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Thursday, August 17, 2017

When It's Okay To Go Off Your Grocery List

Hey everybody!  So my summer vacation is over.  Yesterday was the "First Day of School" at my work site.  Seeing a new batch of kids enter your classroom and calling out new names for roll call is quite exciting.  Why?  Well, if you're a people person like me, you like meeting new people, no matter what age they happen to be.  An occupational hazard, so to speak, that all teachers have to endure on the first day back is getting their teaching legs and voice back.

Boy were my dogs tired at the end of the day.  Don't you just love American expressions that make no sense?  And my voice box was burning too.  But all in all, I had a great first day back at work.  And after school I was off.  First I hit the gym.  Then a little grocery shopping on the way home.  An Albertsons is on my way.  Not the most inexpensive grocery store in town, but convenience often trumps costs.

My list, texted to me by my wife, Jessica, who was at home starting dinner, included the following items: sour cream, pinto beans, shredded lettuce, tomatoes, and ground turkey.  We were having tostadas by the way, and we had plenty tostadas at home.  Jessica handles the family budget these days and I dare not deviate.  Last week, I accidentally made a second $250 payment to my credit card and she just about killed me.

Apparently, I had made one payment as soon as I got paid on the 31st and I made the second one on the 12th.  Mind you my remaining balance now is only $315.  That's all the credit card debt I have left!  She didn't care.  "You gotta tell me when you're doing this kind of stuff!" she said, adamantly.  (I would've if I had known I was doing it at the time!)

But going back to my grocery shopping stop.  So I walk into the Albertsons and low and behold I see this:




Honey Bunches of Oats for $1.88!  But only if I bought 5 boxes.  I go through a box of these a week so it was a slam dunk to add to my shopping cart.  It wasn't on my list because I still have cereal at home, but when you come across a sale like this (one where it is obvious the store is trying to get rid of inventory) you can't pass it up.  Obviously you'd pass it up if you don't eat cereal for breakfast, but for all others who do...who cares if HBoO aren't your favorite!  Think of all the money you're saving on future cereal purchases.

I felt good loading the grocery cart with 5 boxes of cereal.  I continued going down the aisles, looking for the items on my list, and came ever so dangerously close to the booze section.  Too late.  I was pulled toward the wine aisle like a tractor beam had been applied on my cart.  I wasn't low on wine at home, but feeling like I'd already won by saving on cereal, I decided to take a gander and found this:



A $12.99 bottle of red wine for $3.97!  I'm a Cabernet Sauvignon man, but how can you pass up a bottle of a red blend wine selling at a 69% discount?  You can't!  It would totally upset the balance of good versus evil.  So I grabbed two bottles to not be greedy and left some for other lucky customers.

What's My Point?

Well, if it isn't obvious yet, I think we get too hung up on shopping lists.  They make us inflexible, and unadaptable.  You've probably read countless personal finance articles online that have suggested you have a shopping list so that you don't overspend at the grocery store.  And I get it.  Without a list, you will undoubtedly fall victim to all of the juicy marketing tricks grocery stores employ to get you to buy more.

But people, common sense has to prevail.  You have to realize that lists are not set in stone.  Say I had decided against the purchase of the five boxes of HBoO.  I would've spent less for sure.  But in a week or so I would've needed cereal again.  That same super sale may not be available and I'll be stuck paying full price on a box.  Not smart.

So I got home and proudly reported to Jessica that I'd saved $21 at Albertsons.  She asked how much I'd spent.  She entered the total cost of my trip to the store on her budgeting app while listening to me tell her about the five boxes of cereal and two bottles of wine.  Did she get mad?  Nope!  I lived to shop another day...

Thanks for reading! Until next time.  If you liked this post and want more like them in your inbox, please subscribe below:


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Monday, August 14, 2017

Stock Market Investing Strategies In An Aging Bull Market

The beta market that ensued following the March 2009 bottom in the stock market was great for me.  As stocks (and the market) recovered systematically, I was profiting nicely from just about all of my stock investments.  Those were great times that lasted several years.  If you had cash to work with, you probably made out quite nicely yourself.  After all, stock picking prowess was almost not necessary.  Having placed your money back then in a low-cost index fund that tracks the S & P would have given you incredible returns.  How incredible?  Since the market bottom, the S & P 500's total return (includes reinvested dividends) has more than quadrupled, gaining 313%.

Image result for aging bull market


If you were hurt by the Great Recession, and decided to sit on the sidelines out of fear (or lack of disposable cash to invest with), today you probably wish you had been smarter.  Maybe you got back in eventually only to find that the beta market had transformed into an alpha market? Maybe your stock or ETF/mutual fund picking skills have made you some money, and now with a saturated market, you're wondering what to do?  You're no longer able to find equities with enough "margin of safety."  You're no longer able to find stocks priced below their "intrinsic value."  Heck, even growth stocks look expensive and overbought.  Should you exit the market and wait for the correction to happen?

I have some logical strategies that you can use to invest even in an aging bull market.

Image result for stock picking

LONG-TERM INVESTORS

If you're in your 20s, 30s, and early 40s, you have considerable time left before you retire.  Staying in the market, no matter what the market does this year or next, is what you need to do.  You'll want to stay diversified, own several low-cost index funds (ETF or part of the mutual fund family).  For example, you could continue to contribute to your Target Date fund every month and dollar-cost-average, buying more shares as the market tanks.

