rocket finance

5th Edition of the Finance Fiesta!

July 3rd, 2008

Welcome to the 5th Edition of the Finance Fiesta! I wanted to write this post in Spanish, but the only words I know from our neighbors to the south is what I have picked up from my kids watching Dora the Explorer. Plus my keyboard doesn’t have any of those funny diacritical markings that are used in Spanish. I do love to roll my r’s, however, hopefully that counts for something. The FF features some great selections this time and I encourage you to read them all. And remember Just because I personally don’t agree with an author does not mean that the article is bad.

Enjoy!

Editor’s Picks:

Adam Beck wrote a thought provoking article entitled, The Could Samaritan. I think the underlying question is why are you building wealth? To what purpose? To what end?

Kevin from the Red Stapler asks, Do we need a salary camp for CEO’s? His answer is “yes” and he gives a plan to do it. I could not disagree with Kevin more and his proposal made me check his About page to see if the “red” in Red Stapler was a communistic allusion. I hope he realizes that both John McCain and Barak Obama earned more than the average CEO last year. Furthermore, Obama is a trial lawyer - trial lawyers are also awash in cash - I wonder why he has not proposed to cap their income?

Jim at Blueprint for Financial Prosperity posts that a study of the wealthy confirms a classic joke. I had never heard the joke before. BFP is one of my favorite blogs, but I think it is important to point out that if everyone followed the example of the fisherman, our world would be in sorrier shape than it already is. No one cured a disease, freed a people, cared for his family longterm or invented the light bulb by sitting on the beach. I think it all goes back to the question, “Why do you want to be rich?” The pursuit of wealth motivates people to take risks that often result in great benefit to society. What if Henry Ford had never set out to efficiently build and automobile? We would be living in a country where the poor ride donkeys and the rich would still be driving cars.

I love lists and that is why I love the Silicon Valley Blogger - in a platonic way, of course - both of us are happily (at least I am) married and not to each other. By the way, the word “silicon” is a reference to this. (I know what you were thinking) Anyway, she gives a great list of ways to save money by paying bills. I am doing most of them already, but there might be a suggestion that will work for you on the list.

Wide Open Wallet likes high gas prices. Good for her, I wonder if she would love to pay $10 a gallon. If that is the case, she could send $5 a gallon my way every time she fills up. That would solve a lot of problems for me. Turns out that she does not commute to work . . . We love you, Ashley, but just because high gas prices work for your situation does not mean that it is a good idea for everyone else. What if you were a single mom who could only find a job that was 20 miles away? You now have to drop your children off at a daycare, drive to work, drive back to the day care and drive home every day. High gas prices infringe on our freedom to make choices about what is best for us. High gas prices allow us to be controlled by an elite few who don’t think anyone needs and SUV. High energy costs are a hardship for those least able to pay. Sounds like I have a post here. . .

Anand Dillon gives us 25 ways to create more value. It is a good article and if you are looking to invent something or change career paths, read his list.

And all the rest:

Budgets are Sexy asks, “Would you rather have $500K right now, or $1M in ten years?“. He does not give the answer, so leave a comment and solve the dilemma for him.

Money Blue Book is starting to rethink his slavish devotion to shopping online.

Another article on CEO compensation posted at Can I get rich on a salary? Yes, some people are dumb and some people are over-compensated, but let’s not put the government in charge of determining who is smart and who is wealthy, okay?

The DINK at Living Almost Large admits to not being perfect. I admit no such thing about myself.

The Frugal Homesteading Blog asks if the Debt snowball really works, but doesn’t really answer the question. No matter, the positive evidence seems incontrovertible. I think it is interesting that her children are aware of and participating in the debt reduction. My family never really talked about money “in front of the kids”.

Personal Finance Analyst recommends that you purchase Savings Bonds. I have no opinion on the matter. Read the article.

Passive Family Income is blogging about the places that only accept cash (no credit cards, no debit cards). There aren’t too many of those left and it usually means that I don’t shop at them. I do find it annoying that vending machines don’t accept cards.

Jonathan from The Limelight posts about his 6 month journey to debt freedom. Kudos to him, but can we really call 6 months a journey?

