Why I Stink at DIY

My dad will probably shake his head at this post because he is Mr. DIY.  He is amazing, can fix pretty much anything you put in front of him.  Our son loves it because anytime one of his Star Wars toys breaks he knows he can give it to DIY grandpa and it will get fixed.

Unfortunately for me, those do it yourself genes didn’t get passed down to me.  I’ve learned a lot of great things from my dad but being a jack of all trades, handy fixer-upper isn’t one of them.  I feel badly for my wife, house projects her dad or my dad could knock out in twenty minutes take me hours – and never turn out half as good.

I’ve thought about why I stink at DIY and came up with these 5 reasons:

1) I don’t have the tools

I do have many more tools for jobs around the house than when we first got married.  We finished off our basement at our last house so I had to buy a set of tools but my tool collection is still pretty small.

One of the things I’ve learned in the projects I’ve worked on is that having the right tools can make an incredible difference in how long it takes to do the work and how well it turns out.  If you hire an expert that has the right tools, they can get the job done more quickly and with a better outcome because they have all the right tools.

2) I don’t have the skills

The first point I made was that experts do the work more effectively and efficiently because they have right tools.  Of course, having the skills to know which tools you need and how to use them is a big part of it.

Skills for house projects or car projects can take a while to learn.  When you’re a do it yourselfer picking up these skills usually means trial and error – trying something out and learning along the way.  I love learning new things through trial and error but I’m a product of the virtual age.  I spend my days building software where testing and learning is the name of the game. 

I can create something amazing, test it, watch it crash and burn, then tweak it all with my five fingers and a keyboard.  I could literally spend all day, every day online reading about the latest developments in technology, marketing, or blogging but I have zero desire to learn how to build a bookshelf for my study.

So I guess the problem is not only that I don’t have the skills, but that I don’t really care to learn them.  There are other things I’d rather be learning instead.

3) My standards are lower

As I mentioned, trial and error is the name of the game when it comes to DIY.  My problem is that I’m often content with the outcome of the first trial when it comes to house projects.  It may not look great but its semi-functional and that’s enough for me.  Time to call it a day and move onto something else.

Unfortunately that approach is usually not acceptable to my quality assurance partner.  She wants it done the right way (understandably) and won’t put up with a shoddy end result.  Which leads me to the fourth reason I stink at DIY.

4) I don’t have the patience

Here’s how my projects usually look.  I come home from Home Depot or Lowe’s with the parts and tools I think I need for a project.  I sit down and tinker with it for a while before I realize I didn’t get the right size or forgot to buy something I needed.  Then I load the kids in the car and drive back to the store (cursing under my breath so they can’t hear me). While they’re climbing out of the cart and running down the aisles, I wait for the Home Depot worker to finish answering someone else’s question.  Then I finally get his attention, explain what I’m trying to do and why it’s not working.

He usually asks questions I don’t know the answers to so I end up buying more than I need.  I get a quarter inch elbow and a half inch elbow because I don’t know what size I need.  It goes on like that until my kids are lost in the store and I have twice as much as I probably need in my cart.

By the time I get home my patience is worn thin and the last thing I want to do is go mess with a project that I don’t fully understand and don’t even really want to be working on.  By the time the weekend’s over, I’ve visited the store a few more times and perhaps managed to pull something together … however it usually looks awful or doesn’t work exactly like it should.

5) I don’t have the time

I was telling my co-worker about an oil-change appointment and he asked why I don’t change my oil myself. I didn’t even mention some of the points I’ve already covered (I don’t have the tools, skills, or patience) because I know that changing your own oil isn’t that difficult of a task. 

I basically told him that I don’t have the time to do it.  Sure, if I blocked off part of a Saturday I could squeeze it in but when you add it in on top of mowing the grass, taking kids to soccer games, running errands, etc – there’s just not enough time to get it all done.  So I hire someone to change my oil and mow my grass for me and spend my time doing the things I enjoy – like spending time at my kids soccer game or working on this site.

My DIY Mentality Shift

When I have a new project or something to fix with our car or our house I don’t sweat it, I just log into Angies List or call up friends for a referral and hire an expert to do it for me.  It wasn’t always that simple.  When we were first married I hated paying other people money to do something that I could eventually (kind-of) figure out for myself.

I struggled through not having the skills, tools, patience, and my lower standards and would spend forever working on DIY projects.  Then once we had kids and things got really busy, I quickly realized that I had to find a better way.  I could no longer spend my whole weekend wrestling with a home project, especially once the kids were old enough that they wanted to “help” which made everything take even longer.

Maybe when I’m retired with no kid and no job I’ll have more time and patience to learn the skills and buy the tools I need, but until then I’ll pretty much avoid DIY when I can.  What about you, do you love or hate DIY?

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8 Ways Football Fans Can Save Money

Being a diehard football fan is an expensive undertaking. Ticket prices, astronomical concession costs, parking, tailgating, and TV packages can all add up to thousands of dollars every year. For some, football is “the” thing their family does every year so the spending is just part of the annual budget. But are there any ways you can save money without sacrificing your football fandom for the season?

How to Save on Football Costs
Saving money on your football fan experience doesn’t have to put a damper on the season. Sometimes you have to cut back, but you can also get creative to lower your costs.

