Making Career Decisions

So far we have been looking at job types in a two dimensional. In our 2d model your job is in the same position on the chart no matter your abilities for the given job type. The 2d model is good for understanding why you are making money, but it doesn't help determine how to make more money. For that we will need to look at the same chart in three dimensions.



We now hove a qualitative quotient rising vertically from each of the job types. In each case the vertical factor represents qualities which increase the attractiveness of your work to those who will be paying you. For example, a professional musician vs. an amateur.

In order to use this model to maximize your profitability we are going to need to find what jobs we are able to do and choose the best selection of to maximize the pros for each job type, while minimizing the cons.

I start by making a list of which skills and abilities I have, some major personal characteristics and things which I can make. I rank each of those abilities based on how much I think someone could potentially pay for each activity.

What I do :

• Programming (8)


• Wood Working (4)


• Network Security (5)


• System Administration (7)

What I make :

• Informative websites (7)


• Cool Program (9)


• Wooden kids furniture (5)


• Digital drawings (5)


• Cooking (2)

Who I am :

• College graduate (7)


• Son of well respected man in my home town (9.5)


• Young conservatively dressing tall man (7)


• Yet another personal financial blogger (4)


• Eagle Scout (10)

Now I plot them on the chart (either for real, or just in my head).



After listing and ranking my abilities, I add which abilities I would be interested in improving and to what level.

System Administration (9)
Wood Working (8)

Based on my chart I can see that I currently could probably make a cool program and provide something which is in higher demand than my current programming position.

In order to provide a more demanded skill in System Administration I would need to improve my skills a little bit -- maybe take a class, or study online.

To maximize my income right now, I should make a cool program. If I would rather maximize my income by doing system administration, I should improve my skills enough to command a higher salary.

To be good enough with wood working (Which I enjoy), I would need to get a lot better. If my life dream were to support my family as a wood worker then such improvements might be worth their effort. Since that's not my dream, my self improvement time could be better spent elsewhere.

Odds are good that you too will have several skills which will are in higher demand than others. Besides just trying to maximize your income, be sure to also consider that certain skill groups (eg. Programming + System Administration + Network Security) may prove more valuable as a cluster of abilities than a single higher valued skill (eg. Writing a single cool program). Also balance the different positions with the pros and cons discussed in part two in order to find a level of job security and type of job risk you are comfortable with.

Conclusion

This isn't the be-all end-all theory for deciding what to do for work. No model is perfect, and making the most money isn't the most important thing in life. What this model can do though is help you visualize potential areas to improve your income, and help you find ways out of a field you're not enjoying.

Why You're Paid Job Model (Part 2)

Yesterday I talked about my theory on jobs. Today I'll discus the pros and cons of each of these job types.

Who You Are

Pros:

People find some quality in you which is worth paying you for. It is likely that you enjoy who you are, so work is probably enjoyable on some level as well.

If your are paid for the mental or creative side of who you are, you may be able to continue your job after physical disasters.

There is only one of you (limited supply), so if you are popular enough (high demand) you can charge top dollar just for showing up.

Cons:

It may be hard to break your stereotype if you want to change what you do. Eg. A famous baseball player is going to have a hard time being recognized as a serious CEO. He will always be a baseball player who is also a CEO.

You can only be in one place at one time. This limits how much you can make from speaking arrangements, CEO positions (one at a time probably!), concerts, etc. You may be able to overcome this through What You Make.

If you are paid because you are a famous singer and dancer and suddenly can't sing and dance, you will find yourself out of a job.

People are ficle and may change their minds about who they like.

What You Do

Pros:

If you like what you do and are getting paid for it, that's terrific.

If you are better than average at what you do or poses a skill most people don't (limited supply) that enough people want (high demand!) you may be able to command a larger income.

Depending on your skill you may be able to do extra consulting outside your normal job.

Cons:

Many 'what you do' positions are warm-body positions that don't require any skill. Low level programmers, burger flippers, etc. are all easily replacable.

You can only do one thing at a time. This limits how much Doing you can do. Again, you may be able to overcome this through What You Make.

If your skill is boring you may not feel as fullfilled as you would doing something which would make you less money.

What You Make

Pros:

Factory made items and easily copyable items (eg. software) can be created in whatever quantity needed to meet demand.

If you get paid for Who You Are, you may be able to produce CDs, Videos, Books on Tape or other materials that serve as a proxy of yourself.

If you get paid for What You Do, you may be able to use those same skills to create something which can be replicated and sold (eg. software, art prints, etc.).

If you create something which can be sold again and again (eg. art prints), you can bring in money for a long time after the initial work is done.

Cons:

Custom work and hand-made item production don't scale well.

Anything which depends on the whims of fashion can't be counted on as a long term plan.

If what you make is easily replicatable there will be imitators (excess supply) driving down prices.


On Monday: Using this job model to maximize your income and make career decisions.


