mortgage

Fighting Web rage

Dave Farquhar net.culture , , , , ,

There’s something about the Internet that turns people into jerks. Or maybe there’s something about jerks that turns them on to the Internet. — Tim Barker, the St. Louis Post-Dispatch

I loved that lead, and the rest of the story is good too. I first started using the Internet in 1993, and I first went online sometime in 1986 or 87.
I think people who started going online in the 1980s and early 1990s tend to be more polite because in those days, “going online” usually meant dialing into a computer that a hobbyist set up in a spare bedroom for the purpose of attracting like-minded people who wanted to talk about shared interests. It was an expensive hobby–generally the computer had to be dedicated to the purpose, and the operator had to pay for an extra phone line, and the software to run the operatiion cost money too.

Whenever someone would start acting rude, it didn’t take long for someone to step in and remind the person that he (in those days, it usually was a he) was essentially a guest in someone’s house, and he had to play by the owner’s rules or get thrown out.

There were still disagreements, of course, and if there were too many people I didn’t like on a particular bulletin board, I’d quit calling. At first I took it personally, but considering that in 1990 there were literally hundreds of bulletin boards running in St. Louis, it was always easy to find a new hangout.

One of my friends from those days ended up being the best man at my wedding. I ran into someone else I knew from that timeframe back in December at a train show. He and I probably talked for more than an hour, catching up.

The big problem today is that people think they own the Internet because they pay $20 a month for Internet access, so they have the right to go anywhere they want and say and do anything they want. And they also think they can do this without anyone knowing who they are or where they live. The combination of unlimited entitlement and zero presence of fear tends to bring out the worst in bitter, unpleasant people.

The thing is, you don’t own the Internet. That monthly fee just gives you the right to use it. If you hop in your car, drive someplace, and pay the cover charge, you don’t own the place. If you start threatening people or otherwise making things unpleasant, the guy who pays the rent can throw you out.

The anonymyty is a bit of a myth too. Ask anyone who’s been sued for downloading MP3s. Tracking someone down online is sometimes difficult, but it’s never impossible. There’s a guy on a train forum I frequent who uses the cryptic name of LS51Heli. Hiding behind a cryptic username, a throwaway Gmail address, and a bunch of false information in his user profile, he relishes in taunting and harassing anyone who disagrees with him–and some people who don’t.

But the security LS51Heli thinks he lives under doesn’t exist. Ask Lori Drew, the woman whose online bullying drove Megan Meier to suicide in 2006. Knowing nothing more than the name of a neighbor, hundreds of people tracked her down. A friend and I spent a couple of hours one Sunday night and Monday morning tracking her down, before her identity became widely known. Most of the tools we used were a bit more complicated than a Google search, but everything we used is free and open on the Internet, ready for anyone to use–provided they know where to look.

I can’t speak for anyone else’s motivation, but we unmasked her so that we could keep her away from his kids. Once a bully, always a bully. We never did anything else with the information.

I’ve never felt the need to go unmask LS51Heli. But it could be done.

Usually the troublemakers on train forums will eventually get banned, and then they’ll slink off to another forum and complain about how their rights to freedom of speech got stepped on. One forum in particular tends to be a real magnet for these people, and they refer to the more mainstream forums as “North Korea,” “Iran,” and “Iraq” while they talk about goings-on at the places that banned them and poke fun at the forums’ owners and anyone they don’t like.

They forget that the person who pays to run the web site has rights too–including the right to throw out unruly guests.

The Internet would be a much more pleasant place if we all remembered that we’re just guests in someone else’s house. I pay my monthly fee, but the site operator’s bill is a lot higher than my $20 a month. It’s no different from visiting my sister. It costs me $20 to drive there, but she pays the mortgage, so she owns the place and she makes the rules.

Don’t try to do it all at once

Dave Farquhar Saving money , , ,

I’ve been writing a lot about personal finance lately. I make no apologies for that; it’s what’s on my mind. Something that happened this weekend reminded me of why it’s hard to get on the personal finance treadmill to begin with.

The numbers are big. They’re intimidating. You can’t possibly fix it all right now.

So don’t try to fix it all right now.I had an unplanned incident this weekend. It was unplanned, avoidable, and expensive. Some people will spend $400 at the drop of a hat without flinching, but my wife and I aren’t among them. I wouldn’t let myself get upset over it, but truth be told, I thought about it a lot over the weekend.

Mainly I tried to formulate a plan to make the money back quickly. And making $400 is certainly doable, but most people don’t come up with a way to make an extra $400 in just a day.

And that’s when it hit me. Don’t try to do it all in a day.

It’s like in baseball, when a team is losing by 8 runs the way the Indians were against the Red Sox for most of last night. Usually when a team is down by 8 runs, they’re going to lose because everyone’s going to go up there and try to hit an 8-run home run. But it’s physically impossible to hit an 8-run home run.

The way you win a game when you’re losing by 8 is by getting on base any way you can, and then getting around and scoring any way you can. If enough people manage to do that, they can chip away at the lead and soon it’s a close game again.

And that’s the way I have to approach this unexpected expense. Look for the opportunity I normally wouldn’t bother with. Take snacks to work so I stay away from the vending machine for a while. Chip away at it, whether it’s a dollar at a time or ten.

That trick works with big debts too. I once used a mortgage calculator to figure out the smallest amount of extra money you could put toward your mortgage and still see a benefit. On my mortgage, the amount turned out to be $10. Just paying $10 extra per month every month would pay the house off a full month early. Ten lousy bucks. Up that to a hundred and you can start talking about years.

So that’s the key. Nickel and dime your way out of debt, and then you can be on your way to nickel and diming yourself into prosperity.

Surviving a recession

Dave Farquhar Saving money , , , , , ,

I saw a link to a short story on Get Rich Slowly called What to do during a recession.

I think I can do a little better. So I’m gonna try.You might not lose your job, so don’t become a self-fulfilling prophecy. The story states that most people don’t lose their jobs when the economy goes south. That’s important to remember. I lost not one, but two jobs in 2005, not the worst year on record but certainly not the best for either of those two employers. I was pretty certain in both cases that there would be cuts and I would be one of them. I couldn’t do anything about the second case because an edict came down from a new CEO to get rid of all contractors, and I was a contractor. In the first case though, yes, I probably made myself a more likely target for downsizing. I wasn’t as bad as the guy in Office Space who got hit by a truck, but if management thinks you think you’re on your way out, they have an excuse to not feel as bad about letting you go. After all, if you saw it coming and you’re not prepared for it, it’s your fault if something bad happens, right?

So if you think you might be on the short list, don’t let anyone know you think that way, and be quiet and discrete about finding your next job.

Work your contacts. When I lost that job, I knew some people who’d asked me at one point or another if I might be interested in opportunities elsewhere. Of course I called them within 24 hours. None of that panned out for me, but at least I got some practice interviewing and some good resume advice out of the deal.

