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A Penny Saved is Not a Penny Earned

October 3rd, 2012

A Penny Saved is not a penny earned.

Not even one sentence in I can already feel the scorn being thrown upon this post.  Hopefully not for the fact that my writing has managed to degenerate over the years to the level of a high school sophomore, but I digress.  As I was saying, if not for disagreeing with the sentiment then for mentioning that cliche for the hundredth time on this blog.  I stand by the sentiment though; A penny saved is not a penny earned, it is AT LEAST one and a half, possibly two, three or four.

(On a side note, its interesting how our psyche goes automatically to the negative.  How many of you thought I was inferring that its less than a penny rather than more?  Be honest now…)

Starting out in life, it is fairly true.  You make $5. With inflation, now apparently the going rate is somewhere around $30) mowing the lawn, you get $5 errr $30.  As we grow older, it still basically holds true.  You make 10k a year working at <insert collegey job here> and you get to keep, say, 9k, and end up getting half of the other 1k back when its tax time.

Now fast forward a few years, you get a real job.  You still get to keep most of what you make but now the government takes a bigger share.  Lets call it 15%.  Still not terrible, we do have to build roads and pay for schools and whatnot, so I am still a happy-making-what-Imake-paying-what-I-pay citizen, and raises make me happy.

Now fast forward ten more years.  Oh my how the governments share has grown.  You are now a mid level manager at Acme but no longer to you get to keep what you make.  You get to keep some of what you make.  No longer do raises make such a large impact.  Now is when, as the people that were our age when they made up cliches such as you know which one preached, “A Penny Saved is a penny earned.”

Which, I ask you, is better.  A $800 raise or saving $500?
Lets start by subtracting federal income tax.  33% of the increase.  Your $800 is now $534.  Oh but Dont forget state taxes.  Your $800 is now $505. Hey, we’re still on top right?

Well, turns out that extra has now put you over the edge where you can no longer deduct your student loans, or <insert any of the different tax situations that get worse as taxable income rises>.  I dont want anyone to think that Im saying more income is bad, its not, and its obviously important.  The point is, that the more you earn, cutting expenses will much more dramatically effect your cash than income increases will.  Just off the top of my head here are a few big chunks the average person can cut down on:

-Refinance your home.  We’ve done it twice in the past two years and the savings are absolutely ridiculous with the current possible rates
-Refinance your rental properties.  This is much more difficult with new rules, but try anyway (if anyone knows any good 80-20 refi lenders vs 70-30, Im all ears
-Reduce your phone bill.  See if you use all the minutes/text/data on your plan.  If you consistently go over, increase your plan to cut fees.  If you are consistently under, reduce your plan to cut base cost.
-Take advantage of competition.  Sometimes it’s a pain, but switching cable companies is one example. It saved us $100/month and we get NFL Sunday Ticket for free.
-Dont eat out as much
-All the other stuff you can read about over the past four years located conveniently on the right hand side.
-Sell rocks
-Start your own Gold Canyon Candles business



Appreciation, sometimes lost in the fray

March 28th, 2012

What I was supposed to write about about today was taxes. Death and taxes actually. However, there’s something a bit more off topic that has been weighing heavily on my mind. For years most of my writing and those of similar sites such as IWillTeachYouToBeRich (his much greater success aside of course :) ) have written about is getting ahead.

How to get ahead financially.

How to get ahead in your career.

How to get ahead ahead ahead ahead…

Something that gets lost in the fray is this: simple appreciation. It so so easy to get caught up in what you want to do, what you want to have, and what you believe you deserve that what you do have might not take up the space in your mind where it should reside: the very front.

Many people have broken and split families, with bitter divorces, parents that dont speak to children, children that dont speak to parents, children with no parents, or even people with no family whatsoever. I am blessed to have a wonderful wife, son, brothers and sisters, in laws, and friends that make my life worth living. Having money is important in the world we live in, having friends and family is vastly more important. Be thankful for the friends and family you have. When we moved into our neighborhood a wonderful neighbor came over and gave Lauren and I some cookies and Jackson a baby outfit. She thought she had a cold. Six months later she died of lung cancer having never smoked in her life.

