Wealth – Page 37 – Wilder, Wealthy, and Wise

The Shape of Your Money

“I’m quite good at spending money, but a lifetime of outrageous wealth hasn’t taught me much about managing it.” – Game of Thrones

I need a better picture for this, but I give up. Here’s a dolphin.

I was talking with a friend the other day about personal finances, and we were discussing how we were both in pretty good financial shape, but we were (yet) in very different places.

Most of my money is ludicrously liquid, in fact, when I grab a quarter, it turns into a wet, squishy mess. But by liquid, I really mean that have the ability to use it, right now, right here for anything from purchasing a prodigious plethora of Pez® and pantyhose to just letting it sit and rot. Mainly my money has just been sitting and rotting slowly due to inflation.

As I’ve discussed before, most of my time (day and night, sometimes) had been spent out of the house actually earning the money, and I’d given very little thought to actively managing it and the best way to do that. I’ve missed some great deals, but I’ve also missed plenty of bad ones, like that Shetland pony farm. Never could get those seeds to sprout.

My friend, however, has a great financial structure going forward, but he’s fairly illiquid – he can’t really touch vast chunks of that money, in some cases he can’t touch it for 20 years into the future, or it would require severe penalties (like losing a kidney, or paying massive taxes – but I repeat myself) in order to get at it. I think his setup has him set up far better than me, 20 years from now.

In the conversation we were having, I came up with the epiphany – our money has different shape. Shape, like a fine pair of pantyhose, has two sides. Money shape has at least two – liquidity and risk.

Liquidity

Liquidity is when your money is available. The greater the liquidity, the more available your asset is. So, if I have $10 in my hand, I can use it immediately if I so chose. Or I can do like government and just light fire to it and watch the pretty flames. But let’s look at liquidity from liquid to solid of assets we own.

Money

Cash – As above. You can do anything you want with it. Well, most things. It can’t help you go faster than the speed of light.
Checking Accounts/(Debit Cards) – Either way, the money is immediately and totally available, as long as you have money in your account or have recently paid your credit card bill. Many places still checks, which are becoming an obscure throwback to another age when men could actually sign their name. I pay bills with checks. I have never owned a debit card, but I hear they go great with fish.
(Credit Card would go here if Credit Cards were an asset – they’re not, they’re a loan)
Things – Some things are almost as good as cash, but they’re not cash. Silver coins, gold bars, Pez®. This could go nearly anywhere, depending upon the thing, the time of the day, and the tide. Beanie Babies® probably are about as liquid as land near a former Soviet nuclear/biological warfare testing site. Sorry if you thought those would pay for college.
Stocks/Bonds – These are pretty liquid, it will still take a day or two to get a check and get paid.
Savings Account – Different than checking – they can hold your deposit for a period of time if they want to after you ask for it, generally no more than 30 days. It’s actually a loan to the bank. Do you really trust those guys?
401k/IRA – The money is yours, but you get hit with a huge penalty for breaking that piggy bank, takes weeks to get a check. I think it’s just a plan for you to save your money and put it all in the same place so the government can find it easily and use it to buy Carmex™.
Home – Generally takes more than a month to sell/close. Might take a year. Might take longer.
Land – See above, but . . . location, location, location.
401K/IRA (no penalty) – Become 59 and ½ years old. So, if you’re 59.49999, pretty liquid. But easy to calculate how much time until you are liquid.
Pension – Get it at a predetermined age, generally 65.
Social Security – Can start drawing early, but you get less over time. If you die early, that’s a good deal. Wait, did I just really type that?

My issue is that I’ve been living too far up the liquidity tree. I’ve been serially under-invested, and have been for years. As I mentioned above, another dimension to money is risk of loss:

Cash – 100% risk of loss. Inflation, over time will destroy cash purchasing power. It’s the way that government keeps promises – it taxes those who save and are responsible!
Gold/Silver/Pez® – Only lost if you don’t know where you buried it, but values may vary greatly even during a year.
Stock Market – Inflation adjusted, it’s probably one of the best defenses against the tide of inflation. Individual stocks are much more risky than index funds, but have the potential for much greater gain. Probably the best long term choice, but I hate to buy now, when the market is at an all-time high.
House – Even if it blows up, you still own the crater. If only there were a market for craters.
Pension – Generally, these are horribly underfunded. Good luck, especially if you’re a California government employee!
Social Security – I’ve always felt that I’d never get any money back on this scheme. Still betting that.

The impacts of the shape of your money are significant. I have more choices now than my friend, and unless I do a good job managing those choices, I’ll have many fewer as I get older. The nice part of this, however, is the choices are mine, and I’ll live with the outcomes.

Now, to invest in an S&P index fund? Or maybe horde Pez® for the apocalypse?

Choices, choices.

Homes: Affordability versus Income

“Well, you know, I’ve been lying about my income for a few years; I figured I could afford a fake house in the Hamptons.”-Seinfeld

Our old Alaska home. Photo by The Boy.

