Blog, Family Life, Work

My Family’s Money Is Back

The process of moving, trying to make money online, starting school, and getting settled into my new home has not been good for My Family’s Money.  A quick look at the archives shows that I have not posted since May 23, 2009.  Whoa.

It is my plan to change all that.

While I don’t think I’ll be able to pick back up to posting several times a week, I do plan on pumping out a couple of posts a month – which should help keep me honest with our finances and process some of the different decisions that my family is going to be making.

But before we get all into the here and now, I have about 10 months of history to update.

What’s Been Happening

Our savings are pretty much gone.  We have lived for around 10 months, bought a van, and paid for 2 semester of graduate school with the money that we had saved up.  All this spending with small earnings has meant that our savings are now mostly gone .  We still have somewhere around $5000 hidden in the electronic coffers of financial institutions deemed to big to fail, but that seems really low to us now.  Going from over $30,000 in savings to this number  has given us an appreciation for the cushion and freedom that having that type of cash available provides.

We still have about 2 months of living expenses left, which we understand is a huge blessing to have - but we are certainly used to have much more in reserve.

We have substantially increased our online income, but not enough to live off of.   The plan in making the move to Louisville was not to get another ‘real’ job right away but to put time into getting adjusted to our new life and to focus on earning money online.  While I have not yet been able to earn the ~$1800 each month we need to live, I have broken $1000 a month a few times.

The plan for now is to take all the money that we are earning from our online endeavors and pump it back into our business until we have a revenue equal to or greater than our personal expenses.   It may take us a few more months to get there, but that is the plan.  In the mean time, I have tried to find other ways to make some money.

I am once again gainfully employed.  I got a job with a major telecommunications provider working in a call center.  I’ll be making enough to cover expenses (or at least that is what I project) so we will be able to save lots of money once we stop pumping our online income back into the business.

I’ll be working a 2nd shift so I can still get classes in during the morning – but it does look like I might be slowed down at least for a semester or two until I can get back into a groove balancing school work, family responsibilities, and the job.

Where Do We Go From Here?

I don’t really know what the next several months are going to hold for me and my family, but it certainly does feel like an exciting time for us.  It feels kind of strange going from a season in life where we had very little income and were draining our reserves to being at a place where we will be making at least 50% more than we need to live.

The question that we are going to be asking ourselves over the next few weeks is this: how are we going to be using our newfound wealth to make the world a better place?

Family Life, Money Misc.

My Family Is Moving!

In one day less than a month my family is going to be moving.  That is right – my wife, my son, and I are moving away from beautiful San Diego, California.  Our destination: Louisville, Kentucky.  I’ll be attending Southern Baptist Theological Seminary to get my MDiv.  Classes don’t actually start until August, but we are heading out early for several reasons:

  1. It will give us a chance to spend some extended time with my wife’s family who lives on the East Coast
  2. A friend of mine is getting married in July on the East Coast, and it doesn’t seem practical to go from San Diego, then to the East Coast, and then back to San Diego, and then back to Kentucky to go to school all in one month’s time
  3. It will give me some time to focus very seriously on making money online - which is going to be really important since I am quiting my cushy job to become a student again and my family will still need to eat, have a place to sleep, and not running around naked.  And I want to do it all debt free to boot!

Moving is an exciting proposition for us.  We’ll be far from both of our families (hours by plane from one and hours by car from the other) and will need to make new friends in a new area.  Most of the people we expect to be somewhat in the same circumstances of life as we are so that should lend itself to forming easy friendships.  We also plan to live on campus for the first year (if we can get into campus housing), so that should help too.

There are still a lot of finance related things that I have to get done before we move and get into the thick of school, like:

