Archive for January, 2007

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Cash Tip 2 from Cam: Start a Budget

January 30, 2007

If you have read my blogs for a while, you might remember me talking about my budget and how super-cool it is. However, I didn’t just randomly come to the conclusion that I needed a budget. The realization came a little more drastically.

To begin, from about as long as I can remember, I have known the concepts of budgeting. In 7th or 8th grade, my dad, who is an accountant, sat me down and set up a budget for me in the spreadsheet part of Microsoft Works. It was pretty simple, and it was designed to help me save before spending. The problem was that with only $30 or so dollars a month, after I had split it between the 8 categories, the balances were so small that I didn’t really have the motivation to save for 6 months of time just to get the latest computer component that was really cool when I could use one or two months of savings to get it.

Needless to say, that budget fell pretty flat, and pretty fast, but with the apparent failure, I learned two things, one that helped me incredibly over the course of my school life, and another that has helped me incredibly over the course of my post-college life.

The first was how to use a spreadsheet. After learning the concepts, all my high school classes on office software were a breeze, and my college class meant to teach me the same set of skills I tested out of.

The second was the concepts of budgeting. When I graduated, I had no idea where I was going to work. I was renting an apartment with a friend from college and I knew how to get the money to cover my portion of the rent, but after that I was clueless. I dropped a line to a few relatives of mine who worked in the field I was pursuing (Graphic Design), and one of them offered me a job. So I moved out of my summer apartment and in with one of my aunts and uncles who agreed to let me stay for free with them.

If I had been smart, I would have started my budget immediately after the move, but I didn’t. At that time, my student loans were my only debt, and so I didn’t think I would need one. Looking back, I bet I could have slashed a few thousand dollars more onto repaying the debt than I did, and it would have also prevented the two events that lead me to realize I needed a budget even more. I had the ideal debt slashing scenario and I was too naive to work it as intensely as I should have.

The first of the two budget-prompting events happened about eight months later and it came when I was looking to rent an apartment. My aunt and uncle were moving away and they had found a buyer for their house (and it was pretty much a given that I couldn’t free-load off of the new owner). At the time I was pretty much using my memory of how much was in my bank account and the balance shown on my monthly statements and cash withdrawal stubs to track my money and where it was to go. However during the first month, I forgot about the checks I had written to get into the apartment (namely ones to the tune of about $800) and so when I went to withdraw money (after making some other frivolous purchases), I was shocked at how low my account had gone. It hadn’t gone over-drawn but it was a lot closer than I would have liked it to be.

The second came a few weeks later when I was traveling back from Nebraska after spending Thanksgiving with my family. The weather was horrible for a good chunk of the trip, with whiteout conditions for close to half of it, but it wasn’t until after the storm when I was in the nice clear, sunny and “mildly” gusty portion that caught me off guard. A gust of wind and a patch of black ice, coupled with me changing lanes while going a little over the posted speed limit, took and spun my car off the road. I didn’t have AAA and so I basically was ripped off for the towing and tire repair. It cost me enough to put me into the red with my bank and it was the final straw that convinced me that I would start a budget and I set a date goal for having a budget in place — Jan. 1.

Budgeting isn’t evil. It doesn’t even have to be as complicated as I have made mine to be. (My budget didn’t start out very complex.) It is simply having something written (whether on paper or on computer) that tracks the money that is coming in and the money going out of your account. It also keeps track of where different amounts of your money should be going –like taking a certain dollar amount and reserving it for the rent or mortgage payment.

If you have excel and/or are interested, I can demo what I have set myself up so you can see how it works, and if you like it, I can work with you to set something up for you. There are many tools available to help you take control of your money, and if you haven’t already built a budgeting system for yourself, I suggest looking into it. It just might surprise you to know how your money is being spent.

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Cash Tip 1 from Cam: Don’t Loan to Friends

January 28, 2007

For lack of something philosophical to write, I am going to take several ideas from a Dave Ramsey book (The Total Money Makeover) I was given for Christmas (thanks Lorilee), and use them to springboard blog discussions, since I haven’t had a really good discussion on my blog for a really long time. So here it goes:

Myth: If I loan money to friends or relatives, I am helping them.