Houses are both an economic and emotional topic. As a half-human cyborg travelling back in time from the year 2000, I tend to focus on the economic side of the equation, however I realize fully that there are a huge number of emotions (like happy, or sleepy, or caffeine) tied up in a house.

A house can also be a home. And a home is for living in, for entertaining, for loving in, for building memories, for first steps, for raising children. It’s also where I keep my pants, and that is fairly emotional for me, too.

The process of home-buying is built entirely around emotions. The agent taking you around to view properties will have the emotional antennae of a cocker-spaniel with daddy issues, attempting to understand what you like, and, if they’re good, they’ll swap around the listings to show you the one that they think you’ll like the most as the last one on a long day. It’s happened to me. It’s effective. For the most part, you’re tired at the end of the day, and you don’t even blink when the realtor tells you about the repeated haunting of the house by the soul-stealing-infant-snatching ghost. Honestly, you can always get another infant, right?

When selling, though, the realtor puts on an entirely different hat. It looks a lot like the Pope’s, but it’s orange.

A list of things we’ve been told:

No odd objects. Where did you even get a Battlestar Galactica helmet? Do the lights work and everything? (Apparently the buyer can’t imagine their things in the house if yours are too striking or unusual, like that coffin we keep in the corner with Uncle Drago’s skeleton.)
The smell of freshly baked cookies should permeate your house. If you grill a burger? It should smell like a cookie.
Move your, um, things out. We can then stage it with things that normal people might own.

There’s also a huge amount of emotion based on the selling price of a house. I’ve seen (and when I was younger, I was guilty of) being emotionally tied to the value of the house. The value of the house was a reflection of my value! How dare you say you don’t like the color? I painted that!

Also guilty of? Emotion in negotiation. True story, I once negotiated back and forth so often that the realtors (both of them!) pitched in to close the difference. At the end we were arguing back and forth over 0.25% of the price.

Also guilty of? Mixing emotion in with the inspection report. The Home Inspection is the rite of passage for a home whereby an inspector tries to make the current homeowner’s head explode by picking out every tiny possible thing wrong with a house and then whining about it. I mean, what’s wrong with exposed copper wiring in the children’s playroom? They love the way it makes their arms vibrate when they grab it.

I know that emotion is important to those of you who had that chip implanted at the factory. But, really, in the longer term economics is more important.

In my opinion, the most important aspects of home ownership are:

Affordability/Tax Deduction – When I moved to Houston, I was talking on the phone to the nice lady at the mortgage company, and she said I qualified for a loan that was eight times my salary. The payment alone would have been enough to keep President Trump in hair product for a month. Me: “Why would you even offer me that, there’s no way I could ever repay you?” Her: “I have to tell you that you qualify for it. They make me.” More about this topic follows.
Insurability – Let’s pretend you buy a house. Can you even get insurance? Check with your company – they have a list of houses that they won’t insure based on previous experience and claims at the house. It’s a downside of the data-driven world, but your mortgage company (unless you’re buying outright) will demand you have insurance, lest they unleash a cauldron of lawyers to play Justin Bieber songs outside your window all night long until you are insured.
Cost of Upgrades/Code Compliance/Upkeep – Over time, these items add a lot to the cost of home ownership, not to mention the amount of personal time you have to spend polishing the Great Orb in the back room, and making sure that the bare wires in the children’s playroom are where they can reach them.
Cost of Commute/Time – If you have a job, where your house is determines how long it takes you to get to work, unless you’re a witch and can teleport. Commuting costs time and money, and detracts from your ability to spend time with your family though, with some families, that might be a plus. A little more on this follows.
Resale/Future Value – I know I put this kind of low, but this is my list – yours will likely vary. My actual results are below.
Cost of Private Schools/Time – We’ve always bought homes where we didn’t have to worry about this – the public schools have been adequate, and in small-town America, most are pretty good. Our worst schools? Houston area.
Storage Costs – If you buy too small of a place, this might be a thing. Hard not to buy an adequately sized place where we live.

Item 1. In the list above is where it is because, for me, it’s been the most important. You can have an awesome place that you can’t afford, and that wrecks your life, since the insurance and taxes are consuming so much of your income.

Home Number	1	2	2A	3	4	5
Home Cost as a % of Gross Income	22%	17%	20%	17%	14%	5%
Return (Annual) on Sale	16%	3.4%		11%	0%	N/A

Home 2A was a refinance, home 5 is our current home.

Affordability

My experience on home price to income:

Home 1: Too expensive, very little money left over. The cheapest home on the list, but also my lowest income. Bought at just the right time, but wasted the equity on Pez®
Home 2: Next house. Even at 17%, the house was too expensive, but primarily because other debt loads were too high.
Home 2A: Same house, just refinanced to buy more Pez®. Got rid of car payments, so very livable.
Home 3: Great house, made a killing, no car or Pez© debt, so that worked for us.
Home 4: Debt level okay. Also a help? We still had no car payments.
Home 5: Next to no income spent on the house. Plenty of money for Pez™!