Or if you like to pick stocks, you could ring the cash register, take some gains, and keep a portfolio with your core positions still intact.  Buy shares of your remaining holdings on big pullbacks and lower your cost basis.  The key is not to panic sell and liquidate your positions at huge losses.  Only do this if the economic landscape causing the market's correction directly impacts one or several of your key holdings.  For example, when the market crashed, causing the Great Recession, banks were hit the hardest (for obvious reasons).

If you trade bonds, you risk having to sell at lower prices if interest rates rise (so far the Fed has kept rates in check).  Sticking with bonds with short maturities is your best move.  By the way, the same will be true for CD ladder lovers (3-month, 6-month, 9-month, 12-month, 15-month will work best as rates rise).

The main point for long term investors is to stay in the market.  Make adjustments, like raising cash, getting out of long-term maturity bonds or CDs, etc., but don't completely exit.  Timing the market doesn't work!

SHORT-TERM INVESTORS

If you're supposed to be retiring within the next ten years, and you've been in the market since we reached the bottom in March of 2009, you should be on alert.  You can't still be possibly swinging for the fences, trying to find growth plays in this market.  Don't let the FANG (Facebook, Amazon, Netflix, and Google or Alphabet) stocks lure you in.  This is the wrong time to be starting a position in these stocks no matter what anyone says.

You definitely should be ringing the register and cashing out a substantial portion of your portfolio.  Now this doesn't mean get out of the market completely.  Just raise cash to give yourself peace of mind.  You can even swap out your growth plays for some value ones that have underperformed for good reason.  Case in point: Ford (F).  It's a horrible stock that has severely underperformed the S & P now going on several years.  But...it has a great dividend, most of the sellers have left it (hopefully) and the company has plenty of cash to stay alive if another recession were to happen.  Dick's Sporting Goods (DKS) has underperformed all year.  Technically it looks like it's going to break out.  Barron's gave it the thumbs up this past weekend and claimed it will not be a victim of Amazon...at least not in the next two to three years.

In essence, you want to find stocks that are of companies not in jeopardy of going out of business, with plenty of cash, and that have gotten beat up this year.  In other words, contrarian plays.  Buy into these stocks slowly, buying more blocks of shares if they pull back.  Keep your head, remember that these stocks are already at their floors or close to reaching their bottoms, so the downside (if a correction happens) will be less dramatic than stocks on 52-week highs.

CONCLUSION

Okay, it's not a question of IF but WHEN the market corrects, you'll want to be in the right strategic place to ride it out and profit when the next bull market begins.  No one knows how long this will take so timing the market is a foolish proposition.  Stock market success is about buying low, when everyone else is afraid to take a dip in the water, and selling high, when everyone is in the water and the pool is overcrowded.

Thanks for reading!  Disclosure: I own shares of Ford (F).  I don't own shares of DKS, but will!   

Saturday, August 12, 2017

Will Our BBQ Island Side-Hustle Go Up In Flames?

The Gomez family is entrepreneurial...if you haven't noticed.  We like to have conversations about side-hustles at the kitchen table, while cooking, in the car, on date nights, and even across bathroom doors.  A lack of access to capital kept us from starting our previous venture as builders.  We had the city (Pahrump), state (Nevada), and even the empty lots we wanted to build on, but the financing was not to be.  Private lenders didn't want to lend on lots (only on construction) and the banks we spoke to wouldn't lend unless we showed title to the lot(s) we intended to build on.  My rental property refinance fail took the wind out of our sail.  We were going to get cash out and use it as seed money.  Oh well...back to the drawing board.


The wifey building the steel frame with dad watching

While living in Las Vegas before the Great Recession, my father-in-law owned and operated a barbecue island/grill retail store.  I don't know the entire story, but he learned how to make BBQ islands from framing all the way to adding accent rock or stucco as an exterior finish.  Then he taught his oldest son (my wife's brother) and together they set-up shop, becoming one of the most successful and early BBQ shops in town.  Like many business owners who didn't plan for a major slow down, he went slowly and painfully out of business.




Fast forward to today.  The only element of my father-in-law's BBQ island business that survived was my brother-in-law going into business alone, building islands on site as requested.  That is, until now.  My wife wanted to learn the trade.  She figured she could build and sell several of these BBQ islands on the weekends throughout the year.  The idea is not to get ahead of ourselves and build-up inventory, but rather to get orders and build on demand.


Cutting the backer-board.  Very messy, especially if windy.

Our first goal was to build a model.  We are still debating whether to sell this model and use the profit to buy additional tools (to expedite the process) OR to take it around to new developments in our area and drop it off at a model home (with the builder's permission) where hundreds of prospective buyers can decide on ordering one.  One of our challenges right now is physically moving the islands around as they can weigh 300 to 500 pounds depending on what's on them.  We're building them outside in my backyard and it can get messy.

The actual costs of building a barbecue island isn't that much.  About $1,000 for materials on a straight 6-footer, including the grill IF you can get it at wholesale price.  My brother-in-law will help us with this.  What the consumer pays a premium for is the labor.  Having helped build an island, I can tell you that there is plenty of places where you can go wrong and you have to pay attention to detail.  The light gauge steel frame has to be square and supported in the right places.  The backer-board has to be cut with precise dimensions and drilled into the frame properly.  The thin-set has to seal the joints and be plopped in the right amount at the top for the tile (unless you use a granite surface).


With tile surface.  Only stucco process is left.

THE RISKS

The risk of this side-hustle is minimal.  So let's say no one wants to buy our first barbecue island/grill.  What then?

