Sorry for the lack of posts recently. We are currently working some things out, but the blog will be back soon with new posts.
-Tye
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In this CNN Money article, Treasury Secretary Timothy Geithner is quoted as saying that the economy has been showing signs of revitalization the past few months. I definitely agree with him, but I feel that there will be a lag between when the economy has truly recovered and when we realize that it has recovered, just as it was when we slipped into a recession. I really do hope that things pick up and the unemployment situation improves, because I hate seeing the news stories about 800 people lining up to apply for three positions at some minimum wage job. It’s absolutely sickening.  photo by flickr user melanzane1013 There are many aspects to personal finance, and improving ones financial life. Two of the biggest contributors to your financial health are your income and your expenses. The key is to increase one while decreasing the other. Specifically, you should increase the income while decreasing the expenses. This tip is a doozy because it works both ways. It should increase your income while decreasing your expenses or at least not increasing them. I’ll start with the library. Public Library SystemThe quality of your public library system really depends on where you live, and I really hope it’s a good one. Where I live we have an excellent library system and I am completely spoiled by it. If you live in a similar area, then you are given the chance to severely reduce your book buying budget. From comic books, popular novels, and science fiction novels to cooking books and programming guides, you can find almost anything at your library. I am an avid reader, and my tastes vary wildly, so I love being able to run down to the library and pick up the latest Malcolm Gladwell novel (Outliers, it’s excellent by the way) or even a classic science fiction novel like Dune by Frank Herbert. My wife is currently attending business school, and there are some books that she needs for class that she might not want to keep after she graduates. Instead of purchasing them for hundreds of dollars, she checks them out from the library and has access to them for the entire semester. Another benefit to the library is that you can use it to learn almost anything. You can study language, web development, or even project management. By devoting yourself to studying something new, you can attempt to start a new career, or get promoted in your current career to start bringing home some extra cash. The library is a wonderful resource for those of us that are interested in improving ourselves through self-study, and you really should take better advantage of it if you are able. iTunes UiTunes U is a fantastic service that Apple has started in the iTunes Music Store that allows anyone to download lectures from many of the top universities in the world including Stanford and MIT. I have even been able to find the same courses that my wife is taking in business school for free on the iTunes Music Store. Many of the courses include a video or audio podcast and lecture notes. This is a free resource that you should not pass up. You can learn anything from business to web development from the best professors in the world. Head over to Apple to view a guided tour of iTunes U.  photo by Gio JL Hello blog readers! Tonight I made a very tasty pizza from scratch and a light bulb went off in my head. If every time you craved pizza, you made your own, you would save SO MUCH MONEY! I’ll work through the dollars and cents of the pizza making proposition first and then I’ll get into the recipe. Domino’s and Papa John’s are Brilliant!Pizza is a very tasty snack/junk food that is wildly popular across the US. Probably because you can call someone and have them deliver it to you so you barely even have to get off your computer or stop playing WoW. The reason the pizza chains are brilliant is because Pizza is made from extremely cheap ingredients. It’s mostly flour and tomato sauce, with some cheese and other various ingredients. I think that my Pizza, which could easily feed 3 to 4 people, probably cost me less than $2 for the cheese, sauce, and dough. Then for probably another $1 to $1.50 for the rest of the ingredients (all veggies on my pizza!). So, we’re looking at a large pizza for only $3.50. Craziness! Not to mention that I would pick my pizza in a taste test with any of the pizza delivery chains. Now, here is the craziest part; it doesn’t take very long to make from start to finish. My wife and I threw a pizza together in about 45 minutes to an hour, and we could probably get the time down to 30 minutes if we were more efficient. So, it only took slightly longer to make than ordering delivery, it tasted better, and it’s 3 to 4 times cheaper. Seriously folks, I’m not making this up. If you’re planning to feed 30 people, you should probably still order delivery because I don’t think anyone’s kitchen can handle making that many pizzas, but if you want to have 3 or 4 people over for a vigorous round of Wii Sports - don’t be afraid to bake a pizza to feed everyone. Now, the sticky part. Making the pizza. I took my pizza recipe from the Real Mom Kitchen blog. Beware the country music! :0
To make the pizza sauce, I just bought a can of tomato sauce for 35ยข and then added rosemary, oregano, pepper, garlic, and salt to make it more delicious. For the ingredients just get some veggies and mozerella and spread it on the pizza. Bake for 15 minutes and enjoy! You’ll thank me later.