My Retirement Blog mentions a Traditional IRA to Roth IRA conversion loophole. I love tax loopholes.

If you invest in stocks, you may want to check out Daily Money Hacks and his article on Excess Capital Loss rules. I’m sure he did a great job of explaining the details, but most of that kind of stuff is over my head. I guess I would care more if I had any capital to lose.

Personal Finance Basics wants you to invest in the stock market. Sure glad that I didn’t follow that advice twelve months ago.

Young with Bux tells us that headhunting one’s friends and relatives can be tricky.

The Shark Investor discusses how do-it-yourself projects are sometimes a good idea and sometimes a bad idea.

Potential to Success helps you learn how to network like a pro. Lot’s of good ideas and suggestions.

Master Your Card ( the owner of the Finance Fiesta) article is entitled with a Shakespearean, “To Cosign or Not to Cosign“. He leaves the question open-ended, but if my opinion is worth anything: don’t do it!

The question at Debt Smackdown: “Is debt just a fact of life for the current generation?“. The practice of targeting college students for credit cards is deplorable, but I don’t think that calling on the schools themselves to start teaching responsible use of money and credit is going to happen. What would happen to enrollment if every student refused to pay for tuition with credit?

Broke Grad Student posted a list of 8 Cheap Summer Fun Ideas. There are some good suggestions in the post and pretty much all of the Rocket household leisure activities are on the list.

KClau want’s to know “Do you have the assets to pay for your liabilities?” In a word, no.

Carpooling is the subject of an article at Increase Revenue, Decrease Costs. We are looking for our kindergardener to carpool this fall. Anyone interested?

Funny about Money asks a questions that no one wants to think about: What happens if next payday does not come? It is a good article if you can bear to think about losing your job.

ChristianPF teaches us how to make the best of car depreciation. Lots of good info in this article. You really have no reason to buy a new car, do you?

Credit Card delinquencies are increasing. Tell us something we don’t know.

That’s it, that’s the list. Thanks to all the authors for their hard work on the articles and for taking the time to submit. I enjoyed reading all of them and trying to think of ways to make snide comments about them.

Enjoy your 4th of July weekend and don’t blow any fingers off!

Photo by jmbead.

Posted in Uncategorized | 12 Comments »

Does a windfall cause you to overspend?

June 30th, 2008

Do you lose track of “un-budgeted” income? Sometimes our plans for extra money don’t add up. When we anticipate a tax refund or a stimulus rebate or a job bonus or other side income, we start to spend it before it actually arrives - and many times the math does not come out right. Let me give you a hypothetical example:

In January, you find out that you will receive a $1,200 stimulus rebate check at the end of May. Your current budget is balanced and you know that if you stick to your plan, the $1,200 will not be needed by regular commitments. So, that night, you decide to take the family out to eat at a nice restaurant - normally you can’t afford it, but you have an extra $1,200 on the way. What’s $75 when compared to $1,200?

The furniture set in your living room is second hand and does not coordinate quite as well as your wife wishes. You find a nice looking couch/chair set for the reasonable price of $300, but while you are in the store, you notice a much nicer set for $600. Why not purchase something a little better? You have been promised an extra $1,200 this year. Why not live a little? Now you are no longer embarrassed by the furniture when company comes to dinner and you still have $525 for your emergency fund.

On several occasions, you are too lazy to pack a lunch for work and your coworkers always eat out and restaurant food tastes so good. . . and ordering from a menu is so convenient . . . and the stimulus check is on the way. You succumb to temptation seven times in five months, plus you pick up the check twice - it is extra money anyway, right? 150 bucks.

You decide to take the family away for a little two-day, weekend vacation. Normally, you would try to stay with friends or family, but a hotel sounds so nice, besides, you can afford it this year. And while you normally pack a cooler full of food and make the family eat the hotel continental breakfast, you choose to treat everybody by eating out for almost every meal. Hotel, gas, food, and entertainment set you back $400.