We can try to unload to a very lucky buyer on Craigslist.
We can keep the island/grill for ourselves.
If we get too many orders, we may not be able to fill them.

THE REWARDS

The rewards of this side-hustle are many.   Say we get a manageable number of orders.

We will profit enough to expand, perhaps hire help.
We can get out of our backyard and find a garage or space to use as our workshop.
We can maybe even get a retail space and do the whole brick and mortar thing.  

Success in this era will not come from relying on your paycheck.  You need multiple streams of income and that is only possible from side-hustling.  It made no sense for us to not make us of all our family's talents.  Building BBQ island grills is a technical trade.  Your side-hustle can put your skills to use or you can simply join the ranks of others out there using Internet platforms (leaving the thinking to someone else) to make money.

As for this latest venture of ours...I will be presenting updates to you throughout the year to let you know how we are doing.  I'd like for this side-hustle to be more like a paradise and for it to not go up in flames.  Thanks for reading!


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Wednesday, August 9, 2017

My Son's Corrective Circumcision, A Reminder To Be Grateful For Health Insurance

For two years, my wife, Jessica, and I waited for my son's adhesion to tear on its own.  He'd been complaining to the two of us since the age of about 2.5 that his "pipi" hurt.  His pediatrician kept telling us that adhesions sometimes took care of themselves by virtue of little boys curiously touching their privates, or simply from rough play.  Still, we didn't like it.  Mostly because we had elected to have him circumcised as a newborn and felt guilty that his pain was by our doing.


Showing off his stickers.

It also didn't help that the doctor who circumcised him at the hospital didn't take enough foreskin off.  So his wee-wee looked like a cross between both versions of the manhood.  Not good.  I joked with my wife..."He'll never get a part in the porn industry if it doesn't look right."  The pediatrician advised us to wait until closer to four to have him re-evaluated by a urologist.

"Mijo...gotta take you to the pi-pi doctor," I'd tell him.
"Again!" he'd say.

He had no idea that we, the parents, were setting him up for another surgery.  Most of his visits for this purpose involved the pediatrician pulling down his chonies and pulling back his remaining foreskin, checking on the adhesion.  It was in the worst possible spot on his penis...at 12 o'clock.  "Let me refer you to the urologist," he said, in late June, close to his 4th birthday.  The urologist gave us his expert opinion: "Yea, this adhesion looks too thick.  It probably won't tear up on its own."

Surgery was in store.  It would require general anesthesia.  The urologist assured us..."I've done hundreds of these.  I'll cut just enough of his skin and make it look good."  He had a prideful smirk on his face.  All I kept imagining was my son dying through the process.  Anxiety sucks!  My wife was anxious too though.  And it was a good thing we both talked openly about the procedure up until the day of the surgery on August 7th.  (Both of us have never had any type of surgery so we had no idea what it was like).


Minutes from surgery.  My son with my wife.

Three days before the surgery, we were given final instructions and the time of the surgery.  My son couldn't eat any food past midnight the day before.  His check-in at the hospital was 12 noon.  Let's just say this added another layer of worry.  How do you keep a growing four-year-old from not eating and staying on a liquid diet from the time he wakes up until the afternoon?  We put all the food beyond his reach so he didn't sneak in a bite from somewhere and watched him like a hawk until it was time to go.

We drove to San Diego from Oceanside, checked in at the new Kaiser hospital they have in Claremont Mesa, and waited in pre-op.  The nurses tended to him, giving him a coloring book, crayons, stickers, and cartoons to watch on TV.  They gave him new socks to wear along with his gown.  What great service, I thought to myself.  Then it hit me.  What do people without insurance do for their kids in scenarios like this?  Did you know...







The Affordable Care Act has yet to be repealed.  That may have been great news to many millions of Americans who still depend on it.


  • The average annual cost on health care was $10,345 in 2016.
  • The average annual deductible for individual plans was $4,358.
  • The average deductible for family plans was $7,983.

I paid $10 for my son's procedure, my copay.  As a teacher, I have great medical, dental, and vision benefits.  In my school district, we have at least three different options, including two PPO and one HMO (Kaiser).  Kaiser is the least expensive.  I think I have less than $400 taken out of my check each month to insure my entire family.

I'm very lucky and fortunate.  I never had to worry about paying a single dime for my wife's two deliveries, and I didn't have to worry about paying any money for my son's second surgery.  (After all, it was Kaiser who didn't do it right in the first place!)  For an individual or family without health care insurance, any visit to the hospital will probably cripple them financially for some time, maybe even an entire lifetime.  It really sucks.

Wearing a one piece...my tank-top.

Prior to my son being carted off into the operation room, the anesthesiologist informed us that he would be waking up not being himself, as in grumpy and upset.  This was a huge understatement.  My son went all beast-mode on three nurses, my wife, and me.  He wanted his tube out of his arm vein and exerted every last fiber of his muscles to get it off.  He beat us all up a good five minutes even with a tiny bit of morphine injected in him.  What he needed was a tranquilizer!  Ultimately he won the battle and the tube was pulled out of his vein.

How much would this procedure have cost a parent without insurance?  I'm not talking the type given to newborn boys.  Newborns don't require two specialists, general anesthesia, anti-nausea meds, pain killers, and short stays in a pre and post-op room.  According to this article, for a child requiring general anesthesia, it could cost as much as $3,000.  Sounds somewhat too low to me.  I guess it depends where the procedure is taking place.