Cost of Commute/Time

Home Number	1	2	3	4	5
Commute Time Minutes	20	20	10	30	20
Commute Cost (at $0.35/mile)	$14	$12	$6	$14	$14

Meh. Not a lot of difference there, though I will say the 10 mile commute was awesome, and sometimes I biked to work. In Alaska. Yeah, it was awesome.

Resale

As you can see, I’ve never lost money on a house transaction. House 4 was our most expensive house to date, and I had to sell it in the middle of the real estate crisis. It’s at a zero instead of a negative (it should be about a 20% loss) but when I took a job with that company, one of the conditions on the job offer was that, if they moved me, I would, at minimum, be kept whole on the house. Nice work, and it was an easy negotiation that took the form of one question, followed by a “sure, we can do that.”

It’s likely that whenever we sell our current house, it’ll be at a loss. We bought it at a time when the market was (locally) pretty hot, but those days are likely gone. It’s okay, because at my current equity and payment, it’s really not a strain.

What would have been a killer for me would have been living in a house that was too expensive and unaffordable. Based on the above, I’d peg that as a total home payment (including taxes and insurance) of less than 1.4% of your annual income. Above that, and I think (depending on your debt structure and payments) that is enough that ever purchase has to come under extreme scrutiny. And it gets tough, and life is much less fun. So, I’d go for a less expensive house, even if it means living with the soul-stealing-infant-snatching ghost. At least it does dishes more frequently than Pugsley or The Boy.

John Wilder may be a Nobel©®™ Prize winner, but he is not a financial advisor. So, talk to someone who isn’t the Internet equivalent of Bluto Blutarsky.

Identity Theft, Dormant Bank Accounts, Check Your Statements

I”Identity theft. Apparently he used to sit on his couch, hack high net worth accounts all over the world. Turned it into a collection of Hummers, helicopters, and, apparently, Freddie Mercury’s ashes.” – Prison Break

Conquer the Crash of 2004? You bet! Rode it out with Mad Max. You remember that, right?

If you only read one post I’ve ever written, read this one.

William Blake said, “Life can only be lived forwards, but understood in reverse.”

Stupid William Blake.

It started last January, but to tell the story I have to start on April 17 of this year. Every year, tax day is on April 15. Unless April 15 is on a Saturday, Sunday or Monday. So, essentially tax day is tied to the calendar like Easter (only PhD’s in Astrophysics and the Cadbury Cream Egg® people can figure out when Easter is, and that was only after the advent of the digital computer).

Anyhow, not wanting to put things off until the last minute, I sat down on my computer 36 hours prior to my taxes being due (that’s at least 40 metric hours).

TurboTax® is like the person who holds your hair when you vomit. It’s nice of them, but you’re still in horrible agony with a convulsing body with things going entirely the wrong direction. That’s the way I feel about tax day, even if they send some of my money back to me. I rationalize that it’s easy, and, heck, procrastinated to the point where I took a day off to do taxes.

I sat down with a hot cup of coffee, my trusty laptop, and proceeded to open all of those letters that showed up in January with “Important: Tax Information Enclosed” emblazoned in blood red on the envelope. I soon had piles of income, deductions, stocks and toenail clippings arrayed in front of me next to the computer to begin entry into the government’s enabler (TurboTax©) and began entry.

Income was easy. Had all of that. Whoops? Where are the interest statements on two accounts? Pugsley brings the mail in most days. On a windy day, Pugsley might have dropped it and those statements might have blown into Canada along with William Shatner’s toupee.

I called up my bank, “Yo, what gives?” (Okay, I actually said, “Verily, what mayhap be uppith with my interest statements?”)

The response was, “Hmmmm, ohhh, okay, I see. Those accounts are dormant. You’ve done no transactions with them for 24 months.”

John Wilder: “Can you undormant them?”

Nice Lady: “Sure!”

John Wilder: “Wow, does this happen often?”

Nice Lady: “Yeah. What’s really bad is that in some states if the account is dormant long enough, the state takes the money. And there’s nothing you can do to get it back.”

John Wilder: “Wow.”

Nice Lady: “That’s a rough conversation.”

I completed my taxes, but this conversation stuck in my mind. It seemed pretty wrong that this could happen to someone who was just, you know, saving their money and being all responsible.

So, on Friday after lunch, I called up my bank and began to request my account balances.

The nice lady (a different one this time) began rattling them off. A year previously I had put them all in a spreadsheet (minus account numbers) and was comparing them: “Yup, that’s right. Yup. Yup. Yup.”

Nice Other Lady: “And that’s it.”

I didn’t need to add them up. There were the right number of accounts, and most of the amounts were the same. But the amount on the biggest one wasn’t the same as the spreadsheet. Not even close.

