Motivation for living cheap to get out of debt

I’ve talked to a number of people since I first posted my take on one of the many schemes to eliminate debt in a relatively short time frame. Some are doing it, while others, for whatever reason, haven’t been able to motivate themselves to do it just yet.

I have an unorthodox suggestion: Buy something. Read more

Nickel and dime your way to prosperity

An old friend and I have been talking a lot about debt elimination these past few weeks. With any luck, both of us will be completely debt-free by age 45 at the very most, and probably sooner.

The trick is to dump as much money as possible into debt retirement. As recently as November, the interest on my Honda Civic was costing me $1.40 a day. Think what you could do with that $540 a year you’re paying in needless interest.

The challenge is finding the money to use to retire debt.Some of these tricks will only save you a few cents. You must get yourself over the it’s-only-25-cents mentality. That quarter can either work for you or against you. A quarter paid at the beginning of a 30-year mortgage saves you more than a dollar by the end of the loan. Can you find a safer way to quadruple your money? I doubt it.

If and when you have no debt, dump those pennies, nickels, dimes, and quarters into an index fund. An index fund just buys you the same stocks that are in the Dow Jones Industrial Average, or some other index. Historically, these funds double in value every seven years. Great Depression, Schmeat Schmepression. Dump a quarter into an index fund and don’t touch the investment, and in 28 years, it’s $4.

So let’s find some creative ways to get some quarters.

1. Pay your bills online. This potentially does more than save you the 37 cents in postage. My gas and electric companies both have arrangements with checkfree.com to allow online payments free of charge. I was invariably late in paying them, which subjected me to interest payments. The other nice thing about Checkfree is that it schedules the payment for the due date. So if by chance you have an interest-bearing checking account, that money can work for you until the last possible day. You probably won’t save more than a couple of bucks a month this way, but that’s $25 over the course of a year. If someone offered you $25 without any strings attached, I doubt you’d turn it down.

2. Make car and mortgage payments as soon as possible. I may be showing my ignorance here, but interest paid to me on most accounts I’ve had is calculated monthly. Interest on my car is calculated daily. So, making that payment as soon as my paycheck shows up in my checking account reduces the principle, thus reducing my interest payments by a few pennies a few days early. It’s only pennies? I’d rather they be my pennies than Honda’s.

3. Use credit wisely. I remember one day a few years ago, I was at the grocery store and instead of pulling out my debit card, I pulled out a credit card accidentally. I thought how awful it would be to have to pay for life’s necessities on credit.

But if you’re disciplined, and you have a credit card with rewards–and we should be talking cash here, not merchandise–then it makes sense to pay for life’s necessities on credit. Take a look at my Discover Card bill, and you’ll see the bulk of it is things like gasoline, groceries, my telephone bill, and $20 trips to Kmart, which means I was probably buying stuff like toothpaste and deodorant and other household necessities. I pay the balance in full every month, so the result is essentially some bank paying me to buy the things I’d need to buy anyway. This nets me about $80 a year. I never see a dime of it–I apply it directly to the card’s balance.

4. Buy a programmable thermostat. The cheapest programmable thermostats cost about $30. They can easily save you that much in a month. During my 8-hour workday, my thermostat only heats the house to 56 degrees in the winter time. It cools it to 82 in the summer. During waking hours and on weekends, it keeps the house at 70 degrees in the winter and 75 in the summer. During sleeping hours the temperature raises or lowers by 5 degrees depending on whether it’s summer or winter. I used to have $300 heating bills in the winter months. Now I have $175 bills. That’s still ridiculous, but it leaves me money to actually do something about it.

5. Cut out the sodas and snacks. I used to routinely spend $1.50-$2.00 a day at the vending machine and the cafeteria at work, buying coffee, soda, and snacks. Over a 240-workday year, well, do the math. The 34.5-ounce can of coffee in my fridge (it lasts longer when stored there) is marked 9-26, the date I bought it. I expect it will last me until the end of the month. So that can of coffee will last me five months. I buy the off brand, so I can sometimes get one of those cans for between $3 and $3.50. So my morning coffee costs me 2.3 cents. I quit drinking soda entirely and I pack a granola bar in my lunch. Over the course of the past year I am sure I’ve saved $300.