Your stimulus package is now worth a negative $25 at the beginning of May. Not too bad, but here is where things get interesting:

You start to forget about the meals and furniture and vacation on which you spent money over the last five months. All those little extras fade into distant memory and you continue to spend the money from the anticipated windfall. You don’t have a written record of when you spent “stimulus” money and every time you come up against an extra expense, you use the anticipated surplus as justification for further spending. When the stimulus arrives, it cannot be applied to debt or an emergency fund. It is simply absorbed by the family budget and you wonder where it all went.

Here are some suggestions for dealing with a windfall:

1. Don’t spend it before you get it. Discipline and focus are needed to pull this off, but don’t spend the money before it is in the bank. Relax, they are making new living room sets every day.
2. Write down your plan for the money.
3. If you must spend it before you get it - record your purchase and reduce the coming windfall accordingly. For instance, if you anticipate a $50 credit card bonus next week and you justify lunch at Wendy’s because of that bonus - subtract the cost of the food from the bonus immediately. You are spending away your chance to get ahead.
4. The best use of a windfall is to reduce debt or to increase an emergency fund.
5. Never use a coming windfall as justification for unnecessary spending.

Remember that a windfall does not have to be spent. If you survived life without a flat screen television before the windfall, you can probably survive without the television after getting the check.

Have you ever spent extra money “twice”? I have.

Posted in budget | 4 Comments »

A new plan for Rocket Finance

June 22nd, 2008

When I started Rocket Finance a year ago this month. I originally hoped to pattern it after Hustlermoneyblog and sought to become a source for deal, steals and bonuses. Over the next few months, as I spent time interacting with other members of the personal finance blogging community, especially those from the m-network, the blog morphed into more of a traditional pf blog. Most of my blog posts were driven by my family’s financial journey.

Throughout it all, I tried to find my unique voice in the blogging world. I look back over some of my early posts and I am almost embarrassed at what I published on a number of occasions. But a couple of times, I managed to put together a coherent post that struck a responsive chord in the blogosphere. In all, I have published over 300 articles and received over 35,000 visits.

Personal finance is a subject that fascinates me and I enjoy learning more about it every day. However, many times, my political interests bubble to the surface. My views tend to lean to the right as most of you have noticed. On several occasions, I have been warned by fellow bloggers that free market or supply-side ideas are not well received in the blogosphere. A few bloggers who share most of my thoughts choose to keep their political ideas quiet for fear of alienating their subscribers and regular visitors. It must be noted that their blogs are far more successful than mine and I don’t blame them. If RF was generating thousands of dollars a month, I might keep my big yap shut too.

For most of the past year, I have tried to keep the focus on tips and strategies relating to family finance and kept my forays into politics and national economics to a minimum.

I can no longer repress that side of who I am.

I enjoy talking politics. I have literally been following politics since before I could read and I am certain that I disappointed my mother by not choosing a career in that arena. I cultivate friendships from every branch and twig on the political tree. I love to talk about the issues. I attempt to keep the debate civil, and I don’t believe that I have ever alienated a friend or family member during a political discussion.

Therefore, Rocket Finance will remain under the general category of personal finance, the overall focus will stay on the Rocket household financial journey, but at least one post a week will contain political viewpoints or observations. It is very possible that such content will doom this blog, but as they say in the movies, “I am going to follow my heart”. (That’s probably the most liberal thing I have ever said.)

I understand that politics can be inflammatory. They don’t need to be. My intent is not to change the world, or even to change one person - because that is a difficult thing to do. My goal is to engage, discuss and learn.

I hope that the debate will be vigorous, honest and respectful.

Posted in about me | 9 Comments »

Rocket’s attempts to hold down grocery costs

June 18th, 2008

I rarely darken the door of the grocery store for several reasons:

1. I don’t do much cooking.
2. I have no idea where anything is. Seriously, I often make several laps just to find one thing.
3. I always purchase the wrong item. I try really hard, but always seem to mess it up. I write detailed lists and try to call Mrs. Rocket if I am unsure about anything . . . but even that is not fool-proof.
4. I eat too much. I can’t go into a store because everything looks good and I don’t care if it is on sale or a good price or healthy. If I like it, I will buy two. One time I got up early on a Mother’s day and I wanted to cook breakfast for my wife. I went to the store to get what I needed and ended up spending $35 on breakfast for two. I could have taken her out to eat at IHOP . . . about three times.
5. I can’t resist the impulse aisle - especially the dark chocolate bars and I always spend too much on expensive fruit.