Wow, I never thought I’d be so happy to see the DJIA at 8,000. Well, technically the Dow is just below 8,000 at 7,978, but it was definitely above 8,000 for most of today. I don’t know if this is a sign of things to come, or just a statistical annomaly, but I am definitely excited for a big comeback in a lot of my mutual funds. I’ll leave you with these stories: US Stocks Surge via the WSJ A lot of people wonder how they should invest for retirement. Well, for me I like to keep it simple. I follow a pretty strict, but easy to remember formula. The first money that I invest for my retirement is money that will be matched by my employer in my 401k. For example, my employer will match me 50 cents on the dollar up to 6% of my income, so I invest 6% of my income into my 401k. After the 401k, I invest in a Roth IRA account. If you are young, or at least 5 or 10 years from retirement, you should invest in a Roth IRA instead of a Traditional IRA. If you are getting close to retirement, then I would recommend that you invest your money in a Traditional IRA to receive the tax benefits during the year in which you invest. Now that you have fully invested in your Roth or Traditional IRA account you have a choice. You can continue investing in your 401k or you can start investing in non tax advantaged accounts. That is useful if you are investing money that you plan to use before you are 59 1/2 years old. After you have maxed out both your Roth IRA and your 401k, your next tax-advantage investment method is to add money to a Health Savings Account (HSA). If your employer does not offer one of these health plans, then you should ask them to include it the next time you are eligible to change your benefits. HSA health plans are fantastic as they are much cheaper than a traditional HMO or PPO, and they allow you to invest money in a tax-deffered account that is available for paying off medical expenses. When you turn 59 1/2 I believe you can begin taking distributions from your HSA without having to spend the money on medical expenses. Once you have maxed out all these avenues of investment you should take a moment to congratulate yourself because you are saving a TON of money. At that point you probably owe it to yourself to contact a financial planner that can give you a much better handle on all the money you need to invest than you’ll ever get from reading my blog.  photo by thetruthabout... Interest rates are at historic lows right now. If it wasn’t for the market tanking, it would be the absolute perfect time to purchase a new home. In fact, if you have a long enough time frame for owning your home - it may be the perfect time to buy anyway. That said, for those of us that have already purchased a home, now is definitely the perfect time to refinance. Now, here is the real dilemma: “do you pay the closing costs associated with refinancing or do you get a “no-cost” refinancing?” To help with the decision, I’m going to break down the values based on my home and the quotes that I received for cost and no-cost refinancing. The no-cost option costs us approximately half a percentage point more on our mortgage rate than the cost refinancing plan. The estimated closing costs that I received from our broker were approximately $4,000. This is our situation: Current Rate: 6.125% A lot of mortgage brokers told us that it would be worth it to do the “for cost” refinancing versus the no-cost refinance because we would pay off the difference in a year. Don’t be fooled by this. What they are talking about is the difference between what we pay now and what we would pay with the new rate. My calculations have determined that the pay-back period on a “for cost” mortgage vs. a no-cost mortgage is more than three years. In the chart below, you can see the costs associated with each type of refinancing plan. The “cost” refinancing plan has a high initial cost of $4,000, but that is it. The no-cost refinancing has an inherent cost in that it is more expensive per-month than the cost refinancing plan. I have charted these two costs in the following graphic.  The Cost of Refinancing As you can see from the graph, it takes a little over 3 years for the no-cost refinancing plan to cost more than the “cost” financing plan. However, if you take into account the fact that we can invest the $4000 we would have spent on refinancing, then the break even point is pushed even further down the road - it takes more than 4 years for the two plans to intersect on the chart. For my wife and I, we’re not exactly sure where we will be in 3 years. We might not even live in this area anymore. It’s true, that if we end up staying in this house for the next 10 years then it would have been cheaper to pay for our refinancing up front, but if rates remain low we can always refinance the home again sometime in the future. What is really interesting to look at is the cost of not refinancing. If we were to just keep our mortgage the way it is now, we would end up spending almost $12,000 more in 4 years than by refinancing. Take a look at the next chart.  