6. Pack your lunch. Lunch at a sit-down restaurant almost always costs you $7. Fast food usually costs at least $5. The cafeteria at work is usually $3-$4. Sometimes I pack leftovers that would otherwise get thrown away, so they’re essentially free. It’s fairly easy to pack a lunch for $2. Again, do the math over 240 days. Do you want to spend a house payment on lunch every year, or do you want to spend a car payment instead?

7. Eat out less. A couple of years ago I was dating a girl who had to eat out 3-4 times a week, at least. Usually it was places where I was lucky to get out for under $20. I always paid, of course. I couldn’t figure out why I didn’t have any money. But with a little creativity, it’s entirely possible to make dinner for two for $4. You can make a fairly impressive dinner for two for $10.

8. Shop the cheap stores. St. Louis has five different chains of grocery stores. At the top of the ladder is Dierbergs, followed by Schnucks. A third local chain, Shop ‘n’ Save, generally beats the Schnucks and Dierbergs prices by a few percent. But now I do most of my shopping at two stores that white-collar professionals rarely visit: Aldi and Save-a-Lot. In most cases the quality of the product is the same. But when I can get a loaf of bread for $.99 versus $1.59, the difference adds up quickly. For the things Aldi and Save-a-Lot don’t carry, I still go to Dierbergs, but I rarely spend more than $10 at Dierbergs now, unless they’re running a big sale on something.

8. Buy generics. A lot of people are afraid of generic products because they feel they might be getting ripped off. You’re actually a lot more likely to get taken with a costlier brand name. I’ve found the quality of most generics to be as good as the name brands. When it isn’t, I try a different generic the next time. Eventually I’ll find a generic that’s as good as the big name brand, and save a bundle. I’ll buy the name brands when they’re on sale, but aside from that, my pantry is full of generics and I don’t care who knows about it.

9. Don’t spend a dollar to get 14 cents. A common excuse for not paying down your house is that the interest is tax deductible. That may be, but you’re getting pennies on the dollar. My car payment was costing me $1.40 a day until I paid it way down.

It’s tax time. That means you have a piece of paper that tells you exactly how much interest you paid on your house last year. Are you paying $14 a day to inhabit a house you supposedly own? That tax deduction only reduces the net cost to $12. I can think of better things to do with $12, and I’ll bet you can too.

10. Don’t spend your windfall all at once. Are you getting a tax refund? Did you get a bonus? Have you been working a lot of overtime lately? It’s OK to reward yourself and/or your family. But don’t blow all of it indulging yourself. Spend 10 percent of it, tithe 10 percent of it, and use the rest to retire debt, and dream of the day when you have no mortgage payment and no car payment and every paycheck is a windfall.

11. Save your pennies. Coinstar, the makers of those change-converting machines in grocery stores, says the average household has $90 in loose change scattered about the house. A fairly painless way to save money is to dump your change into a jar at the end of the day, rather than spending it on frivolous things. At some point, convert the money into a more usable form, then apply the windfall rule to it.

12. Cascade your debt. I pay extra on my car every month. When the car is paid off, I’m going to start adding that amount to my mortgage payment every month, except in case of emergency. I estimate I can have my house paid off in about five years by doing this.

13. What will I have to show for this purchase? This is key. Before you spend even a quarter, consider what you will have to show for it by buying it. Just because you walk past a candy store in the mall doesn’t mean you have to go in and buy something. If you’re lucky, all it’ll do is rot your teeth and make you fat. You could have paid that quarter into your mortgage and turned it into a dollar.

Some purchases are unavoidable. In a couple of months, I’m going to need new tires. I can think of a million things I’d rather do with that money, but I need it. That’s OK. I’ll have it.