However, circumstances forced me to our local King Soopers the other day and I think I did okay. Here is my haul:

• Four ears of corn for $1.00. Supposedly this was a good deal, but I remember back in the good old days when sweet corn was $1.00 for a dozen ears.
• Eight boxes of Kraft Mac and Cheese for $2.00. I was only supposed to get four boxes, but, c’mon, it was a quarter a box! I think I’ll go back for more tomorrow. Our five year-old claims that she would eat Mac and Cheese for three meals a day. For twenty-five cents, I think I might let her do it.
• $2.49 for a box of couscous. I have since learned that this was not a great deal and furthermore, not the right product. I was supposed to get white rice. Oh, well, can’t win ‘em all and I got to try something new for supper.
• Broccoli for $.88 a pound. I have no idea if this was a good deal or not, but I purchased 94 cents worth.
• Three mangos for $.50 apiece. Mangos were not on my list, in fact, I’m not sure that the Rocket household has ever purchased a whole mango before, but they looked good and I was impressed that my five-year old who can’t read yet, spotted them and knew what they were.
• Three pineapples for $1.00 apiece. This was my original assignment. Mrs. Rocket had a rain check for this deal from last week when the store was out of pineapple. She told me to get one, but I like pineapple and you know the rest. We might try to grill some of it.
• Three half-gallons of lemonade for $1.00 each. Once again, I was sent for one . . . and could not resist a couple extra cartons. I like lemonade.

Our total bill was $15.79. Once again, I have no way to know if my cart full of groceries was such a great deal, but here is where I think we started to do well:

• Our King Sooper’s loyalty card earned us $1.00 off our next fuel fill-up.
• We also used a KS’s gift card that came with a 10% discount when we used part of our stimulus check to purchase it: $1.58 worth of savings on this receipt.
• I originally paid for the gift card with our Chase Freedom Visa Credit Card to earn another 3% cash back: about $.45.
• King Soopers also scanned my loyalty card when I purchased the gift card for another $1.00 off our next gasoline receipt.

So, our net cost on this bill was $11.76. Hopefully the savings makes up for my buying couscous instead of rice.

Posted in food | 3 Comments »

The global warming theory is squeezing my personal finance

June 17th, 2008

and I’m not happy about it.

Back in December, I outlined how former Vice President Al Gore is outlining his own pockets by means of the global warming hysteria. Since that time hundreds and thousands of scientists have unceremoniously exited the global warming express because it is bad science and promotes even worse public policy.

I know that it is difficult for many in our popular culture to contradict those at the forefront of the global warming hypothesis. People like Leonardo DiCaprio, Sonny Bono and Sheryl Crow just seem so hip, so cool and so well-meaning that even our politicians, those who should be our leaders, succumb to the pressure. And then if that was not enough, Al Gore was awarded the Nobel Prize - the award that was also bestowed on that notable peacenik, Yassar Arafat, as well as that man who solved the the Mid-East crisis, Jimmy Carter. Al Gore has also earned an Oscar from that scholarly research institute, Academy of Motion Picture Arts and Sciences. I guess I’m just a little anti-establishment.

I used to believe in global warming. In fact, my 8th grade science project supposedly “demonstrated” its effects. By the time that I reached my senior year in high school, I was pretty well convinced that there was little truth to the hypothes of man-caused global warming. I took a lot of heat (no pun intended) from my classmates for questioning the theory. The theory just did not make sense - it takes a lot of faith to believe that man can change or control the weather . . . we can’t even predict it . . .

I understand that I am in the minority on this topic. In no way does that dissuade me from my position. The masses have been wrong before. I prefer to trust common sense as well as the growing number of scientists who are choosing to make public statements in opposition to the theory. Frankly, most of them seem to be more credible to speak on the topic than George Clooney. Shocking, I know.

If you are one who believes that man must act now to combat global warming, I challenge you to read the following articles. Examine the credentials of those who are writing and then see if a few cracks your faith in the truth of global warming begin to form. Our economy and your financial future depend on it.

