Something you don’t hear about as much, especially in the personal finance world, is the Money Value of Time. As I was listening to the Consumerism Commentary podcadt, I got to thinking, as I often do, about frugality vs time. Many frugal tips pushed involve spending outrageous amounts of time, to save what may be a negligible amount of money.

Don’t misunderstand me – the family with $40,000 in credit card debt may well benefit from making their own laundry detergent, or making their own soap from scratch. But those of us who aren’t in that boat really need to think long and hard – is it worth spending all that time?

Remember – you can make more Money. But you can never make more time. Would you rather spend that time with your family, or starting a business? Maybe there’s a hobby that you would like to take up. Think about it.

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Paul was basically of the opinion that sponsored tweets are selling out, and pretty much unacceptable for any reason.  I can’t help but disagree.  If someone ( Land Rover, in our discussion ) offered me $1,000 to send out a positive tweet about one of their products, I couldn’t hammer out the words fast enough.  That’s a grand, which would look great in my savings account instead of Land Rover’s.  Sometimes it makes sense to accept money for something that we normally might not – as long as we don’t “cross the line.” 

What say you – paid tweets ok or not so much?

Disclaimer: I have not, to date, accepted a dime for any tweet I’ve made.

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So you’ve realized that your financial situation just isn’t working.  You have a problem, and you’ve admitted it – good.  But it’s not good enough.  You have to change, and do it quickly.   The financial choices you’ve made so far in your life are obviously not very good – or you would be doing ok.  You’re not, which means you’ve been making bad choices. 

Stop it.   Look at what you’ve been doing, and immediately start doing something else.  If you consistently carry credit card debt, stop it.  Cut up the card, burn it, whatever.  You’re done – stop using it, and get cracking with paying it off.  If your issue is buying new cars far too often, stop it.  Whatever you’re driving now is good enough ( perhaps it’s even time to downsize, if you aren’t too buried. )  

The bottom line is that you must turn around and go a different direction.  That’s the only way that you will ever improve your finances.  Why not start today?

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Congratulations, that’s the first step to recovery

Realizing you have a problem is good, very good in fact.  But it’s not nearly enough.  Next is figuring out how to fix your finances.  Credit card debt crushing you?  You know you have to cut them up, burn the pieces, flush the ashes down the toilet, and cancel the cards.  You know that.  But why aren’t you doing it? 

Identifying the problem and figuring out a solution will not solve a problem.  You have to change – change the way you do things, change the way you act with regards to money.  Only through change and a commitment to change will you come to a better financial place.  Change is far from easy, but it’s the only way to get where you want to be.  Stop making excuses, stop procrastinating.  Look at your finances, and make the changes you need to, so you can get where you want to be.

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• The borrower is slave to the lender.  With GM sucking on the proverbial federal teat, to the tune of $13 billion and counting, Wagoner really had no choice.  A request from the lender ( in this case, the federal government ) is not really a request so much as it is a command.  Any time you’re heavily indebted to another entity, you are effectively under their control.
• Damn it feels good to be a gangsta.  Wagoner’s retirement package is worth $20.2 million dollars.  That’s right, for being El Jefe while GM was in an accelerrating downward spiral, Wagoner gets an extra $20 million.  That’s on top of his $63 million in salary for his working years.  Not a bad amount of compensation for failing so utterly and completely.

So the moral of the story, kids, is 1.  Don’t be a borrower, and 2. Be the CEO of a large corporation.  Don’t necessarily be good at it, but definitely be a CEO.

