Search Results for: budget

Are You Rationalizing Your Way Into Debt?

May 16, 2012 By Shane Ede 18 Comments

Staying out of debt is difficult. Terribly difficult. It isn’t made any easier if you rationalize yourself into debt, either. Many of us spend a good deal of our time and energy trying to get out of debt, and stay out of debt. We do that through so many devices, and each have our own system that helps us along the way. Budgeting is obviously a big tool that many of us use to make sure that we have enough money to pay the bills, and ourselves at the end of the month. We figure out how many months it will take to pay off this debt, or that debt, and then budget out that amount over that many months.

Many years ago, I spent a few years working as a salesperson at a retail store where bigger ticket items were popular. Computers, televisions, and cell phones were big sellers, and good for commissions. As part of our training for our jobs, we were trained on the many ways to sell a customer on the item they were looking at, and even how to convince the customer that they needed the upgraded item. One of those sales tactics was to help them rationalize the purchase. And, chief among the ways to do that was to take the price of the item, break it up over a set amount of months (24, 36, 48, 60) and tell them how much they’d be spending “a month” for the item. Suddenly, that $2000 computer (it was that long ago) becomes a $25 a month purchase. Psychologically, people are more likely to purchase something if it’s under $100. Even if that “under $100” is in the form of a monthly payment for several years.

Salespeople are the only ones we have to watch out for when it comes to this tactic in particular. Pay special attention the next time you’re looking at purchasing something. See how many times over the next month, you attempt to rationalize a purchase based on what it will cost per month on credit over what the total price will be. I think you’ll be surprised just how often you use that same sales tactic on yourself.

Don’t rationalize your way into debt. Fight back, and stick to your guns. That purchase has a total price. And if you’re buying it on credit, that price will be far larger than if you had purchased it with cash. More importantly, don’t saddle yourself with more debt just because the “monthly” price is more palatable.

The Millionaire Fastlane

February 22, 2012 By Shane Ede 13 Comments

The Millionaire Fastlane

By: MJ Demarco

If there was ever a case for a little less “hype-y” title for a book, this is it. I’m not sure what else I would have named it, but the title just seems like a whole bunch of get-rich-quick hype, and it kept me from reading the book sooner than I did. Which turned out to be a bit of a downer, since it’s really a good book. Demarco spends about half of the book describing his ideas on the different types of life travelers. There’s the “sidewalkers”, the “slowlaners”, and then, the “fastlaners”. Each describes a way of thinking about how we travel through our life, financially.

The “sidewalkers” are the people who subscribe to a 9-5 work life and save as much as they can in hopes that they can one day retire on a decent budget. The “slowlaners” are those that have started to break away from the 9-5 lifestyle and have some side income coming in, but they just don’t (or won’t) make the jump and get into the fast lane. The “fastlaners” are those who have made the jump to business ownership, entrepreneurship, and are making their money on their own terms.

The second half of the book is dedicated to the “fastlaners”. Demarco talks about the dynamics of earning money and how the way you make and spend your money is so important to becoming a “fastlaner”.

As someone who regularly writes about frugality, saving, and making the most of what money you do make, I have to admit that I was a bit off-put by the first half of the book. There is a large contingent of the world that will work most of their lives, save for retirement, and then enjoy the rewards of having done so. His arguement, of course, is that we shouldn’t have to work our lives away until we’re 60+ years old only to have our body break down on us and not be able to enjoy our hard-earned money in retirement. Instead, he talks about becoming a “fastlaner”, and creating your own wealth so that you have control over your life and your income.

On the flip side, as someone who recently quit my job, and am trying to make a go of it as an entrepreneur, I really felt that I connected with many of the “fastlaner” ideas. Going to college, getting a job, and working until you’ve got enough to retire on does seem like a long, fruitless pursuit. Going solo and building something worth a great deal of money that enables you to retire early and live life the way you want to sounds a lot less long and more fruitful. I think he makes a great point that many won’t be willing to make that jump and will, instead, settle for the “slowlane” lifestyle.

If you’ve ever given though to starting your own business, or are just unhappy with your job, I think this is an excellent book to read. It’s inspirational in that it really gives a good idea of what is really possible. Demarco comes across as someone who really is trying to help people out of the “slowlane” and into a “fastlane” mindset. I think some will struggle with the concept, and surely, with the ingrained mindset that we’ve all been taught growing up, but seeing that, and beginning to break away from it are excellent steps. Steps that will be helped by reading this book.

