Musings on Money, Personal Finance, Frugality, Debt, and Other Matters

This is not a political blog, but perhaps I am a bit cranky after losing electricity and water for 5 days, so I will let this one slip by.

So here goes:

Image source: http://codenameblogtastica.blogspot.com/

…. he killed a helicopter with a car, and then he walked bare-foot on broken glass, and then he fired a few people, and then he suspended whatever that was going on and proceeded to Capitol Hill to beat the crap out of bad dudes and to rescue the economy.

Oh wait… it’s McClane not McCain you idiot. Oops! it’s probably the uncanny similarity between the looks of Mr. Willis and Mr. McClane Mr. McCain that confused me.

I don’t mean any disrespect, but I had to get this out because I actually had a dream of John McCain hanging “suspended” upside down in New York’s Central Park right above a huge pile of money (that looked like it was about $700 billion). I woke up a little scared and then realized that it’s because I read about David Blaine’s stunt before going to sleep last night - while I was being constantly bombarded by television commentary on McCain’s suspension of his campaign (or whatever - didn’t look much of a campaign anyways) and the $700 billion bailout.

You can imagine the kind of maverick-ish impact Mr. McClane Mr. McCain is having on me.

Anyways, with that out of the way, there is something else I need to say. It has recently come to my attention that some people don’t really know how many zeroes are there in a billion! That calls for a little bit of elaboration on the numbers you might hear in the next few months.

$700 billion = $700,000,000,000

300 million = 300,000,000 (as per Google search, the actual number is close to 301,139,947 - go figure what this number is)

Now, $700,000,000,000/300,000,000 = $2333.33 per person

As per 2006 tax figures, there were 135,660,228 tax returns filed.

Now, $700,000,000,000/135,660,228 = $5159.95 per tax return

Some other numbers to put things into perspective.

For the year 2007, AIG CEO’s (Martin Sullivan) monetary compensation was $13.9 million ($13.9 million = $13,900,000)

Earlier this year, most people I know received economic stimulus payments that ranged between $600 and $1200

It’s probably just a few more hours before we lose electric power, and have trees flying around. I don’t know long it will be before we have electricity back up, so I just thought of dropping a line here.

If you don’t have anything better to do, follow the eye of the storm closely and you would be able to zero in on my current geographical location.

Anyways, about TV reporters - man, those guys get so animated (even when other people in background are going about peacefully doing whatever they are doing). Interestingly, this afternoon, one of them even suggested this as a part of “survival tips for hurricane”:

People who use electric toothbrush should buy manual ones, and people who use electric shaving machines should get manual ones …

Ha ha.. I couldn’t stop laughing.

The only other funnier thing I heard this week was some other reporter dude suggesting that the CERN Particle Accelerator/Collider may create a black hole that would destroy the earth!

Since reading some comments on my last post, I had been thinking about what this whole deal with “personal finance” is about; is it about making the most amount of money? or is it about saving the most amount of money? or is it about spending the least amount of money? or is it about reducing stress due to money matters? or is it about this obscure concept called “financial freedom”?

The more I think about it, the less specific I get about possible “correct” answers to that question. In fact, looking back at my life, it seems that at different times, a different answer suited me depending on my financial and personal situation at that time.

What came out of this thought process was the realization that personal finance is not just about “maximizing money” - as I used to think earlier - and like most people probably think about it.

It’s not about maximizing. It’s about optimizing.

Given a financial situation, personal finance is about making the best of that situation. Sometimes it means trying to make as much money as you can, and at other times it means trying to make your money work to make you more efficient by reducing your stress, and at some other times it means that you save every penny to make sure that your children don’t inherit your burden of debt.

There is nothing wrong in trying to “maximize money”, but it is important to realize that, depending on your personal situation, there are costs (in terms of stress and time) associated with trying to do that.

Examples are numerous (but vague and difficult to explain) in this area, but a simple one would be to think of a job in which you are paid overtime. Every extra hour you work might mean that you will become richer than the previous hour, but it does not mean that you would be stress-free - or that you would be able to devote enough time to your family. If you overdo it, it wouldn’t be too hard to make yourself and your family feel miserable even with the extra money you earn.

