I have been sick the past handful of days and it made me think, “I spend a lot of money while I am sick that isn’t in my typical budget.”  Maybe its just because I am a young twentysomething guy that doesn’t ever plan on being sick, but I rarely have the right meds in medicine cabinet.  Nor do I have “sick” foods in my pantry such as chicken soup, etc.

When I get sick, here is how my day goes.

1. Lay in bed until I can summon the strength to move.
2. Bitch and moan as I find some clothes to wear to the grocery store.
3. Go to the grocery store, and quickly grab whatever I may need (usually the name brand stuff that has all sorts of adjectives in it, “long-lasting, fast-acting, twice as potent”.
4. Go home, get back into bed and realize that in my sickness, I forgot to buy food while at the grocery store.
5. I find my phone and my wallet, order some chinese food with a big thing of wonton soup.
6. Eat my soup and grumble at how bad I feel and the fact I just spent $50 in a day and I have nothing to show for it but symtoms of a sick guy.
7. I go back to bed and hope that I will not feel this way for the rest of my life.

I swear, when I am sick, I become a sheep to advertising.  Instead of getting the generic store-brand ibuprofin, I get the name brand – everytime.  In reality, its all the same drug.

I am going to be putting together a little first aid sick kit next time I make it to the store.  This will hopefully last me years of random sick days and end up saving me money in the long run.

The contents of the kit:

• Big bottle of ibuprofin
• Generic Dayquil/Nyquil capsules
• Big box of sudafed
• Whatever is on sale size of pepto-bismol
• Box of Tissues
• 6-8 cans of chicken soup (only to be consumed when sick, so its always handy)

I’ll be honest, I already feel like I am forgetting something.  Let me know what else I should be picking up at the store so that I am prepared the next time the plague sweeps through my town by leaving a comment.

In honor of Tough Money Love’s post today on financial mistakes that we bloggers have learned the hard way, I wanted to share with you my biggest mistake.

Six years to the day yesterday I turned 19 (legal age to gamble in Canada).  My father and I took the twenty minute trek to Niagara Falls and we sat down at a blackjack table.   An hour later I was $600 richer and a gambler for life.

College – My Dumb Years

I went to school in Indiana, luckily there were no casinos around and Internet gambling was just becoming a fad.  I would go home on occasion specifically for the casinos.  I will be honest and tell you I came out ahead at live casinos playing blackjack, but along the way I broke some of my own hard and fast rules for not losing my shirt at a casino.  These rules:

• Don’t ever go to the ATM, bring what I am willing to lose.
• Don’t chase lost money with bigger bets
• Don’t overreach (walking into a casino and playing a single blackjack hand for $300, losing, then spending the next four hours trying to get back even, is not advisable)

About the tail end of college I started to play Internet poker.  I had a good year at live casinos so I was willing to have fun with my money.  I am not a poker player, I like action and poker is a slow game.  I probably lost $2000 over the course of a few months before I left Indiana for grad school.

Grad school – My Really Dumb Years

I made some great friends while at grad school and we all loved to hang out and play cards.  Usually we played for small amounts because it was social.  This got my blood pumping for more and I proceeded to start playing online poker about as much as I was studying.  Again, I am not a poker player.  Over the course of two years I lost $6000 took an 8 month break and lost another $4000 when I felt I could come back and control my habit.

I would constantly stress about money, dipping into my savings to pay my gambling bill.  It never became debt, but it was scary.

Employment – My WTF Brian! Years

A friend asked me for my newspaper to check the lines of opening NFL weekend and then placed a call to his bookie in front of me.  I had never bet on football before with any real money, but I know the game and I liked his bet.  I told him to throw $200 extra and I was good for it.  At this time I hadn’t placed a bet in about a year.  I lost that $200 but started to look at football as a way to make some extra cash if I got good at reading the lines.  The next week I placed a few bets and won about $550.