I think it’s a very good idea to ask your friends once a year or so if they know of any openings. In the event of an emergency, it gives you a much better idea of what might be out there.

Build an emergency fund, just in case. Having an emergency fund is also important. When I got hired on at my current job, my boss told me to try to have half a year’s salary in the bank. Some vote of confidence, huh? But the reality of our business model is that we can be forced to make cuts at any time, with no warning. It even happened to him once a few years ago. The upside is that the pay is pretty good and we get at least one or two opportunities to make some extra money each year, so we put up with it.

Six months’ salary can be hard to save, but you should have at least two, and more is better. Sometimes I can find a new job in less than two months, but I can think of two times in my career where my new employer dragged the hiring process out by a month. That was fine the first time it happened, because I still had my previous job, but it really stank the last time, because I’d been out of work a month.

Make a bare-bones budget. I also suggest having a bare-bones budget. Make up a spreadsheet listing the non-negotiable expenses that happen every month (mortgage or rent, car payment, utility bills, car insurance). Then figure the cheapest you can feed yourself for a day. I have a coworker who might try getting by on three packs of Ramen noodles and feed himself for 30 cents a day, but for most people, $3-$4 per day for food is about as low as they can go. Multiply that number by 30 and add that as a line item. Then add a few bucks for gas (it costs money to drive to the store and to job interviews too). It’s much easier to make a budget like this before you need it than when you need it.

You don’t necessarily need to kick into the emergency bare-bones budget the day you lose work, but I did. It helped my savings last longer.

Start saving money now. Knowing where to get things cheaper will help you build your emergency fund faster, and it will help you when you can’t afford to pay full price. Find out where the nearest day-old bakery is. If there’s a thrift store near you, wander into it sometime to see if it’s any good. If there’s a farmer’s market near you, check it out and compare its produce prices to your regular grocery store–and prepare for a pleasant surprise.

Don’t bail on your stocks. This might be the most important thing. When the stock market takes a dive, a lot of people hop on the phone and take their money out. Unless you own marginal stocks, that’s exactly the wrong thing to do. You don’t need to know what to do with marginal stocks when a recession hits. If you own stock in companies that can’t survive a recession, you should sell them now and buy stock in companies that can. I had a relative who made himself rich by investing in boring companies like General Electric and Coca-Cola–companies that sell things that people buy no matter how much money they have–and holding those stocks for several decades.

That money vanished after a generation (and no, I don’t have any of it), but that’s another story.

There’s a financial cliche that poor people run to buy when stores have a sale, but when Wall Street has a sale, they rush to sell.

The thing to remember is that stock prices are purely theoretical unless you sell. So when they go down, you don’t lose anything. If the company still has decent products to sell, its price will rebound if only because vast heards of rich people will come in and buy more of the stock while the price is low. If you have some savings and you know how to stretch it, there’s absolutely no reason for those rich people to be buying that stock from you.

Why I never kept up with the Joneses

Dave Farquhar Saving money , , , , , , ,

I had a bit of a financial epiphany over the weekend.

I have a well-deserved reputation for being a tightwad. Part of it is in my blood; I’m largely of Scottish descent, and Scots just tend to act that way. But I think part of it is what I observed growing up.My wife and I were sitting at my mom’s kitchen table, and for whatever reason, we were talking about my teenage years. In 1988, we moved to a new subdivision in Fenton, Mo. Fenton is a boomtown today, thanks in part to urban sprawl and also because of its first-rate school district, but in 1988 it was still largely an industrial town. Lots of people worked there, and not many wanted to live there. But in the late 1980s, the McMansions started sprouting up like weeds, and lots of families started moving there, ours included.

We talked about our neighbors, and something immediately occurred to me. Most of them were in their early 30s. They were the same age I am now. Not only were they my age, but they drove new cars, and most of them had at least two kids. Meanwhile they were trying to make payments on houses that cost $125-$150,000 at the time. According to inflation, they should cost a quarter million today. Not only that, though, in 1988, interest rates were a lot higher–10 percent wasn’t uncommon according to my quickie research.

Dad could afford that lifestyle–barely. He was a doctor and had been practicing medicine for 15 years. But even we made sacrifices in order to afford to live in that house.

The problem is, I shouldn’t say "even." Most of our neighbors had nicer furniture than we did. Some of them drove fancier cars. And their kids had bigger, costlier toys.

The absurdity hit me. I wouldn’t even try to compete with the lifestyle of a 45-year-old doctor. Not at 33. I make enough that a bank probably would let me have a mortgage of a quarter mil. I could lease cars that don’t depreciate quickly in order to keep my monthly payments down. But there wouldn’t be much of anything left at the end of the month, and I could probably forget about retiring any earlier than 73 (which is what Social Security is saying my retirement age should be). Just because I could make the payments doesn’t mean I should.

I wondered why so many of them got together every weekend and drank themselves senseless. And I don’t think I consciously ever realized I was living in a neighborhood full of people living way over their means–even the family next door, headed by a young dentist trying to establish his practice with five kids and a wife who insisted they needed a Jaguar.

Suddenly, sitting there at the table, telling old stories, I realized why that woman was such a psycho. She couldn’t pay her bills.

And that was also probably why another neighbor wouldn’t go anywhere without a thermos full of wine, and why another young couple who lived nearby smoked pot every Saturday night.

They had everything any reasonable person could dream of having at 32, but if anything at all ever went wrong–a layoff, an extended illness, or a serious injury–they would be in serious danger of losing it.

For whatever reason, I never measured my lifestyle against them. My first few jobs didn’t make me a lot of money, but they let me do pretty much anything I wanted. I had a nicer apartment than Dad had at a comparable age. I could go out to eat any time I wanted. I could buy a new computer every year if I wanted to, as long as I didn’t go overboard on it, and for a few years I did. I drove small cars, but there were always at least two or three cars in the parking lot that weren’t as nice as mine, so I was content to drive my 1992 Dodge Spirit. When it died, I got a 2000 Dodge Neon. It wasn’t a status symbol, but it had power locks and windows, which were two things Dad’s 1981 Chrysler LeBaron didn’t have. It had a nicer radio too. And that LeBaron was supposed to be a luxury car.

My lifestyle was far ahead of where Dad’s had been at my age. And not only that, I had money left over at the end of every month.

There were two things I wasn’t happy about. At the time, I didn’t have a steady girlfriend. And my apartment rent was going up by about $50 a year but the management company wasn’t taking care of the place. When stuff broke, they fixed it halfheartedly, and I didn’t want to pay $575 a month to live in a slum.

When my rent hit $575, I told them I wasn’t going to pay it. They offered me a seven-month lease at about $550. Conveniently, I had enough in the bank for a down payment on a house, and I figured I could afford to pay a couple hundred more every month for a mortgage. I just didn’t want to throw that kind of money away on rent.