The trick isn’t to live in total self-denial, but to exercise restraint. Most of us live like millionaires, but the problem is that we’re spending our million dollars instead of letting it work hard so we don’t have to work as much. And it’s killing us.

Why do people pay $35 for lists of paid survey sites?

I’ve been seeing more and more advertisements for paid survey sites. And the promises keep getting more and more ridiculous.

I think it’s a scam. You can make a little bit of spending money filling out surveys, but don’t let anyone hoodwink you into thinking you’ll get rich. Look at it as a way to spend a couple of hours a week to make a little bit of extra money, and nothing more, and you stand to do OK.First of all, don’t pay your $35. The people who run those sites say you can make that money back immediately. The problem is, they don’t know that. So why should you part with $35 without knowing when you’ll recoup your investment?

I filled out my first paid survey in 1996 or 1997. The first survey I filled out must have been some early marketing research for Webvan, because I distinctly remember it asking me questions about online grocery shopping. I asnwered their questions, and a few weeks later a check for $12 appeared in my mailbox. Occasionally I got e-mail invitations to participate in another survey. I probably made about $50 from that research firm before it disappeared. That happens.

More recently, after seeing an ad for someone wanting my $35, I decided to see what I could find on my own. A Google search on “paid survey” turned up a few leads. I ended up joining a couple. They sent me a few surveys. Some of the surveys meet their quota within minutes of being sent out, so I’ve probably missed half my opportunities.

Here’s my advice on these things. Let people pay you for your opinions, but protect yourself. Get a free e-mail account from Yahoo, since it has decent spam protection, and use it for surveys exclusively. I’ve started getting a lot more spam since I signed up with these guys. I can’t say I’m surprised. I thought I opted out of all the mailings but it’s hard to know you checked all of the important boxes.

Shy away from people who offer you coupons or merchandise. Why should you work for frivolous things you probably don’t want or need? Stick with survey sites that offer cash. One site I signed up for pays in points, redeemable for cash. Problem is, when you convert it to cash, you get five cents per point, and you have to accumulate a minimum of 1,000 points before you can cash out. The last survey I got from them promised to take 30-45 minutes and pay 100 points. Considering I’d have to take 10 surveys before I saw a penny, and the effort was twice as much for half as much pay as some other sites pay, I wish I hadn’t bothered.

A lot of the sites require you to have a bunch of plug-ins installed, like Flash and Real. Most don’t seem to work with anything but Internet Explorer. If you want to do this a lot, it might not be a bad idea to dig the old Pentium-200 out of the closet and use it for your survey activity and only for your survey activity. That way if it gets infected with spyware, it won’t affect your good computer, and you’ll have a better idea where the problem came from.

The claims of making $200 an hour are very misleading. Most surveys that pay $20 take 20-30 minutes to fill out, especially if you answer honestly, which you should. Fill out three surveys and I guess you can say you make $60 an hour. But you’d have to be in an unbelievably desirable demographic to get more than a couple of surveys a day. While some sites promise occasional surveys that pay $100 or more, I have yet to see one. That doesn’t mean they don’t exist, but it suggests they aren’t common.

One site, Surveysavvy.com, allows you to refer friends, and they pay you a small commission based on your referrers’ work, allowing you to set up a two-level pyramid scheme. (Full disclosure: the link above is a referral to me.)

So, don’t expect to be able to quit your day job and get rich filling out online surveys. Don’t expect to be able to quit your job, period. If you’re in a reasonably desirable demographic, you might be able to pull in a thousand dollars or two a year filling out surveys. That could make a nice retirement nest egg, help you pay down some debt, or pay for a vacation.

That pretty much mirrors what an interviewee said in a recent news story I saw about secret shopping. He said he makes enough to go on vacation once a year, but he does have to work a little bit for it. He also said you should never pay anyone to be a secret shopper.

I won’t get rich, but if I end up making enough money to pay my accountant come tax time, I’ll be happy.