With money flush in my account I was looking at the lines for the following week with excitement to make some money.  But when it’s Tuesday, NFL Sunday seems so far away.  In the corner of my eye I saw the online blackjack tables.  To pass the time I was playing $1 and $2 hands.  Again, I like action.  This eventually turned into $25 hands which turned into three $25 hands at a time.

The blackjack hands at an online casino take about three seconds to play.  A couple mouse clicks and it’s the next hand.  My blood was pumping so fast while playing I would mis-click buttons and lose money.  There were times when I would have three hands of $300 playing at the same time.

This behavior lasted for about three months.  It finally concluded when I placed one large (over $2000) bet on a football game.  It was a smart bet and i won it.  All told, when i called the website this past week they said in that four month period i had deposited over $8500 into their system.  Luckily I had cashed out with almost $11,000.  I really thought I had made more (any surprise their?).

Present Day – The Responsible Years

I have had quite the turnaround in the past year.  My cash flow is out in the open and it’s all from reliable sources (employers).  I haven’t placed a bet since that large bet in early December.  I have made a permanent change for the better.

One of my brothers and i made a commitment to each other that we would not place a single bet this year (table games or football).  I don’t know how he is doing with his end of the deal but I have not made one single bet (even a friendly wager amongst friends).

I also discovered the power of personal finance and the knowledge that one can really win the race with a slow and steady approach.  They may not know it, but several personal finance bloggers have been an inspiration to me and have kept me on a path towards accumulated wealth.  I thank each of them for that.  (Going to have to give thanks in particular to J. Money at Budgets are Sexy.  Without his advice I wouldn’t have written about this topic and maybe one of you wouldn’t have had the opportunity to learn from my mistakes.)

It may take you a second, but you know what I am talking about when I say a “six month disposable product”.  Think of the times when you say “I need a new…” and within a day or two, you have whatever that “…” was.  These aren’t products that are designed to last only six months (or maybe they are) but that is inevitably how long they last.

My biggest six month disposable product is earbuds.  I like earbuds, I like how small they are, and how light they are.  What I don’t like is that over the past four years, I have bought EIGHT different sets of earbuds, none of them has fit “just right” and ALL OF THEM have broke within 6-8 months of me purchasing them.  Can you guess what prompted me to write this today?  You guessed it, one of my earbuds just stopped working.  It just stopped.  Guess its back to shopping online for a new pair.

The more I started to think about this, there are a lot of these types of products floating around our lives.  Products that usually last me only six months on average are as follows:

• Earbuds (see above)
• Cellphone cases (I am resisting replacing mine, after seven months it’s looking pretty tattered)
• Hockey sticks (these things snap all the time, or it could be me breaking them out of frustration)
• Cellphone car charger
• And many more

These items cost around $20 a pop for cheap replacements.  A lot of people say “what’s $20?” and don’t think twice when they make their replacement purchase.  However, those Andrew Jackson’s add up over the course of a year.  Now one solution is to take care of your stuff better, but odds are if you are buying cheap goods, they aren’t as durable as their expensive counterparts.

My Current Headphone Dilemma

I have spent $75 in the past year on 3 pairs of cheap earbuds, replacement buds, and shipping and handling charges.  Each one of them has had one ear just stop working all of a sudden.  I am not ruling out user error, but really, how do you misuse earphones?

Since my most recent pair has stopped working, I am back in the market for a new pair.  I am thinking of making a significant purchase, paying for value and buying earbuds that will last over a year or two.  If I pay $100 for a pair and they last for 2 years, I am coming out ahead.  Then again, I fear the product category of earbuds itself is no good and I am resigned to buying a new pair every six months and the $100 purchase could be wasteful.

Does anyone have any suggestions or experiences with earbuds specifically?  What kinds of six month disposable products do you go through on a regular basis?

