Wednesday, September 21, 2016

The Facebook Challenge


For some reason, it’s taboo in our society to talk about how much money you have. I do understand the desire for privacy and safety, but I don’t fully understand the reluctance to discuss finances. While I wouldn’t want to tell people “I’ve got $100,000 in small bills hidden under my mattress and, by the way, I’m going out of town next week,” I don’t see the harm in saying “I’ve got $100,000 saved in my brokerage account for retirement.”

This taboo against talking about money just causes problems. If you can’t discuss finances with others, how do you learn? You can't. How do you know what you are doing wrong and what you are doing right? You don’t. So our society continues on with most people living paycheck to paycheck, barely making ends meet, just one small disaster away from financial collapse.

Forty six percent of Americans can not handle a $400 emergency expense. Almost half of all Americans! That’s a recipe for disaster. You WILL face an emergency expense at some point. Life happens. You have to be prepared for it.

Americans don’t like talking about money, but they sure love to curate their life. (That's a fancy way of saying they love showing off.) Facebook is filled with pictures of the new car your friend bought, or the new house your sister bought. Your friend from eighth grade just posted a picture of the $200 sneakers he bought his seven year old son. Who's that standing in front of the Great Pyramid Of Giza? Oh, it’s your old roommate from college who was always late with his half of the rent!

Add to this the relentless messaging from advertisers that tell you that you must spend money in order to be happy and you can see why people are living paycheck to paycheck. The forces urging you to keep up with the Joneses are everywhere.

No one on Facebook posts a picture of the $5,700 credit card bill they got in the mail yesterday. No one posts photos of the depressingly small balance in their 401(k) or their kid’s college saving account. Social media lets us present ourselves to our friends as we wish to be seen – successful, happy, and well-off. We share photos of the $300 meal we had for our special night out but we don’t post a photo of the actual bill. We share the fun times. We don’t share the times life sucks.

All those carefully selected images give us a skewed view of how life really is and that results in a yuge amount of peer pressure to try to live that fantasy life. We can’t help but think that if we aren’t living in a similar fashion, we must be doing something wrong.

Stop it.

Let’s harness that peer pressure for something good. Let’s take away the stigma of talking about money or being in debt. Let’s discuss our finances amongst our friends and learn from each other. Let’s all help each other improve our financial lives.

I’m going to issue you all a challenge:

Post your net worth on Facebook.

Did you just wet your pants? Maybe a little? Sure you did. Here:

Too little, too late

This is a scary thought. Display your crappy financial situation for everyone to see? WTF! No way!

I admit, I had the same thoughts when I first contemplated posting my net worth on this blog. Ultimately, I decide to face my fears and go through with it anyway. For me, the issue wasn’t so much shame – after all, our net worth is pretty high and we’re definitely in better financial shape than the majority of Americans. My battle was against the stigma of talking about finances. If our net worth was really low, or even negative, in addition to fighting that stigma, I would have also had to face the additional fear of being embarrassed. Those two fears are probably too much for some people to overcome.

Let’s change that. We’ve all screwed up. We’ve all done stupid things and have gotten in over our heads. Tell your friends about it. Post your net worth.

We need some rules, though, so here's some suggestions:

Be smart in what you share. Don’t share personally identifiable information. Don’t post your social security number or your credit card number. Remember Facebook may share your address and phone number with friends if you’ve allowed it to, so don’t list “$10,000 cash under the sofa cushions in the living room” on your net worth statement unless you want your house broken into.

No judging. Posting financial details is scary. You're exposing a vulnerability and that requires a huge leap of faith that those you are sharing with won't abuse it. We’re here to help fix problems, not critique lifestyles.

Be helpful, not hurtful. Everyone’s situation is different. Everyone has different priorities. There’s more than one way to do things. You'd do well to keep in mind Star Trek’s philosophy of IDIC: Infinite diversity in infinite combinations.

Look forward, not back. What’s done is done. Let’s concentrate on how to improve things, not how messed up things were in the past.

Offer constructive advice or encouragement. Build up, don’t tear down. Specific steps to take going forward are more useful than theoretical ideas.

No jealousy or panhandling allowed. Don’t ask people in a better financial situation than you for loans or handouts. It puts the person you are asking in an awkward position and increases the odds of hurt feelings if you don't get the reply you want. You are the captain of your destiny. Accept that responsibility. When you finally reach your goal, you’ll appreciate the accomplishment that much more for achieving it all on your own. Ask for advice, not money.

