Squirrelers | Squirrelers

Squirreling Gone Wild #7 – Starlight, Starbright

“Starlight, Starbright”

What do you think of when you see those two words together? A song?

Perhaps you think of the lyrics to the Madonna song “Lucky Star” from the 1980’s. ”Starlight, starbright, first star I see tonight. Starlight, starbright, make everything alright.”

Could it be that you think of a Metallica song from the 1990’s, where these lyrics were used?

Or, maybe you think of the classic children’s nursery rhyme, “Starlight, Starbright.”

Well, for me, I think of starlight mints. Why, you ask? Well, it’s because of a business lunch I had many years ago, where the mints became fodder for a story that lasted years among coworkers. Its also a story that makes its way into the Squirreling Gone Wild series, as the 7th edition.

Starlight mints, for those that don’t know, are those round, red and white, peppermint spinwheel mints that you often find at restaurants. Sometimes you might see them when the check arrives, with one mint given by the server for each guest at the table. Or, you might find them visible in a bowl by the hostess stand, typically taken by people as they leave the restaurant. You appreciate them when you see your date or spouse taking one after dining on Kung Pao chicken 🙂

Anyway, on my first day of work at a job back in the 1990’s, the department took myself and another new employee out to lunch. This “first day” lunch ended up being a department-wide lunch, as about 15 people attended. I do remember that the other newcomer and myself did not have to pay for our lunch, as it was paid for by the company – something us frugal squirrelers tend to remember!

But what I also remember is the behavior, at lunch, of this other guy who was in the department. I actually sat across from this guy, and he was moderately friendly, but seemed preoccupied. His big, beady eyes were staring slightly up and off to the side half the time. He had kind of a serious look to him, as though he was thinking of something related to the office, while paying half-hearted attention to the otherwise sociable conversation of the 15-person group at the table. I didn’t give too much thought to him, as I was trying to get my bearings and remember the names of the other faces new to me at lunch. He seemed like a regular guy, perhaps a bit quiet, and not immediately standing out of the crowd.

As lunch ended, and the checks were paid, we got up and made our way to the door. There was that aforementioned starlight mint bowl at the hostess stand near the door. As people walked by, some took a mint, others didn’t. The ones that did took one mint. I was toward the back of the group, and have to admit that I was eyeing the mints, and was going to take just one. After all, on the first day of the job, you want to be play it a little close to the vest even with the little things, as you try to figure out the lay of the land.

As my turn approached, the guy I had sat across – who was walking a half stride in front of me – reached for the bowl. He didn’t reach with a small grip of a few fingers, however. No, that would be too normal for a professional lunch. Rather, as his arm extended and reached for the bowl, his hand suddenly opened up wide. It looked like a snake opening its mouth to devour its prey. With a quick strike, he grabbed a huge handful of candy, practically overflowing from his grip. He must have had 10 or more mints in his hand. He put it in his pocket. Then, he reached out with his other hand and grabbed even more mints, putting them in his other pocket. All told, he must have taken at least 15 mints at this work-related lunch.

After working with him for a while, I realized that this fit his personality profile. It made for a good story that a few other coworkers and I made sure not to forget.

How much did he gain by this? A review of starlight mint prices indicates that these can be purchased at $0.05 per mint. So, at a nickel per mint, he picked up $0.75 worth of candy. Is this truly crossing the line of frugality, to the point of losing self-respect? Or is it harmless, since they were there for the taking?

This also brings up another question: do you keep your frugality under wraps when with coworkers or people you don’t know well, but unleash it later? For example, are you a one-mint person at a business lunch, but a mint-grabbing fiend on your own time? I’m curious what others reactions are to this.

Kind of reminds of how some parents talk about their kids: “Little Johnny behaves so well at school, but he’s just wild at home.” Perhaps it’s the same with some of us adults as we practice our frugal ways 🙂

This article was included in Festival of Frugality #281 at Remodeling This Life

List of Tips on How to Save on Taxes – Now

By Squirrelers Leave a Comment

Yahoo! Finance just published an interesting list of 71 Ways to Save on Taxes Now. There were some obvious ones, but some less obvious ones as well.

