I’ve been quiet around here for a few weeks, because I wasn’t really sure how to put some of my ideas to words. Instead, I just read 3 books in the past 7 days, including The Automatic Millionaire by David Bach, The Richest Man in Babylon by George S. Clason, and a work of fiction by a writer in our PF community, Enemies of Peace by MK Williams.
Each of these books got me thinking about various personal finance topics, but the one that stood out to me first was David Bach’s book, and the concept of “The Latte Factor” (TLF). A lot of people have written a lot about TLF and have come down strongly on one side or the other of the argument. TLF isn’t really about some expensive daily cup of coffee at all… it can be anything in your daily life that costs real dollars and that are a recurring expense.
I’m just a simple guy, and I don’t even drink coffee, so I always had trouble believing in TLF. I would wonder, “How could people spend their money so foolishly that they end up broke before the next paycheck?” Surely I don’t have any TLF in my own life…
For many years, I’ve used the “Anti-Budget” that Paula Pant talks about on her blog Afford Anything. Basically, the gist is to save your intended savings rate off the top (Pay Yourself First) so that you are not tempted to spend it on anything, neither on needs nor wants. By doing this, you are meeting your savings goals and not having to worry so much whether you spend extra on dining out, or on entertainment, as long as you instinctively cut back in other areas.
That’s all well and good, and my Anti-Budget has allowed me to save ~50% of my salary for the past few years, sometimes more, sometimes a little less. But I never really stopped to contemplate the things that I was spending the other HALF of my income on, on an annual basis. So even though I have never, and will never, spend $5/day on a latte or other coffee-based beverage, I have my own little spending demons that add up to significant sums of money.
I don’t spend $5 a day on lattes, but in the past 12 months I have spent $936.80 on pizza. That’s $3.50 per day, on average.
I don’t buy overpriced coffee beverages, but I’ve spent $2,078 in the past 12 months on a stupid bundle of TV, Internet and landline phone(?!!!!) from Comcast/Xfinity. That’s $5.70 a day right there, more than TLF!
I would never be so stupid to pay that much for a morning pick-me-up, but I’ve spent $917 in the past 12 months on annual fees for 6 separate credit cards! While I do still experience more value from each of these cards than the annual fee they charge, perhaps I should look into cutting a few to save myself a few hundred dollars per year in WASTED money. That $917 is $2.50 per day, every day, over the course of a year.
So just with these three examples, I’ve spent $11 per day, 365 times, and what did I get? Crappy TV and internet service (which I don’t even use 90% of my life: sleep, work, travel, etc), a bigger waistline from too much pizza intake, and wallet stuffed with credit cards.
But that’s only $11… that doesn’t really set me back too much, does it? That’s a hair over $4,000 per year! Let’s assume I stop this wasteful spending and put it into my trusty Vanguard VTSAX index fund. Compounding at 7% per year, I’ll have $24.6k in 5 years, $59k in 10 years, $175k in 20 years, and a staggering $404k in 30 years, when I hit age 65. Those little habits that only total $11 a day will have really added up to a big amount of money by the time I hit a standard retirement age. Should I keep eating take-out pizza, being overcharged for cable by Comcast, and paying for the benefit of carrying credit cards? Sure, maybe in small doses, but not at the expense of $11 per day, every day, for the rest of my life!
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I actually started this post to write about a $5 bill on the ground. It’s right on the sidewalk between your car and the front door to your job. It’s there every day, and it’s yours to pick up and keep, if you want it! Every Monday, Tuesday, Wednesday, Thursday, and Friday, plus for some reason, it is there on Saturday and Sunday too, whether you go in to work or not. Given this example, I think most of us would stop, stoop down and scoop up the $5 bill every day without giving it much of a second thought. Who keeps leaving this perfectly good money on the ground? What a waste! But we don’t think about our own wasteful spending habits, the ones that drain $5 or more from our wallets/purses/accounts every. damn. day. That $5 bill is yours to keep, as long as you don’t spend it mindlessly at Starbucks or wherever your particular TLF is spent.
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So if you want to drink your daily latte, drink the damn latte. Hell, I know the annual Pumpkin Spice Latte comes out this weekend, and as a shareholder of both Starbucks and Keurig/Dr. Pepper, I welcome the seasonal uptick in hot beverage purchases. Just know that those little indulgences add up… just like the main characters in MK Williams’ book Enemies of Peace (which is seriously so good, you guys should read it… it has a wonderful story-line about the path to FIRE vs. consumerism).
By Josh August 9, 2018 (Warning, post is over 3,600 words)
Sometimes, I feel like a broken record. Pause that, rewind a bit…
As a total FIRE enthusiast and fledgling member of the PF blogging world, I am a member of several private Facebook groups and regularly chime in on posts where overly-excited real estate investors/hopefuls talk about the can’t-lose opportunities available only through real estate investment. They spew crap like “only 3% down and then someone else pays off your mortgage for the next 15 or 30 years” OR the infamous “the house will appreciate, so I can sell it in a few years and pocket the difference.” Inevitably, I have to post a quick paragraph about my own “can’t lose” opportunity that blew up in my face shortly after buying in 2006, and which I am still working on recovering from to this day…
Here’s that story:
I graduated from college in the Midwest, and quickly moved to Southwest Florida to start my career in Urban Planning. I just “knew” that working in local government and knowing about all of the development approvals that were in the pipeline would help me select the perfect house, in the perfect up-and-coming neighborhood, with plenty of upside potential that just about every Joe Schmoe on the street would have no idea was just around the corner. Like most people starting out, I got my first apartment and took in a roommate that I knew from the prior summer when we were both summer interns for the same office that I would work for again in my first big-boy job. As most of you know, “knowing” someone and living with them are two totally different things. I’d had some bad roommates in college, but this guy was the worst of the worst. Because this is a money blog, I’ll just share that he never once paid his share of our common bills on time, and by the time I left, he still owed me a sum of more than $700 (it had been nearly $2,000 at the high point). So I was in a hurry to get out of that living arrangement and buy something of my own.