  • Get a new bank account – After my run in with Chase’s fraud protection I am still unable to get into my online banking with them. This is completely unacceptable and has really hurt my ability to keep track of my families finances over the past several months, that and the fact that I have just been lax recently. I have called Chase customer support and I have gone into the branch and talked to Chase representatives but no one seems to be able, or willing, to fix my problem for me. So I will be taking my money elsewhere.  Both a checking account and a savings account or certificates of deposit will be in order.
  • Get another new bank account -My ability to make money online is steadily improving and I am going to need to claim some of the income that I end up making.  Heck, I may even end up starting by own business – with a company name and everything if profits turn out to be good enough and doing so would be to my benefit.  Getting a new checking account will be the first step in that process and help me better manage the money that my online efforts make me.
  • Find health insurance – This is a pretty big deal.  With a 6 month old son and a wife to take car of, making sure that they have access to affordable health care is really important.  Jr. will need shots and regular appointments to make sure he is growing and staying strong.  There is also the option of us having another child (or two) while we are at school.  Even though natural child birth is significantly less expensive than medically assisted child birth, it still can cost a few thousand dollars over the course of an entire pregnancy.
  • Find life insurance – If something terrible were to happen to me or my wife where we were to die while our family is in Kentucky than the survivor would have to pay lots of money for various things, not to mention need to re-examine what they should be doing with their life now that their “other” has died.  We don’t want to make each other have to worry about money in this situation, so life insurance is the way to go.
  • Find a car – Our 1995 Toyota Corolla has served us well, but I fear that it will not make the arduous cross country trip very well.  Rather than ship it, we are just going to buy a new or new-to-us car while we are with the in-laws on the East Coast.  I’ve never purchased a car before, so the whole process seems a little daunting – especially give with how much I suck at shopping.
  • Buy a laptop - This is kind of business related, kind of school related, and kind of family dynamics related.  We could definitely use a second laptop so that each of us could be working on the computer at the exact same time, especially when Jr. is asleep or when we both have a lot to do on the computer.  I have a feeling that this will only intensify once school starts as I will need the computer most of the time to earn money, study, write papers, and take notes – leaving my wife with no computer, not even to check her bloggity blogs.  I think that we will increase productivity by close to 100% with two laptops.  This is good.  It also means that I will need to fork out $400-$800 for a laptop.
  • Make more money online - Arguable the most important thing because it will impact all of our existence in our new home.  Without money we will not eat and without eating we will not live.  Not good.  I am pretty confident that we will continue to eat and that we will be able to make enough online to get by, I just need to put in the work.  If I don’t put in the work, my family doesn’t eat.  That would just suck.

There is plenty of work to be done around here. Its time to get my family moved.

Early Retirement

5 Reasons I Suck For The Economy

Have you been reading the news recently?  We are apparently in some very serious economic times.  Talking heads, politicians, and big-important economists are kind of saying that this could be the end of western society as we know it while others are saying things are bad but those people who say this is the end of western society as we know it are crazy – or at the very least very uninformed.

There is also this notion floating around that people should really spend more money to help keep us all from falling into the terrible, gawd awful abyss of not buying cappuccinos, not going out to the movies, not buying the latest doodad or gadget, and not buying new cars.

Some countries (Finland) are even using a public ad campaign to encourage spending.

To be honest, this talk does make a lot of sense to a certain way of thinking.  If an economy relies heavily on  consumer spending then it is the worst thing in the known universe for individual consumers to stop spending.  It would be like all the oil wells of the earth suddenly drying up.

But here is the kicker – I won’t be spending more to get us out of this mess.  Not one penny.  In fact, I think that I suck for the economy.  Why do I suck?  Here are my top five reasons:

Reason #5 – I don’t buy things I don’t need.

Consumer economies depend upon people buying crap that they don’t need to make their lives better, happier, more fulfilling, more comfortable, etc.  The underlying assumption here is that crap you don’t need makes your life better, happier, more fulfilling, more comfortable, etc.  I beg to differ.  That is why I don’t do it.

This means that I don’t create jobs in Starbucks because I don’t buy coffee.  I don’t create jobs in the auto industry because I don’t buy their cars.  I don’t keep McDonald’s in the black because I don’t eat fast food.  This is bad for the economy because I don’t create any demand.  Companies produce and produce expecting to meet the demand of the buying public.  I don’t buy so I don’t create demand.

This means that companies don’t make profits because they can’t sell to people like me.  Because they don’t make profits they have to fire employees who in turn can no longer keep up with their lifestyle of buying crap they don’t need.  This creates even less demand which hurts company profits even more which makes them lay off more workers.  It is a vicious cycle if you ask an economist.  I suck for the economy.

Reason #4 – I horde cash like Scrooge McDuck.

Sweet, sweet swimming holes of gold.  Three little nephews with a broke ass father.  Time machines and adventures galore.  Who wouldn’t want to be Scrooge McDuck?  Not very many people if you ask me.

That is why I have taken it upon myself to save as much as I possibly can.  My short term motivation: get through graduate school without incurring any debt and still feed my wife and son.  That means aggressive saving now so that I can eat later.

It also means that all my liquid assets don’t provide the economy with much liquid to grease its dirty clogs.  I don’t take risks.  I don’t invest in new entrepreneurial endeavors.  I don’t fund commercial or government projects.  I horde my cash like a good Scrooge.

What happens when there isn’t capital for these things?  Business stop expanding and governments are not able to hire as many people.  This creates less demand for needless goods and services and causes the economy to tank.  I suck for the economy.

Reason #3 – I think the concept of ‘money’ is really weird.

