Monthly Archives: November 2008

Looking for Happiness In All The Wrong Places

Posted on by  at  6:00 am
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Last week I had the opportunity to be in downtown Atlanta during mid-day rush. I stopped along a bustling business district to grab a cup of coffee and kill some time. Watching the business crowd hustling along the streets from my warm coffee shop window seat I noticed nearly every passerby had one thing in common. I was reminded of the scene in the movie The Pursuit of Happyness where Will Smith’s character is watching stock brokers move about the streets of San Francisco and he says with a touch of envy, “They all looked so damn happy.”  Except in this case, they all looked “so damn miserable.”

Many were feverishly working a Blackberry, pausing only long enough to look up and avoid running into one another. Most of them were dressed sharp, and getting into and out of nice cars–much nicer cars than I am used to seeing in a smaller town. Several people stopped in to grab a cup of coffee, but one man caught my attention. He ordered the coffee after pausing his Bluetooth headset mid-conversation, putting down his laptop bag on an adjacent table, and returning his Blackberry to its holster. Our eyes met and he shook his head, took a deep breath and let out an audible sigh.  I smiled back and asked, “Tough day?”  He replied, “Every day.”  He paid for his coffee, collected his gear and was off and running again.  As I watched him trotting off into the distance I reflected on how it must feel to be in such a hurry all the time. And at what cost.

Before I had kids I used to think that would be me hustling around some large downtown business district. I wanted to do the daily commute, have an office on the 17th floor, and be part of “the grind.” What a difference ten years makes! None of that appeals to me now. I enjoy the slower pace. I look forward to getting home in the afternoon and spending time with my wife and kids. They fulfill me much more than any job could, regardless of the salary.

Attention College Students:  Choose Wisely

When I have the occasion to be around college students I always like to find out what they are majoring in, and why. The responses are pretty typical. The one thing I have discovered in my own surveying of future professionals is that the students interested in lower-paying career fields seem to be the most confident in their choice of major. I can’t remember ever hearing someone say they always wanted to be a teacher because of the money, or that they were interested in the clergy because of the great pension plan. No, people generally select lower-paying career fields because of a genuine passion for the field. They ignore promises of a higher salary to follow their hearts.

When I started school I entered pre-medicine because I did have a genuine interest in helping people, and because doctors made a lot of money. However, I decided after two and a half years that six more years of school (at least) was not for me, financially or otherwise. I left the College of Science and Math and headed over to the Liberal Arts college determined to change my major to education. I wanted to be a high school football coach.  But, it wasn’t long and I left that major as well after deciding there was no money in teaching and coaching at the high school level.  In both cases I allowed money to heavily influence my decision, instead of simply following my heart.

Parents, Guide Your Kids Towards Their Heart’s Desire, Not Towards Higher Salaries

I credit my mom for helping me finally settle down on a business degree with a specialization in information systems. She recognized that I was drifting a bit, and suggested that I look at something like business or computers, because those skills would always be in demand, and offered a wide range of industries to work in. For instance, I could work in the business or technical side of the medical field, and I could coach youth sports in my spare time (something I did for five seasons for my daughter’s soccer team). In other words, I could find fulfillment outside of my full-time employment.

There are a lucky few that enjoy absolute happiness from their jobs, and make good money doing it. Unfortunately, that is not the norm. Most of us get through our 8:00-5:00 jobs to pay the bills and put food on the tables, and that is fine, as long as we find something that fulfills us outside of work. I have several side hustles that keep me going, and above all I enjoy spending remaining free time with my family. I hope to also add more volunteer activities in the near future, but most of those will be a family affair as well.

If you are reading this and relate to the guy in that coffee shop exhaling deeply under the weight of work life, I would encourage you to evaluate why you are doing what you are doing. Is it for the money? Is it to feed your ego? To pay for stuff? If you downsized your lifestyle a bit, could you afford to downsize your work life, too?  Could you spend more time with your family? Catch a few more soccer games? I hate to borrow a line from Mastercard, but those moments really are “priceless.”

Quick and Easy Ways to Start a Savings Plan Today

Posted on by  at  6:00 am
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It is nearing that time of year when we sit down to plan out next year’s resolutions. Two of the most popular New Year’s Resolutions are to lose weight and to save money. Why wait? You can start a savings plan today in just a few easy steps.