Luckily for me, the father-in-law of one of my co-workers was a real estate agent. He was a nice guy, but I felt like he was pretty lazy in trying to help me find something in my budget. We looked at a few condos in old-people golfing communities, but I didn’t want to live on top of someone or have someone else live on top of me, so those were nixed pretty quickly. There was one townhouse complex that was promising, except that it listed 2 bathrooms, which was *technically* true, if you didn’t mind the two bathrooms being joined by a common bathtub! (I swear I’m not making that up!!)
My mom spent most of her free time perusing the internet, and would send me promising listings to check out from the County’s planning and zoning perspective. Finally, she found a newly-renovated 2 bedroom, 2.5 bathroom townhouse in a golf course development. The course had recently been shut down to be the centerpiece of a major redevelopment project: Par-72 championship golf course, three 30-story condo towers, enhanced marina, bowling alley, restaurants, retail, office, etc. The townhouse backed up to the woods, which were slated to remain as a preserved open space piece for the overall development. This was the end-unit of the 10-unit townhouse, so it would feel like a duplex, since I would only share 1 wall with my neighbor. After researching the neighborhood redevelopment plans, I saw dollar signs. This was an opportunity to get in on the ground floor of a HUGE up-and-coming part of the area, only a 10-minute drive to Downtown Fort Myers, and situated in the unincorporated part of the County, which meant lower property taxes than nearby cities, and lower water & sewer bills, too. I jumped at the opportunity!
My first house, as pictured in 2015
All was well for a while after I moved in back in April 2006. The housing market was softening, but I bought my place for $10,000 below the appraised value, so I felt like I had $10k in equity from Day 1. Unfortunately, I didn’t realize I would have less and less equity every day for the next 4 years. The overall economy in Southwest Florida is based upon two things: Tourism & Construction. Being highly-leveraged against any two industries is a precarious situation, but those two in particular are VERY cyclical and the inevitable bust came and absolutely crushed this area. By January 2008, my office had already seen such a slowdown that it became necessary to start laying off approximately 30 people at a time, from a high of 400-ish employees, so that’s 7.5% at the beginning. As the local economy took a beating, layoffs were happening all over, and people were starting to really hurt. The excesses of The Boom (HELOCs to buy fancy cars, boats, jewelry, vacations) were coming back with a vengeance, and people started losing their homes to foreclosure. Lee County Florida was #1 or #2 in the Nation for foreclosures for several years, going back and forth with Las Vegas Nevada.
Due to the pain in the economy, some people started getting desperate. Residential burglaries were on the rise, and I became a victim of a group of burglars on a Tuesday morning in August (in broad daylight). They stole my 50″ DLP TV (this was 2008, mind you), my Playstation 2 and all of the games, DVD player, sodas and alcohol, basically anything of value in my house. They put the chain-type lock on the front door and escaped out the back, leaving the back slider wide open and the A/C blasting all day, just wasting electricity on top of having robbed me blind.
I came home from work, but not until after stopping at the grocery store because it was on my way home. I pulled up and noticed something didn’t seem right, because the vertical blinds were flipped the opposite way from normal, indicating someone was trying to look out, and then I tried the front door and found the chain would not allow me entry into my own house. I dropped all of my groceries on the ground and ran to the back door, when an empty feeling in my gut… I knew something very bad had gone on inside.
I called the Sheriff’s office, and more than an hour later a dopey, young deputy arrived. He took my statement and a couple pictures, spread the fingerprinting dust all over the place and stuck clear packaging tape on anyplace he thought he saw fingerprints. Talk about a waste of time and causing another big mess!
Nothing was ever retrieved, the authorities had no leads, and I was only partly made-whole by the insurance company. Unfortunately, I had only recently increased my homeowners insurance deductible from $1,000 to $2,500 on my home that was now assessed for $47,210, so I got a check for around $8k, when I had lost over $10k in valuables (to a 25 year-old guy).
For YEARS after that break-in, which happened 10 years ago this week (8/5/2008), I would walk through my front door every day and think “what did they take this time?” even though no burglars have ever come back. I had a fright this afternoon when I walked home and saw the kitchen lights turned on, but apparently I forgot to turn them off in the morning, which I NEVER do… crisis averted.
But burglaries happen, and I’m not unique in that circumstance. The next thing to happen was my job was no longer safe, and by July 1, 2009, I was let-go from my first job. But since my degree and all of my relevant experience was in City Planning, and there were no jobs available in my field, I had to pack up and head back to the Midwest, where I at least had some hope of finding a job. I knew that I could either stay with my parents or rent a room from my sister, who had bought a house with her then-fiance just a couple months after I lost my job. But for 7 months, I searched and searched, and did not find any employer willing to hire me because they didn’t think my Florida experience was going to be very helpful for planning in Indiana or Ohio.
Then, by stroke of luck, I ran into a man I used to know through the local skating rink. He and his wife actually owned the skating rink, and I was pretty much a “rink rat” growing up, since it was a whopping 1/4 mile from my parents house, I would go there all the time. Well he was no longer the skating rink owner, but he owned a business in the neighboring town that worked on Grants administration for small communities and small companies all around the state of Indiana. He was looking for someone with a good head on their shoulders, an eye for attention to detail, and willing to help relieve some of the less-technical workload off of his plate so he could maintain quality work for his customers. The job would only pay $11/hour, but that was more than unemployment was paying me, and I had a 4-digit per month mortgage to pay on a house in Florida that I wasn’t even able to live in anymore.
Luckily, living with mom and dad wasn’t so bad, and we knew this would all be temporary. Of course temporary just means “not permanent” and neither was this job. As time went on, the Grants administration world grew very competitive, fighting over every last dollar of Stimulus money and FEMA disaster recovery money that was announced. Applications were flying in from all corners of the state, and fewer and fewer of our applications actually got funded. We worked on a commission basis, so if the projects didn’t get funded, we didn’t get paid! That doesn’t work well for very long, so my stint was up after 18 months and I found myself back in unemployment.
