

Throw in starting back to work at my client, clearing up our rental house to turn it back over to our landlords and making a ton of calls for this service/that service and voila…no posting.

And yes, I WOULD like some cheese with my whine.

But I am grateful, as I often try to remind myself to be, that these are what pass for “problems” in Chez Blap. Many people, including people I know, have infinitely greater burdens to bear. I’m grateful that the most painful problem I have to deal with is a connectivity issue.

photo by fuzzcat

8 questions to ask before buying ‘stuff’

Thoreau said that we will be “rich in proportion to the number of things which we can afford to let alone.” There are 8 questions you can ask yourself every time you think about buying any stuff. By stuff, I mean anything which is not directly required for the continuation of your existence. Food and water are not stuff by that definition. A new pair of shoes is stuff. A heavy winter coat if you live in Vermont is not stuff (but one with a fancy fur collar might be stuff).

  1. Can I afford this stuff? Run down this checklist: I have paid off all of my debts; I have put money in my retirement accounts; I have paid all of the monthly bills; I have added to the emergency fund; I have healthy natural food for my family; I have shared money with those less fortunate than me. If you went down that checklist and answered “no” to any one of those, you probably don’t need stuff.
  2. Do I need this stuff? Sometimes you need to buy stuff, but need is a relative term. If you have a hole in your gloves and winter is coming on, you might say you need new gloves. Fair enough – no one deserves frostbite. But you would have to ask yourself if you really need new gloves, or if perhaps you just need someone to sew up the hole in your current gloves. If you have holes in your underwear, though, I seriously doubt you are going to get far sewing them back up. You probably need new underwear. The concept is relative.
  3. Will this stuff create or reduce clutter in my life? How often does this happen: you go to the store to buy a pan, and when you come home to make room you throw out an old one? Not often, I would imagine. Maybe the old pot is horribly scratched from scouring and it’s no longer useful. When you buy new books, do you give away old ones? Almost all of the stuff we buy creates clutter. In general, every time you buy new stuff some old stuff should go (which is not a good use of your stuff).
  4. Does this stuff replace some other stuff that is still functional? Related to the point above, stuff should not replace functional stuff. I own a very old coffeemaker which still performs its primary function – making coffee. I would love a newer coffeemaker with more features, but at the end of the day I would hate to buy a new one while the old one still works.
  5. Does this stuff somehow make a task or activity easier? We owned a toaster that burned toast. We did not like using it and making toast became a real annoyance. Finally Bubelah went and bought a new toaster. Now we can eat toast when we want it, and it isn’t burned. We also owned a horrible vacuum cleaner that cleaned nothing. We bought a new one and now we can actually pick up pieces of dust weighing more than .0000001 grams.  That stuff actually worked.  The old stuff didn’t.  Some of the stuff, therefore, was more useful.
  6. Can this stuff help someone? There are times when stuff can just be helpful. Better tools are a good example. Flowers for a sick person are another. A better pillow for someone with a back problem is another. In those cases, the good done by the stuff outweighs issues of clutter or need.
  7. Will buying this stuff hurt the environment more than it will help me? I cringe every time I buy a piece of consumer electronics – my USB flash drive is a good example. A flash drive is a tiny thing, maybe 2-3 inches long. When I bought my flash drive, it arrived in enormous plastic packaging 100 times the size of the drive – a huge rounded disk of hard, thick plastic. That plastic will go in our plastic recycling bin, but I don’t kid myself to think that all of that plastic is 100% recycled and finds its way back to new USB flash drive packaging. A large portion may end up in landfills or our oceans or our atmosphere. The oils and energy used to create that packaging are gone forever. Buying that USB drive, because of the packaging, was an assault on the environment. Many items are like that – and in fact almost all.
  8. Is this high quality stuff or junk? Junk will need to be replaced soon, violating #3. Junk may not work correctly and help make an activity easier, violating #5. And it definitely violates #6. High quality stuff will last longer and do the job better. Knowing what’s high quality is often a tough question – maybe the JC Penny suit is tougher and more classic in appearance than the pink-pinstriped Hugo Boss, for example, making it of higher quality/durability. Evaluate this on a case-by-case basis.

I buy a lot of stuff and certainly don’t pretend that I’m perfect in this regard, but I am trying to move in the right direction. I try to ask myself these questions. If I can’t always answer them because of the “buy me buy me” chorus in my head, it doesn’t make me a bad person, just a person who still has room to develop.