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1. Increase my savings account to $20,000.  Stretch goal: $25,000.  That’s a lot of cash to save – but I need to focus on a bigger cash cushion, even at the cost of putting off some investing.  It’s hard, as I want my cash to grow… but I need to have a bigger pile of this stuff sitting around, just in case.
2. Earn $35,000 outside my day job.  Sure, that’s the number I hit in 2008.  But, I had a record 4th quarter, which I don’t like to count on.  I’m shooting to match last year’s small business earnings.
3. Resist the urge to stop my 401(k) contributions.  Pouring money into my 401(k) every month, only to watch the value drop every month is incredibly painful.  Sometimes I think I should just take out the cash, put it in a big pile, and burn it.  However, in the very long term, I know that sitting tight is the way to go.  Stopping now just hurts me later on.
4. Go for year 2 with no new cars.  A whole year – pretty good.  Two in a row – outrageous!  I can do it though, as long as I can avoid the car dealerships.
5. Consolidate my finances.  A broader goal than last year’s credit card goal.  With so many cards, and so many banks, it’s a pain to keep track of everything.  I need to consolidate everything, make things simpler, and I’ll spend less time paying bills.  What’s not to like about that?
6. Embrace the envelope system.  No more Visa.  Period.  Not for Birthdays, Christmas, or even our anniversary.  Make the cash in the envelopes last, and even ( gasp ) save some for gifts.
7. Get back to Zecco.  It’s hard to invest in stocks when they are tanking.  But, deep down, I know that it’s the best time to buy.  As long as I do the research, and make smart choices, buying now is smarter than buying when they go up 20% from today’s prices.
8. Redesign Llama Money.  The look is old and tired.  I need to find the time to not only write more, but give the site a fresh look.
9. Build my Precious Metals Store into a useful item.  Right now, there’s not much to see.  The interface is ugly too.  But I’m a big fan of the shiny metals – and I want to have an easy way for my readers to buy them.
10. Increase my net worth to $70,000.  Stretch goal: $80000.  I came a long way in 2008.  It will be harder this year, with my wife not working.  But I intend to come out of the year with a much higher net worth.

That’s about it – 10 goals this time.  That’s one more than last year.  Think I can do it?  Hopefully you’ll stick around, follow my posts this year, and find out.

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1. Pay off all my credit cards before the end of 2008.  Pass.  Done early in the year, and I haven’t gone back to them, even for 0%.
2. Stick to my budget religiously – Fail. I have done an awful job of staying on budget.  The envelope system helps, as long as I don’t reach for the credit card when I run out.  That’s the trick….
3. Earn $25,000 outside my day job.  Stretch goal – $30,000.  Pass, flying colors.  I still have to tabulate everything, but it looks like my business profit for the year will be right around the $35,000 range.  Absolutely fantastic, and I couldn’t have done it without the help of my wife.
4. Open a Zecco account and invest $2,500.  Stretch goal – $5,000.  Well, I invested a little over $3,000 in Zecco, so I’ll give myself a pass.  Unfortunately my account is worth far less than that amount today, due to falling stock prices. 
5. Max out at least one Roth IRA.  Stretch goal – max out both.    Fail.  Not much I can say here, other than I didn’t focus on this goal at all throughout the year.
6. Consolidate my credit cards.  Fail.  I closed just a few cars, when I needed to close closer to 15.
7. Increase my savings account to $10,000.  Stretch goal - $15,000.  – Technically, this one would be a pass. I have just over $10,000 in my savings account.  I’d feel a lot better with closer to $15,000, though.  Times are uncertain, and a bigger cash cushion would help put my mind at ease.
8. Don’t buy any new cars.   Pass.  365 days – not a single new car in the Llama driveway.  Woo!  I have to admit, we did visit the Mini dealership ( the wife had Mini fever ), but we decided it wasn’t a smart move.  Willpower, baby.  You drive a Mini Cooper S and tell me it isn’t hard to leave without one.
9. Increase my Net Worth to $45,000.  Stretch goal - $60,000.  Pass.  I finished 2008 with a net worth of $46,600.  I was hoping to hit $50k, but didn’t quite make it.

So, I passed 6 out of 9.  That’s what, 67% or so?  D+, which isn’t all that great!  Still, I made great strides this year, and I think I’m learning from my mistakes as I go.  Soon I’ll have goals for 2009 written up, and hopefully I’ll do better than a D+ on those.

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I’m a proud man.  I work hard to earn a living.  I have a dayjob that is demanding and pays well, and in the evenings I work on building my small business.  I am proud of the fact that I work hard and am able to earn a good living.  However, I must constantly remind myself to remain humble.  After all, without the Lord’s blessing, I would not have the skills, intelligence, and drive to do the things I do. 

The money that I earn and have, whether silver and gold coin, or dollar bills, doesn’t really belong to me at all.  Perhaps I should give more care to how I spend it, after all.  Just some thoughts for the evening.