John Coleman’s comments before the San Diego Chamber of Commerce reveal a number of historical facts such as pinpointing the moment in time where Al Gore became interested in this whole topic of global warming. Coleman is the founder of the Weather Channel and this particular speech is passionate, well-informed and credible.

Over 400 scientists dispute the claims of global warming in this U.S. Senate report.

I prefer to be on the side of this MIT professor.

Understand, I am not anti-environment. I love the outdoors and believe that we need to be good stewards of the earth that has been entrusted to our care. However, I prefer that stewardship be based on good science, not line the pockets of an elite few and keep our economy strong.

I am confident that we can successfully meet all of those challenges.

Posted in viewpoint | 16 Comments »

Saturdays are for coffee: Starbucks gift card enhancers

June 14th, 2008

If you are the fortunate owner of a Starbucks gift card, the company recently announced a number of perks that come with their cards:

1. A free coffee if you register your card here before July 14th.
2. Free refills on hot or iced brewed coffee.
3. Free flavor upgrades like hazelnut, caramel, soy, cream, etc.
4. Free tall coffee with the purchase of one pound of Starbucks whole beans.
5. Up to two hours of free wireless internet.

Mrs. Rocket and I just ordered two $5 Starbucks gift cards via our Miles by Discover rewards account. We ordered our cards before we knew about the Starbucks promotion and it was a good thing that we received two separate $5 cards since the free stuff is tied to any gift card - regardless of it’s value.

I am also looking forward to getting a free $25 Starbucks gift card very soon, but I’ll tell you about that another time.

Posted in coffee | 2 Comments »

The Friday Stack: free money, stimulus, blessing

June 13th, 2008

After all of the money we made through cc bonuses and bank bonuses last year, I feel like I should be giving cash to the Hustler. The fact is, he has come a long way. There was a time when he was pushing the ethical boundaries of Sprint’s dropped call program on one blog. Now he authors four different sites and is throwing around $100 bills. Enter his contest for a $100 in free money.

I am sure that many of you have heard about the flooding in the Midwest. We are currently trying to sell our home in Wisconsin since we have moved to Colorado. I just learned that the flood waters are within 75 feet of my house and that there are houses that are completely flooded within sight of our old dwelling. Frankly, since my family and possessions are safely out. . . I have mixed feelings about my house and possible flooding. . .

Our stimulus rebate was direct deposited over a month ago - and none too soon. If you are still wondering about the status of your rebate, check out the Stimulus Payment Status page from the IRS. The prediction on this page was quite accurate regarding our situation.

On a number of occasions, I have shared that we are dealing with a monthly budget deficit of $300 to $500 since we are renting in Colorado yet still making payments on a home in Wisconsin. We were blessed this week with another stream of income as Mrs. Rocket was given the opportunity to provide child care (beyond our own three kids) during the day in our home. The situation is ideal for us and the money that she will be able to make will just about cover the deficit. We are excited about the prospect of avoiding greater debt.

Have a great weekend!

Posted in Free Stuff | 2 Comments »

I am starting to like FNBO Direct

June 10th, 2008

Last summer, I opened a savings account with FNBO Direct in order to take advantage of their 6.00% APR promotion that lasted until mid-September. I pretty much planned to only keep my money there as long as their APR was the highest around. FNBO seemed like a small bank that was only using a gimmicky savings rate to make a temporary splash on the national stage. When FNBO’s APR began to slide (along with every other bank), I moved all of our balance transfer arbitrage money to Everbank which was pushing a 6.01% introductory rate on their online checking account. However, I found the Everbank interface to be a little bit difficult to understand. I don’t like complicated interfaces and I only needed an online savings account. My local checking account suits me just fine.

By the time the Everbank promotion was up, interest rates were plummeting at every financial institution, so there was no reason to open another high rate savings account at that point. I transferred our balance back to FNBO Direct whose rate was now down to 3.25% APR - a far cry from last year’s great rate, but better than most. I planned to just leave the money there until rates began to rise again. Then, in April FNBO offered a $25 bonus to customers who opened an online bill pay account. Not one to turn down free money - I opened an account immediately and have come to like it so much that I use it for almost all of my online transactions.