One of my personal struggles has always been information overload.  I am not overwhelmed by information; I constantly seek ever-changing information. This is evident in a lot of my personal interests.  I tend to enjoy things that are constantly changing, shifting, and updating.  I enjoy the news, sports, and online video games for these reasons.  Now that I have started to invest in the market, I find myself watching the stock indexes even more closely.  This… can become an addiction.

I have money in the market right now in my Roth IRA and in my brokerage account.  The Roth is not going to be tapped for almost 40 years and the brokerage account is probably going to sit and accumulate wealth for at least 10+ years.  With no short-term investments, why do I feel the need to be constantly checking how the market is doing throughout the day, everyday?  I have even had nights where I have checked the Nikkei Market (which opens at 7pm and closes at 1am EST) to see if there is any indicator of how the NYSE will react the upcoming morning.

Tell me, my investing friends, do you watch the market closely even if you are only invested for the long-term?  Is there a way to, literally, set up my investments and then forget about them except to check them around tax time?  Or, is watching our money grow slowly too much fun to not watch on a daily basis (like watching a caterpillar move across the sidewalk)?

Dating is expensive

This past Monday I went on a date with a new friend from an old part of my life. We went to a medium to high priced restaurant and proceeded to go through a bottle of wine, dinner, dessert and dessert wine. We had a great time talking about people that we had long since forgotten about and seeing how we both had connections to those people. Three and a half hours later, the bill came.

How much did this night of entertainment cost? Around $150 – which we split evenly. Did I have an idea going into the meal it would be that much? Yes I did. But that doesn’t mean I can’t be aghast at the unbelievable price tag there is to being a single guy in an expensive city like DC.

It’s rare that I go out to eat, so I don’t mind spending a bit when I do. But, one or two dates a month and I start to really feel the strain on my wallet. At the PF blogger happy hour we discussed all sorts of hidden costs that can be associated with dating, but the food and the drinks are really the two primary culprits of breaking the bank. Even at a less expensive restaurant, you are still looking at $40 for a simple meal (2 drinks, 2 dinner plates, tax and at least a 20% tip as waiters and waitresses need to make money as well, right AK?)

Lifestyle Inflation

The friend that I went out with talked about how much she loves going out and she would do it three to four times a week if she had the time right now (she is studying for the bar exam in a few weeks). This has made me wonder about lifestyle inflation in the coming months for her. From what I have read, going out to eat is the largest indicator of consistent lifestyle inflation (buying cars and houses are other indicators, but those aren’t every day expenses).

For my friend, will three nights a week turn into five or six once she starts work in September? Saying that she is a lawyer and she can afford such outings isn’t the point. I think a lot of young people start to spend more money after college by saying “I will be working soon and therefore can afford it”. And then when they actually land a job, they increase their consumption further because now they have money coming in. This is how people get in over their heads with debt.

For me, trying to curb lifestyle inflation is why I don’t date that often. After a while it gets expensive and while you can meet some interesting people going on dates, aren’t their other ways to meet folks that won’t make me go back into debt?  Of course there is.  A lot of other writers talk about alternative methods to dating, but in a happy hour driven city like DC, the norm seems to be drinks and dinner.

Lifestyle inflation seemed to be a hot topic this week.  Please take a look at what my friend J. Money and Matt Jabs from Debt Free Adventure had to say about it.

Challenge

While writing today I want to put a challenge out there to some bloggers that track their expenses.  I would like to see who spent more over the past year; the actively dating single person, or the married person.  If anyone is willing to compare their going out expenses please email me at brian@buildingwealthtogether.com.

Have a good weekend and enjoy your Friday and Saturday date nights.

On the metro this morning I saw a gentleman reading the Wall Street Journal. I politely asked to borrow the section with an article headline that caught my eye: 7 Smart Places to Stash Your Cash.

I should mention that once the gentleman gave me the section I realized that the entire page was one big advertisement for buying US Coins and armored safes. The page was disguised to look like a legitimate news article in the journal (go check it out – page A7 in today’s WSJ) but clearly, further investigation was necessary.