Pay off a mortgage in five years

Thanks to some circumstances where somebody knew somebody who knew somebody, I found myself tonight at a seminar where John Cummuta was speaking. He’s the guy who you may have heard on the radio hawking a system called Transforming Your Debt into Wealth. From him, I learned how to pay off a mortgage in five years.

Hopefully I won’t get into too much trouble by presenting the simplified version of his plan.The secret of credit is that creditors will not extend you more credit than you can conceivably pay off in a fairly short length of time (like, less than a decade). The secret is to make that work for you, rather than for them.

His system is simple enough that you can plug it into an Excel worksheet. Mine has three equations in it. Here’s what you do.

Take 10 percent of your monthly income and use it to pay down debt. Pick the debt you can pay off the fastest. Forget interest. Pay the minimum monthly payment on all of your debts except the one you can pay the fastest. Add that 10 percent of your monthly income to the debt you’re working on. So if it’s a credit card balance with a minimum payment of $22, and you make $2,000 a month, you pay $222 towards that credit card.

Then, when that credit card balance is paid off, you take the debt you can pay off second, add its minimum monthly payment to that $222. Keep cascading the payments until you’ve paid everything off.

Using that formula, I can have my car paid off in a year and two months, and my house paid off in five years and two months after that.

The more money you can plow into paying off debts, the faster it goes.

He said the interest rates are pretty much irrelevant because you are paying the debts off so quickly. So it doesn’t make sense to refinance or consolidate debts or anything like that because you won’t recoup the closing costs.

The formula is a bit crude because it doesn’t take into effect the minimum monthly payments you are making, nor the accumulated interest on the on which debts you’re making minimal progress. But he said those numbers pretty much end up in a wash. Following this crude formula, you’ll be within a couple of months or two.

Also, he suggested putting off investments until you have your debt eliminated. The exception is 401(K) or similar plans where employers match your contributions. The logic is that the compound interest on your debts will almost always be larger than the compound interest your investments can earn.

However, he did not say you should empty your bank accounts to pay debt. If you have enough money in the bank to be able to take half of it and pay your smallest debt, go ahead and do it, but otherwise leave your existing bank accounts and investments alone, suspend contributing to them (or do the minimum), and then, when you have the debt paid off, you can afford to contribute to them very aggressively. Remember, at the end of the plan, you no longer have those monthly house and car payments to make.

Someone who makes $40,000 a year and works 40 years will make $1.6 million over the course of that career. The idea is to pay as little of it as possible in interest, so that money is working for you instead of your creditors.

It seems to me that debt ought to be like college. It ought to be something we do for a few years in order to get something we need, but after a few years, it’s over. And if we have to make a few sacrifices along the way, just like we did for college, we ought to do them.

Update: It worked. Thanks to finding better paying jobs and applying that, we were able to pay the mortgage off ahead of schedule.

Refinishing without refinishing

As I was walking through the paint section of my local hardware store, I spied a product on the shelves that claimed to work miracles. It was called Howard Restorafinish. The can shows a picture of someone wiping a door or tabletop that has scratches, water marks, and other nastiness and making it look brand new.

Too good to be true? Probably. But it was about five bucks. So I bought a can.I have a grandfather clock that belonged to my dad. A family friend built it for him in 1978. To most people it would be nothing special, but for whatever reason it meant a lot to my dad, and he lost it under some questionable circumstances and ended up going to a lot of trouble and expense to get it back.

Since then it’s endured four moves, and it’s spent the majority of the past 10 years sitting in basements. It sustained some damage in at least two of the moves, and in the last move it got some nasty scratches. Scratches is probably putting it nicely. I want it in my combination study/den, next to my wall-size bookcase, where I think it’d look gorgeous, but not with those huge gouges in it.

Since the clock needs to be sanded down and refinished anyway, I figured this stuff couldn’t do any harm, and I figured it was worth my five bucks to find out. So I took it home, grabbed an old sock, took the Howard Restorafinish and the sock down to the basement, and went to town.

