Money Matters: Plastic Surgery

Tonight I made a leap forward. No, I didn’t “go under the knife” as the title of this post might imply; instead I made a leap forward in my quest for financial freedom – I cut up 2 credit cards.

How to Close Your Credit Cards

It might not seem like much, especially since both cards already had zero balances, but for me it’s the mental switch that’s important here. I know I’m mostly prudent when it comes to my finances, but I also don’t want to have credit cards sitting available. The temptation of having them is a big factor as to why I, like so many people, continue to be in debt. Credit is easy, too easy in fact.

You don’t give an alcoholic a drink, you don’t leave knives on the kitchen counter when children are around, so why would you have credit just sitting there if your goal is to get OUT of debt?

And I still have 1 other credit card (currently with a balance near $4K), so it’s not like I’m going “cold turkey” when it comes to credit. This change also gives me the opportunity to focus my efforts at paying that card off. Sure, many folks (including Dave Ramsey) would argue that the best way to dealing with credit cards is to cut ALL of them up IMMEDIATELY, and never look back. I’m sure this approach is much like ripping off a Band-Aid; if you do it quickly, the pain won’t linger as long. And there is some value in that approach, but I’m not into inflicting pain by any method, so I’ll quietly avoid it whenever possible.

My wife made the classic argument that if I left the cards open (with a zero balance) then it would help improve my credit score. She has a point, that is, if I wanted to try to improve my credit score. Your credit score is a measurement of how well you manage debt. I’m trying to get OUT of debt and I already know that my credit score will actually go *down* because of my efforts, and that’s OK.

It’s been a long time since I could taste the freedom of financial independence, but dammit, I want it back!


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Money Matters – Gross Pay VS. Net Pay

Too often I hear “financial advisors” calculate a budget based on your monthly (or annual) gross pay. “You make $60K per year, that’s $5K per month. You make good money, you can pay off your debts quickly“.

But that’s gross pay. You don’t pay your bills using gross pay, you pay them with your net pay (take home pay). So, how much of your gross pay gets eaten up before you ever get to see your check?

Looking at this typical pay stub, we see almost $700 in deductions & taxes being taken out. That’s a solid 31% that you don’t get to use. The average person is living on only 2/3rds of what they think they are earning.

If you “earn” $55K per year, how much actually makes it into your checking account? You might be surprised to see how much (or how little) YOU get to spend of YOUR money….

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Inside the mind of a killer

This Live Talk Will Take You Inside The Mind Of A Serial Killer - Tyla

What is the difference, psychologically, between someone who kills and someone who doesn’t?

Many people have killed because their love for someone else was totally consuming them and they could not stand the thought of loosing that person. One guy even tried to get away in a white Bronco on the freeway.

What about the killer in Texas who asked to have his brain examined, so that there could be some better understanding of why he killed? He KNEW there was something wrong with himself, but he didn’t know exactly what. His autopsy showed that he had a tumor that was applying pressure to his brain.

The (late) comedian Tim Wilson wrote a book about Ted Bundy, who was a serial killer with a long spree that went on for many years, across several states, and even included keeping some decapitated heads as mementos of his crimes. Why would even a psychotic killer do something like that? A nasty decapitated head is not what most would consider to be a “trophy”.

I recently finished reading the book “Run, Brother, Run“, which talks about a murder that was committed by Charles Harrelson, the father of the actor, Woody Harrelson. Though Charles was not convicted for this particular murder, he was convicted of 2 other murders, all done simply for money. What kind of mindset does someone have to do this, apparently with no remorse?

The movie “American Sniper” shows what happens when a trained soldier realizes the true impact of his actions and the remorse is overwhelming. He was trained to be a killer, but his own humanity won over his mind while in battle.

A good friend of mine *loves* to go duck hunting with his sons and all I can think about is “What the hell did those ducks ever do to you?“. Hunting for food is one thing, but hunting for “sport” is another.

I looked up my last name on Wikipedia and came up with a potential relative with a dark past. His mental state was described as “absolute callous, cheerful, bland and almost friendly indifference”, which I just don’t understand.

If you’ve never looked another living thing in the eye, pulled the trigger twice, then quietly walked away from the body, I don’t think you can understand why I’m writing this.

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Money Matters – Money has a price

Money, just to pile it up, is mental illness” – Dave Ramsey

Is it possible for *EVERYONE* to be debt free, live a good life, and prosper? It’s a trick question, because the answer is “Yes” but with one caveat – what you consider to be a “good life” is vastly different from the next person’s definition of that term.

Every dollar in your pocket comes out of not just one other person’s pocket, but several other people’s pockets. Why? Because money is created with debt (interest) built right in.

Your efforts to get out of debt will most likely work to keep someone else IN debt. Sounds crazy, but that’s how the math works in a world that does not have a sovereign currency. Here in the USA, the Federal Reserve (which is NOT part of the federal government) creates money and loans it to large banks, who then loans it to smaller banks, who then loans it to the customers. Every step has interest added on, but the money loaned out only represents the *principle* portion of the loan. Where does the *interest* portion come from? It does NOT exist, yet everyone works extra hard to earn extra money, to pay back that extra amount.