And it wasn’t more money. It was smaller. By a lot.

A lot.

Over 10% of my net worth was missing. More than my home value, plus all the cars I’ve bought in the last ten years. Just gone.

You know that whole, “blood runs cold” thing? It wasn’t running cold. It was cryogenic (cryogenic comes from the Latin word “Cry” because your money is missing and “Genic” meaning this level of stupidity must be genetic).

I pretended calm. Have you ever tried to pretend to have idle chit-chat with your boss while you think that even this second your bank accounts are draining faster than Amy Schumer chases a cheeseburger?

The next three hours and forty-one minutes at work were the equivalent of sixteen years of my life. The drive home took another four years. I now identify as being seventy-one. I think I will list that on my Social Security application next year and argue that I am “age-fluid.”

As I drove home I prayed. “Please oh please.”

Further, I deduced that there were three possibilities in the situation:

Russian hackers had pilfered an account and were living high on the hog with their fat Bulgarian mistresses in some country where they use wrapping paper for money and eat dark bread and vodka all night.

(I have no idea if Bulgarians are fat, but I was not thinking good things about the potential hackers). Now the family fortune isn’t watched over by a series of accountants I keep chained in the basement, it’s been because I’ve worked really hard – in some years nearly 4,000 hours a year (and gotten amazing results for my company lots of times). As such, I have stacks of unopened bank statements I don’t read; I’m off at work. I know I have enough money for most things I’d like to do (most of my wishes are small and involve T-shirts with funny sayings on them), and so, I skip opening them.

Sadly for me, most banks will only allow you to fix hanky-panky if you let them know in sixty days. I’m not sure I’d opened even statement during that time period.

My blood ran colder. This was the worst possibility.

Whatever state my bank was located in had confiscated my money and had bought themselves hot tubs for their tax accountants and a new snow plow.

This was marginally better. My accounts had just gone dormant, and I could make a good case that they were big poopy heads and give me my money back, meanie. The legal term for this is Prima Whinius. And maybe they could take the plow back.

This was a better possibility for me.

I had made a mistake about how much money I had.

This was a pretty remote possibility.

The amount that was missing was a pretty big one, one I’m sure I hadn’t imagined, and one that the Other Nice Lady had NOT mentioned. I distinctly remembered going through the statements, account by account, and adding them up a year previously. And it was the biggest account, by far. It’s like playing hide and seek with Al Roker’s former pants. If you can’t see them, you’re just not looking.

In a strange way, I was hoping it was this, because then I could pretend I wasn’t as stupid as in either point one or two above.

I finally got into the driveway. The Mrs. was (thankfully) gone to drop The Boy and Pugsley off at a Junior Wine Tasting Festival, while I tore into the house like a poodle chasing a pork chop on a stick.

I ran downstairs to the vault where I keep the gold coins I swim in and my financial statements. (It’s actually a closet filled with tents, sleeping bags, and plastic bins of my cable bills from 1897.

I reached in, and pulled out . . . the golden ticket – the first statement I found was for the account. I ripped it open and looked at the balance.

It was the big number I was expecting. It was from less than six months ago.

I ran upstairs, and dialed the bank. I read the account number off, and asked for a balance.

Nice Lady Three: “Well, John Wilder . . . ” and it was the same number from earlier in the day.

“Is there any problem, sir?”

“Yes,” I croaked into the phone, stress filling my voice, “I’m missing more than 10% of my entire net worth out of this account!”

“Sir, are you sure?”

I looked at the statement again. I looked at the second page. It showed a different number.

A much smaller number.

One that matched what she said. And it had the right account number next to it.

Crap.

It turns out the statement aggregated three accounts. Two of the accounts showed up on other statements that I also got monthly in other, separate envelopes. Wow. I’d double counted a house and a Corvette™.

Dangit.

I then recalled that moment a year ago when I’d added up my accounts, and found, happily, that I had a house and a Corvette® more than I’d expected. Yay! Strangely, my emotions then hadn’t included panic or hyperventilation.

The Mrs. returned home, and I outlined the situation. To her? No big deal. It’s my job to watch the money and to make sure we have enough money to buy Pez©, pantyhose, and elephant rides. I watch our net worth, and The Mrs. watches Mystery Science Theater 3000.

My Lessons and Takeaways:

Check your Statements.

Money isn’t actually real, so if the Russians take yours, and you let the bank know about it within sixty days? They’ll make some more for you, or at least that’s what the Internet thinks. I don’t online bank or use ATMs, so those aren’t danger points for me. But the more you expose yourself to those that love Bulgaria, the riskier it is.

Check your Statements.

And actually math them. Make sure that everything looks good monthly. I’d call your bank every other month. Actually, I’m volunteering. Send me your banking information and Social Security Number. I’ll check for you for free! (HINT: THIS SOUNDS SUSPICIOUS BECAUSE IT IS – I CHARGE A FEE)

Periodically Stir Your Money.