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• Access to healthcare isn’t dependent on employment
• Everyone has access to healthcare
• No one is denied medical services due to inability to pay

Now, some of the downsides

• Hospitals and clincs could experience tremendous overbookage – it’s already a royal pain to get an appointment.  Imagine how it would be when everyone has access to a doctor without regard to cost
• Huge tax increase – healthcare isn’t free.  If we aren’t paying insurance premiums, we’re going to pay for it in taxes.  Big time.

I don’t like the idea of health care depending on your employment – why should my job dictate how good my healthcare is?  Some jobs just offer terrible insurance plans, so premiums and coverage are absurd.  Those who are between jobs or unemployed are even worse off.  I shouldn’t have to choose between taking my child to the doctor or paying the electric bill – it just doesn’t seem right.

Taxes – the big problem

If we do move to socialized medicine, it must be paid for somehow.  How would you feel about paying significantly more each year in taxes?  As awful as this sounds, consider this.  The people who stand to benefit most from socialized medicine are those in the lower tax brackets.  An increase in taxes likely won’t hit them as hard.  Folks in the middle class won’t gain *much* tangible benefit, since most already have health insurance.  However, they will be hit with a huge tax burden as a result.  The rich will be hit even harder ( though I have trouble feeling too sorry for them ). 

What to do?

I don’t think socialized medicine is really a good route for this country to go down.  At the same time, I recognize that our healthcare system is broken.  Perhaps we need national standards for employer sponsored healthcare programs…. or more consistent state standards.  Individual policies need to be more accessible as well.  What do you guys think – go socialized or not?  Why?

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Our lifestyle choices have always followed the fact that we both work.  Two car payments comes to mind – we’ve pretty much always had at least two car payments ( 3 for a time ) – we haven’t known any other way.  I’m not saying that we “need” two new shiny new cars complete with payments.  We also don’t need to eat out as often as we do – though it’s convenient with both of us working.  That’s just how we’ve done things.  Until now, that is.

Times may be a changin’

The past couple months have been filled with discussions between my wife and I.  The topic?  Her quitting her job, and being a housewife for a few months.  After that, college.  From every standpoint except finances, I’m 100% in.  After all, how nice would it be to come home to a delicious home-cooked meal every day?  And my wife is Hispanic… boy can she cook.  How great would it be not to have to worry about washing dishes… or doing my laundry… ironing my clothes…. etc etc.  All those household chores that need to be done every day after a long day at work.  With my wife staying home, they would all be handled.  And of course college is a great idea – she can study to figure out her desired career, and then pursue her degree.  I’m in.

What about the money?

Ahhh.. the money.  Fortunately I’m making more than Mrs. Llama these days.  Plus I have my side business doing fairly well.  And she also gets a monthly payment from the VA for an injury she suffered while deployed on active duty.  With her quitting, we would lose roughly 28% of our take-home pay.  A big chunk, to be sure.  We would also lose health insurance for our 9 year old.  I can add him to my policy at work for big bucks, but we may go with a separate policy.  Either way, that’s an extra expense.  Also, no more 401(k) at her job – so less retirement savings, and less tax sheltered money.

Can we do it?

That’s a big maybe.  If we cut back to the bone.. no more eating out.. no more frivilous shopping… no more credit cards ( envelope system )… yes.  We haven’t been able to stick religiously to a budget in the entire time we’ve been married, I’m sad to say.  But I have locked up our credit cards, and gone to cash… midway through this month.  I want this to work, and am willing to sacrifice.  We may end up *gasp* selling my car.  If we can break even on a private sale, I’ll consider it.  The replacement will likely be something new-ish, with low miles and a factory warranty.  I’m not willing to risk driving a $2000 beater, and the troubles it can bring.  But lowering my car payment significantly will help offset the increased fuel usage it will bring.  Remember, I drive a Civic Hybrid that gets 50 MPG.  Of course, my wife not working for a few months will cut back on her driving too.  So it may roughly even out until she goes back to school.

Quit beating around the bush – are you going to go for it?

Simple answer – I don’t know.  It’s looking pretty sure.  The timeframe I don’t know about yet….. perhaps as soon as September… maybe closer to December.  It will be tough, and will require some pretty big sacrifices.  But all in all I think it will help us become more responsible with our money…. even if it means cutting back on investing for awhile.  For a more peaceful life, and a wife in college – I can live with that.

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