So I bought a house. There was a neighborhood about a mile away that reminded me a lot of the neighborhoods I grew up in. I found a house about the size of the house we lived in before we moved to St. Louis. It cost more than I had planned, but it was big enough that I could get married and have a family there and not have to move again. I hate moving. Plus, it was (and still is) in a good school district, all the schools are close by, and anything I could need was close. I didn’t know it right away, but in an emergency, the nearest grocery store AND the nearest car repair place are both walking distance.

For an extra $100 a month, it just made sense. I bought the house. And every night, I filled up that Dodge Neon with everything that would fit, drove to the house, and unpacked. Several friends with vans or pickup trucks helped me move the stuff that wouldn’t fit in my tiny car.

Even though my 1-bedroom apartment was stuffed to the gills, it wasn’t nearly enough to fill a 3-bedroom house with a living room, family room, a study, and a basement. But it didn’t take long for that problem to solve itself. Several people offered me some nice furniture. They were hand-me-downs, but there wasn’t anything really wrong with any of it. Before I knew it, the house was full.

A couple of years later, the right girl came along too. At first she wanted me to get nicer stuff. The problem was, even though I’d gotten promoted to a server administrator at work, they were still paying me my old desktop support salary. The house had wiped out my savings, and I couldn’t really take on another monthly payment on anything. We fought about it a little. I showed her how little was left at the end of every month, and I argued that everything in the house was nicer than anything my parents had at my age. For that matter, most of it was nicer than the stuff they had when I was a kid.

She relented. I don’t know how happy she was about it then. But she didn’t complain.

A few months after we got engaged, I lost my job. I was mad about it. I was convinced I would lose everything I’d worked for. I guess for a minute I thought I was like those neighbors.

But because I’d lived within my means, I survived and soon I ended up with a job with a competitive salary for the first time in my professional career.

Something else came out of it too. The day we got married, neither of us had a job. We started a small business out of necessity. Our final paychecks made the mortgage payments during that summer, and we used our wedding gift money to get the business going. Soon it was bringing in enough to make our utility payments and buy groceries. When I got a full-time job, she took the business over and I helped out at night and on weekends. It allowed her to not have to work outside the home. There are probably things she could do that would make more money, but she doesn’t have a lot of stress, and she enjoys the flexibility.

The odd thing is, we’ve been able to upgrade our lifestyle on the cheap. For example, there are three light fixtures we’ve been wanting to replace for a long time. This weekend I found two light fixtures at a yard sale for a buck apiece. My sister rolled her eyes when I told the story, but these fixtures don’t fit the yard sale stereotype. A sticker on them says they were made in February 2005. Home Depot still sells the same fixture (or something extremely similar) for about $30. That’s not terribly expensive, but $1 is a lot less than $30. The third fixture we need to replace is smaller. We can get something that will look fine with them, and look much better than what we have, for under $20. The result will be a significant upgrade in how the kitchen and living room look, at well under 1/3 the price.

That $60 savings may not sound like a lot, but we’re constantly finding ways to save a few bucks here and there like that. We’re never the first to have anything, but it seems like we always end up getting whatever it is we want or need, and meanwhile we’re socking money away and whittling down on that house payment.

Judged against the standards of my neighbors in 1988, one could argue I’m a failure. I drive a five-year-old car and most of the time I use a six-year-old computer, and the four shirts I bought in 1998 to comply with my then-employer’s dress code are still in my rotation today.

But let’s look at things another way. Not only do my wife and I have nicer stuff than my parents had when Dad was 32, we also have an easier time finding money for necessities like groceries. She can shop at the health-food stores even though they’re more expensive. As long as nothing unexpected happens, we’ll own everything outright and have absolutely no debt–no student loans, no car payments, no mortgage–well before I turn 40. I stress over some things, but money isn’t one of them.

In my early 20s, I watched some of my friends from high school rack up massive credit card debt. At least it seemed like massive debt at the time. I knew then I didn’t want to be like them, at least not in that regard. Now I know that the average American family has $9,900 in credit card debt. That’s about what one of those friends owed, and about twice what another one owed.

I know who I want to be like. I want to be like my wife’s parents. They paid off all their debt sometime in their late 30s or early 40s. Today, when my mother in law sees something she wants, she doesn’t think about it. She can just buy it. Not only that, she’s retired, and she’s nowhere near 73.

I’m not saying I want to buy anything and everything I see on a whim. But not having to think much at all about money seems really nice.

And I guess on some level I’ve known that for almost 20 years, since I was in my early teens.

How I saved $380 on a cellphone plan

Dave Farquhar Saving money , , ,

I read earlier this year how some families are spending more than $1,000 a month on cellular phone bills. To me, it’s absolutely ridiculous to pay more than some people pay for their mortgage for communication. When I was growing up, a second phone line ($25 or so per month) was a luxury most families didn’t indulge in.

To me, the cel is primarily for emergencies. I have a pretty liberal definition of emergency–if I’m on my way home from work and my wife wants me to stop at the grocery store to pick up a couple of things, I think that’s reasonable. What I don’t think is reasonable is the expectation that I’ll spend all the time I spend in my car yakking on the phone. If it’s going to take more than a couple of minutes, we’ll talk on my landline when I get home.

Here’s how to have a phone for emergencies for less than $9 per month.The first thing is to get your hands on a phone. You may very well be able to avoid buying one in the store or signing a contract you don’t want to sign in order to get a free one. My mother in law gave us her old phone after she upgraded to a newer, snazzier one. That saved us around $20.

Chances are you may have to buy a prepaid phone outright. Some of them cost as little as $30, which isn’t bad, considering you could easily spend $30 trying to hunt down a new battery and charger for a used phone.

And I just let the cat out of the bag. The key is to buy a prepaid plan, rather than getting on the monthly contract treadmill.

If you buy a prepaid phone, all you have to do is activate it. If you get a secondhand phone, you need a new SIM card. In our case, they charged $10 for the new card. This is why I’m not too keen on spending money on a used phone because by the time you buy a SIM card, a new battery, and a charger you can easily spend more getting a used phone going than you’d spend on a new one. If you luck into a good, working phone for free like we did, great. If not, spend the 30 bucks.

The salesperson will undoubtedly try to upsell you to a monthly plan. In our case, she didn’t even try to upsell us to the cheapest monthly plan–she tried to sell us the $40/month plan, not the $30/month plan. Don’t let the salesperson get very far into the pitch. I told her we expected to use the phone once or twice a week and not for much more than 15 minutes a day.

It’s hard to upsell you to a 500-minute plan when you say something like that.

And this is the key to saving money on all purchases. Do your homework, and go in knowing what it is you want from the start. The salesperson’s job is to get you to buy a phone that does more things than most people do with their computers. Since most of us carry a phone so we can either be reached in an emergency or reach someone else in an emergency, we don’t need a computer. Keep the goal in mind and refuse to pay extra for functionality you aren’t going to use.