Many of us know a lot of these, and these are US-specific (apologies to those outside the US) but here are a few that I found interesting:

Job Hunting Expenses: Worth noting, with so many people out of work. Overnight travel-related expenses for position similar to what you were previously in
Moving to New Job: If you move to a new job fifty miles further than your prior one, you can deduct personal moving-related expenses
Alternative Energy: a tax credit exists for those employing alternative energy sources. Equals 30% of what homeowner spends on qualifying property. Think solar electric systems, wind turbines, etc.
Out of Pocket Expenses for Charitable Contributions: if you bake something for charity, drive to a charitable event, or make some other qualifying charitable donation – you might be able to deduct expenes.
Pay Attention to New Coverdell Rules: an education-savings vehicle, these accounts will see their contribution limits cut from $2,000 in 2010 to $500 beginning next year. This is one change I can say I wasn’t aware of.
Roll over an inherited 401(k): old rules required these inherited accounts to be cashed out with taxes paid within 5 years. Now, you can roll into an IRA and further stretch payouts and tax implications. Restrictions apply.
Pay attention to start-up costs: you can deduct up to $5,000 of start-up business costs in the year you incur them

Anything jump at you in their list, as something you will apply to your own situation in 2010?

Vending Machines for Gold

By Squirrelers 2 Comments

When I think of a vending machine, I typically think of a tall, heavy machine that has a big glass case and a side panel with a lot of buttons, a dollar slot, and coin return. You know, the ones that have chips, candy, sodas, and other assorted junk food in them. The ones that I probably used all too often in my younger days while working late.

Well, move over junk food – the vending machine has moved upscale! This article from VOA News describes a gold vending machine. More accurately, it is a vending machine that dispenses gold. Simply put in your cash, and choose your gold – bars up to 10 grams or coins. With gold up over $1200 per ounce as of this writing, these aren’t $1 bills people are putting in these machines as they troll for quick snacks! If you aren’t carrying around such large sums of cash, they will apparently soon be taking credit cards. Should be good news for those who frequently need a quick gold fix:)

This gets me thinking about the different kinds of offbeat things that are probably in vending machines somewhere in the world. Aside from the usual snack fare, I have personally seen a few different things being sold from machines:

Personal items, like toothbrushes, hair gel, etc – in hotels
Playing cards, dice at a casino
iPods, at a department store and at airports
Underwear (I think), in a resort town in Italy

But the one that takes the cake from my experiences was a live lobster vending machine I once saw at a restaurant. This vending machine was really more like one of those amusement crane games. The idea is that you put your money in the machine, and then you get control over a claw that you can position over your “prize” that you can see behind the glass, in a large bin within the machine. Once you find the right spot, you hit the button, and the claw descends and tries to grasp your prize. The prize is rarely caught, but if it is, its then dropped in prize bin for the person to claim. In this case, the prize is not a stuffed animal or toy as usual – but a live lobster in a tank!

The gambit was simple: if you are lucky enough to catch the lobster in this “game” which cost a few dollars in the vending machine, you would get a full lobster dinner for free. You would eat the lobster you “caught” in the vending machine.

Quite different, indeed. I didn’t participate, for the record:)

There have to be other interesting examples of unique items to be purchased in vending machines (or games). What do you think? Have you seen or heard of any “offbeat” items being sold in such machines?

Another question is: Is there anything different that you think would be useful to be sold in vending machines?

This post was included in Carnival of Money Stories at Funny About Money

Yakezie Challenge

By Squirrelers 2 Comments

Just wanted to announce that I have joined the Yakezie Challenge! You can read more about the Challenge at Financial Samurai.

Thanks to my readers for your support and interest in my blog. We are just getting started!

The One that Got Away

By Squirrelers 3 Comments

What do you think of when you read the words “The One that Got Away”? For many people, those words conjure up images of someone of opposite sex from way back when, with whom you wanted to get serious back in the day but it just wasn’t in the cards and didn’t end up in a serious relationship with that person.

As a personal finance maven – or “maven in-development” more accurately – I thought it would be interesting to look at this from a money point of view. Let’s have some fun with this, and reflect on some crazy little money opportunities that could have been – but weren’t. Nothing too serious, like career opportunities, promotions, real estate market issues, etc. I’m thinking along the lines of the following examples:

A fantastic car that you were eyeing on the lot when younger, for which you were saving money, only to have it sold for a song right when you were ready to buy
That purse you wanted, which you heard was on sale at a ridiculously low price, and you rushed to the shop only to find them sold out.
The time you saw someone buy an antique at a garage or estate sale, at a fraction of the actual market value, which you could have had if you only got there a few minutes earlier.
The time you could have written an essay and submitted it for a $200 scholarship award, but didn’t make the time – only to find out that they chose a winner out of just 3 recipients.

You get the idea. Something that could have been, but due to timing, bad luck, or your own decisions, you missed out on an something that would have been one of those little financial victories that would have provided the joy of getting a great deal or something for next to nothing. One of those great deals you can look back on with pride. If I’ve lost you here, then maybe I’m a bit too frugal for you, in that I am glorifying deals as if they were athletic exploits 🙂 Otherwise, go on!

