Wednesday, July 27, 2016

How To Go Paperless

Back in 2010, I decided to go paperless in as many areas of my life as possible. At the time, I was investing in real estate and buying and selling properties generates a huge amount of paperwork. Even excluding those documents, the amount of paperwork in my life was astounding. I had a 4 drawer filing cabinet in my office closet that was full of receipts, utility bills, cancelled checks, and who knows what else. I also had another two drawer filing cabinet in the office itself that was about half full and getting fuller. If I needed to find something, I had to dig out the relevant folder and, page by page, go through all the documents looking for the particular one I needed. It was time consuming.

Keep Or Shred?

I already owned a combination printer / scanner, so I made a decision to scan all my documents and shred the originals. The project took weeks. In the process, I found a bunch of stuff I knew I didn’t need to keep – things like 3 year old phone bills and 5 year old cancelled checks. But there were also things I felt I should keep – old tax returns, for one. As I plowed through my filing cabinets, I had to make a decision for each document – keep or shred?

How Do I Organize All This Stuff?

Once I had that decision made, I had another dilemma: how should I organize all these documents on my computer? After much thinking, I decided to break down my digital archives into two main categories: documents to keep forever and documents to keep for a year (a rolling 12 month window). Things like brokerage and 401(k) statements I would keep forever. (I have been involved in some class action lawsuits regarding stock purchases made years ago, so I felt I should keep all my old brokerage statements.) Things like utility bills, bank statements, and credit card statements, I would keep only the previous 12 months’ worth. That led me to come up with the below directory structure:

A file naming convention was the next logical step to make. How could I name things that made it easy to determine what the document was and when it was from? I settled on naming documents with the following format: Source-N-Description-YYYYMMDD. Source would be the name of the company the document was from. N would be a character indicating who the document applied to. I use "S" for myself, "M" for my wife, "H" for my daughter. For items that apply to both my wife and myself, such as joint accounts, I use "J," for Joint. Description is a short description detailing the document, such as "Statement" or "Invoice." Finally, YYYYMMDD would indicate the document date. (This date format allows items to be in chronological order when the files are sorted by name.) For monthly items, I omit the DD portion.

For example, my April joint checking account statement would be named BofA-J-Checking Statement-201604.PDF. An explanation of benefits statement from my insurance company for a doctor’s visit would be named Cigna-S-Smith-20160512.PDF. From the name, I can tell the document is from my insurance company and is regarding a visit I made to Dr. Smith on May 12, 2016.

I’ve been using this method for 6 years so far and it’s worked out incredibly well.

Searching Woes

Of course, one of the big benefits to having your documents in electronic form is the ability to search them with your computer.  Looking for all brokerage statements that show you owned Cisco stock? Just open up Windows Explorer and type CSCO in the search box. Theoretically.

There are two issues here. First, most of the documents you get when you sign up for paperless billing with be .PDF files. Windows may not be able to index these files natively. You need to install a search filter so Windows can read the PDF files and index the content. A great guide on how to do this can be found here.

But another issue looms. When you scan documents yourself, what you are actually doing is taking a photograph of your document. Even if you save it to a PDF file, it’s still basically a photo wrapped in a PDF box. There is no text for Windows to index, which means you cannot search it. If you get a PDF file from a company via their paperless billing option, this will not be the case because the document is generated from the source directly into a PDF file, retaining all the text as text within the file. Remember that pile of old documents you have to scan? Not searchable. (It is possible to use optical character recognition (OCR) software to translate the images into text, but I’ve found those programs to have a poor success rate.) So what can you do?

A Helpful Tip

Rather than just start scanning everything you’ve got, first log on to a company’s website and see if they have any of your documents archived in electronic form. Even though you may not have signed up for paperless billing until recently, they still might have older documents available electronically. For instance, when I checked my Schwab account, they had electronic copies of my documents going back at least 5 years, even though I had not gone paperless until 1 or 2 months prior. Download as many as you can. This will save you hours of time scanning old documents and will also allow those documents to be searchable within Windows.

The Tools I Use

I’ve had great success with a shareware program called ScanToPDF. I use the basic version, which costs $25. The Standard Edition costs $49 and says it features an OCR component so your PDF files will be searchable. (I’ve never tried it, so I can’t comment on how accurate it is.)