After a few months of searching, with no luck, I encouraged my parents to take a vacation down to Florida to check on my house, pack up a few things that I thought maybe I needed if I was going to stay in Indiana for quite a while, and just have a relaxing week in Florida as the weather started to get cooler in the Fall. I sent an email to one of my old co-workers to see if they still had their old standing lunch plans at a favorite sandwich shop on Thursdays at noon. It turns out, they did, and he was happy to hear I was in town and wanted to catch up with some of the guys. After lunch, he invited me back into the old office to say hello to everyone that remained, and I took him up on that offer, even though I was still quite upset with some people for the way it all had ended. (They accused me of day-trading and “excessive use of internet” so they could fire me instead of a lay-off).
The tour of the office was complete with the awkwardness that you could imagine after nearly 2.5 years away from the place that fired me without cause. But it was nice to see some familiar faces, and I even had one big surprise. The big boss lady (Director of the whole Department) came running out of her office with a printout of a job description and she exclaimed “Josh! Josh! You have to apply for this job!” It definitely caught me by surprise, because I never thought she liked me. Turns out, the job was pretty much the same one I had previously held at the County, but for a local small Town that we used to serve when I was working at the County. I went down to the small local government building the next day and applied on the spot, during my vacation.
I went back to Indiana, with only a glimmer of hope that this job might actually come through for me. I already knew the area, knew the Town’s Land Development Code, and knew a couple of the people I might be working with, but I knew things were still pretty tough for City Planners in the area, and there might be more-qualified people than me applying for the job. I did get a phone interview (which was nice for them to arrange, since I was 1,100 miles away), but I didn’t hear anything for more than 5 weeks after the interview. I reached out to my contact in the department, and she had a talk with the Director. He called and asked if I could come back for a second interview, which was tough to arrange since I was the aforementioned 1,100 miles away. But the call was on a Monday, and I asked him to give me Tuesday to pack, Wednesday and Thursday to drive down, and I would show up Friday afternoon for a face-to-face interview. The interview went OK, but the Director knew he had me backed into a corner, so he low-balled me an offer more than 10% lower than we had previously discussed, and I accepted the job on the spot.
For weeks before this job offer came through, I had contemplated walking away from my house and letting the credit union foreclose on me. I didn’t think there was any chance in the world of me getting another job in my field in Fort Myers, and suddenly I was back and would be working in a beach community that my family used to visit for Spring Break nearly every year since I was in 5th grade. It was only because of my house that I was even coming back to Fort Myers for that vacation to begin with, and it led me to the lunch, with led me to the job posting, which led me to the job offer. Things were starting to turn around!
…Except for the value of my home. This was late 2011, more than 5.5 years after I bought it, and the assessed value was down to $27,841. That’s all well and good when the property tax bill comes, but it’s really terrible when you paid nearly 7 times that much to buy it, and are 6-figures underwater on your mortgage. At this point, the golf course was not in playing shape for more than 6 years, and the promising development had been held up by FAA permits for the aforementioned 30-story condo towers that were directly in the flight path of the local municipal airport ALTERNATE runway. The developers eventually lost the property back to the bank for a $94 million foreclosure, and all of us neighbors were left living on an overgrown critter haven instead of a lush golf course with attendant high-end amenities that we expected.
One day a couple years later, I received a phone call from my uncle, who is a barber in Central Florida. Since he is a barber, he always has the TV turned on and he overheard a news story about a grant program that the Florida Department of Housing was offering to distressed homeowners that had not previously been eligible for the federal relief programs such as HARP and HAMP. The rules were pretty strict, but it sounded like I might be the perfect candidate, which would award me a $50,000 grant to be paid directly towards the principal on my mortgage, to help reduce my monthly mortgage payments and help me get back on my feet faster from the housing debacle. It was called the Florida Hardest Hit Fund – Principal Reduction Program. Sounds good to me, so I raced to complete my paperwork.
The terms of the program are blurry in my head, but were something along the lines of: had to have purchased before 2008, be your primary residence, had to have never had a late or missing mortgage payment, and had to make less than 140% of the area median wage. Finally, I had a reason to be thankful for being a low-paid government employee, and I could use my new Grant application skills for personal gain! As soon as the grant application window opened, I submitted my completed application on the first try, and the attorney in charge of processing the applications commended me on the excellent work I put into preparing the paperwork. There was a monetary limit of around $300M on the amount in grants that would be awarded, but the earliest applicants were going to have first crack at the upper limit of $50,000 each to be considered a $10,000 per year forgivable loan. I was awarded the full $50k, which went straight to my mortgage company. They then “recast” my loan, meaning my monthly mortgage payments went down, by nearly $350 per month! I would be saving a couple hundred a month in interest payments, but also paying less towards the principal for the rest of the loan. If I sold my house in the intervening 5 years, I would owe a pro-rated amount back to the Florida Department of Housing, $10k for each year remaining on the original 5-year window. At the time of this writing, I am 6 months away from having the full $50,000 forgiven, and then I don’t have to worry about any kind of potential claw-back of that money.
In February of 2016, which is supposed to be our DRY season in Southwest Florida, we had some heavy rains that caused a weak spot in my roof to collapse through to the floor of my spare bedroom closet. It caused quite a mess, and I hope to get a couple pictures posted below, but they are disgusting. Luckily, the Property Owners Association takes care of exterior maintenance, but I was responsible for the indoor repairs to the closet ceiling, carpet and shelving.
