Going paperless

Sidenote: I'm having trouble staying focused today...

Today's get rich scheme will serve several purposes:
1. it will save trees by eliminating paper bills
2. it will allow you to ignore paying your bills
3. it will hopefully eliminate overdraft fees and late fees from your accounts

Alex and I have been living about a year with our finances combined. We've been working off of the same budget, and have worked to combine our credit cards into one low monthly payment and interest rate. We've just committed ourselves to set up a long-term financial plan. I think this paragraph could be its own post, so I digress for now. The point is we share our bills, and have several that recur every month.

What we've done is open our own joint checking account. This account will be for regular monthly bills only, but these do comprise the majority of our paychecks every month. First, we'll take all of the monthly bills from the budget. Everything from gasoline to rent to cable to student loans to food. We've been running this budget for a year now, so we've pretty much figured out how much we spend on the monthly bills. I add all of this up, and that's what we have to put into this account on a montly basis.

The next step is to add the buffer. The current budget system will work for now, but I want to add $500-$1000 to this account. If a heating bill accidentally spikes next November and is automatically paid, I want to make sure the account is overdraft proof.

Next, we automate the payments. We add my monthly income to her monthly income and subtract out the bills. This leaves us with our spending money. Divide this in half, and you get my share and her share. Take that from each of our salaries, and you get how much each of us should contribute to the regular bills fund. Hm... time for a hypothetical:

• Bills are $1980/month. I make $2000 + she makes $925 (she's still in school) = we make $2925. Take out the bills, we've got $945/month, or $472.50 each.
• I get paid bi-weekly, or approximately 2 times per month. Since I get to keep $472.50 per month, this means $236.25 per paycheck. I make $1000 per paycheck, so I direct deposit $763.75 into the joint account every payday. The rest comes to me in paper check which I can cash, deposit, save, invest, hide, spend, burn, bury or eat.
• Similarly, she gets paid every week, or $231.25 per paycheck. She also gets to keep $472.50 per month, or $118.12 per paycheck. Just like me, she direct deposits the balance $113.13 every paycheck, and hides the rest in an account to buy me a fishing trip to Montana for our honeymoon.
• So if you add my 2 payments of $763.75 and her 4 payments of $113.13 you get $1980.02, nearly the exact amount of our bills.
• With some attention paid to the timing during startup as to not overdraft, we then create automatic bill pay for every one of our bills on the list. Voila!! No more paper bills, overdrafts, or stamps! PLUS! Our weekly "take-home" pay is exactly the same every week, so we get used to exactly that amount of fun-money. If we run out, tough luck. Go buy some Bologna for sandwiches instead of eating out.

Additional comments:

The montly bills also include a debt payment bill which is much more than the minimum balances on our debts. I'll talk soon about our debt repayment plan, and why we pay what we do.

The montly salary is 4-week's paychecks, NOT 1/12th of a yearly salary. This means at the end of the year you end up with 4 additional weeks' worth of bills left in your account. (12*4=48, but 365/7=52) Check this every 6-months to a year, and move it into a higher-yield savings account.

Why you'll never be a good investor. And you're fat.