Fact: If I loan money to a friend or relative, the relationship will either become strained or even destroyed. The only relationship that would be enhanced is the kind resulting from one party’s being a master over the other party.

I have had two experiences loaning money to friends. The first was my sophmore year in academy. One of the guys in the dorm needed new shoes or something along those lines immediately and the mail was too slow (he had the money en-route from his parents). The amount he needed was $100. We weren’t close friends and at the time I did have $100 saved that I could live without for a week or two. After refusing initially, I agreed only after he agreed to sign a note saying he owed the money to me. My roommate was around, I think, and if I remember the three of us signed it.

I didn’t really think too much about it over the next week, but about a week and a half later, he showed up with an envelope with 5 crisp $20 bills and handed it to me to satisfy the debt payment. I was happy. The debt got paid and I wasn’t out $100.

The other experience in loaning money to friends has happened more times than I’d like to admit, and it usually involves smaller amounts than what I loaned my friend in academy. Some cases involved loaning money for gas, for food, for movies. A few times I was paid back, but most I wasn’t, and it often strained the relationship from my end when I see the person spending/buying optional things with money they could have paid me back with.

Solution in my mind: Give money instead of loaning it, or buy something of theirs that would equal about the amount that is being loaned. That way the master servant dynamic is removed and in the latter case, there is a clear item that has changed hands (which keeps one side from conveniently “forgetting” or thinking they have already repaid the debt).

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Riches and Redemption

January 7, 2007

“It’s easier for a camel to go through the eye of a needle than for a rich person to get into God’s kingdom.” Mark 10:25 (also in Matthew and Luke).

Why is Jesus making it so hard on rich people? Should this be a sign from God that we as Christians shouldn’t aspire to be rich? Could there be anything behind this story that we don’t see?

This story comes at an interesting time in my life. I have just started my “Million Dollar Plan” where I am aspiring to retire (at the regular age of 65) with no debt and a million dollars. I got a book for Christmas that revolutionized my thinking, and I am going to follow its plan for, at the very least, the first several steps, which is long enough to get out of debt and secure six months worth of savings. These actions alone put me relatively high on the wealthy scale since statistics show that a very high number of individuals are living paycheck to paycheck with no real savings to fall back on when something unexpected comes their way.

This isn’t the first time I have been told that if I play my cards right I could have seven digits to my name (with all those digits being to the left of the decimal), but this book had the most plausible and step-by-step plan that I have come across (even the few strategies that I have heard after reading the book don’t seem to stack up after reading this book’s plan).

So how does this long term goal of accumulating wealth stack up against this dark tale recorded in three of the four gospels. Should I not try to secure a future on earth where I can be financially worry-free? Would my doing this secure my place outside of heaven?

I haven’t thought too long about this, mainly because I don’t feel the issue is about accumulating money. If we as Christians abandoned every aspirations for money then that would leave all the money (with the earthly power that goes with it) to the evil people with their less than godly intentions for it. I feel there is something behind this story that we don’t see when looking at the surface, namely that it is impossible for humans to make it to heaven but that it is even more impossible for rich humans to make it to heaven.

There is no difference. Impossible is impossible, plain and simple. What if this story is one about priorities and not about money? We will never know how Jesus would have followed up, or even if he would have, had the rich young ruler said he would sell everything to follow Him.

The ironic twist to this story is that the people who are going to end up being in heaven are the ones who put others before themselves. They are the ones who are not focused on getting wealth for themselves, but they are focused on getting wealth to help others. The paradox of this is that the “wealthy” would be constantly giving away their money to help their fellow man, which would be like trying to fill up a bucket that has a hole in the bottom.

So how high on my million dollar plan will I get? I don’t know. I do know that most of us could live off of very little income if we had no debt (and even less if we owned a home without a mortgage). Erasing my debt is my primary goal. After that, I can focus my money giving onto the things that matter, instead of giving it to banks to pay them for loaning me money (a.k.a. interest).