Save Money on Tickets

If you want to see every home game and sit in the same seat every time, you are out of luck when it comes to saving money. Tickets are usually the item that takes the biggest chunk of your football costs, so any savings here can go a long way. Buying season tickets is expensive and many universities require a donation on top of the face value of the tickets. If you aren’t flexible, you can’t save.

But if you aren’t that picky, consider the following:

1) Splitting Season Tickets with a Friend and Go Together. Season tickets come in pairs. You can split the cost of the tickets (and the donation) with a friend and still get to go to every game.

2) Splitting Season Tickets with a Friend and Pick Games. If you each want to bring someone, you could buy season tickets with a friend and split up which games you get to go to. Make sure you even things out so both sides get to go to at least one of the “big games” of the year. You only get to be in the stadium for half of the home games, but you lower you costs significantly.

3) Buy Season Tickets, Sell a Big Game. If you buy season tickets before the season you can sell one of the “big games” that is likely to be sold out before the season. Every season hope springs eternal, and if a big rival is coming into town you can easily sell tickets for 300-500% more than their face value. You miss out on the rivalry game, but the proceeds from the sale can wipe out the cost of the added donation and even give you some games for free.

4) Buy from Scalpers. This is frowned on in many communities, but there is always a group of scalpers selling tickets around the stadium before the game. The closer kickoff time comes, the more negotiating leverage you have with the scalper. It does him no good to be holding tickets during the game, so you can get some great deals if you are willing to wait. This strategy carries some risk because the tickets might be fake or you might not get the best seats, but if everything works out they can be a great deal.

5) Save Money on Concessions

Concession prices are ridiculous. A soda that would cost you $0.50 at home is $5.00 at the game. The prices are set across the entire stadium, so you can negotiate a lower price. The only true way to save on concessions is either to not purchase them (good luck with that) or to sneak in your own drinks and snacks. Be forewarned: many stadiums search your belongings and your person to make sure you don’t bring in alcohol or weapons, so if you get caught you have to throw away what you were going to sneak in.

6) Save Money on Parking

Universities and professional teams alike know that parking close to the stadium can generate significant revenues. Your parking pass could easily add $150 to the cost of a season. The easiest way to save money on parking is to elect to park somewhere nearby for free and simply walk to the stadium. You are trading convenience for cost. If you still want to park close (for convenience or tailgating purposes), carpooling with other friends can help split up the cost of the parking pass.

7) Save Money on Tailgating

There are varying levels of tailgating. There is “having a few drinks and throwing around a football” tailgating, and there is “I spent my life savings on a massive truck or RV, satellite service, big screen TV, and generator, plus I spend $500 every week on food and alcohol” tailgating. Where you fall on this spectrum determines your costs. You don’t have to go all out, and you can share costs with your friends to bring down your costs. Plus, if you are going to have a crazy setup with satellite service, you probably aren’t physically going inside the stadium to watch the game. You’re their to tailgate.

8 ) Save Money on TV Packages and Pay Per View

If you can’t make it to every game you can always buy a TV package that provides access to your team’s games throughout the season. Saving on this cost isn’t easy because your cable or satellite provider usually has a fixed price. However, you could split the cost of the package with friends and have them over every game during the season. This works especially well if you live far from your team and the odds of making it to the actual stadium are slim.

The same holds true for Pay Per View games even if you live in the same city as your team. Some college games get pushed to PPV because your team isn’t really playing anyone significant. The media companies don’t think they can sell enough advertising and draw enough eyeballs to the game, so it goes to Pay Per View. PPV costs vary based on cable/satellite provider and area you live in, but you might be forced to spend over $100 just to watch the game. Don’t fork out that cash alone, invite some friends over and split the cost.

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Affording Family Lifestyle Design

Rachel and Greg Denning travel the world with their kids and honestly make me fee like kind of a wimp.  I struggle taking our two little ones on a 6 hour drive through the Midwest, they’re taking their 5 kids on a massive road trip from Alasksa to Argentia!

The Denning’s lifestyle fascinates me not only because they’ve figured out how to manage 5 kids on the road for months at a time but also because they’ve figured out how to make it work financially.  Neither Rachel or Greg have “day jobs” – how could they, their family spends months at a time on the road.

Rachel and Greg have to make adjustments to be able to afford the lifestyle their family enjoys, I had a few questions about how they manage money and Rachel took the time to answer them.

1) When you’re living on such a variable income, how do decide when (and if) to splurge?

We live very frugally and simply for the most part. In the past, when we made a lot of money, I would feel ‘poor’ if I felt I couldn’t spend money on something (like if my kids asked for a new pair of shoes, etc.) Now I’ve changed my view of things, and I realize that I don’t want to buy more things for myself or my children, unless it is really going to add value to our life, i.e. they really need a new pair of shoes, or what we’re buying is going to make our life simpler, easier or more enjoyable.

I feel that my purchasing decisions are more logically, instead of emotionally based. I purchase because of actual need or deep desire, not of emotional attachment or infatuation with some ‘doo-dad’. When we do spend money, I feel that we can splurge because 1) we’re buying something we need, and 2) it needs to be quality and last a long time.

2) What are your best health insurance tips for a traveling family w/out an employer’s insurance plan?

Our family personally follows a 3 Part Health Care Plan, that focuses on:

1. Prevention of illness through proper diet and exercise
2. Personal care of minor illness and injury through education of treatments and  (this is our unconventional first aid kit)
3. Use professional medical care when necessary – for example, when we were in a car accident and our three year old broke her femur.