  • Identify your savings goals. Have you ever heard that expression, “If you aim at nothing you’ll hit it every time?” I know it is a bit cliche, but when it comes to savings plans, it’s true. Those who find the most success saving money do so because they are committed to a plan–they have a goal in mind. It could be a down payment on a home, an emergency fund, a new (used) car, a sunny day fund, or even as far out as retirement. Most plans are a combination of both short and long-term plans.
  • Consider an online savings account. I have never been a saver. I like to save money, and I whole-heartedly agree with the importance of saving money, but every time I begin to amass some savings something happens that wipes me out. That was until I discovered ING Direct. I opened an Orange Savings account with them and began moving just $25 a paycheck (every two weeks) into an account. I’ve since opened four more “sub-accounts” there with specific savings goals and put a little in each account out of my paychecks. The money is still accessible, but it is far enough away that it is “out of sight, out of mind.” Check out my reviews of the other best online banks.
  • Sign up for direct deposit. I mentioned that I automated the transfer of money from my checking account to my online savings account. To take that a step further; visit your payroll office and ask if you can split your deposit into two separate accounts. Most employers allow you to identify a percentage of your check to go into a primary checking account, and the remaining percentage to go into a second checking or savings account.
  • Start small, and slowly increase the amount you save. Whether you decide to use direct deposit, automated transfers, or manually write out a check each month, start with a small amount to get used to the idea. Elect to have 1% of your pay diverted to savings, or move $25 a paycheck to your online savings account. Trust me, you are not likely to miss these small amounts, and if you are like me, you probably used to spend this on eating out each paycheck cycle. Now I just brown bag lunch and pocket the savings.

Advanced Savings Strategies

Once you are comfortable with your established system of saving money you can graduate to more advanced concepts.

  • Pocket your store savings. It goes without saying that to be in position to save money, you must first reduce your expenditures. One way to flip the switch is to pass on something you would normally buy in the store and pocket those savings immediately. For instance, the other day I was looking at video games and saw a new one that looked like fun. It was $49.99. The old me would have tossed the game in the shopping cart and moved on without much thought. The new me put the game back on the shelf, made a mental note of how much it cost, and went home and scheduled a $50 transfer from my checking account to my savings account.
  • Keep windfalls as far away from your checking account as possible. If you are lucky enough to receive small windfalls, such as birthday money, tax refunds, money from the sale of items on eBay, etc, be sure to put that money directly in your savings account. If it finds its way into your checking account it will likely be frittered away.
  • Save one dollar bills. Most dedicated savers have a coin jar at home where they dump change. Consider adding a dollar-bill box where you save all one dollar bills (with the exception of keeping a few around for tipping purposes). I heard of this idea on a radio show several years ago. The show’s host saved all one dollar bills he came across for years and presented them to his daughter on her 16th birthday. Up until that point she and the host’s wife had made fun of him unmercifully for his weird savings habit. After opening the box with sixteen hundred one dollar bills they no longer made fun of him.

Hopefully, I have given you some ideas for jump starting your savings plan, but you are the one that has to do the heavy lifting. Saving money is a function of spending less than you earn, and storing the difference. It does not matter how much, or how little, you earn. If you find yourself unable to save money because of low earnings, consider finding a side hustle, or selling some items to supplement your savings plan. The bottom line is to simply get started saving something, today!

The Fab Five: “Hotlanta” Gone Cold Edition

Posted on by  at  1:00 pm
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I was in Atlanta much of the day yesterday, and on the road the rest of the time, but I did get a chance to peruse a few of my favorite sites.  The last time I was in Atlanta the temperature was in the high 90′s.  Yesterday it was in the 40′s and windy! 

The Fab Five

The Low-Gift Christmas. I love the idea of a low-gift Christmas, and the idea of a no-gift Christmas would be even better!  This year we are keeping expenses down and buying for our kids–that’s it.

NCUA Insurance Is As Good As FDIC Insurance. Lots in the news lately about FDIC insurance, but haven’t heard much about credit unions.  I currently bank with a regional bank, but also maintain a credit union relationship where I have financed a vehicle (won’t do that again), and have a small savings account.  Good to know that money is similarly insured, though I doubt I will ever test the maximum limits of NCUA insurance!