Since I live in Southwest Florida, every summer I have the great fear of having a hurricane or tropical storm damage my house. Unfortunately, due to its age (constructed in 1981), it does not meet the more stringent Florida Building Code standards that were enacted in the early 1990s after Hurricane Andrew decimated Homestead (Miami) in August 1992. We have really only had 1 close-call in this area since I bought in April 2006, and that was Hurricane Irma in September 2017, which set a record as the longest-lived Category 5 hurricane in Atlantic Basin history, before making landfall in the Florida Keys and taking a swipe South-to-North through the Florida peninsula. Fortunately, the track of the storm was east of my area, which meant that my community was on the “weak” side of the storm. My house was spared of the 15-foot storm surge that was predicted with a more westerly track, and the home itself faced no wind damage from the North-to-South winds on the west side of the storm. The only major loss we faced was our community apartment-style mailbox was knocked down, landing in my parking spot, had I not moved into a job in Emergency Management that required that I be stationed in an Emergency Operations Center for the duration of the storm event (and several days before and after).
The only other major debacle I have faced with this house is a recurring infestation of bees! Over 10,000 bees have been found in my attic on multiple occasions over the past 12 years. We have tried multiple “professionals” to try and fix the problem; everything from beekeepers, to pest control and exterminators, but apparently they never get the Queen, and the worker bees always come back. I went up into the attic one time to find the hive had become a swirling vortex of bees, tucked up into the soffit and measuring at least 8 feet long! This is not going to be an easy problem to fix, and it is still ongoing at this time.
For all of the reasons listed through this rambling story, between all of the things that can go wrong, and even the things that went right because my journey through life prepared me for future steps, I still consider this the worst investment of my life. I paid $175,000 for this 1,260 square foot townhouse (1,180 under air conditioning), and Zillow says it is worth $128,082 today. So I have lived in this house for the better part of 12.5 years (for this purpose I am including the 2.5 years I moved back to Indiana but was still making mortgage payments), was GIVEN $50,000 (which technically brings my purchase price down to $125,000), and I have BARELY BROKEN EVEN in 1.25 decades of home ownership! This stuff is not for the faint of heart, or for uninformed young investors looking to make a quick buck.
Things appear to be looking up again, with a new developer involved with the golf course/marina project from 12 years ago. This time, the plans call for the woods behind my house to be removed and the golf course re-configured to bring the golf course right behind my house. Instead of being across the street from the golf course, my house will be on Hole #1, near the tee box of Hole #2. The project is planned to have a 543-room hotel, 1,200 multi-family units (800 in two 20-story condos), the marina will expand to 200 wet slips and 200 dry slips, 55,000 sq. ft. of office, ~25,000 sq. ft. each of retail and restaurant, a spa facility, and more! I think this will finally bring the property value back to what I had planned before I purchased my home, as developers will be looking to buy some of these older properties and redevelop them for luxury homes on the revamped golf course. They are still in the planning phase, waiting for a zoning hearing to make this redevelopment possible. Then come the permits and literally years of construction, but I can’t wait!
Ever since J. Money used to write about his “Challenge Everything” mindset/challenge/fund a few years ago, I have been meaning to do something similar and cut out all sorts of frivolous/wasteful spending in my life. But since I’m the ultimate lazy, single dude, I have definitely not completed that task yet. I did take away from his series that small amounts of money really add up! Sometimes that money comes in the form of unexpected sums from an insurance rebate, found money on the ground, selling a few items that are just sitting around your house, or in many Millennials’ cases, a side hustle.
Confession: Starting on January 1, 2016, I began tracking every penny, nickel, dime, quarter, and dollar that came into my life from every source OUTSIDE of my day-job paycheck. The results have blown my freaking mind!
First, the amount of money that must have passed through my hands, without “knowing it” in past years would have added up to a tidy sum. In 2016, my first year of tracking this, the total amount was over $17,000!! In 2017, that number ballooned to OVER $33,000!! So far in 2018 (7 months, more or less), I’m sitting at over $13,700, and I’ve cut WAAAAAY back on my side hustle.
Secondly, knowing that it has come into my life gives me a reason to put a purpose to where it goes. In the past, any extra money had a habit of disappearing on a new video game, DVD, some other technology, or one year I went back and tallied up nearly $3,600 in golf course greens fees <– same year, I put $0 in either my Roth or Traditional IRA. YIKES! Now I actually realize that I was paid back $3,430.97 in travel reimbursement/per diem for work travel in 2016, so I can apply those funds towards my IRA (I mean, that’s what I DID in 2016, and I maxed it out!)
Third, I don’t take any of this money for granted. When money is easy-come, easy-go (You’re welcome for planting Bohemian Rhapsody into your head), it’s very easy to think that another unexpected windfall is just around the corner to bail you out of a stupid spending decision. Now I have the empirical evidence to show me that this money has come into my life, and I better have something to show for it, or at least a very cool memory and story to tell!
I think at this point, I should just post a chart to show all of the money that has come into my life (again, outside of my day job paycheck) over the past 31 months:
The amounts that stick out the most both came in 2017. First, I spent a lot of time concentrating on my Uber side hustle in 2017, because in August 2017 I bought my new-to-me Toyota Camry Hybrid, and I wanted to pay that sucker off as quickly as possible. In all, it took me 86 days to kill the car loan. The second (and larger) big spike was from selling nearly $10,000 of physical silver bullion that I had purchased over the years of 2012-2016, all the while the spot price of silver was falling, from around $35 down to under $14 per ounce.
Interesting or odd payments that fell into the Miscellaneous category:
$31.74 – My one and only paid blog article in 2016 (after PayPal fees)
$41 – total of 3 secret shopper tasks I completed.
$25 as a gift from a total stranger that I helped to save Christmas for her husband. Backstory, she lived in Colorado, but was purchasing a puppy for her husband as a Christmas gift. Unfortunately, the puppy was born in Indiana, so she was paying the breeder for the purchase and transport (airline) cost of getting the puppy to her in Colorado – or so she thought. Apparently, there’s more than just 1 Josh Overmyer, and his email address has some numbers mixed in with his name. Well my email doesn’t have those numbers, so when she sent me over $1,300 for a puppy that I had no idea I had 😉 I politely declined the PayPal payment, and sought to help her figure out what was going on, how to get the money refunded to her checking account, and overall just being a totally good guy, like I was raised to be in the Hoosier Hospitality state of Indiana. She was so thankful that I wasn’t an opportunist and ran off with her money, she sent me an unsolicited $25 as a thanks. This may be the best $25 I ever received… you don’t really expect people to appreciate you for just doing the right thing.