Conclusion

My son is doing okay.  The poor little guy had to walk around with one of his old man's polyester (not cotton) tank-tops all day, the day after surgery.  I now have a new appreciation for the movie, John Q., starring Denzel Washington.  If you haven't watched this film yet, and have children, it will tug at your heartstrings.  No parent wants to see their child suffer and every parent wants to do whatever it takes for their child to be happy and healthy.

It should go without saying, but every child (0-12) in this great country of ours should have access to free health care, no matter how grave or ordinary their ailment happens to be.  Their innocence depends on the adults of any great society doing what's right for them.  Thanks for reading!  


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Sunday, August 6, 2017

Teaching My Daughter To Ride A Bike On The Cheap, Fatherhood Moment

Every parent is responsible for making sure their children learn some basic, but extremely important life skills.  The other day, I read that an adult female escaped two male thugs (who had forced her at gunpoint to drive her vehicle around town) by knowing how to drive stick.  Apparently the suspects only drove automatics.  I know comparing this to teaching a kid to ride a bike is pretty extreme, but hey, you never know when being able to flee on a bike may come in handy.

Biking in general opens up a whole new world for people needing to get around, and it happens to also be environmentally friendly.  Kids love bikes, but for some parents, the cost of a bike can be a barrier to teaching their children how to ride.  My daughter is 5.5 years-old.  She's quite tall for her age, on par with some seven year-old girls.  For her 4th birthday, Grandpa bought her a bike from Walmart.  She got on it a few times, training wheels and all, but wasn't addicted to it per se.  I think it was because the pedals were so hard to push and she was too tall for it even with the seat raised to the top.  The Walmart bike was basically left to the spiders and bugs to make into a home.


The "Walmart" Bike

Many people probably turn to Walmart to get their kids a starter bike.  Their prices on new bikes are hard to beat.  A 20'' pink Huffy will set you back only $49.97.  Amazon may be an option for adults with mechanical aptitude who have the patience to put a bike together.  A 16'' boys steel frame costs $54.99 with free shipping.  

Where else can people turn to get their kids a bike?  The Play-It-Again and other discount (sort-of) retail stores like Sports Authority are closing down all over the country thanks to the behemoth that is Amazon.  Saving money every month until Christmas rolls around or until your child has a birthday is also a sensible thing to do financially.

My daughter's bike training was at a standstill this summer.  Again I encouraged her to try riding the Walmart bike, but she was too scared to try without the training wheels (I'd removed them).  Then we took a vacation to Northern CA in July.  I met up with a former colleague at her million dollar home in Santa Clara, CA.  My two kids and her two kids spent an evening playing with toys, as she and I caught up.  Just as we (my wife was with me) were leaving, I asked my friend's husband (a Silicon Valley engineer) if he was still road cycling.


The two free bikes my kids got

This conversation would end with my children getting two free "Specialized" brand used bikes.  One was actually a balance bike, the type kids use to learn the skill of bicycle balancing by striding along or by rolling down hill.  His two boys had grown out of them.  This lucky break and kind gesture re-energized my daughter.  She loved the balance bike!  Once home in Oceanside, she started asking me to take her outside with her "pirate" bike.  There is a sticker of a pirate on the balance bike.  She first used it to stride along as we went on walks around the neighborhood.  Then she gathered the nerve to launch herself and balance rolling down driveways.  I had to be the car lookout and clear her to go.


My daughter rolling down a driveway on her balance bike

She mastered balancing in about four outings.  It was time for her to try pedaling and balancing.  I drove her to the local elementary and on the basketball blacktop, I gave her some words of encouragement, held the back of her seat, and told her to pedal.  She wasn't as scared because she knew that if she needed to, she could always put her foot down (she was too tall for this bike as well).  After a few attempts with me holding on and letting go, she was able to ride solo!  She'd done it.


Riding the bike! Proud father moment.

But the true test was riding a bike her size.  I turned to Craigslist.  As a bike expert I was sure to find her a name brand bike, her size, hopefully at a decent prize.  I got lucky.  I found a girl's Diamondback being sold in Carlsbad, CA for only $25!  It was a steal and I wasn't going to let anyone else beat me to it.  Within the hour I was at the home of the seller and had purchased this used girl's bike; it was in great condition.  There are deals on Craigslist folks!  Especially if you are great at spotting undervalued/priced items.

A couple days later we were back at the elementary.  The bigger girl's bike was in the back of the SUV.  I took it out.  I could sense my daughter's nervousness.  I reassured her, telling her she already knew how to ride a bike and that she was simply going to be doing it on a bike her size.  I helped her get on the seat, told her to pedal, and let her go.


There she goes!

$25 for a bike my daughter's size.
Seeing my daughter riding a bike for the first time...priceless.

Friday, August 4, 2017

I Finally Cut The Cord, Fought With My Water Utility Company in Oceanside, CA

I'm a stubborn Gen X'er.  I grew up watching television since the days of He-Man: Masters of The Universe.  Back then, we had but 13 lowly channels, one was called, "U."  Then came the greatest invention of all time: cable!  It's taken me almost to my 41st birthday, but I've finally cut the cord.  (Clapping in the background).  I had cable because I liked watching the occasional football, soccer, or basketball game.  My wife liked some shows on network TV and the kids were into Disney and Nick, Jr.  But as of late, no one is watching television.    

Image result for old tv with 13 channels


My kids now prefer YoutTube videos, and neither my wife or I have time anymore to channel surf.  So I called DirectTV/A T & T and had my service terminated.  I'll be saving $77 a month from now on.  Yes!