Half-article written by Austin Edwards, The Motley Fool
Last Friday, something heartbreaking happened. While crammed into a middle seat on a flight from Denver to D.C., I realized that I may never become a great investor.
Tired from a long week, and bored out of my mind, I ignored the more sensible reading material I'd brought along and picked up the in-flight magazine. Before long, I stumbled across an advertisement -- and a troubling fact.
Wasted opportunities "Over 92% of people who own exercise equipment and 88% of people who own health club memberships do not exercise," the ad stated. The more I read that line, the less possible it seemed. But to be honest, at my own gym, maybe one-third of the people I see there look like they've ever been inside a gym.
I guess going through the motions makes them feel good about themselves. But why would so many people spend money, then not even pretend to exercise?
Four words that opened my eyes At one point, all these people had an "I can do it" moment: a brief burst of inspiration brought on by a friend, a personal trainer, or even an infomercial. They came to believe that with a little effort, they could truly get in shape. I should know -- I'm one of them.
Now, I've gone to the gym fairly regularly for years, and I get my fair share of exercise. But have I ever really reached my loftiest fitness goals? Nope.
Is that because I'm lazy, or undisciplined, or I just don't have the genes for it? Sure, that's part of it. But the real reason lies in four heartbreaking words ...
"I don't have time" Time is our most precious resource, and lack of it is the No. 1 reason people don't go to the gym … or travel the world … or, well, you name it. It could also be the reason you never become a great investor, or make the kind of money you want in the stock market.
Becoming a master investor takes an almost impossible amount of time. Warren Buffett began his investing career at 10, and he's been practicing for hours a day ever since. Obviously, he's spent his time well.
But what about those of us who don't have the time it takes to become great investors, or uncover life-changing investments? Heck, what about those of us who barely have time to keep up with the stocks we already own?
Take me, for example Here's a list of stocks I own, along with some of the reading I should be doing just to keep up with them:
Caterpillar (NYSE: CAT), Pages in 10-K:156, Articles in Yahoo! Finance Monday:4
Apple (Nasdaq: AAPL), Pages in 10-K:170, Articles in Yahoo! Finance Monday:93
AT&T (NYSE: T), Pages in 10-K:590, Articles in Yahoo! Finance Monday:28
Google (Nasdaq: GOOG), Pages in 10-K:114, Articles in Yahoo! Finance Monday:39
Goldman Sachs (NYSE: GS), Pages in 10-K:372, Articles in Yahoo! Finance Monday:13
Freeport-McMoRan (NYSE: FCX), Pages in 10-K:202, Articles in Yahoo! Finance Monday:2
Transocean (NYSE: RIG), Pages in 10-K:383, Articles in Yahoo! Finance Monday:5
And that's only a third of the stocks in my portfolio! In other words, I should have read roughly 6,000 pages and 550 articles per day over the past month just to keep up with the stocks I already own, let alone find new ones that could make me rich.
Now, don't get me wrong. I really want to be a master investor -- just like I really want to be in excellent shape. But I haven't had the time to read 6,000 pages of SEC filings and 550 articles per day. Have you?
...

Another article, by Phil Town:

http://www.bankrate.com/brm/news/Financial_Literacy/Oct_07_focused_investing_a1.asp?caret=66d

So, do you have the education to sort out the value of a company? Do you have the time to research like Phil Town? I sure as hell don't! Here I come, Index Funds!

My sister is awesome.

Last week I took a trip to NYC to see my sister graduate from Pratt with her fashion design BA. We had an awesome time! She had her senior fashion show in Manhattan, and showed off a bunch of outfits she designed and made. Although I did feel a little out of place at a NY fashion show with photographers, fashion representatives, and weird dudes with pirate shirts and mohawks, I had an absolute blast! Here are some of the dresses:

The grey one in the middle with the yellow hat was published in Women's Wear Daily, which is apparently a big deal in fashion (not that I know).

Unfortunately the organizers at Pratt didn't get the hint from the last 8 graduations, and it rained on the outdoor ceremony for the 9th year in a row. Nobody could see or hear, and we were all soaking wet and cold. The text messages went like this:

Me, after a 55-minute processional: How many ppl are graduating?

Her: 1000

Her: THIS SUCKS

Me: We can't see or hear. We love you to death and we're going to take a million pics when we get back but I think we're going to go.

Her: I'm coming with then, OK?

So we went back to her apartment and stuffed our faces, as usual at Weir gatherings. I made chicken wings. The recipe is: 8 oz Franks Red Hot, 2 cups ketchup and 2 cups regular coke in a crock pot, cook on high for 4-6 hours. The sauce is equal parts salted butter and Frank's.