Versus Original Mortgage The $12,000 difference between not refinancing and doing a no-cost refinance is essentially the price of a decent used car. So, essentially we could buy a car every four years with just the money that we are saving on our mortgage, AWESOME! If you think you can qualify for refinancing your home, then I strongly urge you to give it a shot. It might not cost you a dime if you do the no-cost option. If you aren’t struggling with your mortgage, and you want to refinance, you could continue to pay the same amount on your mortgage as you did before and you’ll have your home paid off YEARS before the amortization tables say you will. Employee Stock Purchase Plans (ESPP) are set up by employers to allow their employees to buy shares of the employers stock. Usually this is accompanied by a discount on the stock or by the employer matching a certain percentage of the shares that the employee purchased. I am not a huge fan of owning single stocks, and I am definitely not a fan of owning stock in the company you work for. If there is anything Enron and Worldcom taught us, it’s that you shouldn’t invest too heavily in the company you work for. Despite my trepidations about owning individual stocks, I do like the employee stock purchase plan because of the match/discount. My wife and I are using her company’s purchase plan to save up enough cash to pay off the second mortgage on our house. While this works for us, it’s not foolproof. The stock market, as you well know, has been in free fall recently and it hurts when the stock drops in value. But that comes with the territory when you invest in individual stocks. During normal markets I think an ESPP makes a lot of financial sense, and it probably makes sense to start yours now since your company stock is probably close to the bottom, but make sure you feel comfortable with this investment before you decide to jump in. Here are some links to other articles on the net about ESPPs.
As with all investment decisions, you should feel comfortable before making the leap and you should always do your research before making any decisions.
I finally completed the DIY HDTV Antenna that I blogged about here. The results were okay, nothing outstanding, and they were not superior to the HDTV antenna that I had already purchased. It was a fun experiment and I recommend it to anyone that wants to try. Don’t get me wrong, the antenna worked, but it just wasn’t quite as powerful as I had hoped. I’m not in an ideal situation as far as antenna placement goes and I would probably get much better reception if I could figure out a way to get it into the attic. That is probably a DIY project for another day.
If you are a hardcore gamer who loves to play online games with others, then here are a few recommendations for free online first person shooter games available for Mac and PC. Quake Live - Available only for PC right now, but the developers are big fans of the Mac and promise Mac and Linux compatible versions of the website soon. Quake Live lets you play a game similar to Quake III Arena, but you play it in your browser. I have tried it and the service works great. They’ve also implemented some social networking features into the website. Battlefield Heroes - This website is currently in beta, but I am eagerly anticipating it’s release. This one is also PC only, but hopefully they will port it to the Mac soon. Check their website often to see if you’ve gotten into the beta. I still haven’t heard from them, but I hope they let me in soon. Instant Action - Instant Action is yet another browser based gaming website that has three or four different games available. I have tried a few of them, and their most popular one is similar to a shooter game called Tribes. All three of the websites mentioned so far require the user to install a small plug-in for their web browser in order to play the games. Desktop Tower Defense - Amazing flash game. I absolutely love this game and have spent literally hours playing it at a time. It’s perfect for those that are strategy fans, and a great little time waster. Urban Terror - This is the first downloadable game I’ve mentioned, but it is absolutely free. It’s a modification of the Quake III engine set in a more realistic world. My friends and I will play this game from time to time and I’m pretty sure it has a big following online. If you don’t like any of these games that I’ve suggested, you can always try this.
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