The article gave seven ideas on what to do with your money to keep it safe. Each idea is in the order they gave followed by my reaction.

1. Be sure your institution is insured – This is sound advice. If your bank is FDIC insured you have nothing to worry about in terms of keeping your money safe (if you are approaching the $250,000 limit then you may want to look at splitting your money between different institutions).
2. Start and grow a coin collection – What? This is the second smartest place to stash your cash? Anyway, this is not a bad idea for hobbyists, but the author describes the coins as never losing their cash value (which is true), however inflation will make your newly minted never circulated coins worth a few percent less next year. The author of another article on the page mentions that a specific uncirculated coin from 1974 has seen a 500% increase in collectors value. It sounds like speculation to me and I would rather have money in the market (By the way, the Dow Jones was around 600 or so back in 1974.  Even at its weak 8000 today, that is over a 1000% increase.  Do the math!)
3. Keep cash safe at home – This is another suspect idea. If your money is at home it is (a) not earning any interest. (b) available to be lost or stolen, and (c) susceptible to being lost completely if something tragic (like a fire) takes place.
4. US Savings Bonds – I have no qualms with bonds, but this article was talking about tangible paper bonds. I personally view individual bonds as a bit of a hassle. It’s much easier to invest electronically in bonds and saves you the hassle of keeping these documents on hand until they mature, which would be my preference. J. Money over at Budgets are Sexy talks about his bond experience here.
5. Gold and silver – Another idea that I have no issue with. I am not personally interested in the precious metal market, but I always hear buying gold is a relatively safe investment. Then again, this requires more research. I do know that a lot of PF bloggers say to steer clear of buying gold, and they have spent more time considering this issue than I have.
6. Hold on to real estate – I fail to see how this relates to stashing your cash, except that you are likely to need a home just to store all the coins and bonds that the article recommends.
7. Buy a good safe – Here is the whole point of the article (err, advertisement), they want you to buy one of their safes. This sounds more like spending your cash then stashing it to me. The utility of a safe exists, especially a fire safe that can house important documents and valuables.

The moral of the story is to be careful what you read. I was suckered into this article for a minute or two until I noticed it was an advertisement. This “article” speaks to people that are scared and frightened of the economy right now and it’s looking to take advantage. Similar to all media, you need to question what you read and think critically about the material. If you are thinking of taking a new avenue down investing, please check with a financial planner or with people that you trust before reallocating your wealth.

An informative episode of the Personal Finance Hour this week has me thinking about credit scores.  There will be my recap of the most recent episode posted on the PFH’s website later on today/tomorrow but I wanted to share some information with the readers of this site that I thought would have value.

Credit score myths:

• Having too many accounts can negatively affect your credit score.  This is not the case because of how your credit score is calculated (see below).
• Checking your own credit score will lower your score.  This is not true.  However, if you have a friend at the local bank check your score, it is possible this will be seen by the credit bureaus as you “shopping for credit”.  This can be a red flag to creditors and drop your credit score.

How a credit score is calculated:

The specific calculation methods of your credit score is hidden in a multi-variate model by FICO.  However, we do know some of the major components.

• 35% of your credit score is based on your payment history.  If you have not missed any payments, you can expect this section to be in your favor.
• The next 30% is based on your credit utilization.  To figure out your credit utilization, take the amount of revolving debt you have (credit cards) and divide it by the credit limits of your cards.  That percentage is your credit utilization.  The smaller the number, the better.

How you can hurt your credit score:

• Missing a payment! Missing a payment is one of the worst things you can do to demolish your credit score.  Liz Weston stated that your score can drop as much as 100 points based on one missed payment.  If this isn’t enough of a reason to automate your bill payments process, I don’t know what is.
• Having a low credit utilization percentage.  If your cards are near maxed (even if you pay them off in full) makes the credit bureaus worry.  They will ding your credit score as they think you are starting to over extend yourself and that this behavior may become a pattern.  In reality, you may have just charged a couple of airline tickets for a trip 6 months from now that you have the money saved for.