When we our outside of the country, medical care is often free or inexpensive. We prefer to pay for these costs out of pocket, rather than to ‘be in debt’ to an insurance company each month ‘just in case’ something happens. This is the approach that works for us, though not for everyone.

3) What do you do when you run out (or are close to running out) of money?

In the past, we’ve returned to the United States to look for employment. Now we have an online business (selling a course on Family Lifestyle Design), so when the coffers are low, we’ll take a few days or weeks to focus on marketing and sales.

4) Do you give your kids allowance to spend on your travels?

Our children have the opportunity of earning money by completing their ‘job chart’ – essentially it’s a list of the activities they need to complete throughout the day – brush teeth, make up bed, grooming, education time, etc.

The aim is to teach personally responsibility. If they remember to do their jobs, or do them when mom or dad ask, and they remember to mark their charts (an app on our iPhone), then they can earn money on payday for every completed activity. Their memory for being responsible improves when they find something they want to spend their money on 🙂

Otherwise, we don’t buy anything for them. But we do buy things for ourselves, which sometimes includes something they will enjoy. I’ll buy a coloring book and crayons of animals in the Southwest – but it’s mom’s coloring book and crayons, that she bought with her money that she earned. They can borrow it, as long as they take good care of it and return it when they’re done.

I’ve found that this results in better care of the belongings we do have. My children still have toys that were given to them as gifts, but they don’t take very good care of them, because they didn’t earn it themselves.

5) What are the biggest financial obstacles to what you’re doing and how does your guide “Family Lifestyle Design” help people overcome them?

The biggest financial obstacles are finding a way to earn money to pay for living abroad or being nomadic. The way to accomplish this is as diverse as the individuals that are seeking the answers. Some create online business (whether blogging or online stores), others become freelance writers/contract workers. Some take jobs abroad (with non-profits or NGO, with the foreign service, etc.)

Our course will discuss all the of the options (and give concrete examples and resources) that we have personally used or seen used by the countless families we’ve encountered in our travels around the world.

Thanks to Rachel for sharing how they can afford to be “travel nomads”!  If you think your family might want to try something similar someday check out their guide, Family Lifestyle Design.

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Interview Series – Budgets Are Sexy

J. Money is the pen name for the guy behind the site Budgets are Sexy and the focus of today’s interview series. There’s a lot about J. Money that’s totally different than me – he has a big mohawk poking out of his head, he doesn’t have a “day job”, and he’s really good about connecting with people online.

What Makes J. Money Tick?

As I sat and chatted with J. Money at the Financial Bloggers conference this weekend I learned there’s also lot we do have in common.  One of the big things is that we both grew up as army brats.  Growing up as a military kid gives you a good sampling from the buffet of life.  You meet people from all walks of life, live in all different places, learn to adapt to your surroundings, become more accepting of ideas and other people, and are willing to try more new things. 

Giving Back

I think many of these qualities are some of the reasons that after J. Money lost his day job just under a year ago, he was able to partner with a friend and start a really cool charity project called Love Drop.   I was fortunate enough to join over everyone in the picture above last weekend (thanks pffirewall) in the latest Love Drop project, donating our time and money to partner with Phil’s friends and help people struggling to beat cancer. (See if you can find me in the picture).

I’m really proud of what J. Money and the Love Drop team have been able to do for others, I think it’s a great example of how anyone can find a way to give back and I think it’s very noble of them to pour their heart into it they way they do. 

On the Move

One of the many thigns that J. Money likes about Love Drop is that it lets him stay a “ramblin man”.  His roots as a kid in military life mean he’s accustomed to traveling and Love Drop helps him scratch that travel itch.

In fact, he’s been moving and traveling so much his whole life, it led him to try something a little more permanent.  In an attempt to put down some roots, he and his wife bought a house a few years back which is the subject of his second interview question.  Check out  below how J. Money’s been pushed around financially in the past and how he decided to deal with it.  

1) Describe a time that a person or company tried to take advantage of you financially and what you did to stop them.
Funny you should ask that, I literally just got taken advantage of by United Airlines! They charged my credit card $75 for nothing.  And then couldn’t tell me what it was for after 2 hours on the phone with people. So I called American Express and they happily disputed it for me 🙂 

I haven’t heard back on it yet, but I know for 100% certainty that it was not deserving and will get credited.  It just amazes me how large corporations can just charge you for something without an ounce of an explanation.  And then makes you go through hoops to resolve it

(I was advised to email United by one of their reps, which I did and then received back a note that it could take a couple of business weeks to get an answer back.  And that’s just the explanation – God forbid if I have to start debating an email robot!)

2) Describe a time you were bullied into a financial decision (by a person or a company).  How did it end up impacting you and if you could go back in time how would you handle it differently?

Hmm… I don’t think I’ve ever been “bullied” per se, at least in my grown up years, but I know I rushed into buying our house when I shouldn’t have!  (Can America bully you?  Cuz if so, that’s what it did – haha…). 

I bought into the “American Dream” of owning a home when I was not the right candidate for a variety of reasons (mainly, I don’t like to be “settled”).   It’s what got me to start blogging about money to begin with, but here we are 4 years later with $60k+ underwater and me trying to figure out how to unload it. 