Many people do not have their health. I have been blessed to be healthy and have a healthy family. If you are healthy, remember, no amount of money in the world can buy back wasted health.

Many people do not have jobs. For those of us who do, even if it is not your dream job, you have a job. A job means opportunity.

There are many other things in life to appreciate, most of which do not cost outrageous sums of money, or are free. Though I believe ultimately in striving for success in life, success comes in many forms, so, keep reaching for whatever goals you would like to attain, but also don’t forget to appreciate what you do have.

Is it time to pivot your career?

December 2nd, 2011

I have always been interested in small businesses and startups.  I even attempted to start a web development company back in the hayday of the web.  I was marginally successful with two large contracts and some piecemeal work.  Once that dried up I went back to doing what many people are doing right now; searching for work.

It used to be that you stayed with one company your whole life.  This meant a lot of things;
1) You were loyal to that company
2) You hoped to move up within that company
3) You kept and expanded the same skill set over the course of your career and possibly tried to add management into the mix.

Those days are over.  I still fondly remember how I felt at HP – I was sure I would work there for the rest of my life.  I had good friends, a routine, I was good at what I did, and they provided cheap food, a gym, softball leagues, and a great atmosphere.  Interestingly those things are mostly only found now at small companies.  Particularly the atmosphere.  I have digressed some here so I will get back on point.

Small companies, particularly technology companies, in order to survive, will often change what they do.  This is what is known in the industry as “pivoting.”  If the first idea is not successful, you pivot and go to the next one.  The definition I like best is “a change to business strategy and business model in response to or in anticipation of market conditions.”  Makes sense right?

Now I want you to take “business” and replace it with “career.”  If you are out of work, anticipate being out of work, or are unhappy with your career, it may be time to pivot.  Here are some examples of people I know:

Person A – He was a manager for a 3d modeling company.  He was an excellent graphic modeler and a good manager.  The company was on a trajectory he did not like.  He started to teach himself how to program and convinced upper management to put him in an entry level programming position.  It required a paycut, but he did it.  He then started taking classes at a community college and finally, after his company did massive layoffs, he did an internship with a rapid software development company.  He is now an employee there and doing well in something he enjoys.

Person B – He did maintenance and was eventually let go from his work.  He applied to a job he was not qualified for at a consulting company, but was accepted to an entry level position because of his personality where he is being trained.

Person C – He was a successful sales executive and was laid off. He could not find any sales jobs so he began reading and taking online courses that he found for free on statistics.  He managed to get an entry level position doing analyst work and has now worked himself up to a senior analyst.

Person D – He was a manager at a retail chain but was not moving up the ladder so he has begun to teach himself web design.

There is a common theme here: if it is time to make a change in career direction and you can drive yourself to aquire the skills necessary, then you absolutely can do it.

Good luck, and for those job hunting, don’t lose hope and don’t be afraid to do something outside of your comfort zone.

The most gratifying conversation I have had in a while

March 31st, 2011

Me: “Hello Discovercard, I would like to get my interest rate reduced”

Discover Rep: “Im sorry Mr Craig, but your APR of 18% is the lowest we are offering for your account.”

Me: “Ive been a loyal customer for quite a while.  Are there any promos available?”

Discover Rep: “No your account does not qualify.”

Me: “What do you mean, my account?”

Discover Rep: -Silence-

Me: “Ok nevermind, so you won’t even lower it a point?”

Discover Rep: “No, Mr Craig.  I can help you pay it off faster with one of our enhanced automated payment plans.”

Me: “Would it be as fast as paying it off in full right now?”

Discover Rep: “No”

Me: “Ok, well Ill go ahead and do that then”

At which point, I did exactly that.  Ahhh, feels nice. I used to think credit card companies got a bad rap, but recently I actually prefer payday loans even like those provided by www.cashloans.co.uk to some of the credit card companies.

Most online advice is terrible

March 21st, 2011
Lets do a little social experiment, shall we?  I want you to think of something that someone might ask for advice on.  For example “How should I treat a cold?”