Part One : The Why You're Paid Job Model

Why You're Paid Job Model (Part 1)

This is my job model. There are only three reasons people pay you:

a) Who you are (celebrities, famous speakers, successful CEO, etc.)
b) What you do (Flipping burgers, programming, etc.)
c) What you make (Books, music, programs, etc.)

Any given job can be a mix of the three. Each of these pay-reasons has different benefits and down sides to it. We'll hit the benefits and downsides tomorrow. Today, an explanation and examples of each reason.

Who You Are

If you get paid because of your reputation, looks or past successes then you are paid because of who you are.

Examples of Who You Are Jobs

Paris Hilton - No redeeming qualities whatsoever.
A successful CEO - hired for his name so that investors feel comfortable with the start up company.
Steve Jobs - People hang on his every word because he's Steve Jobs. Any other Apple employee making the same announcements wouldn't draw the same interest.
Programmers - When they're paid because they're famous (eg. Joel Spolsky)

What You Do

If you get paid for showing up, for doing specific tasks or serving people you job includes What You Do elements. Examples of What You Do positions include:

Examples of What You Do Jobs

Garbage men
Programmers -- when programming for pay
Burger Flippers
CEOs who can actually turn around a company
Clowns
Skilled laborers

What You Make

If you are paid for the product, art or other creation of yours, your job is in this category.

Examples of What You Make Jobs

Artists (unless their art sells because they're famous)
Woodworkers
Programmers -- when selling a program they've created
Skilled laborers


Tomorrow I will discuss the pros and cons to each of these three pay-reasons.

Part Two : The Pros and Cons of Each Job Type

Working For A Cause (you don't believe in)

I've been doing some consulting as a web developer at night to bring in a bit of extra money. One job is paying a pretty generous $25/hour. For a couple of hours a night I don't mind the programming. The dilemma I have is that the work is for a company I don't approve of. It's a MLM company.

They sell some sort of amazing cancer curing, hair restoring, kidney cleansing, life changing beverage (which hasn't had any FDA trials, of course).

I hate MLMs* and I initially resisted doing work for them. Where do I draw the line though? I wouldn't make a website for a brothel or drug dealer at any price. How about for a scummy used car dealer?

There are certain things which are black and white. Any time people get involved though, things turn gray rather quickly. I still have a preference to not do work for MLMs, but I don't think I could get enough jobs working for world saving charities either.

---

* I realize that they're not technically scams or pyramid schemes. So many of the people doing them though seem to think that they're going to get rich quickly from them. Also, I hate dubious health claims which is what most of the MLMs are about around here.

Financially Stable. Now what?

As I've become more familiar with personal finance blogs, I've slowly come to realize that I am very blessed. Most of the finance blogs are about getting out of debt and reaching the point where we are now.

• Our Credit Cards are paid off


• We have money set aside to pay off our student loans before they start charging interest (and it's making interest for us in the mean time).


• Our car payment is 0% interest, so there's no rush to pay it off ahead of time.


• We have more than $2000 sitting in ING doubling as an emergency fund and a start on a house down payment.


• We're putting away 15% of my salary into a 401k


• Shoot. We've even got a budget.

Ok. Great! Now what?

Now What?

Well, we want a house, so we're putting more money aside each month for that. We know that we're still spending more than we need or want to and we're trying to trim the fat. That one's a continual process though.

Beyond still saving, I'm not really sure what our next stratigic move is supposed to be. If we had a house it would probably be investing. There are plenty of sites that talk about investing. My problem with that is that we want our money back in 6 or so months for a house down payment -- I don't want to make that short term of investments, I want long term stuff.

In other words I have no idea what the next step is. Maybe it's time to buy a new car (I kid!).

CDs VS. Savings at ING

I looked at putting the $2000 or so that I've got in my ING savings account into a CD instead, but the ING CDs are only making 3.3% interest vs. the 3.0% interest.

The difference comes out to just a couple of dollars after the six months are up.

Even though part of my philosophy is to keep our money in the highest earning account possible. The other part is 'while keeping it as liquid as needed'. The two to three dollar difference isn't enough of a difference to get paid for the loss of liquidity I would get hit with.

There's also a chance that the savings account interest rate would go up. Several other banks recently upped their savings rate slightly. If ING ups their savings rate to 3.2 or something, the money locked in the CD would be even less beneficial. (Of course, the interest rate could go down too.).

Credit Card Reasons Revisited

Anonymous Says No To $350

Or, How To Miss Out On $29.20 a Month By Not Using Credit Cards

I recently listed 8 reasons to use a Credit Card which caused someone under the bravery of 'Anonymous' to call my advice crappy.

I understand that Credit Cards can be trouble for some people and I have no problem with people disagreeing with me. I did however take issue with these two segments of his response:

Why not keep the money in a high interest account and transfer it online,free, to your checking account as needed. problem solved
...
Rewards,benefits. Virtually useless. For most people the rewards/benefits do not outweigh the risks with credit cards

Great idea! And if one wasn't using a Credit Card at all, I'd agree. However, I found the line 'Virtually useless' rather suspect. I decided to run an analysis and see for myself (and for you, dear reader) what exactly is the financial benefit of using a Credit Card in the manner I use it.