I honestly feel that is God’s plan for us. That we live as debt free as possible and use the money we make to help others.

So where do I go from here? How does my plan begin? My first step is changing how I think; changing my focus onto one that is task oriented and not stuff oriented. Once I have oriented myself on the task at hand, then the stuff that isn’t necessary to accomplish it kinda fades away. Suddenly buying that thing or going out to that movie doesn’t seem as appealing, because it is me using my money in ways other than the current task at hand (task 1 for me is to knock off one debt at a time, starting with my car loan).

Hopefully I have inspired someone reading this to modify their thinking. Maybe you have been thinking this for a while? Either way, comment and let all my readers know 🙂

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Stealing Females

January 6, 2007

Over the course of my life, particularly in the latter years (college and beyond), I have noticed something in the relationship realm. This idea is that I will jump into a relationship with a so-so person while I am waiting for Mr. Right/Miss Right to come along. (It can also manifest itself in finding the “right person” but that usually is more someone thinking prematurely that they have found the right person and so they start the relationship before much if any friendship has developed.)

Who is to blame for this idea. My soapbox rant blames chick-flicks. Where else than in some idealized Hollywood film does this lottery-odds relationship strategy actually work. It may appear to work all the time, but what really ends up happening is something far worse, a breakup (whether it is warranted or not).

The reason for this is along the same lines as my Grass is Greener blog a few months ago, where I pointed out that there will always be someone who comes along that will end up being a temptation. The difference here is that this is in the dating realm and so there really isn’t a formal commitment like there is in marriage, and so it is way more likely for a breakup to occur without the amount of consequence that there is in an actual divorce.

A typical scenario goes as follows: Guy 1 and Girl 1 hook up. After dating for a few months or more, Girl 1 meets Guy 2, and since Guy 2 seems like a much better match (probably due to the novelty factor that Girl 1 doesn’t know Guy 2 nearly as well as Guy 1), she dumps Guy 1 to go out with Guy 2.

This is a very simplified version of a stealing female situation, and it isn’t exclusively a female thing either. This is something that can easily happen both ways, but since I am giving the example we will go with the way that I experienced.

I have been a part of a stealing female situation, namely I was Guy 2. On first glance this would seem great. “Way to go Cam, you just helped this girl escape out of a bad relationship.”

However under the surface something horrible has just happened. The problem: once an individual (the girl in my scenario) has dumped someone in favor for someone else, they have just set the precedent that they could easily dump the person they just hooked up with for the next better thing. And since I know something better will come around (even if it is only something that on the surface may appear better), Guy 2 has just ended up hooking up with a girl that is 99% more likely to dump him in the future. The relationship is now a time-bomb that is just slowly ticking its way down to a dumping.

Now I am not wanting to totally rag on people who do this too much, but it a HUGE red flag in my mind. Am I dating now, no, and so by simple addition and subtraction one can conclude that that relationship I was in burned someone, and it was me. Had I developed this idea more fully in my head when I started the relationship? No, but it was one that developed near the end of it, and while most people say that their situation will be different, that they will be the ones that break this ugly trend, chances are very high that you won’t. I thought this way and got burned, more than once.

I am even opposed to anything that visually looks like the stealing female situation. A totally unrelated breakup followed by a too quick hookup either signals the stealing female, or even worse, the rebound relationship (which I won’t go into here, except to say that they are typically rebounding into a relationship with someone that is way worse for them than the relationship that they just left.) Very rarely does the dumper ever come out and say that they are dumping to hook up with a new guy, but this overly quick hookup is a great sign that it just happened.

Do I have a good answer around this potential visual problem, because what if you are in a bad relationship and you have the opportunity for a better one, wouldn’t you want to go for it? Sure you would, but I would do my best to make the breakup and hookup as unrelated as possible, even trying to space out hooking up (or even appearing to be hooked up at all) for a minimum of 2-3 months, otherwise it could get you labeled this way.

Anyways, that was just a little rant of mine. Feel free to agree or disagree.