The results were mixed. It really does seem to make minor scratches disappear. It also seems to help tired, faded color. I don’t really know how to describe it, other than spots that seem dry and lifeless. It also seems to do a good job of eliminating dirty buildup that turns the wood almost black.

The parts that were passable before now look bright and shiny–better than I ever remember it looking.

At first I was really impressed with what it did with the gouges. It recolored them. After 24 hours, I’m a bit less impressed. The cherry tint it put down is too dark. It seems where there’s no finish left to restore, its results aren’t as good. But I have to admit it still looks much better than before.

I found a few other light spots that it wasn’t able to do much of anything with. They’re minor. I can live with it.

The verdict? It didn’t exactly work miracles, but it made the clock look more than presentable again. I might need heavier-duty artillery for the spot that gave me trouble, but in all honesty I might be the only one who’ll notice it. I’m glad I spent the five bucks.

At some point I do need to sand it down and restain and refinish it. I’m sure I could sand it down, stain it and lacquer it and spend less than $100. But I really don’t have the time right now to do it. I can easily come up with five bucks and half an hour.

So I wouldn’t buy it expecting to make thrift-store furniture look like it came from Neimann Marcus, but for a scratch or a watermark on a kitchen cabinet, a piece of furniture, or a hardwood floor, it might save you a time-consuming refinishing job, or at least let you put that off until a more serious accident.

I’ll be buying the oak and walnut varieties to see what it can do for a couple of spots on my hardwood floors and my kitchen cabinets.

The second-cheapest way to get household necessities

The topic at lunch at work turned to saving money around the house earlier this week, largely because one of my coworkers suddenly found himself with full responsibility for his two pre-teen nieces. The coworkers who are parents started talking about the best places to get good used clothes, the best places to get food cheap, and other stuff. Not being a parent, I just listened. I’m not at that stage in life.

I’m in a different stage of life, still a relatively new homeowner. Yesterday I paid a grand total of $5 for an ironing board and a stepladder, two things I’ve been surviving without. I’m about ready to quit going to the hardware store and to Kmart.The secret is estate sales.

Estate sales are usually crowded affairs, as people swoop in from all corners of the globe to cram themselves into tiny houses in search of things that are rare, things that are cheap, or best yet, rare and cheap.

I see two types at estate sales. The first is the well-to-do, who are there in hopes of securing antiques and collectibles for pennies on the dollar. The other is recent immigrants, who are generally there in search of inexpensive household necessities. They already know the secret.

The best time to go to estate sales is either really early or really late. If you get there early–it seems like people show up an hour early sometimes–you’ll get the best selection but you’ll pay top dollar. In some cases I’ve seen things priced at literally 10 times what they’re worth. In less extreme cases, I’ve seen tools priced the same as a new one at Sears.

Then again, yesterday I bought a pair of small pruning shears for 50 cents and a sharpening file for a quarter.

If you get there on the last day, reality has kicked in, the sucker prices have generally gone away, and dickering becomes the rule of the day. Prices drop by a factor of two or three, and the later it gets, the more willing they are to listen to prices.

If you’re shopping for household necessities, this is a good thing. The antique furniture dealers have no interest in ironing boards and laundry baskets and trash cans. Recent immigrants do, but chances are they already have those things. Stuff like this is often priced low to begin with, and it gets cheaper as time marches on because the chances of someone buying it are pretty low.

You can get household appliances cheap too. I saw a 20-inch Zenith TV marked at $50 yesterday. I know it works because they had it turned on. I’ll bet someone will get it for $20 today. I saw a washer and a dryer priced around $200 each yesterday. The washer was less than two years old. The dryer was a bit older but it was a Maytag. Those prices were decent, and could go way down if they sat long enough. If you’re willing to live without a warranty, you can save yourself a bundle. Two years ago I paid $900 for a washer and a fridge. A friend gave me a dryer. It looks like it could be 25 years old but it works and I was happy to save $250.