That will prevent the state from thinking it’s dormant and stealing it. It will also prevent your money from sticking to the sides and bottoms of the pot as you cook it.

I am probably now old enough to adult more, so I probably should adult. I should probably figure out a way to invest it so it returns money to me, instead of just the bank. I know, this is a crazy idea.

Outside of How Much You Spend and How Long You Are Retired, Money at the Margin is the Most Important in Retirement

When I re-ran retirement scenarios? Yeah, I’m gonna need to work longer or adopt Justin Bieber. Okay, I’ll work longer.

In the end, the biggest take away of the Wilder Financial Catastrophe That Really Wasn’t of 2017®?

I haven’t changed, and I’m the same John Wilder the day before and the day after, and a bank error in my favor won’t hurt me. And, as I continued to open statements? I found half a Corvette® to add back to my net worth. Yay!

I lost something I never had, but now you have an awesome blog post. Tell six friends or I’ll tell the Russians where you live. On tax day.

Now you understand what an evil genius Blake was. Lived it forward, understand it now.

You should watch this, it’s how I felt. It has four instances of cussing, but it would be PG-13. Honestly? I cussed a lot, too.

Everybody has three mortgages nowadays, – Venkman, Ghostbusters

Sedan2C_Kansas

By Michael Adams (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

This is Sedan, Kansas on a high traffic day. Some protesters closed the road down once, but nobody noticed.

I restarted blogging after being inspired by a post on Financial Samurai (thanks, Sam!) – I had blogged for about five years two to three times a week before putting the blog on a pause that lasted most of Joe Biden’s term as vice president. I’m sad that I missed the opportunity to Biden-ize the blog.

I stopped primarily because work was fairly consuming, but also because I had run out of things to say, and you know that I would rather eat a squirming kitten whole than produce work that was shoddy and substandard. What do I look like, Johnny Depp? (That was metaphorical – Johnny Depp often looks like he’s been fighting in an alley for a can of Sterno®. I only occasionally look like that.)

When I lived in Alaska, blogging was a good way to view a new location through new eyes – I learned about Alaska, and told my readers about it, too. Our move to Houston represented for me our Beverly Hillbillies© moment – people who belong in Alaska attempting to get by in a very hot, very big city. True story: It was so hot in Houston that I often was sweating.

Then we packed up and moved to Northeast Midwestia, and, well, I’d lived in small towns, so it wasn’t nearly as unique to me. Also, The Boy and Pugsley had reached the ages where we were doing stuff with them three and five nights a week. By the time I got home, I was fairly tired, the job was engrossing but also very, very time consuming. Again, I’m not going to give you junky posts. Do I have to bring Johnny Depp back into this?

The change (for me) came when, in the middle of moving responsibilities for what I do at work that I came across this post at Financial Samurai. The post had gone was viral because people were gnashing their teeth at the temerity of the thought that people who made $500,000 a year might be just “getting by.”

But if you go through the post, you can see that the logic and reasoning is sound. You can earn that kind of money in New York or Chicago, or L.A. and life is stressful. $500,000 doesn’t even buy a used legal paper box in San Francisco. The median home price in San Francisco (not a home in a median, the mathematical median, where 50% of the houses are above, and 50% are below) is $1,300,000. And you can get a lovely 844 square foot (that’s two cubic megaparsecs in metric) for that. Dr. Housing Bubble describes one here.

I was scratching my head, and thought, hey, there must some way to ~~piggy back off of Financial Samurai’s success~~ relate the costs to the coastal folks of what life is like in the hinterlands. I threw a dart, and . . . . Sedan, Kansas showed up.

I would imagine that some people in Sedan drive sedans, but that’s not how it got its name. Sedan, Kansas (founded in 1871) was named after the Battle of Sedan (September, 1870) which occurred during the Franco-Prussian War. The Prussians crushed the French 43-12, and most of the French points were scored during the fourth quarter after Kaiser Wilhelm had already gotten a Gatorade™ dunk.

Why was this so big for the people who named the town Sedan? I have no idea. Maybe they just hate the French there?

Anyhow, Sedan, Kansas has a much greater continuity of government than Germany or France, and is a sleepy little town that has a high school and a marching band, and a hospital and a Pizza Hut©.

And that’s where you come in, because you, dear reader, could live large in Sedan.

Let’s look:

Let’s create a family of four, but a two income family

The husband is a teacher. I’m pretty sure that a teacher there makes more than $25,000, but let’s go with that for now.

There’s a rural hospital there, too. And the wife is a nurse. Let’s say that she makes $25,000, too.

Both of their retirement is through the state, so I’ll not mess up the calculations with a 401k. They could save more.