Budgets

You know, I do realize how lame my blog gets when I post this kind of crap. Buuut, I started this over a year ago, and it has been an absolute lifesaver for both Alex and me. Nick also picked up this method, and he says he loves it, so here you go:

How I budget:

It's a pretty simple method, especially for all of us reasonably tech savvy 20-somethings. We're masters of the PC!, wizards of MS Orifice!, and most of us look like a one-armed monkey dry humping a football when it comes to budgeting and finance. Budgets should be the very first thing on everyone's list when they get out of college (or even before). Here's how I do it:

First, I take every paycheck and enter it into excel, with the name (paycheck), date, amount (after taxes, 401k, health, etc.) for the entire year. I highlight that whole thing yellow.

Then I line up every monthly bill, and do the exact same. Rent, car insurance, gas, food, cable, student loans, the works. Anything that I have to pay every month. For credit cards, I put the minimum balance down and the due date. Anything that takes a day or two to clear, I put the absolute last day I could pay it without late fees. Do it for every month for the whole year (not in order, but in groups according to what the bill is). That way you can be sure you have every payment in for the whole year. You can also highlight different bills with different colors if you want.

Then select the whole thing and sort by date, then by dollar amount. This will put them in chronological order, with your paychecks as the first thing in the day. Add a blank line above each yellow line, and in an unused column take your paycheck amount and subtract each item between that paycheck and the next one. Bingo: you've got how much is leftover for each week! When Friday rolls around take a look at the budget and pay everything under that week. Use a column to check off that it has been paid. Then even though you've got $1000 in your bank account, you know you've only got $75 for "sodapops" that night.

Sometimes, sadly, it comes up negative, but that's what the budget is for. Have $400 this week but -$200 next? Just move that $230 truck payment up a week. You can move things up the list, just don't move them down. You don't want to pay the credit bill when you've got extra cash a week after the due date. A tip for that: if you've got extra cash, put some into savings (I use and highly recommend ING Direct). If you've got a slim week, you can just pull from savings and add that to your paycheck. Because you've done the budget, you'll be able to do it soon enough to have the money clear by the due date. Also, any big ticket items (concert tickets, car repairs) can be easily planned in advance so you'll have the cash available.

Here's what mine looks like:

UPDATE: (3/25/10) I just came across an interesting method at nodebtplan. Check it out, see if it's right for you. Nodebtplan has some good stuff, be sure to browse around a while.

I took nodebtplan's excel budget and executed my method on it, step-by-step in the tabs. Check it out here.

...who's in the mood for hotdogs and bagels?

Last Monday the awesome Lowell Ave. cook decided to cook a chicken for dinner, and Jeff had the most tasty idea of deep-frying it in his turkey fryer. Yum! For anyone out there that hasn't had a fried turkey or chicken, please, please eat one before you die. It's fantastic!

If you're not familiar, you have to heat 3-4 gallons of highly flamable peanut oil between 325 and 350 degrees. If you heat it much more you'll reach the flash point of the oil and Kablooey! So far, far away from any flammable substances (my house) I cranked up the burner. 100, 150, 200, 225, 225, 225.... Hm, it was really smoking like a bastard and it didn't go above 225 for an hour. I pulled out the thermometer, jostled it a bit and the temperature shot way past the maximum of 550 degrees. Turns out the thermometer was broken so I had no idea the oil temperature was double the flash point!

Taking great caution in a T-shirt and sandals, I pulled off the lid and as soon as the air hit the oil -BOOM! Up she went.

Now, having just taken my fire extinguisher course 4 days prior, I knew that we couldn't put it out ourselves. Nick tried, with a handful or two of baking soda, which burnt up before it even hit the surface of the oil.


Having admitted defeat, I called the Newton FD. Their first try was putting a lid on it which put the fire out as long as the lid was on it. As soon as they took it off - Boom! again. The first extinguisher they tried was empty (makes me feel secure), and the second sprayed flaming oil all over the backyard, but did put it out. They sprayed the outside of the pot with the garden hose to cool everything off.


We did end up cooking the chicken in the oven, which was done at about 11:30, but after we all had hotdogs and bagels for dinner.

( Notice the handle that melted off of the pot.)