Now onto my fight with my water utility company who I shall refrain from naming out of respect, and only say I live in the city of (cough, cough) Oceanside.

After my week long vacation with my family in the central coast of this great state of CA, I came home to find my water bill in the mailbox.  The previous month (June) had been brutal.  I'd paid $293 for my bill and was reported to have used 31 units of water.  Each unit is 748 gallons!  Wow...I thought to myself, I better stop watering the grass or something.  With gusto I tore open the envelope expecting a lower bill because after all we'd been on vacation, so how much damage could we have made in three weeks?

Gasp!  My bill was $425.  I almost had a heart attack.  The reported meter reading was 55 units!  Folks, that's a whopping 41,140 gallons of water.  The average 21-foot, 48-inch deep round pool holds between 13,000 and 15,000 gallons of water for comparisons sake.  I didn't come home to find our house completely underwater so for sure something must be wrong, I thought.  I called my public utility water company.  The nice lady asked if I wanted a re-check on my meter to which of course I agreed to have.  She also asked me to check around my home for any leaks, look for saturated areas, etc.  That was it.  So I had to sit back and wait for the meter person to show and then I'd get an answer.

1,285 gallons a day! Is there a basketball team showering at my house? So ridiculous.


You know, these public utility companies have us all by the cojones, excuse my Spanish.  If we don't pay, even when we're in the middle of a dispute with them, they can shut off our service.  Pay first, answers later.  I'm not the type of person to wait around for things to happen so I went outside, screwdriver in hand.  I opened the meter cover and low and behold, a dead meter staring back at me.  I cleared the dirt off the little window panel to see if maybe I wasn't seeing the numbers clearly.  Nope.  Dead meter.  I moved the wires around to see if there was a faulty connection.  Nada.  I went to my neighbor's house and checked his meter.  His meter shone brightly lit numbers, obviously a sign of functionality.


No reading. Even after I cleared the mud off the panel, and wiggled the wires.  The cap was off btw.
Remember this post on the drip irrigation system I put all around my house to conserve water?
These days meter readers don't even have to open the cover.  There's this plastic sensor on top of cover and the readers swipe their Star Trek contraption to get a "reading."  So I asked myself...How does one arrive at a reading of 55 units when the meter isn't even working?  I called the utility company the next day to report my findings and asked them this same exact question.  The guy I was talking to, horrible people skills mind you, had no answers.  He kept deflecting, and saying over and over that there was nothing he could do.  (Clearly he had been trained in the art of deniability and non-admittance).  That I had to wait for the meter reader to come by and do the re-check.  He had no authority to order the reading any sooner.  Apparently the meter department is off limits to anyone in the billing office.

I informed him I needed this matter resolved soon because my bill is due and I didn't want to have to pay the entire amount.  It seemed ridiculous to me that no one would think there was something wrong with my bill.  Oh, but the guy was quick to point out that I had to pay my bill.  All he had to do was tell me he'd see what he could do about getting someone out here to my house.  Nope, he got testier with me, upset about my own discontent.  He put me on hold in mid sentence too!  Just bad customer service.

OUTCOME 2 DAYS LATER  

I called the City of Oceanside, yeah...I'm over this respect thing with them after the phone call I had again with my man in that office.  I asked about the outcome of the meter re-check.  He tells me..."Yeah, the check was completed and there is a new digital meter there, it is working, and there are no leaks."  He was in essence telling me the initial meter reading was accurate and the meter is working.

Me: But I have a picture of it off, I shook the wires, tapped it, stared at it for over a minute and it was dead.  My family and I were gone for a whole week, we've never even gone over 40 units.  Does this not seem completely illogical to you? 

Man at City of O: Uh, I can't answer that.

Me: Who do I talk to about the meter reading?

Man: I can give you the number to the meter department.

Me: Okay give it to me.

Man: Okay, hold on (proceeds to put me on hold for 7 minutes!).  Okay, I called the meter department and the supervisors aren't in today.  I also talked to the person who read your meter and he said the reading was accurate.  These are some of the best meters in the market today...they are very (emphasis added) accurate.

Of course I was livid now.  How very convenient to be able to say that no errors were made, and you, the consumer, still have to pay your bill no matter how ridiculous it happens to be.

Me: The supervisors aren't in today.  Give me their number anyway, I'll call them on Monday.

Man: What I can do is email them, and give them your information.  They'll call you.

I'm stuck paying this bill.  Up until this past month, I didn't think too much about the service I was receiving from the City of Oceanside (water utility).  But now, after the inferior service I received from their phone rep, and the information I gleaned about their inner workings (meter readers are protected and infallible), I am going to be ever more vigilant about my water consumption and the reports I get in the mail.  I don't think I'll ever be able to trust them again.  You should be leery too if you live in Oceanside, CA!

My next stop may be a visit to the public utility commission office in San Diego because this isn't right and I'm not okay with it.

Until next time!     
       

Tuesday, August 1, 2017

Go Back to School And Get A State Tax Deduction While Saving

My wife, Jessica, and I (along with our two children) took a trip yesterday to the local junior college in our town.  After a visit to her bestie's house, she has gotten the bug to go back to school and complete her pre-requisites for Dental Hygienist school.  Jessica is currently a Registered Dental Assistant and has 13-years experience.  Her bestie recently completed Dental Hygienist school and "hyped" up her new job where she earns way more money, has her own patients, and more importantly, feels less pain from the repetitive motions of cleaning teeth daily versus how she ached while assisting a dentist.  By the way, if you're thinking bang for your buck in terms of a career, Dental Hygiene is a good one.  Take a look at the job outlook at The Bureau of Labor Statistics.