The current plan is to just start going hardcore with mortgage payments for the next few years and REALLY knock it down enough to at least break even, and then we’ll probably sell it or maybe rent it out.  Financially speaking, I’d go back in time and just never have bought it, but Life speaking – I wouldn’t change a thing. 

I’ve learned an incredible amount since that fateful day, and my new career/lifestyle/friends/everything that’s “me” right now came out of that decision.  Buying a house when we shouldn’t have led me to the online world of blogs and knowledge, and I wouldn’t have changed it for a thing.

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Thanks to J. Money for sharing his stories and for giving so generously of himself in life, if you want to learn more about his charity projects, check out Love Drop.

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Best Airline Credit Cards

The best airline credit cards not only earn you the most airline miles but also make it easy to use your frequent flyer miles.  You have two main choices when it comes to airline rewards, go with an airline specific card or a card that has a flexible travel rewards program.

If you prefer to always fly the same airline then an airline specific card like those from Delta, Continental, and Southwest can be good for racking up free flights the fastest.  Airline branded cards from can also earn you extra perks and can help waive some fees.

On the other hand, travel cards like the CapitalOne Venture card, or Blue Sky from American Express offer more flexibility since you can use them across airlines.  Another benefit of these types of cards is that they often don’t have blackout dates or travel restrictions.

First we’ll take a look at some airline cards and then we’ll go over some of the travel cards that are airline independent.

Airline Credit Cards

Gold Delta SkyMiles from American Express – Delta actually has three cards, the Gold, Platium, and Reserve.  All three cards earn miles at the same rate, double miles on purchases from Delta and 1 point for every dollar you spend elsewhere.  The Delta Reserve and Platium cards can earn you extra Medallion Qualifying Miles (MQMs) that come with extra benefits and additional SkyMiles.  However, the annual fees for the Reserve and Platinum cards are higher and they require certain annual spending limits to reach those reward levels.

The Gold SkyMiles card does have an annual fee, $95, but its the lowest of the three and it’s waived for the first year.  It typically features a new card promotion where you earn bonus SkyMiles with your first purchase. 

As I referred to earlier, airline specific cards do come with additional benefits, the Gold Delta SkyMiles card will get you your first bag checked for free.  The Delta cards also have a feature that you mostly only find in airline independent cards, the ability to use your miles with no blackout dates.  Use the “Pay With Miles” feature and you can apply your miles towards a plane ticket without restrictions.

Southwest Airlines Rapid Rewards – Southwest airlines gave their rewards program a major makeover earlier this year and offers two airline rewards cards, the Rapid Rewards Plus and the Rapid Rewards Premier.  Both the Rapid Rewards Plus and Premier cards earn the same amount of points – double points for spending with Southwest or it’s partner programs, one point for for each dollar spent elsewhere.

Both cards earn points instead of miles, part of the Rapid Rewards overhaul was a switch from miles to points. One of the goals of the change was to make it easier to earn Rapid Rewards points by adding more partners into the network (giving you more places to earn double points).  Southwest has also seen the light and updated their program so that your points don’t expire.  They do have some requirements though, you either have to fly or spend with one of their partners every 2 years to keep your points safe.

The main difference between the Rapid Rewards Premier and Plus cards is the amount of bonus points you can earn.  You earn points every year you’re a member, the Premier card earns twice as many as the Plus card.  There is downside, the annual fee for Premier card is higher, $99, compared to $69 for the Rapid Rewards Plus.  Both cards give you enough bonus points with your first purchase to earn a free round trip flight on Southwest.

Travel Credit Cards

CapitalOne Venture – The benefit of the Venture card is that you earn 2 miles for every dollar you spend on anything.  Above we looked at how Discover earns double miles on all travel spending, which is better than the airline cards.  In comparison, the Venture card earns 2 miles for every dollar, not just travel, which is even better. 

Unfortunately, the Venture card doesn’t share the zero annual fee policy of the Discover card.  You pay $59 a year as Venture cardmember, however, the fee is waived for the first year.  I’ve seen the Venture card offer bonus miles for opening a card in the past but it seems they don’t offer new card members a sign up bonus as often as many of the other airline and travel cards.

After you book your travel using the Venture card you call in or go to their website to redeem your existing miles, they’ll give you a credit on your next statement.  The redemption policy is comparable to Discover , every 10K miles earns you a $100 credit.

Blue Sky from American Express – Like the Miles card, the Blue Sky card doesn’t charge an annual fee.  Unlike the Discover card, the standard Blue Sky card doesn’t offer double points on travel purchases.  However there is a Preferred version of the card ($75 annual fee) that earns 2 points for dining, hotel, and car rental.

The Blue Sky card does have a nice feature that other cards don’t offer, the Blue Savings program.  The “Blue” family of cards, Blue Cash and Blue Sky, have a partner network of companies that offer you a discount if you buy with a Blue card.  There are hotels (Marriott, Renaissance) and rental car companies (Alamo, Enterprise, Hertz) in the program.  So if you pay for your hotel or rental car with the Blue Sky you get a discount (5–20%) and you earn miles.

There are bonus miles for opening a Blue Sky card if you open the Preferred version but none for the standard version of the card.