Have you ever had a nice little sit down with yourself and pondered money?  It is really weird when you begin to think about it.  We have all come to rely upon it to get the things that we need to live: food, water, shelter, clothing.  We exchange our labor for the money we use to get these necessities.  We sit in offices all day long and type on computers, producing words, or images, or codes, or God knows what else and someone else gives us money to do it.

Where did this money come from?  Someone magically created it.  Why does it have value between you and I?  Someone magically said that this was how it should be used.  Sure, the principles behind money have a long tradition dating back thousands of years and it is a useful bit of technology, but its only as valuable as the person your trading it to believes it to be.

I personally think that it is kind of scary that our economy is built on magical paper (especially when that magical paper is so removed from the production of things that are truly valuable).  As a result I don’t do the things with my money that would be good for the economy because I just don’t get it. My not getting money sucks for the economy.

Reason #2 – I don’t produce anything truly valuable.

That doesn’t mean that I don’t work.  It just means that what I do at my job is really pointless.  It does meet a perceived need – the need of my employer.  They need me to do x because they have a customer who likes having access to what x gives them.  But when we all sit down and think about it, x is really just a trite convenience that someone could do themselves if they wanted to.

My job has subjective value, but not objective value.  It isn’t valuable in and of itself.  I don’t save lives.  I don’t make something that improves the condition of humanity at large.  I don’t advance human knowledge.  So in absolute terms I would have to say I suck for the economy.

Reason #1 – I want to retire early.

I would quit my job and live off of $6,000 a year if I had the accumulated capital to do so.  Like right now.  That means I would be leaving close to a 100 perfectly good years on the table (if I live to 125 as I expect!).  I wouldn’t stop adding objective value to the world, but I sure wouldn’t be good for a consumer economy.

If I can achieve the goal of early retirement I will accomplish two things that suck for the economy:

  1. I would effectively relegate myself to a lifetime of under consumption
  2. I would keep all my demand (capital) pent up until I absolutely had to use it to buy necessities

I wouldn’t spend money on lattes and designer jeans.  I wouldn’t buy books when I could check them out of the library for free.  I wouldn’t buy new cars when a bicycle or used car will do just fine.  I would be so removed from a consumer culture of buying stuff for stuff’s sake that I would be an almost imperceptible spec on the economy’s radar.

And because I don’t buy things the whole cycle of businesses not making profits and firing employees who now can’t add to the collective demand is going to perpetuate itself for as long as I am alive.

I suck for the economy, do you?

Work

Commuting Cost Analysis: Bus vs Bike vs Car

Over the past 22 months that I have been working at my job I have commuted to work by car, bus, and bicycle. I have come to love getting to work by bike over the past 4 months and cherish my 22.4 mile, 1.5 – 2 hour commute. However, I have received questions about the relative cost of cycling. Is it really cheaper than other forms of transportation?

I always assumed that it was superior in terms of cost incurred compared to both riding the bus and driving – but I had never really put any effort into crunching the numbers on it.

Well, I have finally put together a spreadsheet that helps me analyze the costs of bike commuting as compared to both driving a car and riding the bus. I made some basic assumptions in this cost analysis that definitely need to be mentioned:

  • I valued my free time to my wage at work. This means that one hour spent idle is worth $16.467. This is per Benjamin Franklin’s (and other’s) assertion that time is money.
  • Things that I would pay to do are worth the value of my time plus the value per hour of the thing which I pay to do. If I spend $4 to rent a movie I want to watch and the movie lasts 1.5 hours then the value of the movie would be $19.13 per hour ($16.467 + $4/1.5 = $19.13). This is considered value added and will be considered as a credit when I calculate the cost of any single mode of commuting. So, if I were able to watch a 1.5 hour movie for free on every bus ride home – it would count as a credit of $19.13 when I total the cost of commuting by bus. If this isn’t clear now, hopefully it will be in my analysis below.
  • All costs are red, all credits are black.  This will help visually distinguish between things that cost money and things that I count as adding value to my life.
  • The time horizon for the analysis will be 5 years. This will enable the up front purchase price of items like the car and the bike to be distributed over a period of 60 months. I think that this is certainly reasonable.

The Cost of Driving

With these assumption in mind, let us examine the cost of driving to and from work. Here are the basic costs of driving and the costs associated with them:

  • Vehicle – $33.33 per month – I imagine that the value of my current vehicle is ~ $2000 (Kelly Blue book agrees) so that is the monthly cost to use my car if it were to last an additional 5 years. With 165,000 miles on it right now, this might be a very generous assumption – but for the sake of this analysis I am going to make this assumption.
  • Vehicle Maintenance – $25.33 per month – This includes 4 oil changes a year, $90 for tires a year, and $15o for miscellaneous repairs and fixes a year. I honestly don’t know if this number is accurate or reasonable, but it seems like it is.
  • Gas – $35.12 per month – This is from a 25.8 mile daily, round trip commute where I average 30 miles per gallon.  It also assumes a gas price of $2 a gallon. This is the value of gas today, but in the past year gas prices have been as high as $4.50 per gallon. I’ll include a table with different driving totals for a variety of gas costs at the bottom of this section.
  • Insurance – $87.99 per month – This was the cost to insure me as the 25 year old sole driver of a 1995 Toyota Corolla with Farmer’s auto insurance.
  • Time Costs – $336.20 per month – I would spend an average of 20.42 hours a month on the road if I were driving. That is about an hour per working day per month.