What Desperation Looks Like. Here’s a guy who is not afraid of being laid off, because he has already figured out that living paycheck-to-paycheck is not a path to prosperity.

Why Simplicity Is More Important Than Ever. I agree that we could all benefit from more simpler lives–I know I could! The “paths to simplicity” in this article can certainly help towards that end.

Wealth Tip:  Learn the Art of Delayed Gratification. Delaying gratification is the cornerstone of a solid plan to build wealth. And us frugal folks have learned it also is a great way to avoid debt!  Simply delaying a purchase to avoid financing can add up to big savings in interest charges over time.

Target Retirement Funds Pros And Cons

Posted on by  at  6:00 am
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One of my shortcomings here at Frugal Dad is that I do not provide much investing advice, and when I do, it is fairly generic and focuses more on providing broad strategies rather than specific recommendations. I intentionally avoid the subject of in-depth investment advice for two reasons.  One, I confess to not being that smart on all the various investment types, and there are others out there with stronger backgrounds on the subject.  And two, I like to keep things simple.

Target Retirement Funds

Following that theme of keeping things simple, I have been able to assemble a very modest portfolio of well-diversified mutual funds in my 401(k) account and a Roth IRA. For the Roth IRA, I decided to give target retirement funds a try. Target retirement funds are basically a collection of mutual funds offered by brokerages to provide the right allocation mix based on your anticipated retirement date.  If I was working with short time horizon of say five years, I would select something like a 2015 targeted retirement fund which would be comprised of mostly conservative investments.

Since I have a few years (decades) to go to reach retirement, I selected a 2040 target retirement mutual fund. Who knows, I might not be ready to retire in 32 years, but when I am five to ten years out I want to slowly move towards a more conservative allocation to avoid losing all I’ve worked to save the 25 years prior.  Ideally, I would like for this to happen automatically, without requiring me to log in and make transactions to move funds to conservative investments, rebalance my portfolio, and manually change allocation percentages for new investments.  Target funds are designed to handle all of those chores for you. However, they are not a totally “hands free” investment strategy.

Do your homework before investing in target retirement funds.  Some have fee ratios higher than that of individual funds. Targeted retirement funds have one other potential drawback: they may become more conservative than your risk tolerance is at the predetermined life stage you are in.  For instance, if I am nearing 60 years-old, but love my job, am in good overall health, and would like to work another ten years, I might like to extend a more aggressive mix of equities to maximize growth potential.  That is not possible with money locked away in a targeted retirement fund.

It is possible to invest in a well-diversified mix of low-cost mutual funds on your own, and manage them accordingly as you near retirement. However, it might make sense to make a targeted retirement fund part of that portfolio to further your diversification even more, and give you one less thing to micro-manage related to finances.

Reader Giveaway: $100 Home Depot Gift Card Stocking Stuffer

Posted on by  at  6:00 am

To get in the holiday spirit, I’m giving away a $100 The Home Depot gift card to one lucky reader. The Home Depot gift cards are a great idea for the do-it-herself-ers and handymen on your gift list.  Or, you may decide to keep the gift card for yourself and invest in household items that help reduce utility bills all year long such as programmable thermostats, CFL bulbs, or low-flow shower heads.

122361_ducttape_card_us.jpg

This year, The Home Depot has 17 holiday gift card styles to choose from including a scratch-n-sniff gingerbread man that can be decorated with stickers, and a card that looks and feels like it is covered with every handyman’s wrapping paper–duct tape (my personal favorite).

Rules for entry are similar to previous contests here at Frugal Dad.

How to Enter The Home Depot Gift Card Giveaway:

  • Leave a comment on this post sharing your favorite holiday memory (be sure to complete your email address in the comment entry form).

Comments feature will close at 11:59pm(ET) on Saturday November 22nd. I will announce the winner on Sunday, November 23 and contact you via email. Each commenter or email will be assigned an entry number, and winners will be selected using Random.org to select a random number from the total number of entries.

Good luck!

*The Home Depot gift card can only be used in the United States, but international readers are welcome to enter the contest if they would like to pass along the gift card to a friend or relative living in the United States.  No email addresses collected as part of this contest will be shared with any 3rd parties.