Show respect. For each other and for each other’s choices.

Use Facebook’s privacy settings. If you don’t want to entire world to know your net worth just yet, change the settings on your post so that only your friends can see it. Or friends and friends of friends. Whatever.

How do you get started?

If you don’t know how to calculate your net worth, it’s not hard. Add up the value of all your stuff – house, car, bank accounts, 401(k), etc. For simplicity, don’t include small stuff like your stereo. If it’s worth less than $500, ignore it. These are your assets.

Add up all of your outstanding bills – mortgage, credit card balances, student loans, etc. Include everything you owe money on. These are your liabilities.

Your net worth equals your assets minus your liabilities. Figuring out all these numbers might take a little bit of work, but then, anything worthwhile usually takes a little bit of work. (Mint.com is a great site that does this calculation automatically for you after a one time step of setting up everything. I use it and recommend it.)

You want your net worth to be a positive number. You also want it to be as big as possible. In fact, that is your goal – to increase this number every month.

Post your number to Facebook. You can post just a number or you can post your breakdown of assets versus liabilities. Whatever you want. But post something.

This does two things:

  1. By posting this on a regular basis, you become accountable for it. You’ve now got people watching your progress, so you’re more likely to succeed. This is the concept behind Weight Watchers. This is peer pressure for the common good.
  2. You can see others aren’t so different from you. Everyone fucks up. Everyone can make it better. Life is not always vacations and $200 sneakers. Life is sometimes delaying gratification so you can retire a bit earlier and not have to work until you are 75 years old.
I’ve thrown down the gauntlet. Let’s stop the silence and shame of financial illiteracy. Are you with me?






P.S. I can’t say this idea was all mine. I first read about it from Kurt at MyMoneyCounselor and I’m sure others before him have suggested the same.

Wednesday, September 14, 2016

Tesla Showroom and Service Center Now Open In Tempe


My wife called me the other day to tell me that she saw a new Tesla building open on her drive to work. She had seen the work going on for a couple weeks, but today she saw 10 foot letters spelling out "TESLA" being delivered. A quick bit of Googling and I discovered the building is going to be a combination showroom and service center. It's also where Tesla ships cars for delivery to local purchasers.

This makes the third Tesla showroom in the state. I'm also pleased with the location. The other ones are both in Scottsdale and this new one in Tempe is about half the distance from my home as those. The site is very close to Arizona State University and I wonder if that was a factor in the decision to locate there. ASU has a very large renewable energy project and they have covered almost all their parking structures and many buildings with solar panels. The Tesla building doesn't say it will be a development site, but I wonder if any kind of joint venture between Tesla and ASU might come about due to their close proximity.

We took a trip there last weekend and checked out the Model S and Model X they had in the showroom. Very nice. Then.. I took a Model S for a test drive.

Damn.

That is one nice car!  I got on the freeway and tested out the autopilot feature. It's amazing. And I tested a bit of the famous acceleration as I pulled onto the freeway. I couldn't get the full effect because within a second, we had caught up  to the car in front of us.

I must have one of these!

We posted about the test drive on Facebook and one of my wife's friends said she drove one also and asked "Why aren't all cars made like this?" Indeed.

My biggest complaint with Tesla is that they keep coming out with newer models with higher prices faster than I can save the money for them!

Wednesday, September 7, 2016

Create Your Own Board Of Directors


Very few businesses succeed entirely on based on the skills of their CEO. While the CEO might set the vision for a company, she likely doesn’t know everything there is to know about how to execute that vision. That’s where the Board Of Directors comes in. The Board of Directors is a group of people who advise the CEO, evaluate her performance, and generally provide support and guidance to the company. They typically have experience and knowledge the CEO does not have. They may or may not work directly for the company, but they have a vested interest in helping the company succeed.

You are the CEO of your life. You are the one steering your financial ship through the often choppy fiscal seas. Why not create your own board of directors to help you? Take advantage of the experience and knowledge of others.

Who Should Be Board Members of You, Inc.?

Your board members should be people whose advice you can trust and people who are invested in you personally and professionally.

Your spouse or partner is probably a good choice, provided you are both trying to improve your finances.

Any relatives you have who are successful at business or finance would be good choices.

Your neighbor who drives a Mercedes, doesn’t contribute to his 401(k) at work, and maxes out his credit cards? Not so much.