Airline Card Considerations

If you’re not a frequent traveler and you only fly during the peak seasons (like Thanksgiving and the Christmas holidays) then an airline credit card might not be the best choice.  Ticket prices tend to go up during those times, offsetting the value of miles earned.  There’s also a higher likelihood that your flight will fall under restrictions during peak times and you might not be able to take full advantage of your frequent flier miles.

If that’s the case, you might look into a cash back credit card where you can maximize your earnings throughout the year and then use some of that cash back to help pay for your airline ticket.

On the other hand, if you are able to find a card with a big enough sign up bonus to earn you a free flight – and you can get the annual fee waived – then an airline card could still come in handy.

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Best Hotel Credit Cards

The best hotel credit cards not only help you earn rewards for a free night stay, they also earn points for each hotel room you pay for on your travels.  Whether it’s for business or pleasure, travel isn’t cheap, and a great way to maximize the money you spend is to use a hotel credit card.

We’ve talked before about how to choose the best credit card for you and how to decide which is the best reward cards but we kind of lumped all the travel rewards cards together in one category.  Today we’re going to look at some of the top hotel rewards cards and tomorrow we’ll drill down and take a look at some good airline credit cards.

Three Great Hotel Credit Cards

Three of the best hotel credit cards include hospitality chains all over the world. These credit cards include:

Marriott Rewards Visa Signature Card: Use this card, from Chase, to earn points toward free hotel stays. There are thousands of Marriott hotels around the world, from the Fairfield Inn to the Courtyard to the Renaissance to others. My parents stayed free on a recent trip to the U.K., thanks to their Marriott Rewards card.

You earn three points for every dollar you spend at Marriott, and one point on other purchases. Get a free night’s stay just for being approved, and earn more after your first purchase. Annual fee: $30. You can “upgrade” to the Premier version for more perks, but the annual fee is upgraded to $65.

Starwood Preferred Guest Credit Card: American Express offers this credit card that helps you earn Starpoints, good toward free nights at any of the Starwood hotels.  There are a range of hotels in the Starwood family like St. Regis, Sheraton and Le Meridien.

The tiered system allows you to increase your benefits as you use the card, so frequent travelers can really benefit from the rewards program. There are additional promotions you can take advantage of with this credit card, including a third night free when you book two nights in a row. There are no blackout dates associated with this program and Starwood allows you to transfer your points to around 30 airline companies if you want to use your rewards to help with a flight as well. You’ll pay an annual fee of $65 for the Starwood Preferred Guest card.

Citi® Hilton HHonors™ Visa Signature® Card: If you prefer Hilton properties around the world, this card from Citi might be just the thing. You get six points for every dollar spent at a Hilton property, as well as three points for supermarket, drugstores and gas stations. Other purchases provide you with double points.

It is worth noting that you need a higher point count to earn a free stay with the HHonors card than with other cards. You do get enough points for a free stay if you spend $1,000 in the first four months. The Citi card does have an advantage over the other two: No annual fee. There is also an AmEx version (that does have an annual fee).

Choosing Your Hotel Rewards Credit Card

When deciding on your hotel rewards credit card, it is best to consider your needs. Marriott works great for my parents, and for me, because we stay at Marriott properties frequently.

Choosing a Hotel
When I was in training a few months ago I started chatting with the instructor about his travels and where he stays.  He flies all over the country, teaching courses in a different city every week.  Being curious about travel rewards, I asked him how he flew and where he stayed. 

He uses airlines in the Star Alliance (United, US Air, Continental) because they have the best flight options from where he lives to the places he flies most frequently.  Most every city he teaches in has a Marriott, or one of the variations like Fairfield Inn or Courtyard, so he always stays there.  The Marriott card is great for him because of how he uses it.  However, if you prefer other hotel properties, you might consider a different card.

Credit Card Terms 
In addition to the hotel chain your prefer or vist most frequently you should also consider such items as interest rate, annual fee and other fees. Pay attention to foreign transaction fees if you frequently travel abroad.

Also, make sure you understand blackout dates, and redemption policies. You want a card that is convenient for you, and makes it easy for you to redeem your free stays when you want to.

Credit Card Usage
Consider your spending habits as well. If you are a frequent traveler, and stay at hotels, using a hotel card that helps you earn large amounts of points quickly can be beneficial. However, if you do a lot of other shopping, and only use your points occasionally, you might want a card that offers extra points for regular, every day purchases.

Happy travels! Stay tuned for tomorrow’s post on some airline credit cards you should check out.

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The American Dream: A Fictional Story

Thanks to Danny Kofke, author of the book Live Wealthy With Little Money, for this portrayal of a family in debt.

Jim and Laura are a typical American couple. They just got married last year after dating for four years. Jim is a manager of a local department store and Laura is a school- teacher. They make a combined salary of $100,000 a year, and look forward to raises and increased incomes in their future. They have around $3,000 in their savings account— which seems ample since they are certain they’ll continue to make more money each year—and both drive new cars.

Spending Spree

Jim and Laura go shopping whenever they want and pretty much buy anything they like without thinking twice. In addition, they eat out most nights of the week but try to keep it cheap; they usually don’t spend more than $30 for these dinners.  

After renting an apartment for six months, they decide it’s time to buy a house.  Even though it’s just the two of them right now, they want at least a 2,000-square-foot house because children are on the horizon. Jim and Laura find the “perfect” house but it’s a little above the amount they wanted to spend.