DIY Disaster; Or, Our New Deck

December 12, 2011 By Shane Ede 28 Comments

We got a lot of snow last winter. We get a lot of snow every winter, in fact. But, last year was exceptional. If I remember correctly, we had over 80 inches of total snowfall. Most of it blows around and drifts, so it isn’t all piled up, but, it was still a lot of snow. And, a lot of snow is heavy. The deck on our house was built before we bought the house, so it was probably 10 years old, or older. Late one evening, just before spring, we heard a loud cracking noise come from outside. I went outside to see if I could find the where the sound came from, hoping it wasn’t a big tree branch (or a whole tree for that matter), to find that part of the deck had sunk about 3 inches below where it was before. It doesn’t take a construction genius to figure out that that is a bad thing.

With snow on the deck, it was hard to diagnose exactly what the issue was, so we waited until spring had come and the thaw had gone. I pulled the first board off of the deck, and found that the sill plate (the board that attaches to the house and supported an entire side of the deck) had given way. The weight of the snow, combined with the age of the deck and mother nature’s toll on the materials had caused it to break apart in several places. It wasn’t really safe to use anymore, so we decided to replace the board and all of the decking, leaving the support posts and railing. We were hoping that by leaving the support posts and railing, we’d save some money on the project. And, that would have likely been true. After I had removed all the decking, here’s what we were left with.

With it torn down to this degree, we were ready to do a little clean up, and start on replacing the decking. So, I got my hammer, and started pulling nails out of the posts and railing. One of the first nails I attempted to pull was a stubborn one. Instead of coming out of the wood, the entire post it was in came up off the ground by about 5 inches. Oh, boy. I went around and tested a few of the other posts, and sure enough, almost all of them were rotted through at the ground level. My affordable deck repair had suddenly become a not-as-affordable deck replacement.

When it was just a deck repair, we had planned on spending about $700 on materials to fix the deck. When it was all said and done, we spent over $1200 to replace the deck. Now, had we had a contractor come and do the work, it would have easily cost us twice that, so I won’t complain too much about the cost. But, when you’re expecting one price, and then end up spending twice that price, it’s a bit of a shock to the system. At the time, we had the money, so it wasn’t that big of a deal. Shortly after we started the deck project, we decided to sell the house, so it was going to be a big bonus for selling the house. Instead of the old rickety deck, we’d have a nice new deck as a selling point. (P.S. attempting to build a new deck while also trying to prepare your house for sale is not the best idea. Just saying. ) Then, I quit my job. And we took the house off the market. So, we get to use the deck ourselves. Of course, we could use the money we spent on the deck, now, but there’s nothing we can do about that.

I didn’t keep track of exactly how long it took, but overall, I think it came in at about 4 weeks of nearly every night after work and weekend work to get it finished. When it was all said and done, this is what we ended up with.

Note: I realized when planning this post that I hadn’t taken a picture of the finished deck, so I took one, last week.

I think it turned out really well. It’s way more solid feeling than the old deck, and since we redid the whole thing, we got to stain it, rather than paint it that “fun” redwood color that the old deck was. One of the key takeaways here is that while DIY can often save you money, the projects that you take on can sometimes be more way more than you intended to do. Had we hired a professional to do the work, it would have likely cost us way more. Replacing the decking is a pretty easy task that most DIY’ers should be able to tackle, but building an entire deck is a bit more complicated. Several times, I found myself scratching my head, trying to figure out what step I needed to do next. And, I’ve built a deck before! Someone with less experience and know-how might have easily found themselves in a pickle and had to hire a contractor to come in and finish up. It could easily turn into a DIY disaster that costs way more than anticipated. And, if you’ve only got so much budget to go around, like most of us do, even a little bit more can put a crunch on your finances.

Be sure you do as much analysis as you can on the project, and budget for unforeseen issues, before you tackle any major DIY project. Also, it’s better to have it done right, than have it done cheaply, so if you get in over your head, find a professional to help you. Many will gladly charge a consulting fee to come and tell you what you need to do next. Find one that will, or hire one to finish the job so that it’s done right.

What have your DIY disasters been? Massive budget overages? Stuff you built fall apart? Share with us!