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In one hour, Jessica was able to register online, inquire about transfer credits (she completed some college courses seven years ago at another junior college), see a counselor, and even get information on child daycare services.  My son will have to go with her on some days while she attends classes during the day.  And this is why I love junior colleges!  They're incredibly helpful to students, and you're treated like a person and not a number.  So if you're thinking about going back to school, getting re-trained, or heck, even starting a new technical career, there is really no excuse for stalling as junior colleges are very friendly to working adults with children.

Money.  Yes, I read your mind.  Well, some of you may not be able to outright afford going back to school as older adults.  You can always apply for financial aid, or seek out scholarships.  If you got any money in a Roth IRA, you can use your contributions to pay for school penalty and tax free.  Be careful to not use any investment earnings within your Roth IRA, however, because those will be taxed.

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STATE TAX DEDUCTION POSSIBLE

If you're going to enroll this fall or next spring, and you itemize on your tax return, why not also get a state tax deduction while making college savings contributions?  You see, with a section 529 savings plan, you may be able to qualify for a state tax deduction.  For example, if you're in Maryland, you can deduct up to $2500 per account beneficiary.  In this case, the account beneficiary is you!  Not your child.  529 plans are not only for minors.  Of course if you happen to live in a state where there is no income tax (e.g. Nevada, Alaska) then this isn't for you.

So I was all excited about getting an additional state tax deduction on our joint income tax return from Jessica's college expenses, covered by a CA 529 plan, until I discovered that stinking CA doesn't offer any section 529 state tax deductions.  I should've known!  CA...you suck!  Go here to see if your state offers an income tax deduction for contributions to 529 plans and to find out what the limits are.

HOW MUCH IS IT WORTH?

Just how much in state tax savings is there for making contributions to a 529 plan for an adult or child?  For a couple filing jointly with $100K in taxable income and living in Oregon, let's say, they'll be saving a whopping $162 a year.  That may not be enough to encourage mom or dad to go back to school and go through the trouble of setting up a section 529 plan, but consider these savings over a 10 year period or longer if it's for your child's college expenses that you're saving for?  If I lived in Oregon and was going back to school in my 30s or 40s, I'd take the time to fund a section 529 plan just to get the tax savings.  Especially if my wife and I made more than $100K...every dollar counts!

If you want to know how much you stand to save in taxes where you live, go here.

HOW DOES IT WORK?

If your time frame is short, like you need to pay for college this year or next year yet still want a state tax deduction, follow these steps:

1.  Go online to your state's section 529 website.
2.  Open an account and fund it.
3.  Select the most conservative portfolio option.
4.  Have payments sent directly to your bursar's office or have them cut you a check.
5.  Keep all your receipts for tax purposes.  Remember...qualified expenses only (books, tuition, computers, and supplies).  No you can't use your 529 savings to pay for your car insurance or for gas to and from school.

Number three above is key.  You don't want to put your money in a plan option that invests in stocks or bonds.  Find the one that guarantees safety of principal (is in money market accounts, e.g.).  Why?  You don't want to risk losing the money you'll be needing immediately to pay for school.

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If you're wondering, most plans allow you to use the money as soon as you deposit it, meaning, there is no waiting period.  You'll get the tax deduction even if you turn around and withdraw the funds the next day!  This is a nice loophole.  Some states, however, have a one-year period on withdrawals so you'll want to postpone registering for classes at least a year.  Do your research.

It's competitive out there.  Last I checked we had some of the lowest unemployment numbers so our economy is recovering.  Still, I recommend you don't get complacent.  Keep learning and staying on top of your game.  Taking some classes at the local junior college may make the difference between an employer keeping you or letting you go.  Getting a state tax benefit while you're polishing or learning new skills is like a cherry on top.

Thanks for reading! Until next time.


Saturday, July 29, 2017

Mutual Fund Or A Bank For Your Money Market?

What's up everyone!  So I was asked over email, "What is the difference between a money market fund and a money market account?"  The person who emailed me wants to do better than keeping his money in a traditional savings account without too much risk.  Okay, so to answer this question I'll start by saying that both of these financial instruments (let's call them) are fairly safe places to put your money, but other than their names both starting with "money market," they're not at all alike.

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Money Market Fund

A MMF is actually part of the mutual fund family.  It's one of the safest types of mutual funds.  Like all mutual funds, you can buy shares, pooling your money with other investors and benefiting from a performance upside in proportion to the number of shares of the fund you own.  With the stock market getting ready to pull back...some say a major correction will happen within the next two years, this is a good time to be placing some of your market profits in safe yield like MM mutual funds.  Depending on the goal of the fund, MMF managers will buy and sell assets like,

1.  Agency Securities issued by government agencies or by government-sponsored organizations.
2.  Bankers' Acceptances.  These are commercial notes guaranteed by a bank.
3.  Certificates of Deposits.  These are usually large-denomination and negotiable CDs sold by both U.S. and foreign commercial banks.
4.  Treasury Bills and Notes i.e. Government debt.
5.  Repurchase Agreements.  These are your basic buy-sell deals where the mutual fund buys securities with an agreement that the seller will buy them back in a quick turn-around fashion (within a week) at a price that includes interest.
6.  Corporate debt with short maturities.