Now, put that into google and see what comes back.  Its a mess of yahoo answers, voodoo forums, organic remedies, and far fetched sales pitches.  Its sort of like asking a question and have a trashcan emptied out on your head.  Everyone knows that the internet is both a wonderful and terrible place for information.  Sometimes when I read CNN.com, the comments make me wonder if we would be better off with monkeys pounding on their keyboards than real humans putting their commentary in.  The trick is to watch out for the bad, especially when it seems to come from a good source.
Recently a popular financial blogger started writing about a certain investment site.  I thought to myself “Huh, well, I respect his opinion, I will try it out.”  I was actually fairly letdown with my experience and started to dig around a bit.  As it turns out, said blogger actually received a large sum of money to pimp that site.  I am not talking the small change I get to have random links on the side of my page, I mean big money to sell his opinion.

I give this promise, I will never SAY to use something or go somewhere unless I really mean it.

Here are a few things I encourage you to avoid taking advice from:

-Random emails.  John’s stock tip is probably not as good as he thinks it is.  Of course, it could be even more insidious and it could be a penny stock scam.
-Forums.  Ive seen great advice like “IRAs R 4 old ppl lol” and one of my favorites “dud jus lease tha car then u get less payments”
-Yahoo questions.  Enough said.
-Blogs.  Blogs not named “The Penny Saved”.


Here is a little example you can try yourself. I googled “Best balance transfer cards” for those that want to transfer their credit card balances to a 0% interest card.  Low and behold, almost every single link is one of those “people get paid when you sign up through their site” affiliate blog posts.

If any of you have made $1,000,000.00 off of a stock tip from Zimbabwe please email me and I will make a large addendum, apologize and I promise to never post again.

Who’s fault is the increasing lack of job loyalty really?

February 2nd, 2011

The empire stuck first.  No warnings, no subtle hints, no gentle transition.  That was the day I changed my perception on the job market forever.  And no, I am not referring to the release of the Bad Religion album…


I have heard a lot of complaints recently about ‘job hoppers’ aka people that jump from job to job in a matter of years or even months in some cases.  The main argument is that generations x and y are used to instant gratification. I have always been a strong believe in the concept of working hard and proving yourself and so when I was younger I was one of the loudest voices in that chorus.  Then, very suddenly, after working my way up the chain at HP, I was laid off.  This came as a total shock to me – I had been getting consistently superior ratings and working harder than I had ever worked.  The empire strikes first.  Now to back up for a second.  I don’t want to sound overly dramatic here; businesses are simply groups of people with common goals but the truth of the matter is that, particularly with large businesses, company loyalty is a thing of the past.

If a hard working productive employee can’t expect that a company will keep them around for thirty years, why would a person stick around for thirty?  This isn’t to say there aren’t exceptions and as most people know, the smaller the company, the more likely the company will be loyal and this is where job hoppers are the blight – the small company that invests in its people only to see them jump to another company – but this is much more the exception anymore than the rule.

I read a study recently that said 88% (I would quote it but I cant remember exactly where I read it) of employees were looking for a new job, thinking about looking, or would be open to switching if the opportunity presented itself.  That number seems high to me, and I suspect that many of the respondents were thinking along the lines of better opportunity vs just a ‘new’ opportunity but it still shows that the average worker doesn’t feel any particular pull to stay at their current position.  More money ranked as the No. 1 reason for moving to a new position. Other considerations included more training opportunities, working with new technologies, more challenging assignments and a more interesting technical direction in a new employer’s IT department.  The number one negative reason was “poor management.”  I have actually been quite lucky in that to this day I have never had a poor manager, and perhaps that is the reason I am only now with my third company in my twelve years in the industry – well below the amount of changes my peers have made, but a far cry from the lifelong commitments of the past.