$41.05 – I received a $20 free play certificate from a local casino, and I put that voucher into the slot machine and punched a button for about 15 minutes, then cashed out my winnings of a whopping 205% hehe
$21.75 for selling old DVDs online.
Nearly $100 in iBotta rebates before I quit using the app.
And my bank bonuses and Tradelines payments round out the more exciting random money amounts of the past couple years. Bank account interest payments, though, have not added much to the bottom line ($147 or an average of less than $5/month).
Lending club withdrawals include both principal repayment and interest that I collected on my 366 loans.
Overall, I think this exercise was a major success, and I plan to continue tracking these sources of extra windfalls in my life, no matter how big or small.
Despite making more money at my (new) day job than I’ve ever made before in my career, I am constantly looking for other ways to add to my banking and investment accounts. This post will cover two that are easy and relatively lucrative!
Bank Account Bonuses
Every once in a while, I receive fliers in the mail that are basically advertisements for banks trying to get me to open up a new checking or savings account with them. Until the past couple years, I would toss those straight into the trash, because I already had a free checking account, had been with my then-bank for 10+ years, and didn’t want to cause any extra work for myself in keeping track of multiple bank accounts across various banking institutions, credit unions, etc.
But as part of my growing travel-hacking knowledge base, I became familiar with Doctor of Credit, which also maintains a list of bank account bonuses that are available at any given time. This list opened up a world of *free* income to me, as long as I could read the fine print and comply with all of the listed requirements.
So what type of requirements does a bank spell out in order to get the bonus? Sometimes you have to set up Direct Deposit and receive a couple deposits from your employer or a certain amount of deposits such as $500. Other bonuses require a minimum number of debit card purchases/swipes, and I’ve been known to make 5 minor transactions in quick succession to meet the minimum requirement (pack of gum, 1 gallon of gas, a bottled beverage, etc). One bonus I am currently working on achieving requires either a direct deposit OR $2,500 minimum balance, 1 debit card purchase, 1 bill-pay of a recurring bill, AND a mobile check deposit. I will receive a $250 bonus for doing each of those 4 things! The one I received most recently was for setting up a Business Checking Account, for my Uber business, duh! 😉 This offer required a $1,500 minimum daily balance for 60 days, and a combination of 5 debit card transactions and/or ACH deposit/payments. I did 5+ of both, just to be sure! Free $300 in my account just the other day, which is basically a 20% return in 60 days for the $1,500 I parked there for a couple months.
So why do banks offer these bonuses? First, they think most people aren’t going to follow-through with all of the requirements, so they won’t have to honor the bonus. Second, they get you used to using the account for debit purchases, direct deposits and bill-pay, so they think inertia will work against the consumer and they will stay-put. Thirdly, many checking and savings accounts have monthly fees, but there are *almost always* a way to have the monthly fees waived, which usually requires a minimum balance of $1,500 in a checking account or up to $15,000 in a savings account, to remain fee-free. But I think that if I can figure out how to switch my behaviors TO this new account, I can just as easily switch FROM the account.
If you decide to proceed with going after these bank account bonuses, the best thing I can tell you is to read the terms and conditions carefully, keep a copy of those terms, and make sure you meet them within the specified amount of time. The next best thing I can tell you is that these bonuses ARE TAXABLE INCOME and will be reported to the IRS on a 1099-INT form. But I have earned $1,350 so far this year from bank account sign-up bonuses, and that’s almost 2 whole mortgage payments ($680/month) for me, so this is not an insignificant sum in my budget. And finally, beware that many of the accounts have language that the account must remain open and with a positive balance for 6 or 9 months, or the bonus will be clawed-back upon closure.
Tradelines
This next topic is a lot scarier to many people, and I spent a lot of time trying to wrap my head around it before ultimately giving it a try last December. I want to caution you, dear reader, that this is something I tried, did successfully for about 5 months, then stopped participating because I had one of my oldest credit accounts shut down without warning.
Tradelines are basically any contract you have with a banking institution for a consumer line of credit. AKA a credit card. You have a contract in place to borrow up to a certain limit, with payback terms, including interest payments per the agreed-upon terms. These tradelines are reported to the credit bureaus, and they are what make up your credit report.
So how does one make money with Tradelines? You basically “rent” access to them! There are companies out there who need a supply of tradelines to sell as inventory to borrowers with poor credit who need a temporary bump in their credit score to apply for a home or car loan of their own. The process is to add the person as an “Authorized User” on your long-standing, excellent credit account, thereby having your credit card tradeline report to the borrower’s credit report for a few months. The borrower NEVER gets any information about you, and they never receive an Authorized User card – the card (if issued at all) will be sent to you.
It generally only took me about a minute to log into my online accounts with a given credit card, click “add authorized user”, type in their personal information (first/last name, address, email address, sometimes SSN) and they would begin to receive a credit score boost within a month. At the end of 2-3 months, I would usually need to make a phone call (2-10 minutes depending on how much hold-time) to remove the authorized user. The telephone agent will ask if you can get the card back from the user (which you can do, because you’re still holding onto the card in the first place), and you tell them yes. Then you destroy the card! And you get paid anywhere from $50-75 for cards that have been open 2-5 years, and can earn quite a bit more for older cards and/or higher credit limit cards.
So why did I stop? As I mentioned before, I had one of my oldest credit cards shut down by Discover. I opened the card in 2012, because I liked the idea of 5% cashback on rotating quarterly categories. Discover actually had one of the easiest processes to add AND remove Authorized Users, so I thought things were going along really well… that is, until I tried to remove my 4th and add my 5th Authorized Users on the same day. I think that must’ve raised red flags at Discover, because my online request was denied and I had to make a phone call. “No problem,” I thought… “Discover has excellent, US-based phone agents.” I was able to talk to an agent and get the request approved. But then, a month or so later, without any digital or mailed communication, my DiscoverMore Card was shut down.