Remember, our financial plan says to use the Credit Card wherever possible (and to pay it off on time, every time).

My analysis involves the following three scenarios:

Scenarios Under Analysis

Checking Account Only

• One 0% interest, $0 fees checking account


• Salary goes in, checks come out

Checking Account and a 3% APY Savings Account

• Salary goes into Savings


• Money is transfer ed over as needed

3% APY Savings Account, 1% Cash Back Credit Card

• Salary goes into Savings


• All expenses go onto Credit Card


• Credit Card is paid off at the end of the month

The Results!

With a monthly salary of $3,013.26 and monthly expenses of $2,187.50 using a 1% cash back credit card and a 3% APY savings account I will make $29.20 more a month than if I were just using a checking account. I will make you $24.96 more a month than if you I were using a checking and savings account (but no Credit Card).

See the whole sheet for a more detailed look including assumptions I made to simplify the calculations.

Table: Monthly Difference Between the Three Scenarios

Blog Sized Excerpt	Checking Only	Checking and Savings	Savings and Credit Card
Vs. Checking Only	$0.00	$4.24	$29.20
Vs. Checking and Savings	-$4.24	$0.00	$24.96
Vs. Savings and Credit	-$29.20	-$24.96	$0.00

A Partial List of Flaws

• Not everything can be paid for with a Credit Card.


• Expenses aren't actually evenly distributed throughout the month


• It is possible to get an interest bearing checking account


• Using multiple savings accounts will give you finer grained control over transfers to the checking account


• Some people really really really hate credit cards, so this won't work for them


• Some limitations may apply to 1% cash back purchases


• Carrying a balance even once will wipe out months of returns

Conclusion

I stick with my recommendation to use a Credit Card. I realize that my numbers are rough estimates, but I believe that they are strong enough and close enough to show that there is a clear financial benefit to using a Credit Card.

Using a Credit Card isn't for everyone, and I respect that, but just because they don't work for you doesn't magically make them crappy for everyone.

Comprehensive Financial Planning: Initial Thoughts

I've been slowly getting up to speed on how money works, on the importance of budgeting and appreciating the principle of compound interest. In this learning process I've realized that there are several expensive milestones which I should be planning for now. As I look at these events, I realize that I need a comprehensive financial plan.

Some Large Financial Milestones

• House


• Kids College


• Sons' Missions


• Helping my kids become financially stable


• Retirement

Some of these are so near it's scarry (House). Others are so far off it's hard for me to be able to estimate how much I need to save. All of them will require large amounts of money. Some (retirement, college) can get extra help from special types of accounts (529, 401k, IRAs, capital gains vs. earned income taxes) if I plan wisely.

Complicating Financial Factors

There are complicating factors for me to consider when thinking about these financial events. Markets will change, my job will probably change, I don't know how many kids we'll be having.

Side Note : Inheritance assets

On a trip last weekend to visit my grandpa-in-law I was also reminded that there are some people in my life who will be leaving something to me in their wills. My father and grandpa-in-law have potentially large assets, possibly my grandpa too.

Inheritance assets are hard to include in a comprehensive financial plan since there's no way to know when someone is going to die, or how much their assets will be worth when they do.

How To Get Started

I don't know how I'm going to make my comprehensive financial plan. I think that I'm on the right track to create it though. The first steps are to 1) get my day to day financies in order then 2) understand the events I need to be planning for then lastly 3) make educated guesses and estimates about the situation.

In a few weeks you should see an initial revision of my plan. If you have any suggestions before then, I'd love to hear them.

Job Interview Full Disclosure

Morality, Honesty and Applying For a Job

I have been pretty excited about this new job I'm applying for. I've felt confident that it would be a great fit and that both I and the company stood to gain from me working there.

Then my father in law asked if I felt there was any moral issue in not telling the company that I am planning on moving in January. I hadn't even thought about it before that, but his comments got me thinking.

Big Business

First of all, I've never really liked big business. I don't think for a minute that they are going to worry about me if they need to lay me off. I don't think that company loyalty or employee loyalty is a true principle or a moral obligation.

This is the logic that I use when I decide not to talk about my real future goals at work (move out of state, get a more interesting job). The same logic was what I'd been using in this job application process.

I figured that if they didn't ask, I wouldn't tell them. I don't think any business has the illusion that an employee they hire is going to be around for life. After my father in law's comment, I started considering different factors.

The Invisible Hand

First of all, I thought about Adam Smith's principle of the invisible hand which is summed up by Wikipedia thusly:

...[I]n a free market, an individual pursuing his own self-interest tends to also promote the good of his community as a whole through a principle that he called “the invisible hand”. ...[E]ach individual maximizing revenue for himself maximizes the total revenue of society as a whole, as this is identical with the sum total of individual revenues.