After she swapped the card in the phone, we just had to buy minutes. We buy minutes in $25 increments, and we get 90 days to use them. In our case, it costs a dollar a day to use the phone (you’re only charged on the days you use it), and 10 cents per minute. The other plan charges a flat 25 cents a minute. Depending on how we end up using the phone, the 25-cent plan might be better. We’ll find out. The nice thing is that since we have no monthly contract, we can walk away just as soon as we’ve used up the minutes and switch to something else.

And after the first day of use, I can say it’s not bad. At the end of every call, I get a text message telling me how much is left on my balance. That makes budgeting the minutes very easy. I’ve never seen a monthly plan do that.

I think we can get what we need with the prepaid plan. We have a land line, which we use for normal, everyday calls. That costs $24 a month if you eliminate all of the extras. You don’t need call waiting if you have a cellular phone–people can call you on that and leave a message if your line is busy. You don’t need call notes if you have an answering machine. Those cost $10 and you only have to pay for them once. Call forwarding is useless. Caller ID is useful for screening your calls, but you can screen your calls with your answering machine too, and that doesn’t cost anything.

If you’re subscribing to those things on your land line, I suggest you take a long, hard look at those features and see if you’re getting any real benefit from them.

Some people suggest getting rid of the landline altogether, but I’m not so keen on that. For $24 a month, I can make all the local calls I want for free, with no restrictions on use. And people can call me all they want for free. Plus, having the phone line lets me get DSL for $20 a month. The long distance stinks, but we don’t make a lot of long-distance calls.

I’m almost certain I would quickly end up spending more than $24 per month to make up for not having the landline.

I’ll have a better idea in 90 days if this is going to work, but for now it looks like I’ll be able to meet my cellular needs for a Scrooge-like $8.34 a month.

How to find motivation to balance your budget

Dave Farquhar Saving money , , , , , , , , ,

This week I read a story on Get Rich Slowly about a couple who refuses to budget. The conversation ended when the person who needed to budget bragged about getting five shrubs on sale for $10 each. She didn’t need them, but the deal was too good to pass up.Consumerism is an easy trap to fall into because of easy credit, and the messages are all around us. Most people who know me probably categorize me as an extreme cheapskate. Certainly there are lots of things I could be doing that I don’t, but even by doing a few little things you can improve your financial situation immensely.

Watch less TV. I think this is a really big one, because TV is the primary source of marketing messages. It’s not just the commercials either. The TV shows give lots of messages about how you’re supposed to live. It’s not a realistic picture.

At one point in my life I was able to go a year without watching TV, just watching the World Series each year. I watch more now. I try to catch This Old House on Sunday evenings and sometimes I’ll watch a show with my wife, so I probably watch 3-4 hours a week now. But that’s a lot less than average.

My advice to someone who wants to watch more TV than I do would be to watch older movies (1940s-1960s), as that would make it harder to compare your life to someone else’s. Plus, there’s a lot less product placement and other marketing shenanigans going on, and if you watch it on video, no commercials.

Have realistic expectations. A lot of 20-somethings seem to think they have to have furniture as nice as their parents. That’s unrealistic and sometimes impractical. The previous generation didn’t always have what they have now. Walk into the home of a 50-something, and some of the furniture will be new, but some of it will be 10-15 years old, possibly more. The furnishings were bought over the course of many years. Plus, nicer things are impractical when you have kids running around. There will be spills and stains and dirt. Kids need to be taught to respect things, but what’s the point of ruining a $1,000 sofa to teach the lesson? It’s better to put something older and cheaper in harm’s way instead–much easier on the credit card and on your sanity.

Budget. A budget isn’t some mystical thing. It’s a simple list of your money as it comes and goes. It can be as simple as a spreadsheet. In one column, list all your sources of income–your paycheck, plus anything you make on the side. Add up that total.

In another column, list your monthly expenses. That’s everything–your car payment, rent or mortgage, credit card bills, utility bills, gasoline, food, and entertainment. You may have to save your receipts for a month to do this realistically. Add up that total. Hopefully it’s a smaller number than the first total.

I first did this in college when I was treasurer for my fraternity. We were in serious financial trouble but nobody knew why. I grabbed the checkbook, did the simple analysis I described above, and figured out we were spending more than $400 per member every month. We were only charging $380 a month for people to live there.

When we couldn’t raise rates, I started cancelling things. I cancelled the Super Bowl Party. I cancelled cable TV in the lounge. If it wasn’t a basic necessity of life, it went. It made me unpopular and it didn’t balance the budget, but it cut the shortfall.

I’m guessing most of the people who voted against me raising rates are having more trouble paying their bills today than they need to.

The expenses involved in a personal budget are different than for an organization, but the principles are identical. You still need to have more coming in every month than comes out, and if you can’t figure out how to make more, the only way to have more money is to spend less.

Reward yourself. Practically. A few years ago my budget was tight and I’d taken on an expensive hobby. Then I realized what I spent on food every day. It started with $1 for a cup of coffee and a doughnut. Lunch was $5 at the cafeteria. And usually I spent another dollar or two in the vending machine. I let my ego tell me it wasn’t worth my time to pack a lunch.

Then I did this math equation: (365-52-52-10-10)*7 and came up with $1,687. I was spending $1,687 a year on (mostly) bad food because I thought I was too important to pack my own lunch.

I was also making about $15,000 a year less than I make now. Dice.com tells me I’m slightly underpaid now, let alone then. Who was I kidding? That $1,687 was a luxury I couldn’t afford.

So I went to the store, bought a Thermos and a big can of coffee, bought some instant oatmeal and some breakfast bars and granola bars, and started packing fruit and sandwiches. What was left became my hobby budget.

I couldn’t motivate myself to cut that expense just to have more money, but being able to afford something I otherwise couldn’t was enough motivation for me. Eventually I shrunk the hobby budget and started using that money to pay down debt.

But had my situation been different I don’t think it would have been a bad thing, necessarily, to keep using that to fund a hobby. It’s easy to get discouraged when it seems like everyone else is passing you by, even if they’re passing you by on borrowed money.

Look at opportunity cost. Opportunity cost is about the only thing I remember from college economics. The theory goes like this: The cost of a new car isn’t $20,000. It’s what else I could have done with that money. So the cost of a new car is a plasma TV ($5,000), a high-def DVD player ($500), a nice computer ($1,500), a new high-efficiency furnace ($4,000), a nice vacation ($3,000), all three current generation video game systems (roughly $1,000), a new living room set ($2,000), and you’d still have $3,000 left to replace two or three appliances with high-end models, or all your major appliances with new low-to-mid-range models.

Would it be worth driving an older car for a few more years to be able to afford to go on a home-improvement binge like that?