Let’s break this down to a simpler example: the board game “Monopoly”. Let’s pretend that you have 4 players and each player owns 1/4th of the real estate while also possessing 1/4th of the cash. Everyone takes their turn and moves around the board in a very systematic way. The game is very boring because nothing changes. That’s how socialism operates.

Now let’s make one change – we increase the rent on a building that we own. The next person who lands on that space has to pay you more money than if you had landed on a property they owned. You’ve tipped the scale slightly in your favor, at least for the moment. They pay you but retaliate by raising the rent on their property, hoping that you land on it, so you have to pay them back. That’s how capitalism operates.

Ironically, the game Monopoly has morphed from it’s meager beginnings as an educational tool to illustrate the negative aspects of concentrating land in private monopolies, to it’s current version that teaches the domination of a market by a single entity.

So which way do you want your financial life to go? Are you going to use money for good or for evil?

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Money Matters – Multiple Income Streams

It’s real simple advice to tell someone to get a job (or 2) to increase their income. It’s another thing to actually go out and work another job. Sometimes you need to get “creative” in finding a way to make money.

Multiple Streams of Income: Helping You Get to Financial Independence and  Beyond - ESI Money

Some of the wealthiest people have found ways to “monetize” other aspects of their lives outside of the typical “job” environment. Hmmmm, what could one do if they had a degree in finance….

  • Start a radio show with paid advertisers
  • Write a book about money management and sell it
  • Build a radio studio and rent out space to others who want to start a radio program
  • And don’t forget to help “brand” their futures by including your name in their “personality label”
  • Sell “naming rights” to your own studio to an advertiser
  • Sell show merchandise
  • Create a budget app and sell a “premium” version
  • Create educational content and sell it as a financial “university”
  • Bundle up access to your content and sell it with a “PLUS!” name
  • Buy & sell real estate deals
  • Sell your financial education curriculum to high schools
  • Start your own mortgage company

What creative ways can you come up with to monetize your life?

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Money Matters – Delusions of Grandeur?

My (now ex-)wife once accused me of just wanting to hoard cash. She could not have been so wrong in her misjudgment of my intentions. One year she wanted to take a vacation so I asked her how much it would cost and she answered “$1500“. Then I asked her “How much do we spend each month on credit card payments?” and she said she did not know, so I told her the answer: “About $1500. Right there is your vacation. Help us get OUT of credit card debt and the vacation you want is paid for!“. She was unable to grasp this concept and it was yet another nail in the coffin regarding our marriage.

My (2nd) wife and I have gone through some economic hurdles through the past 15 years, but overall we’re in OK financial shape. We have some credit card debt and we are working to pay them off. We had been paying each credit card with just a little bit more added in, mostly to keep the minimum payments from going up; but in the long run, this method wasn’t making any real progress at paying the debts off. So this past August, I quietly switched to the “debt snowball” method for paying off our credit cards and it’s quite apparent how effective it can be. Without any drastic change in the *amount* of payments we make each month, it is possible to affect how fast your progress can be and these graphs shows it plain as day:

I simply concentrated our payments on one specific debt (the smallest one) and kept the snowball rolling from there. Hindsight is 20/20, but it’s too late to look back and ponder where (financially) we’d be had we started this process years ago. We can only go forward from here.

After we pay off the credit cards, the next step is to quickly pay off our car loan. It’s currently under $8K total and I expect it to be about 1/2 of that by the time the snowball reaches it.

We already have a fully funded emergency fund, so the next step would be to start investing for retirement, something that I realize we are starting far too late to be truly effective, but still necessary. Then it’s time to work on paying off our home mortgage.

Paying off credit cards is an easy goal; everyone can do this.

Investing for retirement is easier than one thinks, especially if you start early and stick to a plan.

Paying off a home mortgage seems impossible, but it’s not as difficult as it seems.

Having all your efforts work together to give you a net worth in the millions seems like just a pipe dream, at least it does to me. But that’s OK, because I don’t want to be a millionaire. My goals are quite simple – I just want to be OUT of debt.

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Clutch Volume Index

Starting in 1989, Chrysler started using an electronically controlled transmission, that also had “adaptive memory” within the TCM. It was a new way of controlling a transmission and very few people understood how it worked, let alone how to diagnose it when problems occurred. In later years, the basic functions of this transmission was used in several other transmissions, including some light duty pickup trucks.

Checking for codes is only part of the diagnostics that can be performed on these transmissions. If your scan tool can access the TCM, you can check the “Clutch Volume Index” (CVI), which is a measurement of how much fluid is needed to fill each of the clutches. Chrysler prints what the normal range for each clutch pack should be.

CVI or Clutch Volume Index scantool readings 41TE - YouTube

Some important points to know:

  • If your number is in range, then OK.
  • If your number is on the high side of the range (or out of range), then that clutch pack is worn out.
  • If your number is below the good range, then that clutch pack is binding on a groove in the clutch drum.
  • If your number is zero, there is a large fluid leak in that circuit and the TCM gave up trying to count.

Here is a quick explanation of CVIs:

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Could Everyone Stop Trying To Screw Everyone Else, That’d Be Great

The history of mankind is littered with the blood of everyone trying to screw everyone else. Physically, mentally, emotionally, and of course, financially.