Their Realtor® tells them that it’s not a problem. They can sign up for a five-year adjustable rate mortgage (ARM) and by the time it adjusts, they’ll have so much equity in their house they can just refinance. The housing market is strong and they’re confident their home will go up in value considering the prime neighborhood it’s in.

Both Jim’s and Laura’s parents live in much smaller homes but, after some talk, the couple feels they deserve this larger house because they work so hard and all their married friends are getting big houses too. Jim and Laura sign on the dotted line and their American Dream begins.

Never Enough Money

Fast-forward five years. Jim and Laura are now the proud parents of a little boy, James, and a girl, Sarah. After having James, Laura took eight weeks off from teaching to stay home and loved every minute of it. She wanted to stay home longer but they went through their savings on that 10-day Caribbean cruise before she got pregnant.

Laura began to feel very upset at having to send James to daycare but there was no way around it—they needed her check to pay the bills. Jim saw how unhappy she was and one night decided to have a talk.  It was very encouraging and they both agreed to make a change and start saving so Laura could eventually stay home.

This change lasted a few months before they started spending their entire paychecks again on things such as new clothes and dinners out.  Last year Laura had Sarah and was only able to stay home with her for four weeks before having to return to work. She now spends over half of her take-home pay on daycare expenses. Laura dreads going to work and hits the snooze button at least five times every morning because she hates getting up to face another day.

Jim is not doing much better. He’s had to lay off most of his salespeople. The raise he was promised every year did not happen. There are even rumors that his job might be the next to go. He’s started to look for other jobs but nobody seems to be hiring in his area of expertise.

Bad to Worse

To make a bad situation even worse, Jim and Laura’s five-year ARM is scheduled to adjust this year and their monthly mortgage payment will increase by $500.  The house has dropped greatly in value and Jim and Laura are underwater on their loan so they cannot refinance.

In addition, after James was born, Jim and Laura began to use their credit cards again with the promise of paying them off in full each month. That plan didn’t pan out and they now have $10,000 in credit card debt.

They both have a lot of trouble falling asleep at night and don’t feel optimistic about either their marriage or their future.  They have started arguing more and more—something they never did in the good old days—and these arguments usually concern their finances. What was supposed to have been their American Dream has turned into a scary nightmare!

Your Money

Not a pretty picture, is it? I hope your story is not like Jim and Laura’s but, unfortunately, I know a lot of people can relate to this couple in one way or another. The great news for Jim and Laura (and maybe you too) is that life allows us to learn and adapt and change.

Jim and Laura are obviously an example not to follow—but we can learn so much from them.  Many people don’t see the need to learn about money and how to manage it correctly. They bury their heads in the sand and don’t want to be worried about the true state of their finances because, if they did, they might have to change their spending habits.

The thing is, if you continue to make poor financial decisions, these actions will eventually come back to haunt you.  Even if you make $5 million a year but spend $6 million, you’ll wake up one day and find that you are broke. The great news is that it doesn’t have to be this way. We can educate ourselves, find examples to emulate, create goals and take action.

 

Editor’s Note: When Danny first contacted me I noticed he had already written one book “How to Survive on a Teacher’s Salary”.  So he’s definitely writing about an area where he has personal experience, trying to make ends meet on a small salary. 

My wife used to be an elementary teacher and it was interesting to see how teachers, making similar amounts of money, used that salary in different ways.  Some managed it well and never complained and some didn’t know how to handle their money and always seemed to be scraping the bottom of the barrel at the end of the month. 

So if you’re running dry at the end of the month and want a way to stretch your dollars farther, check out Danny’s book, Teach Yourself (and Your Kids) How to Live Wealthy with Little Money .

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Interview Series – Bible Money Matters

Today’s interview about money bullies is with Peter Anderson, the guy behind the site Bible Money Matters.  Peter started the site several years ago to talk not only about personal finances but also, as you might have guessed from the name, how his faith impacts his money decisions. 

Peter has actually grown Bible Money Matters into a part-time business and wrote an ebook to shares the steps he took to grow a following of readers and earn some side money from the site.  He’s also quite a social guy online, you see him a lot on Twitter (@moneymatters), which is the topic of his roundtable at the upcoming Financial Blogger Conference.

Today, Peter shares with us some pretty sizeable lessons.  Cars and homes are some of the most expensive things you’ll likely buy in your lifetime.  Spending decisions like those aren’t something you want to be bullied into so read on to hear how he handled his money bullies.

1) Describe a time that a person or company tried to take advantage of you financially and what you did to stop them.

My wife and I were recently looking to replace our small 4 door Honda Civic with a larger vehicle because we had our first child just over a year ago. We’ve been managing with the smaller vehicle for a year now, but as our son gets older we’ve needed to cart around more things for him wherever we go.  We just didn’t have enough room in the little Civic anymore.

We knew what we wanted for our new vehicle, a Honda CRV, but the problem was that they weren’t in as plentiful supply as we had thought. Due to the Tsunami in Japan used Hondas are in shorter supply, and the prices weren’t that flexible.  Because of that our vehicle search ended up taking a lot longer than we had thought. We did end up finding several vehicles that fit our criteria, but when we test drove them something just didn’t feel right, or it would smell funny, or the price would just be too high.

After searching for 3 weeks we finally found the vehicle we had been hoping for after an hour drive from where we live.  But that’s when the fun started, and we started to feel taken advantage of.  I think the salesperson (who also happened to be part owner of the dealership) could sense that we really liked the vehicle – even before the test drive. 