For me, when I think of “The One that Got Away”, I think of my lot of 200 Barry Bonds rookie baseball cards from back in the 1987.

As a 39 year old, I have no interest in these things now, though I have kept them all these years as something to pass on to my kids. The last ones I purchased were probably 20 years ago. That said, back in the mid-1980’s, these were all the rage with many boys – and men – at the time. What was interesting is that these cards, which were available to be purchased in retail stores for $0.50 or so per pack, became “investment” commodities that went up or down in value based on a player’s performance. The most valuable were the rookie cards; if a current player was an all-star, his individual card could be worth a few dollars. If he looked like he could be a potential future Hall of Fame player, his card could shoot upwards of $50. I remember Mark McGwire and Jose Canseco cards being in that range, soon after they were issued.

Anyway, I chose 4 or 5 players young who I decided to invest in, and do it in bulk. That is, I bought 200+ rookie cards of each guy, and paid between $0.03 to $0.17 cents per card depending on the guy, and thought I would “invest” in the possibility of success. The idea for me was that as a die-hard baseball fan, I would pick the prospects who I thought had the potential to succeed down the line. It was sort of like investing in penny stocks or startups with high growth potential.

Lo and behold, one of the guys I invested in was Barry Bonds. I always thought he had the potential to be good; that said, I never realized that he could eventually be the all-time home run leader, albeit one mired in controversy.

I paid $0.17 per card for 200 cards – about $34. Not small change for a 16-year old kid then. If you recall the $50 per card value I noted earlier for guys who looked like potential Hall of Famers, this would mean that Bonds cards – if the overall market would hold – would be at $10,000 at those prices. The thing is, given that Bonds ended up breaking home run records, his cards could have skyrocketed to greater heights – $200, maybe $300 per card wouldn’t have been unrealistic. This could have been a nice chunk of change!

Alas, the baseball card “investment” market collapsed within a few years and values plummeted. There was really no supply and demand tradeoff that supported the crazy values of these so-called investment collectibles to begin with. As supply of newer cards increased by the year, and interest in other sports increased relative to baseball, the values fell off and never recovered. Looking on EBay today, these cards of mine could possibly fetch $1 each – if I was lucky. And that’s before shipping costs!

Well, that’s my “The One that Got Away” story. It’s just baseball cards, and I was just a kid, but man oh man….that would have been cool to see that work out. If nothing else, just for the fun of knowing that I called it right, and picked up a true bargain!

What about you? Anything jump out at you as The One that Got Away?

This article was included in the Carnival of Money Stories at Personal Finance Journey.

Squirreling Gone Wild – #6

By Squirrelers 9 Comments

Do you like food? Yes, of course, we know that we have the same answer to that question. Now, how about FREE food. I’ll bet that most of us think that sounds good too!

When it comes to free food, some questions might arise as to why the food is free. As I have been quoted before, I think that frugality goes too far when you’re taking advantage of others, or lose your self-respect. That said, there is one source of free food that I have seen enthusiastically embraced, which is the topic of this 6th installment of Squirreling Gone Wild: The Office.

I don’t mean the television show, but I mean “at the office” at which you or someone you know works. The office with lots of cubicles, copy machines, printers, water coolers, executive corner suites…..and people.

About those people….

In a position from way back when, I observed that some very smart, highly professional individuals became just a bit different when it came to how they handled free food in the office. The free food would come in three primary ways:

1) It would be a free lunch, as a part of a meeting that one attended

2) It would be set out for all to eat, in the form of snacks sent by a supplier (pretzels, popcorn, etc)

3) There would be leftovers from a larger, executive-level meeting where some “good” food was served, and then set out in the common areas for everyone else to share.

With #1 above, people were professional in getting food at meetings. With #2, the snacks were nice but not enticing enough to change behaviors. With #3, all heck broke loose!

Now, it was civilized, but when the “free” food from meeting leftovers was left out, it would be gone in a hurry. Typically there would be restaurant-quality sandwiches, pizza, salad, cookies, brownies, and things of the like. The food would be rolled out on a cart, and left in a common area.

It was a typical scene: when the cart rolled by, and someone audibly commented words to the effect of “hey, there’s food!”, the reaction was as if someone in shallow water at the beach yelled “SHARK!!!”. People within earshot got up out of their cubes and scrambled to get the food. Within minutes, the food would be half gone – just as a result of those in proximity to the food.