Here is why I now pay all my bills through FNBO:

• The FNBO Billpay has a simple interface. No bells and whistles, just enough to get the job done.
• For most payees, all you have to enter is the payee name and account number and FNBO takes care of the rest. No laborious filling in the mailing address and phone number for every payee. Frankly, I’m not sure why more banks don’t do this. One of the banks that I used to use, would not accept a payee unless the phone number was entered with exactly this spacing and punctuation: (000) 000-0000. Even when the number was an 800 number.
• I can schedule when each bill is paid during the month and when the transfer from the savings account to the billpay account will take place. This allows me to earn as much float interest as possible.
• The money in the Billpay balance earns a competitive 2.5% APR.
• The best feature of FNBO Billpay is the way it lists all of my payees on one page and gives the last date on which a particular bill was paid. It is a straightforward way to make sure that all of your bills have been paid for the month.
• Then just this week, FNBO raised it’s savings APR to 3.50%.

After my check is direct deposited into my local checking account, I immediately transfer it to FNBO and pay all of our bills from there.

I plan to be an FNBO customer for sometime.

Posted in banking | 2 Comments »

Credit card bonuses coming back

June 8th, 2008

A year ago, Mrs. Rocket and I made almost $2,000 just from credit card bonuses alone. This year, the bonuses have been a little thin . . . I guess maybe we contributed to cc companies becoming a bit more stingy with free money from credit cards. Anyway, if you have a good credit score and can handle a few hits, there are two relatively large cc bonuses still available:

If you have to travel and want to offset the cost of gas prices, you can reduce the cost of your lodging with the Starwood Preferred Guest Card. You will earn 10,000 bonus points after your first purchase. These points can be redeemed for up to three hotel stays. You can also earn and additional 15,000 points if you spend $15,000 in the first six months that you are a card holder. Remember that these are bonus points, so you will earn points for the money that you spend and earn the bonus points. I will never spend $15,000 in six months with a credit card, but this could be the right card for your. Be sure to read the fine print to make sure that you will will come out ahead if you apply for this card. If you think it is the right fit, apply here. You might also be interested in the Starwood Preferred Guest Business Credit Card.

Another business card, the Discover Business Card is offering a $100 cash back bonus if you apply for their card. This card also comes with a 0% for 12 months introductory offer. The bonus, the APR plus the great Discover cash back program make this a pretty enticing deal.

I don’t own either of these cards since I am satisfied with my Chase Freedom Card and Miles by Discover at the moment. A year ago, both of the above cards would have been on my list. Remember that anyone can apply for a business card and just about any business venture - even a hobby that brings in a little cash - can help you qualify for a business card. Your business should be a sole proprietorship and use your social security number as your Employer Identification Number. I have the American Express Business Gold Card, but I will be canceling it this week because of the high annual fee that was waived for the first year, but will soon come due for the second year.

Let me know if you are considering any type of credit card, I enjoy helping people find the right card for them. Always remember to only use your card for budgeted expenses and pay off your balance every week.

Posted in Uncategorized | No Comments »

The Friday Stack: Saddle sore edition

June 6th, 2008

Some great posts from around the pf blogosphere:

Mighty Bargain Hunter asks if you notice frugality. I notice it all the time. How about you?

Lynnae details how she is going to both save money on groceries and try to eat more organic food. God bless her.

Bible Money Matters emphasizes the importance of counting the cost. This is a critical problem in our society. We like to buy first and then ask how to pay for it later. Are you counting the cost of eating out for lunch every day? Seriously, the amount of money you might be throwing away is incredible.

Gibble asks, are amusement park season passes worth the money? We are using a season pass to the Denver Children’s Museum today. A friend of ours purchased it for us! Our kids are the perfect age for this sort of thing and we are going to have a great time.

And to top things off, I left one of the longest, most sarcastic comment ever on Punny Money. Punny is all about having fun and I think I brought him down. Why do many of the mainstream solutions to our energy crisis sound like they come from the mind of Marx and I don’t mean Richard.

Have a great weekend!

Posted in blog round-up | 4 Comments »