Salary
Base Wages	$ 50,000
Federal Tax	$ 1,756
State Tax	$ 970
Net	$ 47,274

Kansas taxes, and taxes on incomes of an intact family of four are a pretty good rate. I used TurboTax© to calculate this, so any errors are mine. TurboTax® required that I put in names for the family, so I used Bob, Bob2 (his wife), Bob3, and Bob4.

Child Care

Bob and Bob2 don’t pay much in child care. Child care doesn’t cost much in Sedan (possibly due to the Franco-German war?) and Bob is a teacher – he just needs some in-service days covered. It’s possible that Bob2 could take a day off from the hospital and turn this down to zero, but I’ve tossed in a completely defensible $1800. It would probably be less.

Food

Again, one of the advantages of Sedan might be viewed as a disadvantage to the uninitiated – Sedan has few restaurants. I’m not sure how good any of them are, and at $11,600, a year, I think the family could eat very well, indeed.

Mortgage

This is my favorite. I went to Realtor©.com and found a 2000 square foot house for sale for $84,000. Yeah. It’s silly low. Now if you were going to try to move, you could probably bet that house would sit on the market for a year or more. But since you bought it for less than a carport (no land) costs in San Francisco, you might be okay. I tossed in some guesses for insurance and taxes.

Home Maintenance

Can Bob fix it? Yes, he can. $1,100 probably takes care of most of the honey-do list.

Vacations

$400. Go camping. Or go visit Grandma Bob in Branson and stay at her place.

Cars and Gas and Insurance and Taxes

Bob owns his cheap cars. He hardly drives at all, being in town, so gas is cheap, too. And cheap cars=cheap insurance and taxes.

Clothes

Bob2 is a bit of a shoe-hound, so I tossed $4800 in. Plus Bob3 is growing like a weed!

Sports/Lessons

Small town – Aunt Bob teaches piano for $5 a lesson. Flag football is $10 for the season.

Guaranteed Student Loans

Teaching in a small town Bob qualifies for whatever super secret handout they give to teachers. Probably Bob2, as well. I put down $200 a month.

Unexpected

$5,000. What for? Who can say? If I knew it would be expected, goof.

Expenses
Childcare (2)	$ 1,800
Food	$ 10,400
Dinner out	$ 1,200
Mortgage	$ 7,800
Home Maint.	$ 1,100
Vacations	$ 400
Car	$ 1,440
Gas	$ 600
Car Insurance	$ 600
Clothes	$ 4,800
Sports/etc.	$ 480
Student Loans	$ 2,400
Unexpected	$ 5,000
Total Costs	$ 38,020

So, I subtract the costs from the income?

What’s Left?

$ 9,254

That’s more than power couple in New York in the original post, who only saved $7,300 a year.

What amazes me, especially after living in a big city, is why they don’t sell their overpriced homes, buy a much bigger house, and live like royalty out in the boonies. One house in Sedan is for sale now (April, 2017) and it is 3,400 square feet on 41 acres. But it costs the whopping sum of $345,000. How much would that house (in a safe free public school district) cost in New York? It’s like a unicorn, or a balanced federal budget – it simply does not exist. Did I mention the 41 acres has its own lake?

Many people live in these economic centers work really, really hard, but they end up being poor their whole lives, because:

“We buy things we don’t need, to impress people we don’t like.”

-Tyler Durden (Fight Club)

I read a great quote (and I can’t remember where it came from) that went like this:

“If you have to ask how much money you need to retire, you’re asking the wrong question.” And it’s true – it’s not only what you have, it’s also what you spend, and what you think you simply must have. I’ve heard of happy people in their 40’s retiring with $400,000 and thriving. And people who retired at 65 with $5,000,000 ending up unhappy and broke. Understand that the biggest part of this is you. It’s not what you have, it’s what you think you need.

So, I’m back blogging, and am really sad that I missed being able to make fun of Biden. Ohhhh, perhaps he’d eat a kitten? Or fight Johnny Depp?

Now, every Wednesday I must remind you that I’m not a financial professional, and taking my advice might just be the most foolish thing you ever did, besides the time you burned your eyebrows off.

In the future some blog posts might be sponsored, and, again, in the future (past April, 2017), I might get paid for some of the links (I’ll tell you if so) but my advice will be like a professional psychic – for entertainment only.

I’m gonna tell you about an accident, and I don’t wanna hear “act of God.” – Jack Burton, Big Trouble in Little China

This car needs termite insurance?

Once upon a time, I threw money into the streets, until I learned a tough lesson on the tough streets. It ended in blood, like it always does.

That’s probably enough hardboiled detective lingo for this post, but’s it’s all true.

When I graduated from high school, my dad bought me a new car. No, not a Porsche®, rather a Buick©, that looked quite like:

skyhawk

https://www.pinterest.com/pin/32721534764741186/

What a Buick™ looked like in the 1980’s. Sweet!

After that, I ended purchasing a used car in the second worst ~~car~~ deal I’ve ever done, and, after it exploded, bought another new car, this time a really cheap car, but still a new one. The car was worth about 30% of my gross annual income. And then interest rate? Only 9%!