I was definitely acting in my own self interests -- who wants to hire an employee for only six months? The business was acting in it's own self interests, they were trying to hire the best employee they could get.

Could I Provide the Company Value in 6 Months

I would have worked there for six months. My skill set was very closely aligned with what they were looking for. I believed (and still believe) that I could have been profitable for them within a month or two.

That is, I think that my benefits for the company would have offset the cost of training and of the hiring process within one or two months. Some sites however say that the cost of hiring an employee is 150% of their salary. Obviously I have no way of knowing exactly how much the company would have spent, but I find that number very high for this position.

Job Hopping Is Normal Now

My generation is the slightly maligned job hopping generation. There are many different sources saying that this is a normal practice for younger workers like myself.

Granted, I've only been at my current job for 10 months, and I would be at the new one for 6, but when we move I plan on finding a job to hold for a longer time.

Am I being Selfish? (And is that wrong?)

The wonderful MPR asks if my generation is 'the selfish generation', and you know what? Sometimes I feel like I deserve better. I can't blame businesses for doing what is best for them financially going forward, but when they cut pensions and 'let go' older workers I feel like if they're not going to give me a fair shake, so why should I give them a fair shake?

I think that I don't want a lot. I just want to do something that I can support my family with and which will leave me happy at the end of the day so I can enjoy my time with my kids and wonderful wife at home.

My current job doesn't do that. I feel frustrated, bored and grumpy at the end of the day without enough energy to say "Hey! Let's go to the park and play!", which is what my two year old would really like the most.

In part that's what this whole site is about. A big part of my self improvement is that I'm trying to find out how to support my family and be able to spend better time with them. If that's selfish, then by all means I'm selfish. If that drives me to not disclose to a future employer that I'll only be around for six months, then yes, I am inclined not to tell them that.

Is it Honest?

This is where all my invisible hand job hopping selfishness broke down. After several days of introspection, I decided that

• I wouldn't tell a lie to get a job


• Telling only part of the truth could be as bad as lying


• I would hate to be in the employers position and not have all the cards on the table


• If they were planning on laying me off in six months I would want to know


• Even if they are a big business, that didn't change the fact that deals should be done honestly


• I felt that if I withheld information that was critical to making a good decision on their part, I wouldn't be being 100% honest with them.

*sigh* I really wanted that job. It looked like it could be fun, certainly more fun that where I am now.

I sent an email to the manager I was to interview with last week, explained my situation and said that I felt that I could provide value in the next six months. I also said that I'd be happy to telecommute from new new location if that was acceptable. They sent me back an email saying that they needed someone local and long term.

I am disappointed, and still job searching, but I feel that it's what I had to do to be honest.

Groceries Without the Games

What's the Grocery Game

If you've been to a couple of personal finance blogs you've probably heard of "The Grocery Store Game". If not, here's a story on it over at Get Rich Slowly. The idea is that you combine coupons in such a way that you get most of your groceries and toiletries for very little cost.

It's Hard Work

Frankly, it seems like a lot of work. You have to go through all the store fliers each week, find the best coupon deals, find the manufacturer's coupons that match with the fliers coupons, etc. Oh. Then you have to drive to each of the different grocery stores and get all those deals, figure out what meals you can make with whatever products you may have been able to get for cheap.

As noted in the comments of the story over at GRS, most of the goods are actually toiletries or unhealthy foods. For me, I don't think it's worth the work.

Saving 14.5% On Groceries With (almost) No Work

As you'll see below, I save 14.5% on groceries before coupons even enter in to the equation. The process I use depends on the store having the two programs I use in place, so my process may not work for you.

Of course, playing the grocery game depends on you having the right big-chain stores in your area anyways, so I think this is a viable alternative for many people who could play the grocery store game.

Full Sheet : http://spreadsheets.google.com/pub?key=pFOJsib3bG6Gbi-GWZVFXRA

Here are the factors that let us save 14.5% whenever we get groceries:

• Grocery Gift Cards
  • Our grocery store sells gift cards which give you a 10% bonus. Eg. Buy a $300 gift card, get a $330 gift card. We bought $1200 of cards five weeks ago.


• Buy the Gift Card on your cash-back Credit Card
  • We get 1% on our Credit Card purchases. That's $12 back on our $1200 purchase


• 5% Student Discount Card
  • The grocery store has a special student affiliate card which gives you 5% off your purchase beyond the normal affiliate card price. My wife is still a student, so I don't think this is dishonest in the least.

Affiliate Card Price Caveat

The grocery store we go to doesn't always have the best overall prices, however when using the affiliate card the prices are competitive with other stores in the area. For this reason, I do not include the "mark down" that the affiliate card gives us. That mark down is only present because they mark the prices up for anyone who doesn't have the card.

Downsides

1) Be sure that the grocery store you do this at is one that you like, otherwise you get stuck with $1200+ of gift cards locked up in the one store.