A financial advisor? Maybe. If they are solely fee-based and will act as your fiduciary (and will put that in writing), sure. A commission-based advisor who might steer you towards products that make the most money for him but might might not be right for you? Nope.

Your Board of Directors should be made up of people you try to emulate or who you look up to. People who are strong in areas where you are weak. Also, they should be people you can trust with the details of your financial life.

Their purpose is to provide guidance and support to you and your financial decisions. Not sure if buying that new car is a smart move? Run it by a couple of them and see what they think. Trying to decide which of two different loans would be the best for you? Ask a board member! Want someone to review the progress of your financial journey and make sure you are on the right path? Ask your board for an evaluation.

Your board of directors doesn’t have to be a formal thing. It can just be a group of mentors you occasionally seek advice from. You don’t have to gather all of them together for a big meeting or put anything up for a vote. If fact, you don’t even have to tell them they are on your board! (Although personally, I think it might be fun to go all in and tell everyone what you are doing and have monthly or quarterly meetings, maybe over a pizza or two.)

Regardless of how you implement it, manage your life like a CEO and create a board of directors to help you succeed!

Wednesday, August 31, 2016

Goal Update: End of August 2016

At the end of each month, I post an update of my goals, including a brief discussion of any notable events that might have occurred during the month. The latest month's figures can always be found under the Featured menu in the menu bar at the top of the blog.

Last updated: End of August, 2016
Current value: $25,001
Change from last month: +$174
Percent of Goal:  22.99%




Note that the funds in this account are invested in stock, so there will be fluctuations in value that are outside my control. I never withdraw money from this account, so any dips are purely due to stock price changes.

Events Of Note Last Month:

I squeaked past $25,000! That means I've unlocked another achievement!


Income this month from my online courses was $285. My hard money loan generated $133.33 in income. Those two things alone should have pushed over $25,000 with a couple hundred dollars to spare, but my stock account declined a bit, so that canceled out some of these gains.

As I thought they would back in June, Udemy has once more changed their pricing model. The model they tried to go with was a maximum price of $50 and a maximum discount of 50%. This was a big reduction in overall prices and a much lower cap on allowed discounts. However, even though the total cost to students was lower under this new pricing model, I saw my profits drop and I'm sure the company saw theirs drop as well. I think there were two issues here, both of which involve the irrational thought processes of shopping humans: 1) people prefer getting big discounts off a higher price, even if a small discount off a lower price gives them a lower overall cost and 2) a lower cost for a course implies the course might not be of high quality.

The new pricing model, which went into effect August 22, now allows a new maximum price of $200 and maximum discount of 75%. I've increased my prices and we'll see how things work out. I can tell the company is really anxious to get course prices raised again - they've sent me no less than 6 emails in a week reminding me to increase my prices.

This month I also won $20 in a drawing at work for filling out a survey about car pooling. Thanks to friend Pam Moore, bassist for The Neptunas and Cheap Chick, for reminding me to add this into the Tesla fund as well!

Pamita, back in the muumuu days

I also received $2.30 in ebook royalties. My birthday was in August and I threw $50 I received as gifts into the Tesla account.

Realty Income (O) stock dropped from the crazy highs of last month and I took the opportunity to buy some more shares with the cash I had accumulated. I picked some up at $66.56 a share. With their dividend of $2.418 per share, that gives me a yield of 3.63%. I look for a minimum of 3.5%, so this is good.

You Really DO Love Me!

I also am very happy to be able to say that this blog was mentioned on J. Money's Rockstar Finance blog a couple weeks ago. He featured my post "Are You Good At Ignoring People? You'll Probably Be Good At Investing." It's been a longtime goal of mine to get featured on his site, which highlights three "awesome money articles" each day. I'm honored to be chosen! (And coming one day before my birthday, this was an awesome present!) After you're done here, check out his blog, Budgets Are Sexy. I read it regularly.


Net Worth Update

Our net worth continues to grow, increasing by $11,346 from last month to a new total of $703,325.


July 2016August 2016
Note: Mint.com categorizes our HELOC as a credit card debt, not a loan, hence the apparently high credit card balance.







Once again, the big increase in our net worth was due to Zillow's estimate of the value of our house increasing. I won't argue with it, but the huge gain is not really from anything I did this month, so I don't really deserve any credit.

If you have any questions or suggestions for topics, please drop me a line!