Working your ass off for a few extra bucks might be a good idea when you are a bachelor with hardly any cares in the world, but if you are a family man, then you might be better off by working a little less in lieu of spending a little more time with your family. Now, just because you gave up that little extra money to spend time with your family or to reduce your stress, it does not mean that you are careless or frivolous with your personal finances. In other words, just because you chase every penny, it does not mean that you are an epitome of financially astute people.

In general, for the sake of the betterment of the whole universe and your own self, try optimizing your money instead of maximizing it. It also helps to reevaluate our understanding of “personal finance” in perspective of our changing personal situation and revise our money-chasing efforts accordingly.

Duh!

Since a little more than seven months ago, I made some adjustments to the path in which my career was taking me and took up a job instead of pursuing PhD. One of the main reasons for going that route was that I was so narrowly focused for so long that I forgot why I was doing PhD in the first place (of course, there is more to that story that just that, but I won’t go into that with this post).

Anyways, our household income increased by about four times after I took up the job. Initially, things were taking a deflating turn for the first couple of months - I guess this was in part because I was a relatively “newly employed” and was undergoing training without any major responsibilities (plus,  I apparently hadn’t discovered new ways of spending the increased income). However, our spending took a turn for the worse right after I published this post in early February.

Additionally, I have now started paying a lot less attention to our financial details (”details” is the key word here). There are only two fundamental concepts that I have been keeping in front of me: 1. to not spend more than what we earn (look at #7 in the linked post), and 2. to not time the market. Everything else is just falling in its place automatically.

The rest of our life is now governed primarily by convenience. Here are just a few changes in our spending habits and financial attitudes that occurred over the last few months.

1. Paradigm shift in the way I manage credit cards: I no longer have the time or the patience to follow those balance transfer offers and research/keep track of how our income would be increased by juggling such offers. I don’t care about optimizing the rewards anymore, and just use credit cards for the simple reason that I get an itemized list of where we spend our money at the end of the month.

As such, I am not using all my credit cards anymore. The fact that I have so many of them seems a bit ridiculous to me at present (this is an interesting development). Plus, I have discovered other practical problems in having too many credit cards (more on this later), so I am down to using just two credit cards at present.

2. Preferences for schedules rather than prices. We have flown thrice since February and every time, we went for flights that were more “convenient” instead of flights that were cheaper. On one of those three occasions, we had the option to drive (which would have been a whole lot cheaper), but again, the time spent in driving didn’t seem worth money saved. Interestingly, in the past, we have driven to that very location twice and at that time, the money saved seemed a lot more worth than amount the time spent in driving.

3. Buying what we “like” rather than buying what is “cheap”. Affordability is still in our minds but we don’t kill ourselves trying to save a few cents (or even a few dollars at times). For example, earlier, for cereals, it was usually “Great Value” from Walmart - now, it’s Kellogg’s or whatever brand that seems better - from a store that is closest to home.

4. Outsourcing clothes for ironing. Ironing is one activity I hate - it may be because I never ironed my clothes (over several years) when I was a student. It either took 10 minutes of my time every morning, or about an hour every weekend. Now that’s replaced by 5 minutes of detour every other week and $25.

5. Eating out more. This is again a product of optimizing convenience rather than costs. If we are too tired or not in a mood to cook, we just eat out without worrying too much about it. And, when we eat out, the choice of restaurant is usually dictated by time (and sometimes by what we feel like eating) rather than by how cheap or expensive it is.

6. Using toll roads instead of regular roads. I tried using regular roads (read as traffic-light-infested-roads) for the first couple of months. However, as the stress at work started growing, I started using toll roads more frequently. The toll costs me a lot more than I would like, but using toll roads has reduced a lot of stress in my life. I am now happy when I reach my workplace in the morning, and I am happy when I reach home in the evening, and I don’t have to bitch about how horrible my luck is to catch all the red lights on the way.

Also, the drive that used to take me 30 minutes via regular road now takes about 10 minutes via toll road. That much time saved everyday is just priceless.