A lot of companies are working to reverse the trend, but its clear that things will never exactly be as they used to.  The question really is, should they?  My wife showed me an excellent video that I highly recommend about what really motivates people.  Maybe more companies should take notice as well…

Its a pretty dang good time to buy or refinance

November 8th, 2010

When we bought our house several years ago, mortgage rates had spiked considerably.  In fact, within a month before and a month after we bought, they varied more than one and a half points.  In any case, our interest rate ended up at 6.25% for a 30 year fixed.  At the time, it was pretty good.  Now, its not so great.

Now is the time to refinance or buy a new house.  After the housing bubble burst, house prices dropped considerably.  Now that mortgage rates have fallen as well, if you are in the market for a new house, you’re in luck.  Everywhere you look there are foreclosures and houses for sale and chances are pretty good you will be able to get a good deal.  If you decide to refinance or buy a new house here are a few quick tips to think about:

1. Know your FICO score:
I know I have harped on this in the past, but its important to remember; FICO score = rate you able to get.  Its that simple.  Even if you have a FICO in the low 600s, right now chances are you can still get a rate as low as 5.5% which may be lower than what you have now.

2. Fix any credit glitches on your credit report:
When you look at your credit reports, do not just focus solely on the score. Look also at each line of your report. If you notice any mistakes, errors or glitches, be sure to get them straightened out right away so that they do not affect your chances for getting approved at the lowest rate.

3. Do your homework on your lender
Know the lender and make sure you aren’t paying any more than you have to in points, fees or origination costs.

4. Do your homework on your house
If you are buying a house, make sure to have it thoroughly inspected, independently of the homeowner inspection.  Make sure you understand exactly what you are paying for.  If you are refinancing, its a good time to see what your house is worth.  Has it appreciated?  Has it depreciated?  How much?
Right now, rates are low, even for things like payday loans such as those from www.ppiclaims.uk.com

TPS Top Five of Last week

August 23rd, 2010

I haven’t had a good links post in a while and I think its about time.  I have been reading a bit more lately and in doing so have caught up with a lot of my favorite blogs.  Here are some of my favorite posts for the week:

-PT throws out some Job interview tips for those who have a tough time with it

-Ramit, who is now on TV, talks about going from $25/hr to $75/hr which I actually know someone who did (close to)

-An article that I just found interesting, Should you invest in an Ivy league education? (Ive always thought not personally)

-Five Cent Nickel has an article called How to Negotiate like a pro that I liked, after all, I am all about negotiation

-Sun posted about the New Overdraft Law which I have gotten about 100 pieces of mail about recently from Wells Fargo.  If you haven’t read Sun’s financial diary, do so, hes one of the smarter guys that I like to read consistently.

The million dollar career mistake

August 23rd, 2010

When you think about career mistakes, you might start with the most obvious, say, yelling at your boss or not bothering to show up for work.  Then you might work your way into the more mundane things such as slacking off, not paying attention or getting behind.  Its actually amazing how much bad advice there is out on the internet about career mistakes.

Here are some of the things listed as career mistakes on other sites that you should NOT LISTEN TO:

  1. Working Overtime

Work life balance is essential to keeping up fresh ideas and rising to the top.  There is never a reason to work overtime and there is no reason you should believe anyone that tells you to.  We are not designed to concentrate on one thing for 8 hours at a time let alone 10 or 12.  How many people are burnt out because of overworking?  I would say most of america.

Advice so terrible, it probably belongs in my failing 101 article. Now, I am not saying work/life balance is a bad idea because obviously it is important. If I had to work somewhere where I never saw my wife and son I would quit instantly. However, there are going to be times in your life where you have to work. If you want to be the best, you have to put in extra effort, there is no way around that. I have a friend who likes to say “work smarter, not harder.” I agree with that statement, but quite frankly the person who only puts in their 9-5 is not going to be a top performer. I would not want to hire or work with such a person. If you are getting stressed or burnt out during a work crunch time try exercise and some healthy food.  Sounds cliche, but it works.

Here are a few other so called “#1 worst career mistakes” that I found on other websites:

“Not watching your back”
Really?  Im not even sure I should comment on this.

“Not experimenting”
Uh, ok?

“Burning bridges”
WRONG.  Act with character.  At times this may mean that bridges are burnt down. If you act with character then any bridges that are burnt aren’t ones you would want to cross again anyway.