Or here’s the way I prefer to look at it. I could invest that money conservatively, using a no-load index fund that just does exactly what the Dow Jones Industrial Average does. Historically, money invested in the DJIA doubles every seven years. Some seven-year periods are better than others, of course. If I dump $20,000 into that kind of a fund, it will be worth $320,000 in 28 years.

The sticker price on the Honda Civic sitting in my driveway was around $15,000, but that’s not what it cost me. It didn’t cost $16,500 either (I paid some interest on it because I didn’t have the cash to buy it outright immediately). It cost $264,000.

I know some people look down on me for driving what’s now a five-year-old car, but I can build myself a very nice nest egg just by keeping my cars two or three times as long as everyone else does. Will they still be looking down on me if I retire at 65 and they have to work 10 more years because they still have debt to pay off?

If the cost of a secure future is driving a car typical of what 16-year-olds drive, I’ll pay that price. It’s a bargain.

Don’t pay interest. If you have a choice between financing something and waiting a while and paying cash, wait and pay cash. Paying interest is like paying rent. It’s paying money off and having nothing to show for it in the end.

I do use interest-free periods to buy things because that gives me a little more time to get the money together. I financed a furnace earlier this year because they offered 6 months same as cash. I probably could have paid cash on the spot but it would have been less comfortable. Being able to spread my payments out over six months allows me to pay more on the mortgage, which does charge interest.

The overworked American

Dave Farquhar Society , , , ,

This is old, but still true, and Labor Day is a great day to explore the topic of The Overworked American. The trend has not reversed since it was written.

Basically, what Juliet B. Schor says is that productivity has soared since the 1940s, and when productivity soars, you can choose to do one of two things: work more, or work less. Europe by and large has chosen to work less. The United States hasn’t.I know ever since I saw a John Cummuta seminar back in November 2004, I’ve been harping on living cheap and paying off debt as quickly as possible. The goal isn’t so much to pile up tons and tons of money. That’s just a side-effect. That’s not the goal. There’s a different goal, and it’s actually a lot shorter-term: The goal is to buy freedom.

When I was growing up, Dad almost always carried a beeper. And invariably, when we would go out (on those rare occasions when we did get to go out), that beeper would go off, and Dad would have to find a phone, and more often than not, then Dad had to go away.

Then I grew up and I got a beeper of my own. Back in the ’70s, you had to be something really important like a doctor to have a beeper. Today all you have to know is what ctrl-alt-delete means. I guess it was the first time my pager went off in the middle of a date that I knew something was horribly wrong, but I didn’t know what to do about it.

It took seven years, but I finally got the answer.

Cummuta’s tapes are pretty expensive, but you can go to the library and get a book by Dave Ramsey or David Bach and get the same benefit because all of those guys pretty much say the same thing.

What those guys can’t give you is motivation. My wife and I have amassed a library of financial books. In a lot of cases my wife had a conversation with the original owners of the books. They all said the books had good ideas, but it was so hard to do.

Which brings me back to The Overworked American. What Schor doesn’t say in that excerpt is that you do have a choice. When your boss comes to you and says you’re going to work Labor Day, and not only that, you’re also going to work on Saturday and Sunday of that weekend too, and, oh yeah, you’ll probably have to stay late on Friday, you’d better believe you have a choice.

Well, assuming you don’t have to write a check to the bank for $1,000 every month for that roof over your head, and another check for $400 or $500 every month for those four wheels that get you to work, and another one for the four wheels that get your spouse to work.

When $24,000 of your annual income goes strictly towards transportation and shelter, you will return the call when the beeper goes off. You’ll answer the cellular phone (which you pay for) on the first ring if that’s what your boss wants. You’ll work Labor Day weekend and you’ll like it because your boss has you exactly where he wants you.

That’s why I’ve been harping so hard on living within your means. I don’t drive a Honda Civic because it’s what all the cool kids want to drive. I drive a Honda Civic because it’s a reliable car that rarely has to go into the shop, because it gets really good gas mileage, and because I was able to pay it off in two years.

Perhaps more importantly though, I plan to still be driving that Honda Civic on the day I write that final check that pays off the mortgage.

Unless something were to happen to that Honda Civic in the meantime, that is. If that happened, I’d probably go buy a 2000 or a 2001 model and put whatever money was left over towards the house.

You don’t have to get a new car every three years, or even every five years. We’ve been conditioned to trade in our cars every few years, but if we do that, then someone else gets to control our lives. We’re slaves to consumerism! Slaves!

And when you can’t spend any quality time with your spouse because you’re always at work (or working from home), and you don’t have the time or energy to pull your own weight at home, and there’s all the stress that puts on your marriage, could that have anything to do with why divorce rates are as high as they are?

But if you can drive home every night in your car that you own outright to your house that you own outright and can sit down on your couch that you own outright, guess what? When your boss tells you that you have to work Labor Day, you can say no. Why? Because if your only monthly expenses are medicine and food, if your boss says the f-word (the five-letter one), all that matters is whether the White Castle down the street is hiring because that job will more than cover your expenses while you try to find another regular full-time job.

And that, my friends, is why I’m typing these words on an old 700 MHz computer, why I didn’t go out for lunch this afternoon, and why I haven’t traded in my four-year-old Honda Civic. The math tells me I can have this house paid off in two and a half years. I don’t know if that means I’ll find a way to do it in a year and a half, or if it means it’ll take closer to four. But I look at it like high school–something with a beginning and a very definite end. In the meantime, there’ll be some good things that happen and some bad things. But there will come a day when it will be over.

And on that day, I’ll get a taste of the real world.

I don’t know about anyone else, but I’m really looking forward to that.

Dealing with being laid off

Dave Farquhar Personal , , , , ,

Well, it’s been just over a year since I was laid off from the only job I was ever willing to relocate for. Layoffs are never fun. Dealing with being laid off is hard. Looking back, with the perspective of a year and two days now, it was the best thing that could have happened to me.

But I’ll be honest: That doesn’t make it hurt much less. But I know the shoes I was in a year ago try on someone new every day, and every year around this time, one or more of my former coworkers finds themselves in those shoes. I don’t know if I can help, but I’m going to try.

It’s harder for guys. For men, work is a big part of their identity. In most parts of the world, when you’re introduced, the second question people ask after your name is what you do for a living. (In St. Louis, that’s the question they ask after where you went to high school). But seriously, losing your job involuntarily is a really big deal, so feeling bad about feeling bad about it is counterproductive. Of course you feel bad about it. Grieve. Don’t hold it in–you’ll just get depressed, and everyone around you will sense you’re depressed, and it’ll make it that much harder to get another job.

Be a miser. You just lost your job. You don’t need it to cause you to lose everything else. I haven’t talked to a lot of homeless people, but more than one of them was once a highly skilled, productive worker with a lot of education. Homelessness is a complex thing, but loss of job plus depression plus running out of money can equal that.