And finally, once you have all these documents in electronic form, you’re probably going to want to make sure they are backed up somewhere. You can make backups to an external drive but if your house burns down, that backup drive is probably going to be gone along with your computer. For that reason, I use Carbonite for secure, offsite backups.

Putting The Post Office Out Of Business

So there you go. That’s how I went paperless. I spent days shredding all my old documents – my shredder overheated several times during this process.  I was able to empty out my 4 drawer filing cabinet, sell it, and reclaim a ton of closet space. It was a long process, but now that it’s done, I can process new statements or invoices in less than 1 minute, the day they arrive. I can search for just about anything almost instantly, going back years. And because I pay bills electronically through my bank, I don’t need to write checks and mail payments either. My snail mail volume has been cut by over half. Fewer checks and statements going through the mail means fewer chances for identity theft.

But Wait! That's Not All!

I’ve also extended this concept to product manuals for any items I may purchase. If I get a new television or kitchen appliance, it usually comes with a book-sized manual. No need to keep those! I have a folder in my directory structure called Manuals and in that, subfolders for each appliance. I scan the purchase receipt for the item (if it’s not already in electronic form) and put it in the folder. Then I use Google to find an electronic copy of the product manual and download that to my folder as well. I'm just saving trees left and right!

Wednesday, July 20, 2016

Making The Most Of Your Las Vegas Budget

My wife and I took a trip to Las Vegas recently and I thought I’d write about the expenses involved and how we managed to reduce those by using a casino's player's club card.  I’ve written before about how important these are when it comes to getting comps while gambling. Hopefully, this will provide some hard evidence as to just how much you can save.

I'm Not Referring To Gambling Money

First, let me say that I have two budgets when I go to Las Vegas – a gambling budget and an expense budget. The gambling budget is solely used for gambling. The expense budget includes all non-gambling expenses. "That's cheating!" I hear you scream. "You can't write about Vegas expenses without considering gambling!" Yes, it’s a purely hypothetical distinction. After all, it’s all money coming from our pockets. However, by thinking about it in these terms, I can better track and analyze how much we win or lose gambling and how much we spend on lodging, meals, shows, etc.

Whether we win or lose at gambling is completely random. No amount of planning, praying, blowing on dice, wearing red, or carrying lucky charms will change that fact. Therefore, the gain or loss in our gambling budget is also random. As a result, I view our gambling budget as something I have no control over, short of adding funds to it. If I have no control over it, there's nothing to write about. If we are fortunate enough to end the trip with some of our gambling budget left over (which we usually do), I just roll that money over to the gambling budget for the next trip.

So un-ruffle your feathers, sit your ass down, and let’s look at what this trip cost, excluding gambling.

Details Of Our Trip

We stayed at the Cosmopolitan for three nights in a Terrace One Bedroom room with a view of the Bellagio Fountains. Prices vary by date, but the regular price for this room during our stay was $245 per night. Because we had been there before and are a member of their player’s club, I had received an offer in the mail for 2 free nights plus $130 in free play (credit they give us to gamble with). I also receive one free night per year based on my tier in their players club. By combining these deals, I was able to get all three nights for free. When I made the reservations over the phone, I was told the daily resort fee ($30) was supposedly not included with my free room, but when I checked in I was told it had been waived. Bonus!

A Nicer Room

However, the free nights are for their lowest priced room. My wife and I like to have a bit nicer room, so we upgraded to the one bedroom room with a terrace and a Japanese soaking tub. (Yes, I’m a diva when I go to Vegas.) This is a 2 tier room upgrade and they charge $70/night for that ($35/night each tier). The fountain view I like is usually an additional tier upgrade, but I find I can almost always score that upgrade for “free” with a $20 tip to the person checking me in. Technically, that’s not free, but a one-time $20 cost is much cheaper than another $35/night upgrade fee for 3 nights, so I consider it "free."

The view from our room during the day...

and at night.

 At the Cosmopolitan, besides earning player’s club points by gambling, you can also earn points by spending money at the rate of 5 points per dollar spent. This means it is incredibly important to present your players card whenever you purchase anything in order to maximize your points. I also prefer to charge everything to my room, just to make sure there is another record of my spending in case the wait staff or store clerk forgets to run my player’s card at the time of purchase.(I have one other reason for charging meals to my room, which will become obvious a bit later.)