After paying sixty months on the car, it was still running like a champ! Sure, it was a manual transmission, but it was awesome. I had just installed a new CD player with a buddy.

I was on a date with The Mrs. (when she was still just The Main Squeeze), and we were driving down a divided, interstate highway-type road. We had been fighting, and we drove silently down the dark multilane.

“Dear,” The Not Yet Mrs. said, breaking the silence of our fight.

“Honey,” I replied, looking her direction, happy that she had gotten over the fight.

“DEAR!” The Not Yet Mrs. yelled.

“HONEY,” I yelled back, looking at her.

She pointed in the direction we were heading at 72.3 miles per hour (that’s 5,000 liters per second, if you’re metric), and I looked forward just in time to see a deer suspended in midair, lit by the bright flash of burning out cracked headlights, both legs pointing toward the sky as it vaulted off the front hood and over the top of the car.

“Oh, deer.”

This was in the great and rumored time before everyone ~~plugged into the matrix~~ carried a cell phone. Soon enough (half an hour?) a highway patrolman pulled up behind us, and examined the scene.

“Didn’t even hit the brakes, eh? Must have jumped out at the last second.”

Me: “Yes! That’s much better than what really happened.”

The patrolman radioed for a tow truck, and The Main Squeeze and I leaned on the car, listening to the chorus of the dripping car fluids hitting the concrete.

“Well, it’s been paid off, at least.”

I had just finished payments on the car. I noticed the check I got for the totaled car was less than half of what I’d paid for it, even though it was only five years old.

So, what did we do? We bought a new car, got married, and bought yet another new car. In that order. On loans.

We could afford it? Right?

Well, the combined cost of the cars was about 50% of what we paid for our mortgage. Proportioning it out over our combined income, the value of the cars represented between 40% and 50% of what we made in a year.

Those cars killed us financially.

Fortunately those cars didn’t try to physically kill us – Video has one slightly NSFW word at the beginning

Eventually, The Mrs., on a bright and snowy day, wrecked one of our new cars. (Disclaimer – even though she was going to get me fried chicken, that does not make me culpable, and I never did get fried chicken that day).

The car was totaled, and her knee needed several stitches (say that six times fast). I told you there was blood in the streets!

I took that insurance payoff check and paid off the other car.

We had no car payments as of that point.

And never have had one again.

Since that time, I’ve bought nine cars, and sold five of them, and the average price of those cars is less than $10,000.

The purchase price of all of the cars I own now is about 12% of my annual income, but I bought one of the cars ten years ago and another one of them eight years ago. The average age of my cars is about ten.

Cars don’t kill me financially any more.

John Wilder’s Hard Earned Car Iron Lesson One:

If you can’t afford to buy a car with cash, don’t. Don’t. Don’t. Don’t. Payments like these are an obligation. Is there a time when you might need to break Lesson One? Yeah, when you are just starting out. Find someone nice to borrow money from, and pay them back as soon as possible. Don’t ask me. I said a nice person.

Interest payments kill happiness (more on this in future posts).

The Buy-Here/Pay-Here people are also not nice. I talked to one gentleman who had bought a fifteen-year-old car for $5,000. When that broke down, he financed the difference with them and they took the car back. Last time I talked to him he had a car that was worth about $3,000 that he owed $10,000 on.

Don’t be him.

John Wilder’s Hard Earned Car Iron Lesson Two:

You can’t possibly afford a new car. Cars aren’t investments, with the exception of the 1967 Camaro® RS© with Highway Headlights. And I don’t advise those, either. A new car is the worst purchase that you can make, outside of a tattoo of your soon to be ex-girlfriend’s name or Kardashian© Footed Pajamas.

New cars are expensive, and even if you pay cash for them (thus avoiding interest payments), you will still have to pay much higher insurance rates as well as higher sales and property tax (depending upon where you live).

Additionally, everything about the new-car buying experience is built around lulling you when you agree with them (Full Sticker Price Means NO HAGGLING! Just sign here.) or doubting yourself into anxiety and fear when you haggle by forcing long delays while they “clear the deal with the boss.”

This is how car salesmen want you to feel, except with less Jell-O™

Exceptions to Iron Lesson Two:

If you like buying something that’s worth 50% to 60% of its value after five years (that’s $15,000 off of the current average new car price of $33,000), please, do so. Also, if you think you’ll save that $15,000 off of warranty service, when was the last time you spent $15,000 on fixing a car? $15,000 is enough to repair an older car for, what, a decade or more?
If you are one of the few who can really afford it, and want it to drive to your private MiG fighter jet to fly to your hidden lair? Go for it. I suggest a Tercel®. Seriously, rich peoples can do what they want.