2) It's easier to be spendy if you're spending gift-card money than real money.

3) You have to put down a large chunk of money right at the start. If the 10% bonus is going to be an ongoing thing, we will buy the smallest denomination possible, and leave the rest of the money in our ING account to further stretch our grocery money.

Real Life

Between May 9th and June 16th we bought $306.94 worth of groceries for a cost of $265.08. Considering that we had agreed to increase our grocery spending (we did) and decrease our eating out (we did!) we are about where we expected to be for grocery spending for the month.

Other

I have no idea where the extra $41.86 I saved went. Probably into my ING account...

On Hypermiling and Common Sense

What Is Hypermiling

Hypermiling is a set of techniques which are supposed to increase your fuel efficiency beyond the EPA estimates.

To me it seems like mostly hype around traditionally good driving practices. Eg. Don't accelerate or decelerate quickly, slow when approaching red lights so you don't have to stop, etc.

Some hypermiling proponents recommend dangerous or illegal practices such as drafting, putting the car in neutral on the downhill, or turning off the car at long red lights. These activities are foolishly dangerous or illegal and are part of what turns me off to the hypermiling hype.

The upside to the hypermiling trend is that normal average Joes and Janes are hearing about good driving practices from a fresh angle and some are adopting it. Like say, my wife, for example. Last weekend as we were driving home I noticed that she was making a concerted effort in her driving style. I didn't say anything (critiquing driving skills is asking for trouble), but when we got home she said 'Did you notice I was driving differently?'. Um, yes, that was kind of weird. "I was Hypermiling!", she said.

A few trips later and her efforts are much less concerted, and our MPG has gone up!

The 308 Mile Test Drive

We took a trip this weekend to see my wife's grandpa, who lives 308 miles away (according to Google Maps). Our estimated highway fuel efficiency before the trip was about 32 miles per gallon. On the way to grandpa's, we got 36.5 and on the way back we got 33.5 for an average of 35 miles per gallon. It's downhill overall on the way there, but I think averaging the two makes it fair.

We haven't had enough in-city driving time to recalculate our city MPG, but the higher freeway MPG makes me happy and is saving us money. Ok, so we only saved $6.36 on this trip, but hey, it's a start.

I've updated the MPG calculator to reflect the new highway MPG.

8 Reasons to Keep Your Credit Card

Are Credit Cards Evil?

Credit Cards catch a lot of flack in the personal finance blog world and deservedly so. Many people have fought or are fighting mountains of credit card debt and feel that credit cards are unsafe.

Brack over at Goliath Debt, David Income is one of those people fighting back from debt. He is working on paying off "$68,000 in credit card debt, student loans, and a car loans". He recently asked if he should Cancel the Card? Or Be Prudent?.

Despite the risks of credit card use I still think they are a great too. I can't imagine having to carry cash or a checkbook everywhere so I am going to assume that the decision is between Credit Cards and Debit Cards. I think that keeping a Credit Card and being prudent with it is the best choice.

Eight Reasons To Use a Credit Card

Liability

The most you can be liable for a stolen credit card is $50 (if you report it correctly). With a debit card the limit is your bank account balance (plus overdraft!). See http://www.ftc.gov/bcp/conline/pubs/credit/atmcard.shtm

Built in Overdraft Protection

You have $50 left in your bank account and you're getting paid tomorrow. You buy $100 at the grocery store. With a credit card, there's no problem. With a debit card you will very likely have an overdraft charge.

This is assuming that you don't blow your credit limit of course. That kind of use wouldn't be prudent though.

Self control

As you use your CC wisely, you will improve your overall self control. This will benefit you in your financial life and in other areas of your life.

Earn Interest

It's seems silly to me to keep hundreds or thousands of dollars in your checking account when it could be earning money in a high-yield savings account or a money market account.

I put my paycheck into an ING savings account earning 3% APY. I pay off the credit card a few days before it's due. That gives me 25 or so days a month to have $1000 or more extra dollars in my savings account making me money. If that money was in my checking account, I'd make zilch.

Rewards

As I posted a few days ago, I am currently getting 1% cash back with my credit card. I'm not aware of any debit card that offers rewards, but if you are, please tell me!

Credit Score

If you have large loans in your immediate future, you probably want everything in your favor for a lower rate. If keeping even an unused no-annual fee credit card open will keep my credit score higher and make it easier to get a lower interest rate on my mortgage, you can bet I'm going to do it.

Benefits

Some Credit Cards offer benefits like car rental insurance. This can save you money if you use these services anyways.

Emergencies

If you do have an emergency, you will have the Credit Card to fall back on. No, it's not idea and yes you should use your emergency fund first, but debt is better than homelessness, missing meds, or other urgent situations.

Prudence is a Virtue

Essentially what you need to do is treat your Credit Card like a Debit Card. You can even write DEBIT on it with a sharpie if it will help you be responsible.