But yesterday I wasn’t looking for appliances. I wasn’t necessarily looking for household necessities either, but I’ve been needing a stepladder and a full-size ironing board. So when I spotted one marked at $4.50 and $6, respectively, I wasn’t going to pass them up. It was around noon, and it was a Friday-Saturday sale. They’d be closing up shop in an hour or two. Anything under $20 was automatically half price. I dragged the ironing board and the stepladder up to the checkout. “Five dollars is fine,” she said.

And it was fine with me too. I still remember the day when I went out to either Wal-Mart or Kmart (I try not to shop at Wal-Mart anymore but I did then), days before I moved out of my mom’s house for good, to buy household necessities. After spending more than $200 on things like trash cans and laundry baskets, there was still a lot of stuff I lacked.

If I’d known then what I know now, I probably could have gone to three sales, spent a grand total of 50 bucks, and ended up lacking a lot less.

What’s an aluminum can worth?

I saw someone out scrounging for aluminum cans recently. That made me wonder, what’s an aluminum can worth?

I remember my Dad telling me once that as he drove to one of the many remote hospitals in southern Missouri that he used to cover, he got used to seeing a couple on a riding lawnmower, driving along the shoulder of the road, picking up cans. He commented that he didn’t realize aluminum was worth enough to make that worthwhile.

Being a notorious cheapskate–so much so that the indigenous people of the Himalayas have a folk song about me–I decided to find out.

There’s a recycling place between home and work that I drive past whenever I’m hitting the grocery store on the way home. It posts its aluminum prices where they’re highly visible from the roadside. Price varies; I’ve seen it as high as 39 cents a pound and probably as low as 33 cents a pound.

Lacking a scale with enough precision to weigh a can, I did a Web search and found someplace saying that a pound of aluminum makes about 36 cans.

So, in south St. Louis in 2004, an aluminum can is worth about a penny. But I’ll grant that it has the advantage of being more likely to be sitting on the side of the road, and being far more visible.

Why that high? Aluminum isn’t a rare element by any means but it’s more expensive to process than iron or copper or tin. I’ve heard it said that you can estimate the amount of energy required to process an aluminum can by filling the can with gasoline. So a gallon of gasoline produces enough energy to refine enough bauxite into aluminum to make 10.75 cans.

At a penny a can, it’s certainly not worth my time to go out hunting them, as I’m sure I can’t find 500 of them in an hour. And I save a lot more money by not drinking soda than I’d save by saving the cans. (If you don’t want to give up soda, try cutting back and/or changing to generics. How much you save will amaze you.)

But is it worth my while to save the cans I do inevitably end up with? Sure. Also remember, a lot of other food containers are made partially of aluminum. We use aluminum foil all the time in our kitchens. Pie pans and other disposable food containers are often made of aluminum. My yogurt and applesauce containers have an aluminum foil lining under the lid.

Ten pounds of aluminum yields enough cash to pay for lunch at the cafeteria at work. I don’t know yet if I can accumulate 10 pounds in a month, or if it’ll take all year. But there’s only one way to find out.

Maybe I’ll find that it takes too long. But if that’s the case, my church saves cans. If everyone who goes to my church donated a pound of aluminum a month, we’d be talking $300-$400. And that’s enough money to do something at least semi-serious.

What’s an aluminum can worth? If you guessed a penny a can, you have my congratulations.

Insulating electrical outlets

Insulating electrical outlets

Insulating electrical outlets and light switches is a cheap way to reduce your energy usage. I insulated mine in 2004 and it’s a quick, easy project to make your house more energy efficient that will pay off for years to come.

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How to get rich–the Biblical way

Money is a controversial topic in Christian circles. On the one hand you’ve got people who say money is the root of all evil. The other extreme says if you do the right things, God will reward you with health and wealth and who knows what else.(This was the topic of my Bible study last night, in case you’re wondering. And I’m short of material, so I’m recycling. I’m also mixing in some insights people shared.)