You can’t know when you’ll have another paycheck, but you can figure out how long the money you have will last. You have a pretty good idea what your mortgage or rent and utilities cost. Throw in a couple hundred for expenses like groceries and gasoline, then divide that total by what you have left, and you have a pretty good idea how quickly you need to find a job.

Cut all the non-essentials. Quit eating out, buy generic products instead of name-brand, and do what you have to do to stretch what you have left.

Occasionally, my lunch was a package of Ramen noodles, half a can of fruit and half a can of mixed vegetables. Extreme? You bet. Fun? No way. But it helped keep me out of debt while I looked for work.

Search. Go to the library and get your hands on a copy of What Color is Your Parachute? The current year’s edition is always checked out. Don’t worry about it. Things change year to year, but that doesn’t mean the 2003 edition is worthless. The world doesn’t change that quickly. This book helps you find a job, but the more important thing it does is help you figure out what you should be doing. If your job isn’t worth having, trust me, Bill Lumbergh will notice it, and you’ll be on his list of jobs to cut. Lumbergh may not know anything about running a business, but he knows enough to keep the people who are happy to be there.

Interview. I called up everyone I knew who might know about a job opening somewhere that I would be qualified to do. I got my first job interview less than a week after I lost my old job. I lost the job on a Thursday, and I think I had an interview on Tuesday. I didn’t get the job, and I didn’t get one from the second place I interviewed with either, but they got me in the mode.

I will say one thing: If you get a second interview somewhere, don’t turn down an interview somewhere else. I quit looking for a couple of days because I thought I had a job in the bag. That didn’t pan out, and I lost valuable time and momentum. Interview at multiple jobs–you know they’re all interviewing multiple candidates, after all.

There are books that coach you on interviewing. Reading about interviewing is helpful, but frankly, a magazine article’s worth of advice on interviewing is all you need. Dress like you’re interviewing for the position of CEO, make sure you give a firm, warm handshake (visit the bathroom and wash your hands with hot water and dry vigorously just before the interview if you’re like me and you’re known for having cold hands), and be confident and personable. You don’t really need a 200-page book to tell you how to do that. Practice is what you need the most.

Trust me. From ages 16 to 25, I interviewed for exactly five jobs, and I got all five of them. At 25, I interviewed for another one and didn’t get it, but the guy interviewing me had his mind made up that he wanted a C++ programmer, something I’ve never pretended to be, so I didn’t get that. I’m 2 for 6 since age 30–but given what was going on at those four companies that didn’t hire me, nobody would feel bad about being turned down by them.

Think twice about taking the first offer. I got my first job offer about five weeks after my layoff. The main interviewer told me during the interview that the company was in trouble. One of the guys with him didn’t like me from the start and I could tell. They offered me the job. I took it, for a variety of reasons. I was going stir crazy. I’d just gotten married and my wife wasn’t working either. It paid $6,000 a year more than I had been making, with less responsibility.

I had a bad feeling about it, but I was desperate. I took it. It might or might not have been the best decision. Five months later I was looking for a job again. It wasn’t anything personal, they were just out of work for me to do. Had I clicked better, they may or may not have tried harder to find work for me to do. I’ll never know.

My point is, if you have a bad feeling about it, talk it over before you say yes.

Find someone to talk to. When it’s been a couple of days since the phone last rang and you’re feeling down about the situation, find someone to talk to. Talk to a trusted friend in the same job field. Talk it over with your SO. Talk it over with family members.

If you can’t do that, or you need more, there are other places to turn. The State of Missouri happens to have a career center within walking distance of my house. Had I not gotten my current job when I did, I probably would have gone there the next week. I would imagine every state has that type of resource–employed workers are good for the state, and unemployed workers are bad for it, after all.

Barring that, find a church. Seriously–even if that’s the last place you’d ever go for any reason. Walk in and tell whoever’s there that you just lost your job and you don’t know what to do next. Tell ’em you’re not asking for money, you just need some idea what to do next. A large percentage of pastors today weren’t always pastors, so they’ve dealt with being in the workforce and the issues that go along with it. And pastors in some denominations can be dismissed from their church with little or no notice, so some pastors live with less job security than everyone else is used to having.

Take a chance. While I was trying to find work, I also prowled the library, looking for books about business, trying to come up with a business to start.

I didn’t find a lot of viable ideas. There are better books out today than there were a year ago, but even those aren’t perfect. I probably had a dozen ideas. I actually tried three. The third one–the one that seemed like the longest shot–was the one that worked.

What that business was doesn’t matter. What matters is finding something with low overhead that you can do better than anyone else–something that matches your skills and interests.

My wife was the key on this. For the most part her strengths are where I’m weak, and vice-versa, so we cover each other’s weaknesses. I’ve always suspected I’d be good at selling a product I believed in, and it seems I was right. And as it turns out, my wife is good at it too.

She kept the business going after I went back to work. I help out on Saturdays and on the occasional evening. Some months she makes more money doing this than I made at the job I lost in the first place.

Stay away from “network marketing” (a fancy word for pyramid schemes). You want to actually be in business for yourself. Look for some business books, and if you find places where the author is wrong, you’re on the right track. Think about things you like. If you like music, think about reselling vinyl records. If you like sports, think about reselling baseball cards. If you’re really good with computers and not an extreme introvert like me, go into business doing computer service.

If you happen to be outgoing, you really have it made. The secret of the most successful sellers of vintage Lionel and similar trains is that they talk to everyone about it–they literally hand out their business card to the other people standing in line at the grocery store and say, “If you’ve got old trains or if any of your neighbors do, I’ll buy them. If you refer anyone to me, I’ll give you a commission.” I would imagine the same trick would work a whole lot better for computer service. These days, everyone has a computer, and nobody’s happy with how well it works. And people don’t look at you funny if you talk to them out of the blue about computers.

If I had enough nerve to talk to five strangers a day, I’d probably be a millionaire.

So starting a business might be a good way to go. You’ll probably need to find a regular job for a while, since many businesses are actually a drain on your resources for the first 18 months or so, but if you can find a job to keep you on your feet in the meantime, being in business for yourself could be the ultimate solution to dealing with a layoff.

How to get my job (2006 edition)

Dave Farquhar Personal , , , , , , , , , ,

It seems like every year or two, somebody asks me how to get my job. Given the way the last year or so has gone, I can’t believe anyone’s asking me that question, but it’s been coming back up again. I’ve made some mistakes in my career–obviously–but since I’m still in the field, I must have done a few things right too.

I guess it makes sense to trace my career and see what I would do differently.1984: Yes, it all started when I was 10. I’d wanted a computer for as long as I could remember, and that year, Mom and Dad finally bought one. I spent as much time messing with that old Commodore as I could. And when I wasn’t messing with that Commodore, I was reading about it. It was an obsession. It bordered on unhealthy. Or maybe it was unhealthy.

In high school, if you’d offered me a choice between a date with the best-looking girl in the school or a new Amiga 1200 or 3000, I might very well have taken the computer. Sure, I was interested in girls, but the computer wouldn’t break up with me, right?