How We Ate

My wife and I ate at the Wicked Spoon buffet twice – one time for breakfast and one time for dinner. (We usually don't eat lunch in Vegas.) As part of my player’s club benefits, I get a 2-for-1 buffet once a month, which we used for one of the dinners. Total cost for these meals was $85.

We also had dinner one night at the newly opened Beauty And Essex, the Las Vegas version of Chef Chris Santos' New York restaurant of the same name.  That dinner was absolutely amazing! We had 6 tapas-style courses plus three drinks. The food was some of the best I have ever eaten and my wife discovered a new favorite drink called The Woodsman. Total cost for our dinners was $170. Worth every penny.

We ate two meals at The Henry, which is the Cosmo’s 24 hour restaurant. Total cost there was $90

We also went to the Wynn one night and tried their newly remodeled Buffet for dinner. That cost $95 for the two of us. (For the record, we felt the remodeled decor and slightly changed menu added up to a big “meh”. It’s not too different from how it was before the remodel.)

Use Your Points Wisely

Of course, when we gambled, we made sure to use our player’s club card, so we earned additional points that way. You have the option of converting your points into either gambling credits or cash to be used to offset any charges you incur. On previous trips, I would convert them to gambling credits, but this trip, I realized the smarter move is to use them to offset spending, which is what I did.

The reason this is a better option is because, when gambling, your expected return is less than 100%. For example, the video poker machines we like to play have a return of about 95.5%, which means the casino keeps about 4.5% of the money you put in, on average. Slot machines probably have a worse payout ratio - you can't tell because, unlike video poker machines, which display their pay tables*, slot machines do not post their payout ratio. But if you use your points to pay for expenses, you’re getting a 100% return on that money. When I checked out, I converted my points to $158 in cash that I applied to my final bill.

* Using this information, plus the known probabilities of certain hands occurring in poker, the machine payout ratio can be calculated.

Extra Credit

And finally, I was able to use a $200 credit card bonus that I earned on a new credit card to offset some of these expenses as well. With this particular card, the bonus can be used only for travel-related expenses such as hotels and transportation. By charging my restaurant bills to my room, they show up on my credit card bill as a hotel charge, not restaurant charges, and hence I can use my bonus on them.

Total Savings: Almost $1,000!

So, let’s look at the overall savings using a player’s club card got me. Costs without discounts:

  • 3 nights in 1 bedroom suite with fountain view plus resort fee: $825 
  • All meals: $478
  • Total: $1,303
  •  My cost: $387

 I saved $916 by using my player’s club card!

My Net Cost Was Even Less

My net cost after using my credit card bonus: $187

So our vacation for 4 days and 3 nights for 2 two people cost only $187*! Not bad, considering we ate 4- and 5-star food the whole time. I haven't even mentioned all the free drinks we got while gambling.
* Technically, it cost a little bit more than this because we drove to Las Vegas and had to pay for two tanks for gas to get there and back, but what's $40 between friends, huh?

What About Gambling?

Speaking of gambling, how did that go? Not too bad. We ended up losing $900 total, but this did happen to me:

(Credit - Win) shows I was down to my last 15 credits when I hit this

Am I being disingenuous when I say the trip cost me only $187 and I don’t include my $900 in gambling losses? Possibly. But as I’ve said before, budgeting means separating your money into buckets and my gambling budget is its own bucket.

For this analysis, I am looking only at how my player’s club card saved me money on things I bought and how it can save you money if you use it as we do. Winning or losing at gambling is something outside of our control, so it has to be excluded from any analysis such as this. (Note I have also excluded the $130 in free gambling play I received from the casino, which could be viewed as offsetting some of my loss.)

As an added bonus, we got to meet up with a friend of mine from high school while we were there. (Hi Kevin!)

Wednesday, July 13, 2016

I love you, honey. If I die, here's how to get our money.

 A while back I read a post titled "I love you honey. If I die, you'll be rich" over on the Beards & Money blog. The upshot is that, because, Dr. Beard's wife does not bring in an income, if something were to happen to him, she would not have any income coming in to pay the bills. So he has a life insurance policy and laid out a plan his wife can follow to ensure she will be taken care of financially for the rest of her life, should something happen to him.