For the record, 1 Timothy 6:10 says money is a root–not the root–of all kinds of evil. That’s somewhat less of a strong statement than saying it’s the root of all evil. So, money causes problems, yes, but it’s not the cause of every problem in this world.

To see some other causes and symptoms of evil, see 2 Timothy 3:2.

Isaiah 55:2 asks why we spend our money on what is not bread (when the Bible says “bread,” it’s frequently referring to the necessities of life such as basic food, clothing, and shelter) and on things that don’t satisfy. The main reason we do it is because we’re surrounded by messages that say this product or that product will change our lives. And while some products have changed lives, let’s think about it for a minute: Those kinds of things tend to come along once a generation, if that. I’m talking about things like the airplane, the automobile, and before those things, the railroad. Computers belong in that category. But the soda we drink is not going to change our lives, at least not for the better. Drink soda instead of water and it could make your life worse–regardless of what that 7up commercial with the bear says.

The American Dream is to give the next generation things the previous generation doesn’t have. Some have said that dream is dead, because we’ve become so affluent that we can’t think of what the next generation can possibly get that we didn’t have.

But it’s not working. Our kids have entertainment centers in their room that give a more life-like experience than the movie theaters of 20 years ago. They’ve got videogame machines that play better games than you could find in an arcade a couple of years ago. They have everything imaginable, and yet they’re all on ritalin and prozac. Meanwhile, their parents are both working, to pay for those two luxury SUVs and the next big home improvement project and all the toys and all the drugs that are necessary to keep themselves and their kids afloat in the miserable life they’ve built together.

My dad wasn’t always there for me. It seemed like most of the time he wasn’t. But it’s safe to say that when we ate dinner together 5 or 6 times a week, it was unusual. Most weeks we ate dinner together 7 times a week.

My American Dream is for my kids to have two full-time parents. Screw the luxury SUVs and the $300,000 house in the suburbs. My Honda Civic has more ameneties than I need. I’ll drive it for 15 years so I can have more money when things that matter crop up.

I told you how the Bible says to get rich. And maybe you’d argue I haven’t answered that question yet. I think Isaiah 55:2 can lead one to wealth that’s very enviable, but, yes, the Bible also tells how to gain material wealth. Check Proverbs 13:11. It’s especially relevant in the era of dotcom billionaires.

You’ve seen stories of wealty people who nickeled and dimed themselves to the poorhouse. What Proverbs 13:11 says is that you can nickel and dime your way to prosperity as well.

What the Bible doesn’t say is how, so I’ll share the concept of opportunity cost, which is one of two things I remember from Macroeconomics. I don’t know how many other people in my class picked this up from the dear departed Dr. Walter Johnson at Mizzou, so I’ll do my best to make my examples clear.

Opportunity cost says a 13-inch TV does not cost $99. That’s the amount written on the sticker, but that’s not the price. The price is about 30 lunches at my company cafeteria.

The monthtly cost of driving a new car every three years is about half my mortgage payment. But my mortgage will be paid off in 28 or 29 years and my house will be worth more then than it is now. In the year 2031, I will have absolutely nothing to show for the car I’m driving today. Those people who buy a $2,000 used Honda Civic or Toyota Corolla every few years and drive it until it dies have more money than you think they do.

Assuming you work about 240 days a year, two cans of soda every workday from the soda machine at my employer will cost you $240. But not really. What happens if you invest that money in what’s called an index mutual fund, which follows one of the major indices, such as the Dow Jones Industrial Average? Historically, you’ll gain about 10% per year on your investment, which means you’ll double your money every 7 years investing that way. (That’s taking into account times of bad economy, like today, or worse.) Anyway, I just grabbed my calculator. If you take that $240 and dump it into an index fund, in 35 years you can reasonably expect it to be worth $7,680.