Next, an email would typically be sent out. This would usually happen right as the food was set out, and as the first people nearby realized there was food. The emails would have a subject that usually had something very simple such as “Food”, and the body of the email would indicate where the food was stationed.

At that point, when people instantly opened their new email, the stampede was on. You would see plenty of people stand up in their cubes, like prairie dogs shooting out of a hole in the ground, looking in the direction of the food. Then, they would politely get up and walk toward the food. They weren’t running, or overtly doing anything uncouth, but they were like heat-seeking missiles, walking briskly toward the food. It was a sight to behold, as you would never see people move so quickly in the office – even for a fire drill. All done politely, but with a purpose: FREE FOOD!

As can be expected, there was one individual who went over the top. She seemed to have a sixth sense for the food coming out, as she would always seem to be in the mix of people with this food. When she did get it, she would go against the “protocol” of taking only one sandwich, cookie, etc – and take multiples. Further, she would come back after a while and take whatever leftovers were still there after nobody wanted anymore. I saw here walking with a huge salad container one time, and just laughed – she did too! That thing looked like it could feed a family for dinner.

This “outlier” individual said that she spent only $100 per month on food, as she was able to use enough leftovers from the office that nobody wanted. Apparently, eating grilled chicken pesto sandwiches 4 days in a row was no problem for her!

I’m guessing this overall scene might be typical for large offices. What do you think? Is this sensible frugality, or extreme frugality gone too far?

This article was featured in Festival of Frugality #280 at Penniless Parenting.

Man Lives On Squirreled Away Frequent Flyer Miles

By Squirrelers 2 Comments

Check out this story from abcnews, featuring a man using his airline points to live in motel rooms while unemployed. He went from a high-flying (pun not intended, but it works) executive to a man without a permanent home who used motel rooms as his shelter. What a nomadic existence this guy had.

More than that, this is an example of a guy who literally lived off an asset that he squirreled away for a rainy day. And that asset wasn’t even cash. Very creative indeed.

He showed further creativity in publicizing himself and his situation, which has landed him a job as CEO of a company!

What do you think about this? Inspirational? Crazy? Motivating?

Remember Rule #1 – Don’t Lose Money

By Squirrelers 2 Comments

Sure, none of us want to lose money. That’s no fun! Making money and growing our investments is what we look to do. When you look at the math, its more important than we might think.

The world reknowned super investor Warren Buffet has even been paraphrased as indicating: Rule #1: Never Lose Money. Rule #2: Don’t forget Rule #1.

Sure, we have to take risks at times. It is a part of being an investor, and there is a risk/reward dimension that frames many of our choices with our finances. It even frames choices in our life too. But as a personal investor, its important to manage your portfolio with some simple math in mind.

And it really is quite simple, conceptually.

Here is a classic example:

Scenario 1: You have $100, but lose 10% in year one and gain 10% in year two. This means that after year one you have $90, and after year two you have $99.

Scenario 2: You have $100, but lose 20% in year one and gain 20% in year two. This means that after year one you have $80, and after year two you have $96.

Think about it.

When you look at both Scenario 1 and Scenario 2, its clear that once you lose money from a certain base amount, gaining the same percentage back on the new base won’t get you back to where you originally started. This is where losses in your portfolio – be it equity or real estate – can really wreak havoc with your overall financial situation. It might not be evident a the time, but it puts us behind the 8 ball, so to speak, when we lose money.

To further illustrate this, lets focus again on Scenario 2. With a 20% decline from $100, you’re then at $80. To get back to $100, you need to have a 25% increase in the following year. Again, showing that once you lose a certain percentage of money, you need to increase it at a higher percentage to get back to where you started. This can be a challenge; a 5 percentage point difference is fairly significant, all things considered.

An additional point to consider when looking at Scenario 1 and Scenario 2: look at where you end up in Scenario 2 vs. the first Scenario. In Scenario 2, since the percentages were higher, you end up at a lower amount after year 2. Thus, the bigger the loss, the harder it is to recover.

The takeaway from this as it applies to our investments is to carefully manage risks. Losing money puts you on a slippery slope when it comes to getting back to your starting point.

A further takeaway from this concept, taking it further, is that money can be hard to come by. Keep your earning power by having marketable skills, and live within your means by embracing sensible frugality. This puts you in a position to recover in other ways if your portfolio takes a hit.