Although no one likes to think about it, at some point we all die. When you have a family you love, you want to make sure they will be OK if you suddenly die or are otherwise incapacitated and were unable to provide the financial support you currently do. This is what life and disability insurance is for. I have it. Dr. Beard has it. It's just something you do when you care about the people that depend on you.

But the post got me thinking about other issues that might come up if I were to perish. My wife does earn an income, so she wouldn't suddenly lose all income when I die. I do, however, handle all the financial details of our life - everything from investments to paying the bills. Furthermore, 97% of what I do is done online, which means logins and passwords. My wife wouldn't know any of those, nor would she know where to find them. As I mentioned previously, we've got a lot of accounts. She'd be lost, at worst. At best, she could easily overlook some account and lose whatever money was in it because she didn't know it existed. We've gone almost entirely paperless and she probably wouldn't even know where to find old statements.

So I sat down and, over the course of a couple of days, I made a spreadsheet of all our accounts. I listed what they are used for, what institutions they are with, the account numbers, and the logins to the various websites. I added notes that detailed any information about each account that she might need to know or to clarify what the account was for. I thought about including passwords in the spreadsheet, but that was just a little too risky for me. If someone got a copy of that sheet, they could ruin our lives. Instead, I've stashed the passwords in a different, secure location.

I printed out the spreadsheet and sealed it in an envelope and wrote "I love you" across the front. Then I stored it in our safe. We'll eventually get a safe deposit box and a copy will go there. I intend to review this spreadsheet once a year to make sure it's up-to-date. If something ever happens to me, she just has to open that envelope to find everything she needs to take over our finances.

In the information age, it's not enough to just provide money for your loved ones when you are gone. You also have to make sure they have the digital keys to access it.

Wednesday, July 6, 2016

Goal Update: End of June 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 June, 2016
Current value: $24,085
Change from last month: +$924
Percent of Goal:  22.15%

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:

Income this month from my online courses was a somewhat poor $102. Next month is looking to be about twice that, which is good. Overall though, I think Udemy's new pricing structure isn't having the effect they hoped. It seems my monthly income has dropped, which means Udemy's has dropped as well. They probably hoped the lower base pricing with fewer discounts would attract more customers. I think the problem is people feel they aren't getting a great deal anymore when the discounts aren't so high, even though they may be paying less. This is exactly the situation JCPenny found themselves in a couple years ago when they tried the same tactic - lower prices overall but fewer or no sales. It didn't work for them either.

Even though it makes no logical sense, people seem to prefer getting a 65% discount off a $100 price than a 15% discount off a $35 dollar price. The latter results in a lower overall cost, but all people seem to focus on is the discount percentage. I personally liked the old pricing model better because once in a while, I'd get someone who paid the full price for a course. Even if only one person a month did that, it was enough to provide a significant boost to that month's numbers. I wonder how long it will be before Udemy reverts back to their old pricing model.

My hard money loan continues to pay on time ($133.33 a month). Ho hum. Real estate investing is so boring (and I love being bored like this). I also received $17.47 in a class action settlement for something or another.

I received $100 in blog income from my real estate blog. Even though I am not actively writing for that site anymore, apparently it still gets a fair amount of hits from search engines. I have been contacted a couple of times by people asking if I allowed sponsored posts. After some thought, I decided sure. I'm not going to publish anything I disagree with and I will make sure the posts are clearly labeled as being a sponsored posts, but I figure I might as well leverage the site to create some additional income.

Net Worth Update

Our net worth continues to grow, increasing by $10,602 from last month to a new total of $648,807.

May 2016June 2016
Note: categorizes our HELOC as a credit card debt, not a loan, hence the apparently high credit card balance.

The big increase was due to gains in our stock market accounts. Despite the huge drop in the market after the Brexit vote, our accounts held up pretty well. And you wouldn't really know it from looking at these numbers, but my wife and I took a 4 day trip to Las Vegas this month. We ended up losing about $900 gambling and spent close to $200 on food and lodging. I've got a post going over all the details of that trip coming up in 2 weeks, so I won't go into it here.

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