So what is the true number one career mistake, the one that harms more people in the workforce than anything else?

Its very simple; not having a plan.

career plan

That’s right, the absolutely worst thing you can do for your career is not having a plan.  How many people do you know that are in their job and have no idea what they are going to do next, or don’t even have a “next” in mind?  It goes along with the college kid who is getting a degree but has no idea what they are going to do when they graduate.    I have a couple examples of people that I would like to share.

Person One: John Doe
John is a borderline genius.  He has a masters degree in an advanced field.  John has vast amounts of experience in more fields than I can even count.  Hes intelligent and a very quick learner.  He has taught himself everything he knows, including what he is currently doing for a job.  John’s problem is that he never really made a long term plan and never really took initiative to further his career.  He is, in my estimation, the best person at his particular job of anyone that has ever lived.  He should be the VP of engineering somewhere, and they would be lucky to have him.  John makes somewhere around $75,000.00 a year.  He should be making $250,000.00, no exaggeration.  In my estimation, he has lost out on a million in the past 10 years alone.

Person Two: Jane Doe
Jane has worked at her company for 30 years.  She has known that layoffs were happening all around her but she was loyal.  She never made a plan, she never even thought of what could happen.  Now she is laid off and has no idea what to do next or where to go.  She feels like it is too late for her to start over but she has become so specialized in her skillset that she cannot find anything.  Jane is less extreme than John.  I would guess that had she had a career plan, she could have advanced from her job as an assistant to an executive assistant, to a program coordinator.  I estimate she ended around 50k a year. She probably could have averaged an extra 30k a year over the past 30 years.  30k * 30 years = 900k.  Nearly a million.

All of the above people are great employees.  They all excel at what they do.  However, all have cost themselves immensely in the span of their careers.  In fact, I got kind of emotional writing this because it is sort of the old adage “life is not fair.”  That actually is great news, if you use it to your advantage.  Don’t waste your million.

Fixing bad credit, building new credit, and how to be the tail that wags the dog

August 16th, 2010

Well, the floodgates are officially open.  Since I wrote the article on fixing your credit, if my email were normally a like sprinkle like a seattle afternoon, it has now reach Atlantic hurricane status.  It seems that a lot of people are struggling with bad credit from past bad decisions, bad luck, and bad ex’s.  Lets start with the great news; you are reading The Penny Saved so your decision making is obviously taking a turn for the better and soon your credit will be following right along.  The part about bad ex’s I can’t help you with, though I have some excellent whiskeys I can recommend.

So you fixed any mistakes on your credit score but now you need to deal with the mistakes that aren’t by credit bureaus or banks but rather by that good looking person in the mirror.  Here is our goal, you are going stop being slaves to credit, the tail on the dog getting whipped everywhere with no control.  Some people, such as David Ramsey espouse that you should snowball payments, pay off debt and cut up credit cards for the rest of eternity.  WRONG ANSWER.  You are going to be methodical.  You are going to fix the bad credit, build new great credit, you are going to become the tail that wags the credit dog.

What does this mean?  It means improving credit score, using it to your advantage and actually profiting off it.  Here are the steps to take;

Part One: Credit Damage Control

Do not hire a thief credit counselor
You do not need a credit counselor.  I am your credit counselor, this site is your credit counselor and you are your own credit counselor.  I promise you that free trifecta right there is better than any $100/hr pipsqueak you will find in the yellow pages (oooh here comes the hate mail from credit counselors).  If you see any credit counseling ads in my sidebar, don’t click them.  Or click them to satisfy your itchy finger, and then close them and come back.  I have had many different emails from people on the verge of hiring a credit counselor.  Don’t, don’t don’t.