The True Long-Term Costs of Home Ownership

By Squirrelers 2 Comments

Home ownership has long been touted as a foundational element of building personal wealth. Rather than rent, the theory often goes, by taking on a mortgage you are avoiding “throwing away money”, as a portion of your payment goes toward principal, and you obtain tax deductions as well. Plus, it feels better for many to own than rent, as you have a sense of possession and pride with your own home. The emotional component of this is important to note. Overall, home ownership seems like a great deal, especially for those aspiring to buy their first place.

I am very positive toward home ownership, as long as the market is stable (a topic for another day). If your hope does appreciate at a modest rate – say 2% per year – you can amplify the return through leverage. This means that if you have a $300,000 home with 20% down ($60,000), your 2% increase ($6,000) can appear to be a 10% return on investment. Very good, indeed.

The only thing is – those same people looking to buy their first home tend to overlook the true costs of home ownership. I will make the following two suggestions here:

1. It is more expensive to own a home than many first-time buyers realize
2. You don’t ever truly own your home

It is more expensive to own a home than many first-time buyers realize

Taxes: When people rent, they typically pay the rent, plus renters insurance, and that’s about it. With homeownership, there is the mortgage payment, plus insurance, plus property taxes. That last component can be significant. The national average in the US has hovered around 1.0% of market value, but many counties have average rates well over 2.0% of market value. Thus – with that $300,000 home I mentioned, taxes at 2.0% would be $6,000. Sure, there is a tax break, but if you end up paying a net $4,000 of taxes after deductions, it comes out to around an extra $333 per month. That’s not small change.

Association Fees: This isn’t applicable to all homeowners, but most condominium or townhouse complexes will require association fees. The fees typically cover things such as common area costs (roofing, siding, landscaping, etc). These fees vary by complex or building, due to each one’s unique needs, but these fees can be relatively significant. For a $300,000 home, you could be looking at $100 or more per month – perhaps in the $500 or more range for a high rise building. With single family homes, this is less prevalent, but some newer ones do have neighborhood association fees.

Maintenance: When you rent, it’s a matter of calling the landlord to have him come fix the problems. When you own, you’re on your own (so to speak)! If the roof leaks, you have to fix it. It there is a plumbing problem, you have to handle it. Either you personally fix problems or you pay someone else to do it, which will be expensive. Plus, you have to account for the periodic replacement of certain things – the aforementioned roof, sump pump, appliances, etc. It is a wise idea, I believe, to budget at least 1.5% of your home value for such expenses. Thus, for the $300,000 house, you put away $4,500 annually for such expenses. It might not all be spent up each year – some years less, some more. But the money should be regularly set aside. Problems will happen, and shouldn’t be entirely unexpected.

Updating: If you buy a pre-owned home, you may be tempted to update a room in the house – perhaps the kitchen, maybe the master bathroom. You might even want to put new flooring throughout your place. Even if you like the place as is, you might want to change some things after living there for a long period time. All of this takes money, and in some cases it takes significant money. For example, a total remodel of a large kitchen can easily cost over $30,000 (U.S.).

Outdoors: If you are renting, outdoor maintenance is covered. If you own attached housing such as a condo or townhouse, this is likely included in your association dues. With a single family home, you will have to pay for things such as lawn mowing, snow shoveling, landscaping, etc. Even if you do it yourself to save money, you will be spending time on such activities.

You don’t ever truly “own” your home

Lets say you purchase a home and take out a mortgage. What a great feeling, you are a homeowner! Now, if you try to stop making those mortgage payments, you’ll see whether or not you truly own it. Remember – if you have a mortgage, you may have the title, but you’re still paying for it. It’s not yours free and clear.

Speaking of free and clear, what exactly does that mean with respect to home ownership? In most circles, this has come to mean the mortgage is paid off in full. Some people hold little parties for this accomplishment, when their loan is finished and they feel that they own their home outright. And make no mistake, it is a great accomplishment as you no longer owe money to the party that is servicing your mortgage.

Realistically though, your payments are not done. Furthermore, they probably won’t ever be done. In effect, you have rent payments to make on your home, and they go on in perpetuity. These payments are called property taxes. Back to that example above with the $300,000 home – those taxes of $6,000 annually will most likely move higher over time. If you try to stop making those payments, once again you’ll see if you truly “own” the home.

All of this said, should a first time homebuyer be leery of buying a home? After all, its easier to just write the rent check and forget about it. As I said, I’m pro-home ownership. Long-term, it’s a good move financially, and there’s something about having your own home that’s point of deep personal pride for many of us. But the timing has to be right, and it’s a step that can be taken with complete knowledge of the true long-term costs of home ownership – which continue even beyond when the mortgage is paid off.

This article was included in Carnival of Personal Finance #257 at Canadian Finance Blog