I bring this up for one reason: If you’re wanting to get into the field for money, find something else to do. Go into sales or something. If you don’t absolutely love this stuff, you won’t last, so there’s no point in wasting your time.

1994: I started my career in sales. When polite company isn’t around, I say I whored myself out for a large consumer electronics chain. That might be a bit more accurate. In a way it was a good move. A lot of IT people my age started their careers the way I did. It’s better than fast food, at least in regards that IT recruiters use it as a scouting ground. Work there and do well, and it’s just a matter of time before recruiters will want to talk to you.

What I did right: I started filling in for the store’s technician, who frequently had problems showing up for work.

What I’d do differently: First, I’d find out who the best salesperson was, and really learn how to sell. I’ve worked with IT management people who couldn’t figure out how to make their computer play solitaire, but they know a little bit about selling, so their jobs are safe, even though they had no qualifications.

The other thing I’d do differently is to get A+ certification. It’s not strictly necessary to get a better job, but it opens more doors. A lot of jobs require A+ certification just because some idiot in HR (and yes, most of them are idiots) decided it’s a good idea.

1995: I caught a break because I knew both Macintosh and IBM hardware, I knew OS/2, and I had connections at the journalism school at the University of Missouri. A professor mentioned the job opening to me and handed me a phone number. After class I called the number. The guy on the other end asked me what I knew how to do. I told him, he told me he’d pay me $7 an hour, and asked when I could start.

It was supposed to be a temporary gig. But it turned out I knew how to do a lot more than just the grunt work that needed to be done, so they found money to keep me. And when I was about to graduate, they offered me a full-time job.

What I did right: I showed up for work, I did everything they asked me to do, and whenever somebody else was sick and they asked me to try to fill in, I filled in and actually managed to do a decent job.

What I’d do differently: It wasn’t a bad gig, until Yoko Ono came along. Actually she was from Pittsburgh and she was Scottish-American. But the relationship interfered with the job and the job interfered with the relationship. And when something went wrong with one, it messed up the other too. I’d have done well to learn how to separate the two. That’s a lot to ask of someone who’s 23. Now I’m 31 and don’t know how now either. Neither does my 40-year-old boss.

1998: I moved to St. Louis to take another job in IT. This was also the year I re-discovered God and religion. This was a dream job, working for my church. I took a demotion and a pay cut to do it. Of course I didn’t know until I’d already quit my other job that it was a demotion.

I’ll get off track if I talk about it much more than that, so let’s just talk about what went right and wrong.

What I did right: I racked up a lot of impressive statistics and I learned how to do everything they asked me to do. I usually wasn’t happy about it, but I always did as well or better than the person who replaced me. The guy I replaced was a legend and I don’t think anyone would have been able to replace him adequately.

What I did wrong: I shouldn’t have taken the demotion. Not at 23. If you’re married and have kids, I can see taking a demotion so you can work better hours to spend more time with your family. When you’re 23 and single, you can’t waste time climbing a ladder you already climbed once. A banker in Columbia offered me a job as a systems administrator when he found out I knew OS/2. I should have taken it and called St. Louis and told them I wasn’t coming.

This job really went downhill as another relationship was coming to an end too. No need to re-hash that.

I made one other mistake. I won’t elaborate on it. But if you see upper management doing something unethical, LEAVE.

2005: Mercenary time. My first contract was with a very large and very nearly bankrupt cable company. The work wasn’t nearly as interesting or challenging as my previous job, and my coworkers were at either extreme: Some were among the very best people I’d ever worked with, and some of them were just overgrown high school bullies. But it was work, and the pay was fair, which was nice after working for seven years at anywhere from $15,000-$20,000 less than I was worth. Making a double mortgage payment and still having more money left over at the end of the month than I’d had a year before was very nice.

What I did right: I came in, learned quickly, took things seriously, was very professional and very effective.

What I did wrong: I didn’t press in. I did what I was asked, and that was it. That’s what a hired gun does. And the result was I was treated like a hired gun. As soon as the money got tough, I was the first one out the door.

I had coworkers who didn’t want me to learn more about the system. Since they didn’t want to show me, I should have found another way to learn it. And I should have loosened up.

2006: I won’t tell you who I’m working for now, other than to say it’s someone you’ve definitely heard of.

This time, I made an effort to go to lunch with my coworkers. I didn’t do that at the cable company because I was trying to save money. I’d gone without enough money for a couple of months and was deathly afraid of having to do it again. I’m still a tightwad and everyone knows it, but I’m willing to spend $7 to bond with my coworkers once a week. The theory is it’s a lot harder to show the door to someone you like than to someone you barely know.

The other thing I did this time was to steal some responsibility. I volunteer for everything. Sometimes they end up giving it to someone else anyway. But I’m always willing. When people give me some of their old responsibilities, I take them, and I figure out how to do them faster and smarter. After about two months, now my boss is surprised when I do something his way.

My path isn’t the only path. There are two previous bosses I wouldn’t hesitate to work for again. One is a retired U.S. Marine. He went into the Marine Corps as a technician, fixing teletype machines. When teletypes became less important, he moved on to computers. When he retired, he kept on working for the military as a contractor.

Most of my coworkers today took a similar path. Some enjoyed very long careers as defense contractors after their military days came to an end.

That seems to me to be a good route to take if you don’t have a lot of connections. And the upside to the military approach is that you know your job won’t be outsourced to India. That’s a real danger and that danger is going to get a lot bigger before it gets any smaller.

The other previous boss has a degree in psychology. He started working with computers because he found them interesting. I don’t know how he got started in the field, but during the time I worked for him, he was the epitome of connections. He knew everybody, and whenever something goofy came up, he knew how to get in touch with them to get the answer. The result? He’s every bit as entrenched as a tenured professor would be. The difference is there’s no question as to whether that’s a good thing.

How to make more money, but more importantly, keep more of what you earn

Dave Farquhar Saving money , , , , , , , ,

Most GenXers don’t spend their money wisely.

That’s not an insult on my peers; there’s plenty of blame to go around. Yes, we want what our parents had at 50 and we want it at 25, but part of the problem is the images all around us tell us we have to have all that. And if my education is any indication, the only financial education I received in school was an aside in a U.S. History class.

Let’s talk about how to earn more to dig out of financial ruin, and how to stay out.First and foremost, usually when people get to the point where they start typing “earn more money now” or something similar into Google, usually they need immediate help. A year ago, I was in that situation. Talking it over with the higher-ups didn’t help–a few months later I lost my job. Ouch.

I’d be lying to you if I told you I wasn’t bitter. I still am. But in a way it was the best thing that could have happened to me, because it forced me to look for opportunities. I already had been, but it forced me to find others that I probably wouldn’t have, otherwise.