I come from a town where hunting is quite popular, but there's still a lot of controversy over guns. It seems that feelings among personal finance bloggers are similar, and I take the same position I do on guns:

They are useful tools if you use them right. If you use them incorrectly they are incredibly dangerous. If you or someone in your home can't use them safely, get them out. If everyone who will be using them can be safe with them, then by all means keep them around.

Driving Adds Up

Driving Cost Estimates

Blah blah blah price of gas blah blah blah. You already've heard all that.

On the Road Again

Our Chevy 2007 Malibu gets roughly 24 MPG city, 30 MPG freeway. Given the cost of gas, the miles per gallon and a couple of quick lookups on Google Maps, I now know how much it's costing us to go places. Like, say, $0.48 to visit the inlaws ($0.24 each way).

I kept separate columns for City and Freeway miles, and we just have to think for ourselves which trip belongs where.

Run the Numbers

This is a stupidly simple spreadsheet, but you might as well see how much you're paying for yourself.

1. Download it as ODS, XLS


2. Enter your MPG and local price per gallon. Get your MPG estimate at http://www.mpgbuddy.com/ if you don't know it


3. Use the dollars per trip to estimate the value of using public transportation, ride sharing, getting a new car, quitting work (just kidding), etc.

View the whole thing online

Next Steps

I have no idea how many times we drive different places. We should start tracking that so we can see if we can cut out trips to the inlaws ($0.48!), to the grocery store ($0.12!), etc.

This week I will also be checking our tire's air pressure and getting those pumped up correctly. We are also working to drive more smoothly to improve our mileage.

Scooter Love?

Lots of people are getting scooters thinking that they're going to save a ton of money. At least for us, this wouldn't have been the case if we'd bought the scooter ourselves. My scooter is a 2006 Honda Helix which was $5,000 new. Since I only drive it in the city, the money saved per mile is $0.07. At that rate, I'll need to incur no other expenses for the scooter (oil, tires, insurance, etc.) and drive 71428.57 miles.

That's not going to happen, and so I don't think I can recommend getting a scooter (at least at this price) in addition to a car.

If we hadn't been given the scooter we would have needed a second car eventually. In the case of buying a scooter instead of a second car, it can make sense.

Don't forget to get a helmet.

Warily Eyeing Credit Card Reward Programs

Are Credit Card Rewards Programs Worth The Trouble?

Currently we have two credit cards. One we've had since we got married, almost five years ago. The other we got when we switched to the credit union.

The old Visa card is through a large national bank, and is pretty crummy. 24% interest, no rewards. The only reason we haven't closed it is that it's the oldest piece of our credit history. We'll keep it around until our mortgage is secured, then we'll close our account with that bank.

The newer card gets 1% cash back at the end of the year. It's convenient that we can just transfer money from our savings or checking to the credit card account, all in one spot.

Our Spending Habits

Neither of us likes carrying cash. I hate having things in my pockets, and she loses stuff in her purse. As a result, we use our credit card everywhere we can, our debit card where that doesn't work, checks where debit cards aren't accepted and cash as a last resort.

We always pay of the entire balance each month.

Current Rewards Program

I guesstimate that this year we've been spending about $2,200 on our credit card each month. If 1% cash back works the way I'm assuming it does, that means we'll get $264 back at the end of the year (.01*$2200*12).

Other Reward Options

Thinking that I'll get $264 back and knowing my average monthly spending means that I can now start comparing other credit card offers and maximize my rewards. Some cards appear to offer really good deals with reasonable APRs and no annual fees.

Let's pretend for a minute that I really did get 5% back on all purchases (there are a couple of exceptions). Spending the same amount each month would then get me $1320 cash back. (0.05*2200*12).

Is this really how it works? If I use the card responsibly (paid off in full each month!) do I really stand to gain that much in cash back? Does anyone have experience with any of these types of cards?

Other Factors

Our credit union is local. We will be closing our accounts when we move in January. Since we don't like our other credit card or the bank it's through, we'll need to get a new credit card anyways.

The cards I listed all require having 'Excellent' credit. My credit score according to Credit Karma is 811. My wife's is similarly high. That along with a car loan in our name and regularly paid cell phone bills I think might put us in the 'Excellent' category.

I'm not fan of credit card hopping. I don't want to switch or open cards every year in response to good deals, so I don't care much about the introductory bonuses or APY; I want to find the card that will be best in the long run.

I've heard Dave Ramsey's and JD's calls to get rid of credit cards, but that's not how we live. We have both been pretty financially reasonable, even before we had a budget. We treat credit cards like we would guns: useful but dangerous tools that need to be treated with respect.


I'd love to hear other's advice and experience with these or similar cards.

Interview Phase Two, and How I Write A Resume

>Job Hunt Update: I got an email today that asked if I could come in for round two of interviews next week! I believe that there are only two rounds of interviews, but I suppose we'll see what happens after this one. Since my resume presumably was one of the factors which got me an interview (I had a friend who works there deliver it too), I've decided to share my resume techniques. Maybe they'll be helpful to someone, and maybe someone can help me improve as well.