The real cost of a can of soda is sixteen dollars. Unless you’re not going to live 35 more years. But unless you’re going to die tomorrow, the real price is considerably more than 50 cents.

There are a total of 118 verses in the NIV translation that use the word “money,” and considerably more talk about the concept without using the word. Of those, Matthew 6:24-34 is poignant, as is Ecclesiastes 5:10-20. What I take from them is this: If you build your empire 50 cents at a time, you’ll never be as wealthy as Bill Gates. But you’ll have more than you need, and you’ll be happier than Bill Gates, and you’ll sleep a lot better.

And if your name is Jackie Harrington, I suggest you start selling autographed 8×10 glossy photos of yourself. Sign them, “Bill Gates just stiffed me for 6 bucks! Jackie Harrington.” Sell then for $10 apiece to people like me. Then put the money in an index fund. Then in 35 years, when you’re a millionaire, write a thank-you letter to Bill Gates.

Time to shop for a car again

I shredded a tire on my 2000 Dodge Neon this morning. That’s one way to keep me from getting to church on Sunday. What makes things much worse is that I won’t have the car past the end of June, so my last few miles on that car are expensive ones.Since I’d just thrown a bunch of money away, I figured I’d spend some time looking at Americans’ favorite money sink: cars. I was slightly happy to find out that it’s almost impossible to get a gas/electric hybrid in St. Louis. That probably means they’re not bringing enough of them here, but it’s good to see that the ones that are coming in are selling.

But I want an upgrade from my Neon in terms of reliability, fuel economy, and price. My Neon’s been decent, but I want something that’s an improvement in all three. With financing the way it is today, almost anything lowers my monthly payments. But now I have the opportunity to slash my second-largest monthly expense and significantly lower my sixth-largest, and I’d much rather spend money on almost anything other than gasoline and a depreciating car. Computers depreciate even faster, but I’ve more than made back the money I dumped into computers over the years.

The Volkswagen Jetta is priced well and holds value extremely well, but its fuel economy is rated at 23/29 MPG city/highway, and I consistently get between 27 and 32 in my Neon, depending on how much city driving I do.

The Nissan Sentra is priced similarly and gives upgraded fuel economy (28/36) but Nissans don’t hold value as well as a Volkswagen, Toyota or Honda. The only reason I looked, in all honesty, is because the local VW dealer also sells Nissans.

As I scanned the three rows of Honda Civics at the Honda dealer across the street from the VW dealer, I spotted something I really liked. In a jungle of cars rated 29/38, I spotted a lone car rated 35/40. It’s a Honda Civic HX. It’s a mid-range Civic, and it offers the same transmission they use in the Civic Hybrid, which gives it a slight edge over the other Civics for fuel economy. (The Hybrid is rated at 48/47.) I did the math, and a Civic Hybrid getting 10 MPG more will save me about $600 over the course of the next five years, but it’ll cost me $7,000 more. The $2,000-a-year tax deduction on hybrid vehicles is going away, so it’ll only save me $560 in taxes once. If I kept the car for 10 years and got a $2,000 tax deduction every year, the Hybrid would be more economical than the HX. Barely.

A little research at www.fueleconomy.gov shows that particular Civic is the most fuel-efficient conventional gasoline-powered car with an automatic transmission on the market in the United States. The only cars that beat it are hybrids or diesels.

I know where to get a Toyota Prius (52/45 MPG), but it’s not priced much better than the Civic Hybrid. It still won’t pay for itself over a Civic HX without help from the government. I also don’t like its styling all that much. I can live with it, but I actually like the way most of the other cars on my short list look. (The Nissan Sentra I can take or leave, but I like it better than the Prius.) The Toyota Echo has the second-highest fuel economy among conventional gasoline cars, but I really don’t like the Echo’s looks.

A few test drives will undoubtedly change my order of preference, but for now I’m definitely leaning towards the Civic HX.

It doesn’t hurt that the Civic HX’s tires are a lot cheaper and easier to find than tires for my Neon, either.