There are a few ways to make a little money but it won’t necessarily happen immediately. If you have a web site, put Google ads on it. Click my link to find out how. Whether you get your first check in a month or in a year depends on how much traffic you get. A faster way to make a little money is to sign up for some online surveys. You won’t get rich, but a dollar here and five bucks there adds up. Sometimes you’ll hit the jackpot and qualify for a $25 survey. That won’t pay the mortgage but it will pay for a few meals.

Here’s another idea: Become a mystery shopper. Google for it. But don’t pay anyone to become a mystery shopper, not when there are legitimate outfits who are willing to pay you. Just keep in mind some of them want references. That’s actually a good thing. It protects your reputation and theirs. Again, it’s not big money, but it’s fairly easy money.

But I’ll be blunt: If you’re in some real trouble and there’s a bill that’s due in two weeks and you can’t pay it, then it’s time to make some sacrifices. Do you have any recent video games? Any collectible CDs or DVDs or VHS tapes? Collectible toys, such as Star Wars figures? There are lots of places that are willing to buy things like that, but to get top dollar you have to sell it yourself. Search eBay, find out what your items or something similar are selling for, and think seriously about liquidating some stuff. Don’t sell your family heirlooms, but if there are things that you can sell now to get you out of trouble and replace later when you’re out of trouble, consider it. While collectibles do increase in value, I’ll let you in on a dirty little secret: Most of them are doing well to keep up with inflation. None will increase as quickly as your debt–not for a sustained period of time, at least. If you have something that is, sell now. The bubble will burst, and you’ll be able to buy it back cheaper later.

And something sobering will happen as you research what some of the things you own are worth. You’ll find a lot of them aren’t worth anywhere near what you paid for them. There’s a lesson there. It’s much better to spend your money on things that hold their value than on things that have bling factor but have no value once the 14-day return period is over.

So when you have money again, spend less on worthless things so you have more to spend on things that do hold their value. A big truck turns heads and lets you bully people on the road (and the ads to some degree encourage it) but can you really afford $40 a week to keep gas in it? Do you have to haul stuff often enough to justify that expense? For the majority of people, it’s much better to drive an economy car and put the money you save on the lower payment and less gas towards paying off debt. Borrow or rent a truck those occasional times when you need to haul something. So skip the Hummer and get a house. You need a house anyway, and while a Hummer will lose value when you go to sell it, a house usually will gain.

Let’s go back to the eBay thing for a minute. Ebay does a lot of good things. Once you’ve sold your stuff, you have the option to go buy more stuff to sell. Buy what you know and only what you know, and only if you can buy low and sell high. If you can’t either double your money or make $10, don’t bother. It’s best to find something that lets you do both. But if you have the ability to do that, you have an asset that stands a chance of turning your financial situation around within a few years.

But it also does something else. It teaches you how to sell. There is no better, more useful ability than how to sell. Not everyone sells merchandise for dollars, but everyone has to sell ideas. If you regularly find that people don’t listen to you, then that’s a good indication that you need more salesmanship ability. Yeah, but those people are idiots, you say. Even better. There are more idiots out there than smart people. Most rich people got rich by getting idiots to buy their junk.

I remember reading a line in a book once that asked me if I could make a better hamburger than McDonald’s. Of course I can. So why did Ray Kroc have more money than me?

By the way, I don’t mean any insult by any of this if people don’t listen to you. There are a lot of people who don’t listen to me either. I need to work on my sales skills as much as anyone.

I did something else before I started selling my stuff. I took a walk. I walked at least once a day. But I didn’t just walk. I was picking up aluminum cans. At 40 cents a pound, an aluminum can is worth about a penny. There’s no way I can pick up 100 cans in an hour, so it’s a lousy way to make money. But nobody else was paying me to do anything else during that time. I made sure I didn’t walk during working hours so I wouldn’t be out if the phone rang with a job opportunity. At least I felt like I was doing a little something. It was very little, but it kept my mind off things so I didn’t get as depressed. It also helped me watch for opportunity. Those cans aren’t worth anything, but the ability to quickly spot things of value from far off is worth something. It made a few house payments when I didn’t have a 40-hour-a-week job.

That’s enough talk about making money. I’ll admit that they’re just general ideas. I can’t give specific advice because something that works where I live might not work 100 miles away. Something else works there. The nice thing about the United States is that there always is an opportunity, no matter where you are. Although politicians seem to be trying their best to destroy that, they can’t destroy opportunities as quickly as you can find them.

I read a study this past week that said 70% of college graduates today can’t balance a checkbook, and when presented with a 20-ounce jar of spaghetti sauce for $1.99 and a 32-ounce jar for $2.49, they don’t know how to figure out which one is the better deal. That should scare some people.

But it occurred to me that I didn’t learn how to do that in school. I learned it from my mother. And I think she learned it from her mother, who must have known it because she managed to raise 11 kids and her husband didn’t have any money.

They don’t teach that kind of thing in school. To me, that’s the only thing math is good for. But I don’t know how old I was when I realized math was useful for that. Before that I thought math was just something teachers used to prove they knew something I didn’t.

There are lots of books out there that try to teach you how to make more money. But a more valuable skill is learning how to spot the good deal. Learn how to calculate the cost per ounce and use it. Carry a calculator with you if that’s what you have to do. There’s no shame in that. A calculator is also a useful tool for keeping a running total of the cost of the stuff in your cart. So it might be a good idea to carry two calculators. They’ll pay for themselves the first time you use them.

And if you have any influence with math teachers, please hand them this word problem. It’s the only good use of math I can think of for a non-engineer:

A television costs $199 at a store two miles from you. The sales tax rate in your town is 5.75%. The same television costs $179 at a store 100 miles away. The sales tax rate in that town is 6%. Your car gets 25 miles to the gallon. Gasoline costs $2.00 a gallon. Is it cheaper to buy the television at the store two miles away, or is it cheaper to buy it 100 miles away?

I’ll conclude with the secret of getting rich. The secret isn’t to make lots of money. It’s human nature to spend more money as soon as you make more money. The secret is to spend less.

I remember when the first of my college classmates bought a house. He told me that at the end of the paper, it told him how much money the loan was for, and how much money he would pay between then and the end of the term. “Am I really going to make that much money?” he asked. Then he laughed it off.

He will. So will I. So will everyone. Most people living in the United States will make a lot more than a million dollars between their first job and retirement. The question is whether Nike and General Motors and Phillip Morris and Coca-Cola get to keep most of it, or whether the wage-earner gets to keep most of it.

I really don’t like the tone of this rant–and it basically is a rant–because it sounds like someone who made it looking back. I’ve only started the journey myself. I started 14 months ago. But my wife and I already have something to show for it. We have no credit card debt, we own two 2002 Honda Civics outright, and if we can keep up our current pace, we will own our house outright in a little over three years. Five years is probably more realistic.

Remember, around 12 months ago there wasn’t enough money to pay the bills. So if I can do it, lots of people can.