7. If the market bothers me, I just don’t look at it. Out of sight, out of mind is what probably works with me in this case. I have some set investing goals this year (in terms of how much I should invest and where) and I just stick with that without really worrying too much about what the market is doing at any given time.

Come to think of it, the increased income is working towards making our lives a bit easier. Call it lifestyle inflation or improvement in the quality of life, or call it just sheer laziness (I am sure there will be different perspectives), or whatever. All we care about is that there is a lot less stress in our lives by spending a little more  money.

As long as we avoid these problems with lifestyle inflation, I think we are okay.

After debating with myself on whether to use the BS word in the title or not, I finally decided not to censor myself on my own blog and went ahead with it. Censoring the BS word on a BS topic is actually some BS in itself; and using BS instead of bullshit is also bullshit … so what gives.

Anyways, the point of discussion is that, recently, it has come to my attention that one of our “highly decorated” acquaintances might have misled a number of scholarship organisers with her “powerful” essays and personal statements. We (me and my wife) happened to figure this out over a dinner meeting when we heard of some extraordinary high-flying crap (unreasonably lofty ideals, fake “personal life experiences”, etc.) from this person. A few things just jumped out at us as pretty obvious discrepancies (when you have been through a similar experience, you can very easily tell when the other person is exaggerating/lying - sort of) and a few other odd things we figured out after pondering over the entire story all over again.

I was thinking over it for a while and then realized that she is just playing the scholarship system to her advantage. Almost every scholarship/award that I have seen in seven years of graduate school asked for an essay or a personal experience statement, or some document of that sort. Many of the scholarships/organizers specifically state (verbally or otherwise) that, generally, very similar academic profiles of graduate students, scholarship decisions will ultimately boil down to a contest between personal statements. “Powerful” personal statements will have a better chance of getting the scholarship.

Now, I haven’t really understood this obsession with “powerful” personal statements and essays .. and with preferences for people with “powerful life experiences”. Sounds very “Miss America” like. This obsession for larger-than-life idiocy encourages words over deeds, lofty ideas over achievable targets, and bullshit over plain old simple truth.

Why should something dramatic happen in your life to make you eligible for a scholarship? Why is it necessary to relate your success to obscure words that your mom/dad (or a dead relative) said 20 years ago? Why is it necessary to “boast” about your far-fetched “noble” intentions in future (which are not really “noble” the moment you start boasting about them)?

Interestingly enough, almost none of the scholarships will actually take the pains to verify any of your “personal” events. So whatever you throw at them will be accepted - and even glorified. So where is the motivation to be honest and straightforward about who you are, why you want the scholarship, and what you want to do with the money you will get from the award?

As educational expenses rise, we will probably see more such bullshit floating around in future.

I wonder what else we will do for money.

Is it too much to ask for a very little tiny bit of personal honor? Or is that some kind of bullshit too?

I guess by now nobody cares if I am around … so this would be just to motivate myself to write a little more.

Looks like the site was down for a couple of months after some screwup with Wordpress/Hostmonster/Upgrade/That-Kind-of-Crap; so it took quite some efforts to get it back on track. Now, it looks all messed up so it will be a while before it looks pretty again.

Hoping to see some old friends again.

I won’t go in to the details of what prompted this topic since it might get a little too bitter for my own taste, but there is a serious need for reforms in the way the government looks at internet income.

To put it in a concise way, I am regretting that this blog ever made any money at all.

There is only one piece of advertisement remaining on this blog, but I am positively sure that after a few months/years of unsuccessfully negotiating with the organization involved, the issue will remain successfully unresolved (for the lack of any clear guidelines to either party) and the money will be eventually donated to charity …or something of the sort.

Then, I heard someone say something about how there are stupid laws and stuff. On that I have only one thing to say - laws are only as stupid as the people who make them.

Anyways, the point is that there is a need to take a second look at internet income regulations. In one way or other I am sure some other bloggers feel the same way.

Lastly, to put a closure to this incoherent rant I have another thing to say. This “equal opportunity employer” legal statement thing is a big load of crap. Here is an example:

” … to ensure equal employment opportunity without discrimination or harassment on the basis of race color, national origin, religion or creed, sex, age, disability, citizenship status, marital status, genetic predisposition or carrier status, sexual orientation, …”

Almost every one of those issues listed in the statement has an effect on employment opportunities. Sometimes we are just blind enough not to notice it.