How you can help your credit score:

• Paying your bills on time.  This shows responsibility and that creditors can rely on you to pay them on time.
• Pay off your installment loans.  Paying off installment loans may not help your score much initially, but the more that are paid off, the larger of an affect they have on your credit score.  Also, it will feel great to not have to worry about your car payments, mortgage, or student loans anymore.
• Get a secured Credit Card.  Using a secured credit card will give you the opportunity to show your reliability to creditors.  Eventually this card can evolve into a normal unsecured credit card.  As Weston put it, if you aren’t using credit, the credit bureaus can’t track your usage of credit and can’t affect positively affect your score when you are acting responsibly.

A saddening tale that Liz discussed on the show was a couple that had driven themselves into such financial damage, that they emptied all of their home equity and retirment accounts in an attempt to avoid bankruptcy.  Unfortunately, when all was said and done, this couple had to declare bankruptcy anyway and lost all of their equity and their retirment accounts in the process.  These things can be protected in bankruptcy court.  It is not advisable to declare bankruptcy, but if you are in that deep of a whole, it may be best to consult financial advisors to see if nuking your credit report is the best way to try and repair the damage you have already done.

This personal finance hour episode was very informative as it discussed something that affects every one of us.  Not everyone deals with debt, not anyone needs tips on retirement accounts, or high yield savings accounts, but everyone does have a credit score, and that score can impact your life drastically be it high or low.  Learning more about your credit score is the first step you can take to ensuring your credit is helping you and not hurting you.  For more information, I suggest listening to the Personal Finance Hour episode for this week by clicking here.

Things drastically change after high school and after college.  All of a sudden we are thrown into the real world and we are faced with modern day Darwinism, known as capitalism.  The things we look for in a partner change drastically as well, especially for young adults in large urban areas.

Responsibility is Sexy

I was reminded of the idea that “responsibility is sexy” during a discussion with a friend last night after she had a very good date with an individual that she may be interested in.  However, the person she went out with seems to have some behaviors that have caused my friend to be apprehensive.  The person in question seems to be a fun and nice individual, but hasn’t grown into the responsibility that his age would dictate.  Therefore, my friend is conflicted.  Had this individual not been stuck in his “college years” with some of his behavior, this topic between my friend and I may not have even come up.

Responsibility can be conveyed in many ways, but being responsible with money shows several attributes to others including, ambition, self-control, and foresight.  It’s important to look at each of these three characteristics and see how they can appeal to the opposite sex.

• Ambition – Responsible spending and saving will open up all kinds of opportunities in the future.  While the appearance of wealth may be the ambition of many, it is those that have real wealth that have the upper hand in making significant life choices (a new house, having another child, retiring early).
• Self-control – We live in a consumption driven society.  If you are able to make sacrifices, remain focused on your goals, and not give into the marketing machine known as the US of A, then you have mastered self-control.  Think of how attractive you are to a partner when you show that you are capable of making the necessary sacrifices requires for those big life challenges (marriage, raising children).
• Foresight – saving for a rainy day may not seem fun or all that sexy, but having the foresight to do so ensures that you are prepared for life’s little hiccups (and there will be hiccups along the way).  Is there a better way to show someone you care about them then by confidently saying in a time of need, “everything will be fine” because you have saved for just such an occasion?

One’s attractiveness to the opposite sex can stem from many different characteristics, intelligence, appearance, sense of humor, etc.   As we get older, certain things enter onto that list of characteristics including, security, stability, and responsibility.  The former characteristics usually are qualities that we are blessed with by good genes, but the latter list is something everyone can work towards.  Everyone can be responsible with money; it just takes a bit of effort.  Making the decision to be responsible is the first step you have to make.  And really, who wouldn’t want to be responsible, because responsibility… is sexy.