As you can see, these are basically all "money market" securities with minimal credit risk (default is rare).  MM mutual funds don't buy stocks!  They're also NOT FDIC-Insured, but this is really a non-issue because of how relatively safe these investments are.
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What Type of Investor Should Own A MM mutual fund?

1. Beginning investors who want to test the waters before diving into bond or stock mutual funds.
2.  Investors that switch investments as interest rates rise and equities become overvalued.
3.  Investors with an investment goal with a short time horizon that would rather not be stuck selling their investment at a loss when they need the money.  
4.  Investors who need their money to be liquid and still make some money from interest payments.  For example, your emergency fund can be held in a MM mutual fund.
5.  Investors who plan on writing checks against their account.  A MM fund will allow you to write as many checks as you like, with $150 to $500 being the minimums per check quite often.

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Here's the catch.  MM mutual funds have fees and sometimes even a sales load that could offset any money you earn.  Plus you may have to make a minimum investment at first.  You need to read the prospectus of any MM mutual fund you are interested in.  To offset fees, some investors buy shares of Tax-Exempt MM funds.  Depending on the fund, you can be making money (from dividends paid to you) that is exempt of your state's income taxes or federal income taxes.  Heck...sometimes exempt from both!  Shop around.  People in states with high income tax rates (California, New York, e.g.) are better off investing in tax-exempt MM funds.  For reference, here is a list of taxed and tax-exempt MM mutual funds offered by Vanguard.  Notice their expense ratios and yields.
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Money Market Accounts

Okay, so MM accounts are basically glorified savings accounts.  You can go online or to your bank and get a money market account set up in less than an hour.  These are bank accounts that offer higher interest rates than a regular savings account.  Banks are essentially doing what MM mutual fund managers are doing, investing in low-risk, high credit, short-term "money market" securities.  

Your deposits are FDIC-insured so they are the least riskiest of all investments.  The interest rate or Annual Percentage Yield (includes compounding interest) will depend on whatever the bank wants to offer.

Some MM accounts have monthly minimum balances.  The best ones don't.  Also, the best MM accounts will allow you to write more than three checks per month to third parties.  Right now, a total of six transactions is the limit and law for all MM accounts.  MM accounts come with a debit card, and you can easily transfer money between this account and your other accounts, like checking.

MM accounts are great for people that,

1.  Want a place to park their kid's tuition money temporarily until the next quarter or semester.
2.  Need a place to keep their money for future tax payments (like your property taxes or other business taxes you know you'll need to pay).
3.  Need to build an emergency fund.

I've taken the liberty of finding you an article where you can have at your disposal the best MM accounts for 2017.  Here it is.

Well, that's all I got for today folks.  I hope you've learned the difference between MM funds and accounts and have a better grasp of which one is more suitable for your financial goals.  Thanks for reading!


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Monday, July 24, 2017

Being In Love With Grades Can Lead To A Bad Financial Decision, College

Let me ask you something: Are high schools in the U.S. college preparation environments?  Yes?  What if I told you that they're in fact NOT where teens go to become prepared to succeed in college?  High schools in America are where teens go to get "accepted" into college.  Big difference.  You see, according to the National Assessment of Educational Progress, also known as the "Nation's Report Card," only about one-third of high school seniors were prepared for college-level coursework in math and reading in 2015.  What this means is that 66% of high school seniors have done everything according to plan, keeping great attendance, behavior, and most importantly, grades, but still aren't college ready!

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That's a lot of unprepared kids, isn't it?  So one of the biggest lies in all of schooling also happens to be the biggest selling point of all high schools: "We offer a wide selection of college prep courses."  Unfortunately, high schools give teens a false sense of superiority or of being "special" when in fact most seniors who get accepted into a university are quite average.

Here's more perspective.  According to a USAToday report, nearly half of graduating seniors from the class of 2016 were "A" students, yet SAT scores are on a downward creep.  What's going on?  There is obviously a huge deviation between grading and what the Scholastic Aptitude Test assesses.  You already know grades are subjective measures of performance at best.  Unfortunately, teenagers fall in love with them.  Many teens live to get A's and are crushed when they get an A-.  Some have parents who'll go all the way to the school board to have their teen's A- be changed to an A to ensure Johnny gets into Stanford.

Ready for some more disappointment?  Many students attribute high marks to intelligence.  Over the course of my career as a teacher, I've heard many teens say out-loud, "I got an A in...I'm so smart!"  Yet, we know intelligence and grades have practically zero correlation.  Having what would be considered stellar grades (3.8 g.p.a and above) makes a teen at most a stellar "student."  The worst part of it is that many teens become complacent, doing the bare minimum to earn their high g.p.a.  I have to burst their bubbles.  When they say out-loud, "I love my grades," I reply, "You mean, you love the grades you're getting at this school."  I then explain to them that there are over 21,000 public and over 10,000 private, high schools in America and each one of them will have a Valedictorian.

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The best schools are the ones that offer the most Advanced Placement (A.P.) courses.  There are two benefits of taking Advanced Placement courses.  One, your teen student gets to see what they are truly made of.  If they pass the class with a B or better, and pass the A.P. subject test at the end of the year, they are probably ready for college.  Two, students who take their respective A.P. test and pass will have earned college credit on the cheap.  Just think, if your teen takes an A.P. Calculus AB test and passes, they don't have to take a quarter of calculus in college! Savings galore.

