Financial Life Preservers

Imagine a friend, caught in the rising tide, the shore getting smaller in the distance. They slip beneath the surface of the water, then spring back up gasping for air. It happens a few times, and then finally, they are overwhelmed.

This has become the state of many people's financial affairs in today's economy. People are literally drowning in debt, with financial freedom shrinking on the horizon. And rather than call out for help, they choose to let the waters take them.

It seems almost ironic to me that there are people I work and interact with daily who are struggling to get by yet take no positive steps to improve their situation. In particular, there is someone whom I have been speaking to about her future.

My friend, who we shall refer to as Kate, has told me a little about her financial challenges. The gist of it is that she's living check to check. I gave her some basic advice and then offered her my favorite book on turning your life around - The Wealthy Barber.

Kate has so far read only four chapters in the two or three weeks she's had my book. Which, unfortunately, tells me that she's not serious enough about taking her life back. Or, more specifically, she isn't willing to give up her lifestyle.

Now, to be fair, Kate makes very little money. In fact, she works a second job after she leaves her 9 to 5 just to keep up. But there is still room to maneuver, even on her budget. Did I mention that she wears very trendy clothes and owns a phone that is several hundred dollars? How about her fabulously manicured nails and perfect hair?

The problem, as I see it, is that people have developed the fast food mentality and are trying to apply it to every aspect of their lives. If they want something, they want it right now; tomorrow is too far away. Saving $20 per check just doesn't put the big numbers on the board fast enough for them.

What they fail to realize is that all of us who practice the live below your means (LBYM) philosophy started at that point. We got to where we are today one dollar at a time. It is merely through discipline and continued resolve that we have achieved more.

Unfortunately, my efforts thus far have been in vain. Kate is still living beyond her means and not planning for tomorrow. But I have not given up on her. I have thrown her the financial life preserver that can save her. The one that saved me. The one that can save all of you.

Credit Card Confession

Okay, I've been keeping a dirty secret from you all for a while now. But I think it's time I came clean. Here goes...

I'm an obsessive credit card bill payer! Don't laugh, it's true!

I think I must be the reason the credit card companies restrict monthly payments. Oh, didn't know about that? Yep, they actually won't accept more than one payment every three days. And if that wasn't horrid enough, they also cut me off after four payments in a single billing cycle! /dies

Okay, I know some of you think I'm exaggerating, but here are the dates of the last 90 days of payments from me.

4/27, 5/1, 5/19, 5/27, 6/16, 6/30, 7/9, 7/20, 7/27, 8/11, 8/19

The only reason there aren't more payments in that list is because my credit card company won't let me pay unless I have a non zero-balance, even if I KNOW there are charges that will hit within a day or two. Man, that one irks me.

Okay, so maybe I have a bit of an OCD thing going on there. :)

Revisiting Goals

It's very important to keep goals and track your progress. However, sometimes we forget to revisit and revise them.

In my case, I set a goal for a net worth I wished to achieve by the end of the year. Well, it looks like I'm about four months ahead of schedule. Rather than coast the rest of the way into the finish line, I'm gonna raise the bar some and see if I can make it.

While I'm at it, I am going to go ahead and update the entire list. So, here is my new set of goals for the remainder of 2006.

1. Create an encrypted backup of my financial data and put it in safety deposit box.
2. I'd like to get a simple will created.
3. Obtain duplicate copies of the last 5 years of tax returns.
4. I'd like to finish my MCSD to ensure better job security.
5. Explore at least one entreprenuerial idea with Chris.
6. Learn more about stock trading from my brother.
7. Talk to previous employers for letters of recommendation.

The Unthinkable!

Something crazy happened today. Something that I never thought could happen. Yes, I have finally run out of checks for the account I opened in 1996!!!

Now, to be fair, they gave me an initial batch of probably 200 checks. And then at some point, they randomly gave me another batch without my asking. Which, given my habit of writing only 1 or 2 checks a month, seems like it'd last an eternity.

Alas, the fountain hath dried up. I have to bite the bullet tomorrow and call the bank to order checks. Hopefully they have a reasonable price. Either way, I have a plan.