Or may be I am just jaded because of not being able to blog for so long.

Finally, it’s time to implement what I have been talking about on my blog over the last year or so - it’s time to address lifestyle inflation!

The first salary after getting a job is always a tempting  excuse to indulge in a shopping spree. Plus, a new unfurnished apartment cries desperately for a several-hundred-dollars expenditure on furniture/bed/accessories.

However, with great restraint, I have finally managed to convince myself back into a sleeping bag. I have had some good (and prolonged) experience with sleeping bags, so I don’t mind it.

Also, most other things were acquired at much lower costs than what I had imagined earlier (new leather shoes - $50, trousers - about $25 each , shirts - about $20 each, etc.) - so most of the inflationary items have been under control. Plus, I threw away an incredible number of clothes/accessories during my moving/clean-up spree - so I ended up with a lot less “stuff” in the new apartment.

May be it’s lifestyle deflation or whatever… but it certainly feels good to carry less baggage and live light.

I don’t know what to call this passport photo business, so I am just going to stick with “stupid ripoff” for now.

During the weekend, we went into a CVS Pharmacy Photo Center to get some passport/ID photos. We wanted a specific size (as they say “from chin to crown”), so we asked the dude who was attending the photo center whether he can adjust the size. Pat came his reply “No, we just print the standard 2″ by 2″ photo and we can’t adjust any proportions“.

I asked him “But, don’t you have a software where you center the face in the photograph and mark the upper and lower boundaries for the face? All we have to do is to adjust those boundaries and then we can cut the photographs to the size we want - and approximately in the proportion we want“. He didn’t seem too impressed with the knowledge and insisted that he won’t do anything other than the standard 2″ by 2″ without any editing.

So we left the shop, and wondered why the heck they charge $7.99 if they wouldn’t do anything other than click the photograph and print it. Camera rental charges or something? - perhaps they use expensive digital SLRs to get good pictures (wishful thoughts).

Anyways, we then visited a Walgreen’s Photo Center and again got the same story. Next, we again tried a CVS - a different one this time - just to see if one of these “Kodak Certified” dudes could get our photographs the way we wanted. But we met with the same disappointment at this location too.

Finally, we surrendered and asked the CVS guy to click passport sized photos for one of us. We confirmed the price and he said $7.99 for two copies - additional copies will cost extra.

We decided to try it out with two copies to start with.

While we waited for the photos to print out, I saw (with my own eyes) that the photographs were printed on a 4″ x 6″ photo paper - and there were 6 copies on it. Then the dude coolly cut away 4 copies, disposed them, and handed us the remaining two copies.

WTF!?

Man, does CVS implement this type of idiotic business at all it’s photo centers?

Plus, the photos he printed didn’t look sharp at all - pretty sure it was some crappy point-and-shoot camera that didn’t do a very good job of focusing. When we pointed that out, he was like “Oh really? don’t worry all photos printed here look like that and no one ever came back because a photo was not accepted“. Wow! that’s an awesome argument to complement a crappy service.

What’s wrong with these photo centers. Why should a passport photo - clicked by a mediocre digital camera - without any studio-type lighting arrangements - without any professional photographers, cost $7.99?

Just to be sure that I am on the right side of statistics, we checked out another CVS Photo Center and two Walgreens Photo Centers - and got similar less-than-average-quality pictures, overpriced at $7.99 for two copies - topped with a totally unprofessional approach towards clicking good photographs.

Eventually, we gave up on these photo centers and decided to make our own pictures. Bought a 2 yard long white cloth (for background) from Walmart for $2, used our digital camera, adjusted the brightness and contrast in Photoshop, used this free service that lets you size your photos according to your requirements, and printed them again at Walmart (through their online photo service).

Total cost for 32 excellent passport/ID photographs: $2 for the white cloth and about $1 for photo printing = $3 (took a little bit of time with the Photoshop editing, but we were absolutely happy with the end result).

Down with $7.99 for two crappy photos!