Total Monthly Costs: $517.97

Gas Price Affect on the Cost of Commuting

Gas Price Monthly Commute Cost
$1.50 $509.20
$2.00 $517.97
$2.50 $526.75
$3.00 $535.53
$3.50 $544.31
$4.00 $553.09
$4.50 $561.87

The Cost of Bus Commuting

With no start up costs, bus commuting probably has the fewest cost categories to deal with. They are:

  • Bus Fare – $64 per month – This is the standard fare for a monthly pass on the bus that I would ride if I were commuting by bus. Chances are it will change over the course of 5 years, but I don’t want to deal with inflation in this example so I am not going to do it.
  • Time Costs – $1008.60 per month – Commuting by bus would eat up about 3 hours of my day, for an average of about 61.25 hours per month. About 100 minutes of this would be time spent on the bus and about 80 of it spent walking from the closest bus stop to my office.
  • Reading Credit – $356.62 per month – While riding the bus I would have about 1 hour of reading time per day. I mostly read free books from the library or material from the internet, so there are no additional costs here. Also, since I value my time reading slightly higher than I value my time working I have put the monetary value on reading at $17.47, a dollar more per hour than my work time.
  • Exercise Credit – $346.41 per month – I like to walk and it is decent exercise for my body. I do spend time walking on my own as a way to relax both my body and my mind from a day of work. It gives me time to think, which I do value. This activity has a value of $16.97 (my base time value plus $0.50).

Total Monthly Costs: $369.50

The Cost of Bike Commuting

Bike commuting is my current mode of transportation to and from work. Its costs are as follows:

  • Bike – $2.67 per month – My current ride cost me $160 cash money from a nice deaf man in La Jolla.  It is old (probably from the 70s or 80s), but it rides well enough to make me think it will last for 5 more years – easy.
  • Bike Maintenance – $20 per month – I really haven’t spent this much so far on maintenance, but I don’t really know the costs that I could incur in the future because I haven’t learned to properly maintain my bike.  I think $1200 over the course of 5 years will definitely be more than enough to cover any of fixes that might crop up, seeing as how it is 7.5 times the cost of my bike.
  • Cycling Apparel – $5 per month – I haven’t bought anything in terms of cycling apparel, but I do keep thinking about buying shoes for my clipless pedals – I just can’t seem to get up the gusto to check them out and fork over the dough.
  • Time Costs – $558.09 per month -  This assumes 1 hour and 40 minutes in the saddle each day, or two 50 minute one way trips.  That comes out to about 33.9 hours a month, on average.  It also means that I travel about 13.4 miles per hour on my rides home – which isn’t very fast.
  • Exercise Credit – $591.99 per month – The exercise value of cycling is very high.  It is great cardiovascular activity, promotes flexibility (even though I am terribly inflexible), and strengthens the core.  For the sake of this analysis I have valued my time cycling at $17.47 an hour.

Total Monthly Costs: $6.23

Cost Analysis Conclusions

It appears that commuting by car is the most expensive at $517.97 per month, bus commuting is next at $369.50 per month, and bike commuting is the least expensive (and actually “pays” me) at $6.23.  Now I know that not everyone will value their time the same exact way that I did or count exercise and reading as credits, so I have included a table of the cost as I demonstrated above, without including time and credits, and without considering the credits I gave biking or bus riding.

Cost Analysis
Everything Included Without Time and Credits Without Credits
Bike Commuting $ 6.23 $27.67 $585.76
Bus Commuting $369.50 $64 $1072.60
Car Commuting $517.97 $181.77 $517.97

In the end analysis, bike commuting appears to be the most cost effective mode of transportation given my assumptions and predicted costs. I have certainly left things out, like the difference in lifetime health care costs, but I think that this is a fair and accurate analysis.

Update:  Thanks to all the individuals who left useful and insightful comments.  I have appreciated them and they have helped me think about this topic with more clarity than I was previously able.  I also wanted to thank Free Money Finance for hosting the Carnival of Personal Finance and including me as an editor’s pick.  Apparently I did something useful with an article about commuting costs.