Before he would allow us to test drive the vehicle he said he wouldn’t allow us to test drive it unless we agreed to the price.  We laughed it off, but he was insistent – and we finally said we wouldn’t have driven that far if we didn’t think the price was OK.  After a test drive all we had to do to finalize a deal was to get the vehicle inspected.  The dealer wouldn’t allow us to do that and started to verbally abuse us and minimize us, implying we were stupid for wanting to get an inspection done.

I think the dealer knew we had driven quite a ways to see the vehicle, and thought he could take advantage of us and keep us from taking the extra time to inspect the vehicle – and still get his full price for the SUV.  I’m sure his tactics had worked plenty of times before and others had given in and bought –  but we wouldn’t back down.  We were not feeling good about the transaction after his bullying tactics.  We walked off the lot right there.  If you don’t feel good about a deal, listen to that voice inside of you, and walk.

2) Describe a time you were bullied into a financial decision (by a person or a company).  How did it end up impacting you and if you could go back in time how would you handle it differently?

One time I think I felt a little bit bullied into a financial decision was when buying our first home 9 years ago.   The people doing the deal weren’t very detail oriented and had made some mistakes on the Good Faith Estimate that they sent over. 

When I pointed out that the GFE and the final documents had different figures on them they tried to brush over it and try to tell us how they were essentially the same.  By this point we were already at the closing and I was feeling a lot of pressure to just sign the documents and figure out the details later.    In the end I did end up just signing the closing documents, and finalizing the deal.

By just giving in and finalizing the deal it probably ended up costing us a few hundred dollars in closing costs.  Thankfully the error didn’t include the principal and interest on the home which could have had a much bigger financial effect.   If I were to go back and do it over I would have insisted that the closing documents be corrected, and that they remove the extra fees – and I would have examined them a lot closer the first time around.

My advice, if you don’t understand something completely, don’t sign it.

 

Thanks to Peter for sharing!  I’ve been in somewhat similar situations when buying a car and a house.  Since they’re such big ticket items, the people making the sale and lending the money have a lot at stake and probably won’t be afraid to try and pressure or intimidate you into making decisions that aren’t in your best interest. 

Not that all car salesman, realtors, and loan officers are that way.  I’ve had the good fortune of working with ones that were honest and fair.  A big part of it is doing your research before you decide who to work with.

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The Pill to Cure Debt

Would you agree that taking a pill to cure us has become ingrained into our trips to the doctor?  When we’re in pain or sick we hope there’s a pill we can to make our troubles disappear.

Sometimes it’s possible and the little purple, yellow, or pink pill our doctor prescribes us does make us feel better… at least for a while.  But many times the pills we find only treat the symptoms of our underlying illness or pain. 

The pills are great for short term relief or for getting our symptoms under control but when we stop taking them the same nasty pain creeps back into our nerve endings.

Disease of Debt

Obviously debt is a “man-made disease”.  There’s no virus or gene that determines whether you’ll go into debt.  Some people end up in debt as a result of their own decisions, others find themselves broke due to an illness or accident.

However we get into debt, there are tools that can temporarily help us shuffle our cash and pay our bills to stay afloat another month.  These tools are our “debt pills” but unfortunately, they only treat our symptoms.  Cash advances, pay day loans, credit cards, home equity loans, or money borrowed from friends and family help us get by but they don’t address the root cause of our debt.

In fact, some times these “debt pills” come with such high interest rates that we’re actually worse off after we absorb the pills than we were before.

Temporary Relief

Fortunately, I can say we haven’t been in that position when it comes to debt but I have faced my share of medical “magical pills”.  Usually the way it plays out is that I’ll have some problem that’s being caused by behavior (posture, eating habits, repetitive stress, etc). I’ll spend money to go see the doctor and have tests done and buy medicine.  The medicine will help but when it’s gone, if I haven’t changed my behavior, the pain will still be sticking around.

In reality, it takes a while to “fix” whatever I’m doing that is causing me the pain.  Debt’s the same way, it’s not something that you can cure overnight.  Even if someone gave you enough money to pay off your debt it wouldn’t necessarily be “cured”.  You’d be free of it for a while but if the source of the debt wasn’t taken care of then eventually it could surface again.

A Family in Debt

I know a family who learned this lesson the hard way several years ago, the Baker family.  They found themselves pretty deep in consumer debt and finally realized that popping debt pills wasn’t helping, they needed to attack the source of the debt.  So they sold almost everything they owned, went through a major mental transformation, and focused most of their energy on paying down their debt.

A few years back the dad (Adam) actually started up a blog to write about their battle with debt and called it Man vs Debt.  Now that the Baker’s have paid off all their consumer debt and pay cash for everything, Adam is on a quest to help others win their struggle with debt.

You vs Debt

Adam just released a course called You vs Debt that walks you through the steps of beating your debt, the same steps that he and his wife went through to pay off the money they owed.  Since they were figuring it out as they went along, it took them over a year to pay it down.  Now since they’ve “been there, done that” now they share everything they learned so that others in debt can squash the “debt pill” mentality and get thiers paid off much faster.