Salesmen telling lies just to get you to sign on the dotted line. Politicians slinging mud in every direction, hoping some will stick. Preachers asking you to tithe for an eternal reward that you’ll never be able to prove even exists.

NO CHILD is born a killer. Shitty parents raise shitty children and they grow up to be shitty parents. Same goes for poverty – poor kids grow up to be poor adults. It’s a vicious cycle unless someone breaks the cycle.

A product might be designed perfectly, then a bean counter decides a penny needs to be saved, so an engineer cheapens up the materials for that part until it finally fails. Planned obsolescence is the term and everyone needs to stop accepting this as ‘normal’.

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Money Matters – Step 8: What To Do With All This Money

You’ve paid off your debts, you’ve paid off your home mortgage, your children’ college fund is taken care of, and you’ve got enough money in your retirement account to live off the interest. Now what do you do?

The Joys Of Giving - Key Biscayne Magazine

Dave says there are only 3 things that money is good for: Investing (to keep the financial ball rolling), having fun (enjoying life), and giving it away (helping others).

INVESTING in your financial future is easy when you’re in control. Your money matters become enjoyable, more like a ‘game’, rather than the drudgery that comes with being in debt. When you have stable investments, financial fluctuations don’t affect you like they used to. Always manage your own money; even if you have a team of people working for you, YOU should make the money decisions. When your money makes more than you do, you are officially wealthy. When you can comfortably live on your investment income, you are financially secure. If you can live off of 8% of your nest egg, you have crossed over the top of the financial mountain and can enjoy the coast down the other side.

Having FUN with your money is what everyone wants to do; unfortunately most people try to have fun when they are broke. If you want to make a large purchase and you can afford to pay cash, then go ahead and do it. That’s one aspect of ‘enjoying life’.

GIVING is how you improve other people’s lives and it’s the biggest reward of all. Money gives power to good intentions. Buying things may feel good, but giving always feels right. You can make a difference in numerous other lives by helping them in direct and indirect ways.

Don’t allow greed to trap you in the end. Don’t allow your views of wealth destroy your own peace. The danger is old-fashioned materialism. Wealth has a way of magnifying your true inner self – If you are a jerk and become wealthy, you will be a bigger jerk, if you are kind and generous, those traits will be amplified.

Dave says that personal finance is 80% behavior and 20% knowledge, meaning you have to take a long, hard look at the person in the mirror and change who you see, or you will end up miserable.

My ex-wife once accused me of wanting to hoard money. As part of my divorcing her (for numerous reasons), I absorbed all of the debt we had (approximately $13,000), which I paid off in 2 1/2 years. In that same time period, she got back into debt, had a new car repossessed and filed bankruptcy. Years later, she passed away, completely broke. I am happy that our son has grown up with a solid start to his financial future.

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Money Matters – Step 7: Pay Off Your Home Mortgage

This is a HUGE step for the vast majority of people, not only because having a mortgage is viewed as ‘normal’, but also because a home mortgage is the single largest debt any person or family will likely have.

Pay Off the Mortgage Early or Enjoy Life? - Peloton Capital Management

A ‘normal’ mortgage takes 30 years to pay off, mostly because the payment is calculated with the total amount of interest (for the full term) included at the beginning. If this sounds like a catch-22 situation, that’s because it is! If mortgages were calculated on a yearly basis, then the total length of the loan would be greatly reduced.

For example, a $300,000 mortgage at 4.0% interest for 30 years will cost a total of $215,607.15 in interest, making the overall cost of your house a whopping $515,607.15 (and that doesn’t include points, fees, taxes, insurance or any other expense that comes with a mortgage loan.)

Your monthly payment of $1,432.25 will apply $1,000 towards interest and $432.25 towards paying down the principle. As you make future payments, a little more goes towards the principle while a little less goes towards the interest. You’d think that the amount of interest paid VS. principle paid would cross an equal point 1/2 way through the life of the loan, and you’d be wrong. In reality, that crossing point is 7/10ths of the way through the life of the loan. This means that ANY EXTRA PAYMENTS you can make in the beginning of the life of your mortgage will save you a tremendous amount of money in the end.

Almost every bank web site has a “Calculators” section. Use these tools to find ways to save long term money, like this:

  • Add an extra $100 each month for the principle and you will save $27,086.49 in interest and shave 3 years and 4 months off a 30 year loan.
  • An extra $200 each month will save $47,611.20 in interest and 6 months time.
  • Refinance your 30 year mortgage for a better rate and only 15 years.
  • Instead of making monthly payments, switch to bi-weekly payments.
  • Downsize your home, especially if you bought more home than your really need or if you no longer need a large home (like when your children grow up and move out).
  • If you have at least a 20% equity in your home, ask your mortgage company to drop the PMI (private mortgage insurance). This will save you $1,250 to $2,500 a year, which is money better spent at paying off your mortgage!
  • Utilize the Debt Snowball method to pay off the loan quickly!

Debt free, mortgage free, and still heading in the right financial direction! Next up – Step 8: What To Do With All This Money

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