Weird Wilder Fact: I actually rode in a car owned by a billionaire (his wife’s daily driver). It was nice – a Mercedes®. A five-year-old Mercedes© with worn interior and a cracked plate surrounding the CD player. It was rumored that the car could take a strike from a rocket-propelled grenade, but I didn’t have one, so we couldn’t test that theory.

John Wilder’s Hard Earned Car Iron Lesson Three:

If the car is worth more than 15% of your gross income, don’t buy it. This Iron Car Lesson is one I’m debating on, but the principle (if it’s 10% or even as loose as 20%) is the same: have hard limits on what you spend on a car. This rule gets very much relaxed for people who have WilderNetWorth© (I just made that term up, I like it!).

If have WilderNetWorth©, which I am right now defining as enough money that you don’t have to work a day of job for the next ten years and you and the family are fine, the rules are relaxed. You can afford to splurge. But there’s no way you get to WilderNetWorth© and ever consider burning that kind of cash on a car (hint, see how billionaires buy cars above).

John Wilder’s Hard Earned Car Iron Lesson Four:

It is no longer 1940.

Cars are more reliable now than ever before (I know that may be changing for the negative soon due to government CAFÉ regulations fiddling with the transmission, but my statement remains). You can keep a 2003 Ford or Chevy sedan going FOREVER on a $1000 a year, if you know a good and honest mechanic (and, unlike unicorns and a balanced federal budget, honest mechanics do exist).

Since my cars are older, I don’t like to take them on long family vacations, especially when the weather is inclement. So, I rent a car with unlimited mileage for about $30 a day and enjoy pretending I bought a new car that my kids spill trip food and trip trash in and then someone else cleans up. I will admit that, alongside the interest payments, I also miss paying so much in taxes and insurance, which are nearly zero for a ten year old car where I live.

So, avoid the Iron Laws at your peril. I’m certain I’ve saved hundreds of thousands of dollars following them in avoided insurance, depreciation and taxes, as well as spending that money reducing other debt, so I can now say I’ve got WilderNetWorth©.

Although the dame didn’t know it yet, when she stumbled into that accident, it was the luckiest move of her life . . .

I guess I couldn’t resist another hardboiled detective line.

Attention and Note: I’m not a licensed financial adviser. I don’t intend to be one. You need to put on your big boy or big girl pants and own your own decisions.

Changes in Latitude, Changes in Attitude -James Buffet (Warren’s Cousin)

The photo above is what inter-dimensional real estate might look like

Today everything changed.

Actually, it was yesterday.

I have been thinking a lot, I mean, a LOT about what I want to do when I grow up, and finally came to the conclusion that it was to trod (tread?) my sandaled feet over the bones of dead kings as I took their thrones, watching them crushed, seeing them driven before me, and hearing the lamentations of their women!

No, wait. That’s Conan.

Me, I wanted to start blogging again. I came to that conclusion. I mean, if I talked, even AS LOUD AS I COULD, I could only influence a few hundred ~~cult followers~~ people. My booming basso profundo voice only carries so far.

But blogging could allow me to reach everyone on Earth with an IPhone©, or an unexploded Samsung®, even. If you’ve been in a restaurant recently, you’ve seen that’s everyone, even babies.

As I discussed my evil plan for ~~world domination~~ helping people with a friend, a funny thing happened. This person, making a salary and bonus in the top 1% of people in America, decided to sign up to sell real estate, and follow their passion to see where it takes them.

Huh?

As I discussed my evil plan elsewhere, a different blogger decided to take up a keyboard again, and (maybe) a person to pick up a long-neglected novel.

Huh?

There are thousands of people that are literally sleepwalking through life.

You may be one of them.

I was.

Let me explain:

I was driving through a small town in the Midwest with my sons and saw a sign that said, “Jim McGill, Insurance and Real Estate.”

I spontaneously pulled out my best radio announcer voice and said,
“Jim McGill is here to help you with all of your insurance and real estate needs, AS HE HAS FOR A THOUSAND YEARS HERE IN CEDAR RIDGE.

“No one has more experience than McGill, who has brought the experience of his countless years of his nigh-immortal life and communion with the deep powers of the earth to find the best property for you. Since the dawn of time, there is no insurance agent who will ever get you a better deal.”

The Boy piped in: “Brought to you by the power of the Necronomicon™.”

We laughed. Life is like that around our house.

I reflected on it the following day at work. Why was it so very funny? (And, trust me, nothing makes a joke better than explaining it)

Simple: because you expect an immortal living on Earth to have a mountain redoubt, and an evil plan to take over Estonia, not sell insurance in a town of 2000 people.

Then it hit me. I don’t have a thousand years. I *might* have 30 or 40.

Why did I waste today?

And why did you waste today?

You don’t have many days. That’s why I’m writing this at 12:36AM instead of playing a game. Or sleeping.

I don’t have time to waste, since I’m not an immortal insurance agent.

And neither do you. Unless you’re Jim McGill.

Regardless, get to work.