It’s a pretty cool story, here’s a video where he talks about the debt they were in and how they were borrowing from one credit card to make payments on a different card (you have to scroll down a bit to get to the video).  I think it’s pretty brave of him and Courtney to be so open about their mistakes and that they invested so much of themselves in creating a course to help others beat their debt.

So if you’re struggling with debt, definitely check out You vs Debt to hear their story and see how they beat their debt.

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MarketRiders Review – Custom ETF Portfolios

In recent years, exchange-traded funds have grown a great deal in popularity. They trade like stocks on the market, but they are funds. ETFs generally come with low fees, which means that you keep more of your money, rather than watching your returns eroded by fees. If you are interested in how an ETF portfolio might be able to help you reach your investment goals, you can use MarketRiders to help you put together a portfolio.

What is MarketRiders?

MarketRiders is a subscription service that offers you the ability to create ETF portfolios based on asset allocation. With the right asset allocation, the theory goes, you should be able to meet your investing goals, whether you are looking for growth, income, or have some other end game in mind.

This service allows you to put together portfolios using information about your goals. There are more than 1,000 ETFs that MarketRiders helps you choose from. After creating your portfolio, MarketRiders will send you periodic alerts about further steps you should take, as well as offer helpful hints on rebalancing.

MarketRiders comes with a 30-day free trial, after which you must pay $9.95 a month to continue the service. Signing up also allows you the option to receive a weekly newsletter about investing.

How to Build a MarketRiders ETF Portfolio

After you set up an account and log in, you can begin to build your portfolio. This is quite easy to do. You start out with two options:

1. Have MarketRiders build a portfolio for you
2. Create your own portfolio

 

MarketRiders portfolio: If you decide to have MarketRiders build a portfolio for you, you start out by answering some basic questions. MarketRiders has an algorithm that takes into account your age, when you expect to need the money, your level of investment experience and your risk tolerance. You also enter how much you have to invest right now, and MarketRiders goes to work.

I like how MarketRiders provides you with the reasoning behind the portfolio, explaining why the selected ETFs complement your investing style, and how they can be useful as you work toward your goals.

Additionally, MarketRiders lets you know how much the fees will cost you each year — and compares them to what you are likely to pay if you go the managed fund route. The difference is astounding. If there are dividends being generated, MarketRiders tells you that information, based on the last 12 months.

Create your own portfolio: If you are satisfied to have MarketRiders generate a portfolio for you, no worries. The recommendations made appear to be solid. However, more advanced investors might want to tweak a portfolio to more closely mirror their requirements. When you choose the “let me build it” option, you have three choices as you begin:

1. Start with a template
2. Start from scratch
3. Start with ETFs you already have in your portfolio

The templates start you out with the ability to narrow your types to growth, balanced or income. You can also choose “specialty.” The specialty portfolios are rather interesting, allowing you to choose from different specialty funds, such as a rising inflation fund, an energy hedge fund, or a reweighted S&P sector portfolio. You also have the option to specify what ETF provider you are most interested in (Vanguard, iShares, etc.).

Once you choose what type of portfolio you are interested in, you are taken to a page that breaks down the initial asset allocation. You can then tweak the allocation to fit what you are looking for. If the suggested portfolio doesn’t have just the allocation you want, or if you want to add something to the mix, you can adjust the numbers to fit your goals.

The other options, starting from scratch and starting with what you already have, can also help you build a portfolio. You start out with your asset allocation, and then tweak your portfolio to the allocation you want.

Generating Your Portfolio

Whether you have MarketRiders build a portfolio for you, or whether you build your own using the asset allocation technique, MarketRiders will then generate a portfolio for you. If you have indicated a preferred brand of ETF, all of your recommendations will come from that.

If you are building your own portfolio, you will have the option to add or remove different ETFs before the final portfolio assembly. Then, all you have to do is tap the “continue” key, and your portfolio will appear.

You will get a list of ETF symbols, and the number of shares you should buy, based on how much you have to invest. You are even provided a printable version, if that makes things easier for you. Then, all you have to do is head to your broker and enter the trades.

Tracking Your Portfolio

You can continue to update your portfolio by entering in changes you make as you buy and sell. Right now, MarketRiders does not have broker integration, so everything has to be done manually. This is something you’ll have to remember to do, kind of inconvenient for those who are used to complete financial integration. However, MarketRiders hopes to include broker integration in its next release, making it possible for trades to be automatically confirmed.

MarketRiders also sends you a monthly email update that summarizes the performance of your portfolio.  Here’s an example of the monthly email that you’d receive for the ETF’s you’re tracking:

Another nice feature of MarketRiders is that they’ll let you know how your portfolio is doing in terms of the target asset allocation that you setup.  The example above represents ETFs for Bonds, Commodities, Currencies, TIPS, Real Estate, US Stocks, and World Market Stocks.  When those holdings are no longer in balance with the asset allocation you specificed you’ll get an email from MarketRiders.  The example below is a MarketRiders email showing how the ETFs in your portfolio fall into your asset allocation targets and where you might need some rebalancing.

 

 

Bottom Line

If you are interested in using ETFs to build an investment portfolio that will help you meet your needs, MarketRiders can be a great choice. You have the ability to build multiple portfolios, so you can create different profiles for immediate income, retirement and other goals.

MarketRiders is good for DIY investors who want to invest their money themselves but would like some recommendations in terms of quality ETFs and asset allocation – for a 30 day trial Click Here .

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