In all, I “rented” out my good credit (score over 800 on all of my recent credit card applications and using all of the free tracking apps) on 17 occasions. This earned me a total of $1,125 in 5 months, and I probably only spent a total of 2 hours online to add, and on the phone to remove, the authorized users. But after my Discover shutdown, I didn’t want to risk having the same thing happen with Chase (my beloved travel hacking cards issuer), so I stopped participating in the program.
The Wealthy Accountant has a good write-up about Tradelines, with more details than I have provided. Check out his post if you want to learn more.
Hey reader! Overall, my home ownership story has been a truly awful experience that I wouldn’t wish upon anyone… but these days, I am finally seeing some light at the end of the tunnel.
My first house
Quick recap: Bought a 1,180 square foot townhouse in Southwest Florida in April 2006, for $175,000. My mortgage is through a credit union, and they only required a 3% down-payment for First Time home-buyers like me. That sounds like a good way to get people into their own homes for the first time, but very few people predicted what happened to the housing market. This was especially true in my area, which led the nation in foreclosures for years after the bubble burst.
Long story short, my home dropped in value by well over 50%. According to my assessed values, my house dropped from somewhere in the 100s down to a low of 27,430. While that was good for my tax bill (see below for past 10 years of property tax bills), I worked for local government at that time, and when local government isn’t collecting as much money in taxes, they make staffing cuts, and I quickly found myself with an underwater mortgage AND no job.
So where am I now? A couple months ago, I passed the 12-year mark since I bought my first home. The recovery from the great recession has been slow, especially since Real Estate Rule #1 “Location, Location, Location” hurt me when the golf course that my property is located within went kaput! If you clicked the link above about foreclosures, you will see my neighborhood at the 1:15 mark. There are plans being considered by the County to permit a luxury development and revamp of the golf course, which should make my property worth considerably more in the next few years, but for the purposes of this post, I will stick with current Zillow value: $126,519
Twelve years of paying mortgage payments, and my house is worth $48,481 less than when I bought it. But I also had the good fortune to know about a grant program for distressed homeowners, such as myself a few years back, and I was awarded $50,000 towards my mortgage principal, which effectively makes my net purchase price $125,000. That 50k grant was actually a 5-year forgiveable loan, in $10k increments, so at the time of this writing, I actually still “owe” $10k on that grant, should I sell and walk away anytime between now and February 2019. For that reason, I will consider my purchase price $135,000 ($175k – 4x $10k)
Doing this math, I have zero equity. I am $8,481 in the hole.
Counting all of the mortgage payments I’ve made over 12 years, I currently owe $80,376 on the mortgage. Subtracting this from the Zillow value, I own $46,143 worth of house. Based on its current Zillow value, I own 36.5% of my house. That’s 430.7 square feet, or the approximate size of my master bedroom, living room and the half-bath downstairs. But I don’t yet own my master bathroom, nor the stairs to get up to my bedroom and guest bathroom. The kitchen, laundry room and dining room still belong to the credit union, too!
$48,481 isn’t a lot of progress in 12 years. Just over $4,000 per year or a little more than $336 per month.
I’m not really a proponent of paying off the mortgage early, if you have a low fixed-rate mortgage or an adjustable rate mortgage (like me) that is still sitting on the floor of the possible rates I could be charged. I’m glad my adjustable rate was low during the high balance years, so now I’m better able to withstand a rate increase without hurting my bottom line too much. If my rate goes up beyond 5%, I’ll start paying down my balance with more gusto, and above 6% I’ll discontinue putting money into my taxable brokerage to kill off the debt beast. Fortunately, my mortgage balance is now down to around $80k, so any interest rate increases won’t hurt me as badly as someone carrying hundreds of thousands of adjustable rate mortgage debt.
Thanks to Ty from CampFIREFinance for the feature on July 13! Check out more of the best from the web on his site, which features 3 posts daily.
Hello reader! As I began typing this post, I was sitting on an Amtrak train on the Coast Starlight route, from Los Angeles, California to Seattle, Washington. The trip took 34 hours, and included magnificent sights including the Pacific Ocean, Silicon Valley, and Mt. Rainier.
The trip was possible because I had scheduled 15 days of “Funemployment” between jobs. I needed to turn in my work vehicle and all of my work materials and computer equipment when I left employment with the State of Florida. But since I live in Southwest Florida, and the State Capitol is in Tallahassee (in the Panhandle), I started my trip with a 400-mile drive to Tallahassee for one last work day.
Day 2, in the morning I turned in my stuff and said goodbyes. In the afternoon, I took an Uber to the Tallahassee airport, and then I flew to Atlanta, Georgia, which is a hub for a large portion of trips to/from the Southeast US. I booked the flight on Delta, using 32,000 Delta Skymiles I had accumulated over the years, mostly from a 30,000 Skymiles offer on the Gold Delta Skymiles credit card from American Express a couple years ago. Don’t be like me, wait for a 60,000 or 70,000 point offer before you sign up for this card. American Express cards are usually only available once per “lifetime”.
While in Atlanta, I was able to use my Priority Pass Select membership (free with my Chase Sapphire Reserve credit card) to spend a free hour in the Minute Suites in Terminal B at Atlanta Hartsfield-Jackson International Airport. It was nice to unwind a bit, kick my shoes off, and have room to spread out, without having to keep a vigilant eye on my luggage.
From Atlanta, I could arrive in just about any major city in the US, so I caught a cheap flight on Southwest for only $130. I had a voucher for $51 from finding a fare reduction on a previous business trip, so I only had to pay $79 out of pocket. I have developed the habit of arriving early and asking the gate agent if there are any available seats on the plane, and this time there were 32 empty seats. So my next question for the agent is to see if I can get an extra seat and pre-boarding due to my height and large frame. This has worked on each of my last 6 flights with Southwest. This way, I’m able to raise the armrest between the two seats and sit diagonally to gain some extra legroom.