Enrolling at a 4-year college may not be the best option for certain teens and their families.  The telltale signs of a student who may be best suited for a two-year college after high school are:

1.  Great grades, but poor SAT scores
2.  Few if any A.P. courses taken
3.  Poor performance on entrance exams

Some teens who fit the bill enroll at a 4-year college anyway and are stunned when their midterm grades come out.  Some will correct and work harder, swimming, while many more will not come to terms with their shortfalls, do nothing, and sink.  Aside from a lack of money, the inability to keep up with the rigor has to be another reason for America's huge college dropout rate crisis.

In my latest book I champion falling in love with effort instead of earned grades.  I use the following example to make my case that effort is more important.  If two students in the same class both earn an A, but one does the minimal amount needed while the other works her tail off, who is winning?  The one who is learning the role of effort in life clearly will win in the end because the natural will hit an eventual plateau and not risk trying for fear of failure.

Is your student in love with his/her grades?
Are they content in earning high marks, pushing themselves only insofar as it keeps them in the top 50 of their high school ranking?

Wake them up!  Tell them they are but tiny fish in all of the earth's oceans.  Don't let their inflated egos convince you, mom or dad, of paying any amount of money for attendance at a 4-year college.  Have them prove themselves at the local Junior College first.

Thanks for reading!  
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Wednesday, July 19, 2017

4 Reasons Why Latinos Don't Get Life Insurance

So I'm on day five of our 7 day family vacation that included a two-day stay in Los Osos-Morro Bay CA.  Currently typing this post up at my parent's condo in East San Jose.  It's been a few years since last the Gomez family visited the Bay Area.  It's always cool to see how much things have changed.  What's changed about San Jose?  1) More traffic  2) New shops and businesses replaced those that failed during the Great Recession 3) More new home construction everywhere and 4) Home values are even more unaffordable than ever before.  But I'm not here to talk urban sprawl and real estate bubbles.

View from my retired friend's house where we stayed, Los Osos, CA.


I'm here to talk why Latinos don't purchase life insurance.  You see, being here with my parents has given me time to talk face to face with them about their finances.  My dad is open to sharing how hard it is becoming for him to afford the mortgage.  Helping my two Millennial siblings out with car insurance and the occasional bill is part of his problem.  Also, my younger brother lives at home and isn't putting in his fair share.  Now 64 (dad) and 60 (mom), my parents worry about leaving all of us burdened should they die unexpectedly.  And they should, considering neither of them have life insurance!

Farmer's Market in Baywood.

A study conducted by the nonprofit LIFE Foundation and LIMRA in 2013 concluded that only 54% of "Hispanics" owned a life insurance policy.  In contrast, 76% of African Americans and 62% of whites had policies at the time of the survey.  I really doubt much has changed in 4 years.  So we can probably safely say that Latinos still lag in life insurance policy consumption.  The question is...Why?  I have some researched answers taken from Spanish speaking sites as well as thoughts of my own on this.  This one in particular had a lot of great insight.  It said that "Hispanics"...

(For the record...we don't like the word "Hispanic."  We prefer Latino or the gender neutral term Latinx)

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1) They don't "get" life insurance.  In other words, if you were to ask some Latinos to tell you what they know about life insurance, many of them would say, "Que es eso?" with a puzzled face.  Clearly there is an education gap that must be closed if consumption of life insurance products are to happen.  They need people to take them through the basics, from what they are to how they can benefit.

2) Cuanto cuesta?  (How much is it?)  Many Latino families, alike all other American families, prioritize other financial expenses (medical bills, retirement savings, etc.) over life insurance.  When I asked my dad why he never got life insurance, he said, "O pago, o como."  Translation: I either pay or I eat.  He said he couldn't find a policy he could afford.  This is a big misconception among Latinos that know about life insurance.  They believe it's costly when under the right situation, term life insurance policies can be bought for under $50 a month.

3) Trust.  Many Latinos, especially first or second generation, still mistrust anyone associated with the financial system.  Remember what happened to Latinos during the Great Recession?  They got burned in droves and many among them lost their homes.  All because they had very little understanding of how subprime home mortgages worked and they were easy prey for lenders.  An interesting finding from the LIFE survey was that 14% of Hispanics purchased life insurance online versus only 7% of whites and 8% of African Americans.  Could it be because they trust what's in writing more than what someone tells them face to face?

4)  Not enough talk of death.  To this day, my parents haven't told me how they want to be put to rest.  I don't know if they want to be buried here in San Jose or back in Mexico where they were born.  Heck, I don't even know if they want to be buried!  They may want cremation.  My point is that many Baby Boomer Latinos don't talk with their generation X or Millennial children about death in general.  Planning for the unexpected is obviously very important and sure, we Latinos are known to be a happy group (fiesta!!) so talking up a depressing topic may not be our style, but we can leave ourselves in serious financial peril if we don't take care of our business after life.

A term life insurance has many benefits.  If you have a policy and you should die unexpectedly, your beneficiaries can use your money to,

A.  Pay off your mortgage.
B.  Cover your burial or death related costs.
C.  Have an inheritance.
D.  Replace your income.  Your wife and kids won't have to deal with all of the bills without you.  

Latinos, we need to do better!  You can't live in America and not have a life insurance policy.  The risk of death any day is real and not being insured can be financially life threatening to your familia.  We're all about the family and working our butts off in life to make sure our kids have what they need, but we are leaving out accounting for one key event.  Do yourself and your family a huge favor, give them peace of mind, and get life insurance.

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