Get everything current and pay off liens/judgments/collections
This is sort of the self explanatory step but you cannot start to rebuild until you have taken care of the worst of the worst.  I had several people ask about waiting and letting things get written off and then fall off the credit report.  There are several problems with this.  The first is that just because a credit card company writes off your debt does not mean that is the end of the ordeal.  There is a lot of misinformation going around about this,  the main thing to remember is, that unless it is not possible that you will be able to make any progress at all on your debt, pay it off.  One thing to remember is that once you are this far in trouble, the debtors are expecting less and less that they are going to be able to recoup money.  Use that to your advantage, tell them that you plan to pay it off, and would like help reporting the positives to the credit bureaus or removing all reporting about the collections.  If it increases the odds they will be able to collect, they will be happy to oblige.  Use this as much to your advantage as possible and you will be able to avoid the “reset the clock” problem you may have heard about.  The best bet is to get things in writing, so just be careful when dealing with collections.

Part Two: Steady as she goes aka the repair

The Paydown
If you have credit cards with balances get them on auto-payment, pay as much as you can per month but keep in mind the important thing is that you need to make consistent payments on-time.  That’s the key, consistently paying, and improving your credit to debt ratio.

Keep all payments on time
This means everything, including mortgage, car payments, utilities, and of course revolving (aka credit) debt.

Redistribute debt load
I know this one sounds a bit weird but here is the skinny;

First off, make sure any creditors report your credit limits to bureaus. When no limit is reported, credit scoring software scores the account as though your current balance is “maxed out”. For example, if you know that you have a $10,000 limit on your credit card, make sure that the limit appears on the credit report. Otherwise, your score will be damaged as severely as if you were carrying a balance of the entire available credit. Credit scoring software likes to see you carry credit card balances as close to zero as possible. If it is difficult for you to pay down your balances, read the following guidelines to maximize your score as much as possible under the circumstances:

  1. There are different degrees that scoring software can impact your score when carrying credit card balances.
  2. Balances over 70% of your total credit limit on any card damages your score the most. The next level is 50% of your balance, then 30% of your balance.
  3. In order to maximize your score without having to pay down your balances, evenly distribute your credit card balances among all of your credit cards, rather than carry a large balance on one credit card. For example, if you are carrying a $9000 balance on a credit card with a $10000 limit, and you have two other credit cards with a $3000 and $5000 limit, transfer your balances so that you have a $1500 balance on the $3000 limit card, a $2500 balance on the $5000 limit card and a $5000 balance on the $10000 limit card. Evenly distributing your balances will maximize your score.

If you do not have a credit card, get one, charge something on it, and pay it off
If you have no cards at all, find a low balance card and get it. Having a card that is paid on time will help your credit in the long run.  No card means you are not building credit.

Part Three: Wag the dog aka make money

Use a cash back credit card
By getting a card that gives a good cash back, you can actually make money on regular spending.  The steps are
1) Pay with card
2) Pay card off immediately
3) Repeat
4) Receive cash back

Use a points card
The usage is the same as above, however sometimes you can get better return when you use a points card.  The trick is get one that gives you extra points on things that you actually want and use.  An example would be the frontier visa if you fly frontier often (as I do).

Set up auto-pay
You get all the rewards without having to do anything at all after initial setup.  Pretty awesome!
1) Find a card that will let you use it to automatically pay bills.  American express is one such example.
2) Setup auto-pay for all of your bills
3) Setup your bank account to auto-pay that one credit card
Plus you get to save on ATM fees, Stamps, Letters etc.

Interest Free Loans
This is where we get even trickier.  If you have a credit card with a billing cycle that ends the first of each month, your payment may not be due until the fifteenth. Finance charges (interest) are typically assessed only on the previous balance on your card, meaning that if you pay it off in full each month, you pay no interest. This means that all the charges you make between August 1st and September 15th are interest-free, which is like getting a 0% loan from your bank.  Even banks pay interest on overnight loans from the Federal Reserve (albeit not much right now), so you’re really getting a great deal.

Protection from Theft
As anyone who has ever lost a lot of cash knows, carrying around cash is risky.  When I had my wallet stolen, the person immediately started racking up bills.  Imagine if I had had cash in there.  I was able to cancel my credit cards quickly.  Cash however would have been gone forever.

If you haven’t read part one, Fixing your credit score – Fight for your score go read it now!  Also featured in the Carnival of Personal Finance