Resume Writing, My Style

I don't remember the last time I actually sat down to write a resume from scratch. My resume has kind of evolved and grown since I started college. Recently though I did have an opportunity to sit down with my brother Bob and help him with his resume.

Bob is a really smart kid. He got into computers way before I did, speaks fluent Spanish and is very responsible. And if that weren't enough, he just graduated from high school. Bob isn't very wordy though. His emails and essays make Hemmingway look verbose.

Before and After

So, here below is a before and after of his resume. The one of the left is the one he created himself, the one on the right is the one I helped him with.



Here are the differences:

Things Wrong With the First Resume

• Duplicate information


• Vague, tangentially related objective


• Only one work experience entry


• List formatting runs together


• No spacing between sections


• All fonts, except his name, are the same size


• One third of the page is blank space


• Non-work related interests


• No reason why visiting a foreign country is relevant


• Soft verbs and interest

Improvements In the Second Resume

• Single line address format saves valuable vertical space


• Name top and center makes it the most noticable page element


• Different fonts for each level of information


• Included all past, current and planned education


• Each skill or activity line starts with an adjective or, if appropriate, a verb


• Name software or other tools you know by name


• Title 'Work History' as 'Experience' and include related non-work activities


• Include real numbers in job descriptions where the demonstrate added value


• For jobs/positions without official titles, use a descriptive title that says what you did


• When possible, use verbs with positive connotations in the job title, otherwise use them in your job description

Other Notes

I'm sure there are other considerations that could improve the resume greatly. I'd love to hear your suggestions. One obvious thing would be to tailor it for the specific job you're applying for. In my brother's case, he doesn't have much to work with yet.

In my case, I have more jobs than fit on the resume, since I like to keep it at a single sheet. I include the most relevant jobs and projects I've done, and reword job descriptions to emphasize portions of my responsibilities that could relate to the job I'm applying for.

A good resume is only half of the package for job application; you also need a great cover letter. With the job I'm currently doing interviews for, I found out who I would be interviewing with initially and directed the cover letter to him.

Wii Fit, Gym Membership, Stroller or Something else?

Weight Weight, Don't Tell Me

I've hit a weight floor it seems. I've gotten down to 215 pounds (From a new-years weight of 240) three times now, and each time I'm back at 220 a few days later. I realize that I should expect fluctuations, but this has been over a three week period, so I'm starting to worry that I'm going to have to change my methods a bit more.

My weight loss plan thus far has mainly been eating less and eating more responsible foods. I have been playing more sports than I did last year, but no one would ever call twice a month a workout plan.

Added to the mix is the fact that my wife is now fully recovered from the baby we had two months ago, and is also wanting to lose weight. We've both agreed that we need to be more active to achieve our goals, the question now is : What form of activity would fit our lifestyles the best?

What would you get?

In an ideal world an exercise purchase would :

• Cost very little


• Be usable any time day or night


• Be something we could do no matter the weather


• Be fun


• Would let us work around the kids


• Help us lose weight


• Be something we could do together


• Be something we could do outside

The current candidates are : A Wii Fit, A gym membership or a double stroller.

The Wii Fit fits most of those options, but we're afraid we'd get bored, we're not sure if it would actually burn enough calories to make a difference,

A double stroller would let us go running / walking outside, but winter here involves snow and ice, and it rains from time to time too. We're not entirely comfortable walking around our neighborhood at 1:00 AM when we're done with projects either.

A gym membership would be fun, and they'd watch the kids, but a family pass at the local rec. center is $30/month, more than we'd like to be paying.

Compromises

I don't think there is anything that will perfectly fit our needs, and we're ready to compromise. The question is where to compromise. Do we compromise on cost with a gym membershipt? Do we decide we'll get a stroller and use it now through October (when it will get too cold)? Do we get a Wii Fit with the risk that we won't like it or that it won't be effective enough?

What would you do in our situation?

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Image from Prognatis' Flickr photo stream

Is It Time to Switch To CFLs?

I've known for quite a while that CFLs (Compact Fluorescent Bulbs) were cheaper in the long run, but I was ambivalent about the savings, and was under the impression that it wasn't that much of a difference anyways. Now that I'm trying to become more disciplined and save money wherever I can, I decided to do an honest evaluation of the potential savings.

We are likely moving in January, so I wanted the CFLs to pay themselves off before then since I don't know what kind of lighting our yet-to-be-found new house will have.

My plan was to a) analyze the costs and b) stick all the existing incandescent bulbs into a shoebox till we're moving out and take the CFLs with us.

We now have all CFLs, except for the two porch lights which are almost never used and which are difficult to replace anyways. If my estimates and calculations are correct, we should save about $10 a month and recoup our costs in four months.

Below is the spreadsheet I used for my calculations. Please let me know if you see any errors. The in-line view doesn't have quite the whole sheet. Please view it on Google docs or download it to see the full thing.