See, about two months ago, I noticed a random $20 charge against my account labeled "safety deposit fee". Interesting, given that I don't even have a safety deposit box. Turns out, they billed my account for my mother's safety deposit box.

The reason for that is because since I went away to college, my mom needed a way to easily transfer money to me. That way was the very checking account I still use today. And she is still listed on the account today as a joint owner.

Now, you might ask why I felt this was important enough to share with you. Well, the reason is because my mother is a senior citizen. She gets free checks for all her other accounts. So, while my account is a different type of account, it may be possible for me to get some free checks. I'm not gonna get my hopes up too high, but it's worth a shot!

Cutting Costs

This month I decided to do something I haven't done in several years. I decided to start bringing my lunch to work.

Now, I know this is mostly a no brainer for many of you super budgeters out there, but for me this was a tough one. I figure I cut a lot of corners in life, and having a fresh cooked meal for lunch was a reasonbly splurge. However, when you start having two ATM withdrawals for $40 in a single week, you realize that it's gotten out of hand.

So, I did something about it. I bought some new plastic dishes to store my food in, and hit up the grocery store to buy lunch type items. My dishes cost me about $10, but they have cool compartments in them to separate my food so I don't go through ziploc bags all the time. I also reuse the plastic bags my groceries come in to tote my food to work and back.

I've only been doing this for about two weeks, but I've already noticed a difference in my checking account. Mainly, it stopped going down for no reason at all! Unfortunately, I'm not quite disciplined enough to track the success of my change down to the dollar, but I estimate that I'm saving upwards of $30 per week.

Wedding Extravagances

Okay, it's no secret I think expensive weddings are a pointless waste of money. But this one takes the cake.

Now, it's their right to waste the money however they see fit, but this is just sheer stupidity. If you have so much money that you can afford to throw it away, try giving it someone who needs it instead.

Increasing your income

Increasing your income is perceived to be a hard thing. Your salary is usually the primary source of income, and employer's don't like to give out raises just so we can all fatten up our bank accounts. So how can you speed up your accumulation of wealth without a raise?

The good news is there are lots of opportunities out there for enterprising people. One of them is taking advantage of free money. There are many sources of it, which is great because not everyone will be comfortable with all of them. So here is a list of things I've done so far:

• Take advantage of store promotions. This netted me $20 in free gas.


• Find out what deals and coupons you can get from your company. This saved me $150 in groceries.


• Open accounts and earn free gifts. I scored $50 on this promotion. I got another $200 from opening credit cards.


• Use a balance transfer to earn interest. I make about $60 a month off this.


• Cash those checks from your CC that auto-enroll you in their credit protection program then cancel a month later for no cost. I've made $20 on this not long ago.

For those of you who don't like doing the promotion deals, or just can't seem to find them, you still have options. I started doing side gigs late last year just to pad my resume. I never thought it'd bring in any significant amount of money, but boy was I wrong.

So far this year, I've made a decent amount contracting, and I've got an invoice that I'm submitting next week for another payment. My only regret is that I didn't start doing this sooner!

How about you? Are there things you could be doing right now to increase your income? And if there are, why haven't you done them yet?

Net Worth - July 2006

Here are the numbers for last month, which represent a 36.8% increase in my net worth:

I started my 401k this month. This is the first month I've been eligible under my new employer, so the balance is not that impressive yet.

I invested more into my mutual funds account this month, but overall I'm still in the red. Just for reference, I've contributed quite a bit to that account so far, which puts it down by about 3.3% since mid May. I'm hoping for this to bounce back into the black by the end of the year.

I also picked up some more stock last month, which increased the balance on my brokerage account. My stock holdings are both up so far, which is nice after the disappointing performance of the mutual funds.

Liabilities continue to decrease. Also you can see I made another payment on the 0% balance transfer that I'm doing. I'll pay that in full early next year.

Overall, a pretty good month. Next month will be a little challenging though, as I need to pay for GF's tuition. And September will also bring some challenges as I'm going on vacation that month.