I arrived at LAX and caught a quick Uber to my hotel a couple miles away. I had initially booked 5 nights of lodging at 3 different hotels in the Los Angeles area, but when I left a Facebook message for my cousins living in the Anaheim/Buena Park area that I was flying in that night, they reached out to me to have me cancel my stays and sleep in their guest bedroom. One night at the Holiday Inn LAX ran me 30,000 IHG points (and I got 2,000 back from an Accelerate promo), earned from the Chase IHG credit card last fall (100,000 point offer for $2,000 spend in 90 days), and I was able to check-out early and recoup the points that would have been spent for my second night stay. I was able to cancel my 4th & 5th nights stay easily and got the points refunded, but unfortunately I changed my plans too late for the cancellation window on my 3rd night stay at the Hotel MdR – a DoubleTree Hotel in Marina del Rey. I used 50,000 Hilton Honors points, and since I couldn’t get them refunded, I went ahead and borrowed my cousin’s car (she had left on a trip to Ohio the night prior) and I went exploring in that area, and went ahead and stayed in the hotel, since the points had been spent, anyway.
On Day 4, I set out to adventure with my counsin’s car. From Buena Park, I drove to the Santa Monica Pier, then went on the Pacific Coast Highway to Malibu, turned around and came back towards Hollywood via Sunset Boulevard to the UCLA campus, and on to Rodeo Drive before driving back to Marina del Rey to beat the evening rush hour. After checking in, I walked about 2 miles to Venice Beach and grabbed an early supper at Cabo Cantina, to munch on some chips & salsa and a quesadilla, while sipping a margarita and watching the Cavs-Raptors Game 2. I walked back to the hotel and spent the majority of the evening relaxing poolside and called my parents to fill them in on my trip so far.
Day 5, after checking out of the hotel and grabbing the breakfast buffet (should have been a $4 upcharge from the complimentary continental breakfast I receive for my Gold status at Hilton properties, but the waiter was gracious to upgrade me for free), I drove back to Buena Park and went golfing with my cousin’s husband. We played “Dad Miller Golf CLub” which is where Tiger Woods played when he was in high school. Apparently the guy named Dad Miller was a 93 year-old golfer who hit a hole-in-one on the 11th hole, and they named the course after him! I hadn’t really planned on golfing during this trip, so I didn’t have my normal golf clothes, shoes, hat, glove, golfballs, or golf clubs(!) so I played in a too-heavy shirt, tennis shoes, no hat, and with borrowed clubs, on a club I’d never heard of before that morning, so I was fairly pleased with my 93 I carded that day. My playing partner shot 108 and he’s a member, so I felt decent about the round, given all of those limiting factors.
That evening, I went to a school carnival at my little cousins’ elementary school. They are finishing up 1st and 6th grades, so they were excited to show off their school projects from the whole year to their parents and their unexpected-visitor/cousin from Florida 🙂
Day 6 happened to be Cinco de Mayo, and being in Southern California, I knew there’d be a party! This time, my other cousin hosted a bunch of us at her (very nice) house with a pool in the backyard. All of my little cousins were jumping onto and playing with their “Cous-uncle Josh” because I’m the age of their uncles, but I’m officially their cousin (2nd cousin, once removed?). I got way too much sun, and had way too much fun. Ate way too much chips & salsa and had a few adult beverages to wash it all down.
Day 7, before heading to Union Station, my golf buddy (cousin’s hubby) took me to see Huntington Beach, where the AVP was hosting the annual Huntington Beach Open beach volleyball tournament. Action had not yet started for the day, but it was cool to see it up-close, since I’ve seen it on TV several times in the past. Upon arriving downtown at Union Station, I checked in to get my seat assignment and grabbed a handful of snacks for the train. I found my train platform and fairly quickly found my seat (and the empty one next to me, which I definitely will not complain about!). I booked this train trip (LA–>Seattle) on the Amtrak website for $122 cash out of pocket. I went with a regular coach seat, knowing that there is ample legroom and wider-than-airline seats, 120v outlets, and it’s possible to get up and explore the train (dining car, observation car with floor-to-ceiling windows, and a café lounge car that operates like a mini 7-Eleven onboard the train). We got delayed by more than an hour in the Oakland area, and have been gradually losing more time between stops. But this caused us to be near Mt. Shasta as the sun was rising, and I got to see some cool sights that would normally have been passed by during the dark.
Around 9pm on Day 8, I arrived in Seattle, and checked in at the Grand Hyatt Seattle for two nights, with a list price of $548/night. I paid 15,000 Hyatt points per night instead, which I earned from the 40,000 point sign-up bonus on the Chase Hyatt credit card (plus a 5,000 point bonus for adding an Authorized User when I opened the card). I can’t believe I got nearly $1,100 in value out of that Hyatt card signup bonus, with another 15,000 points remaining that I used for Day 11 in Boston.
On Day 9, I purchased the CityPass for $89, which includes admission to 5 top destinations, including the Space Needle, Chihuly Museum & Gardens, Museum of Pop culture, Seattle Aquarium, and the Argosy Harbor Cruise (the 5 options I chose; you can opt for a different museum in place of Chihuly and #MoPop), and these are valued at over $160. I woke up to a perfect weather day, sunny and in the upper 50s. Working through the list of suggestions from friends and locals I had tapped via Twitter (Shoutouts to @CeceMcKiernan, my friend Kelli @FloodGeek101, Angela from @TreadLightly_RE, and Ty Roberts from @CampFIREfinance, along with some Twitterless peeps), I started out in search of breakfast at Biscuit Bitch. These Bitches are very popular, and there was a line out the door for people to get their hands on some scrumptious fixin’s and coffee. I Tweeted to the OG Bitches (@bitchesgetrich) that I found their Mothership!