(Post continues after spreadsheet)

View it, Download it as ODS, Download it as XLS.



As you may have noticed, the longer you leave your lights on the sooner you recoup your costs. The obvious solution is of course to leave your lights on all day long. You'll be saving money before you know it! ;-)

There are some minor issues to switching to CFLs. If you're concerned about the color of your lighting, you may want to buy just a couple of bulbs and try them first. The CFLs, though they claim to be pure white, daylight or whatever do seem to have more of a blueish tinge than the incandescents.

I put the bulbs in our house last night, and due to the color of the glass around the light fixtures, the color temperature change isn't that noticeable, except in the bathroom, where we have a built-in vanity with six bare bulbs surrounding it.

When my two year old walked into the bathroom this morning, he said "We got new walls in the bathroom?", "No" replied my wife. "Somebody painted the walls in the bathroom?" returned my son. The color change isn't bad, but it does exist and may take some getting used to. For $10/month though, I'll do it.

Categorizing My Monthly Spending

When we used our accounts at Wells Fargo, we could see a categorical breakdown of our expenses, but only for the Credit Card. My current Credit Union doesn't offer this functionality, but I had a driving need to know where my money was going.

Initially I would download the .csv (comma separated values) files, and manually sort them out into categories on a spreadsheet.

Of course, that grew old quickly, and I was forced to search the internet for something better. Coming up empty handed, I wrote my own script to sort out my different expenses into categories.

You run it on the command line like so

./statementToCategories.pl list.csv of.csv account.csv statements.csv

It will ask you how to categorize different expenses, and when it sees them again, it will remember what you entered last time. When it's done, it will ask you what to save the file as, and will create a .csv file with the different categories, and how much was spent in each category. It will also tell you how much you spent in each category in an average month.

With that data you can make charts, make plans and moan about how much you wasted on eating out....

You can find the script here:

http://richerandbetter.blogspot.com/2000/01/statementtocategoriespl.html

The script is in Perl, since that's what I'm comfortable with, and it probably won't work as-is for you, unless your bank/credit union lets you download .csv files with the same format as mine does, and you're running Linux. You are free to edit the script however you want and redistribute it.

I have no idea if the .csv files I download are some banking standard, or if they're just the way my credit union decided to make them.

ING Direct

I finally set up a savings account at ING Direct today. As you know, part of our plan is to move money to the highest interest rate account it can go in, while being as liquid as it needs to be. We had accrued $2500 in our Money Market account, so it was time to move some of that into a higher interest account.

Since we have to pay rent tomorrow, and we have $318 on the credit card which is due on the 25th, I decided to only put in $1000 into the ING account for starters. In a week or two when rent is paid and we're closer to our next paycheck, I'll transfer another $500 in.

How accessible will our money be? From what I've read, a transfer from ING takes about 5 business days. At my credit union, I can cash in the CD at any time, and I only lose the last 60 days of interest on the CD. So, I'm exchanging urgency in an emergency situation (where I could use my credit card anyways) for lack of penalties really.

Depending how well I like the ING Savings account, I will probably open an Electric Orange checking account as well. We use an average of 5 checks a month. Any of those things which couldn't be paid with a check from ING could be paid with cash, and then we wouldn't have to worry about changing our bank account whenever we move.

Job Interview

Today I interviewed for the job I mentioned in "What Am I Worth?". Overall the interviews went pretty well. There were three interviewers, one attending via phone. I certainly did better with the in-person interviewers than over the phone.

The company is something of a cube farm company but I'm optimistic that it'll be a good experience, assuming I get the position. I should find out if I get to have the second and final round of interviews within a week.

I ended up asking for $60,000 per year. I choked and didn't play the 'how much could you offer?' game like I should have. I'll try harder when we move in January. My current position is dull enough that I'll take a non-maximum salary to switch positions.

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Interviews are always fun in a way. I get nervous and a bit queasy, but the task of trying to relate my life experiences to the questions they ask is always an interesting challenge. My resume was prepped to help me this time, as I included several non-work projects I've done in the experience section. In the past I wouldn't have included them since I wasn't paid, I didn't have a manager, and they were relatively short term. They did use technologies tangentially related to this companies offerings though, so it ended up helping.

Estimating Mortgage Payments and How Much House We Could Afford

Guestimating Housing Costs

Buying a house is somewhat stressful. As I've mentioned, we're trying to move at the end of the year. One approach to our house hunt has been 'how much can we afford?'. We don't want to actually stretch ourselves to the very limit and buy exactly the most house we possibly could, but understanding where we are is going to be financially is important.

Today I'm sharing a spreadsheet I've created which is helping us understand what kind of price range we will be able to afford. I realize that these numbers are a little rough, but we're still months away from buying. The numbers will firm up as we draw closer and know exactly how much I'll be making next year, how much we will have saved up for a down payment etc.

You can download a copy to play with, if you'd like: Download as ODS , Download as XLS

Here's a snippet of the results. See the full spreadsheet here