Moving on from there, I walked 2 blocks to Pike Place Market, which was full of merchants getting set up for the day. I walked around for a bit and checked out the GumWall, which might be cool to some people, but I’ve seen more gum on one wall at a loose-meat sandwich shoppe in Greenville, Ohio (Shoutout to Maid-Rites). From there, I walked through Belltown to check out the Space Needle in Seattle Center. The Space Needle is undergoing a “Spacelift” (facelift) right now, so my views were partially obstructed by construction workers and ongoing construction, but it was such an amazing view. Mt. Rainier stands so much higher than, and closer to, Seattle than I expected! With the morning’s marine mist still showing up, the peak of Mt. Rainier looked like a perfectly-painted mountain from a Bob Ross painting, sticking its head above the clouds.
After Space Needle, I checked out the Chihuly Museum and Gardens, which were impressive, but I had already seen a large collection of Chihuly works at the Morean Museum in St. Petersburg, Florida. I also went to the Museum of Pop Culture, but felt underwhelmed by it Last on the agenda for sight-seeing was a one-hour harbor cruise around the Elliott Bay, which was full of opportunity to take more pictures of the Seattle skyline and enjoy the nice sunny day. The onboard bar didn’t hurt, either!
As cool as those sights were, the highlight of my day came later, around Happy Hour, when I met up with a fellow Personal Finance blogger for the first time. Ty Roberts had a meeting downtown, and met me for a beer at Yard House. Honestly, this was the first time I’ve ever been able to talk to someone In Real Life about FI, FIRE, blogging, and this PF community that I honest-to-goodness LOVE. Ty was so easy to talk to, encouraging, and I just had the most amazing chat with him. I can’t wait to experience more of that at FinCon in Orlando this September!
Day 10, I wanted to check out more sights that were recommended to me, so I walked to Pier 51 to catch the Ferry to Bainbridge Island for $8.35 (round-trip).
The ride over & back were the most enjoyable part for me, because I arrived so early in the morning that most, if not all, of the local shops had not opened for the day (around 10-10:30AM). In fact, I hopped back on the return ferry by 10:25 and made it back to Seattle by 11. After that, I used up the last ticket in my CityPass to check out the Seattle Aquarium just a few piers away. In the early afternoon, I went back to the hotel to shower up and pack my bag so I could check out of the hotel room by 2pm (late checkout granted for my World of Hyatt Discoverist status). I left my bag with the front desk, and took the Link over to the University of Washington campus to check it out.
After walking around campus for about an hour, I went back to the hotel, grabbed my bag, and took the Link to the Seattle-Tacoma International Airport. Arriving at the airport 7 hours before my flight was not ideal, but I was able to once again use my Priority Pass Select to gain entry to an airport lounge with free snacks and beverages. The Priority Pass app shows 5 lounges that we are supposedly able to access, but the Alaska Airlines lounges had signs at the entrance that said they were not accepting Priority Pass holders that day. So I walked up and down every terminal (C, D, B and then A) except N & S, and counted at least 10 airport lounges in that airport. I finally gained access to The CLUB at SEA where I spent a couple hours charging my devices, listening to a podcast, called my grandma (awww) and took advantage of somde free snacks.
At the end of Day 10, at one minute until midnight(!) I flew on a JetBlue flight in Mint class (first class with a lay-flat seat) to Boston. I booked the flight using JetBlue TrueBlue points, only 33,700 points, when that class was listed on other flights the same day for 70,000-110,000 points). I figured for my first-ever Red-Eye flight, it was a good idea to trade-up for some comfort, and I really wanted to check out Mint, anyway.
Arriving in Boston on Day 11, I will use some additional Hyatt points (15,000/night) at the Hyatt Regency Boston in downtown. Unfortunately I was about 1900 points shy of having the 15,000 needed for my second night, so I transferred 2,000 Chase Ultimate Rewards Points at a 1:1 transfer ratio to Hyatt from my accumulated Chase points (reminder: I have Chase Sapphire Reserve, Freedom and Freedom Unlimited, and I transfer all of my rewards to my Sapphire Reserve points balance to allow the points transfers to Chase’s travel partners). I was pretty exhausted from the overnight travel, but I did manage to walk 2+ miles to Fenway Park to take the tour of a sports and cultural icon, with some amazing views of the city.
Day 12, having caught up on sleep, I set out for a day of exploring. I had previously visited Boston in 2003, on a family trip before I turned 21, so I knew I had to stop at Cheers and have an adult beverage. I checked out the Freedom Trail and walked over to Bunker Hill and the USS Constitution. I also killed at least an hour watching various street performers in the Quincy Market area. I explored Chinatown a little bit and grabbed a local hard cider to go along with my dinner.
Day 13, I took the Silver Line MBTA bus to Boston-Logan International airport for $2.75 instead of the $23 and change that I paid a (terrible) Uber drive on Day 11 morning when I arrived in Boston. For my return flight to Southwest Florida (RSW airport), I used 8,600 TrueBlue points from JetBlue. I had these points plus the Day 10 red-eye flight points from the Barclays JetBlue Plus card, which came with a 40,000 point bonus for spending only $1,000 in 90 days. I forgot that the card also gives me a 10% refund on award redemptions, so I ended up getting over 4,000 TrueBlue points back into my account (over $80 worth at 2c a piece).
So I share this whole story to say that I went overboard on a 13 day trip to celebrate the end of my previous job. I worked in a position that was effectively a full-time temp for almost 3.5 years. Due to this work status, I did not have any paid holidays or vacation time in that time, so I had this pent-up urge to hit the road, skies and rails to see more of this magnificent country. I could probably do without the overwhelming scent of weed/pot in the various cities/states I visited, but that only minimally reduced my enjoyment of these fine places. I’m excited to be moving into a position where I will be earning a standard 2 weeks of vacation and 11 paid holidays to help me get back on the road moving forward. I’m glad I had the opportunity to bank all of these various points so I could use them in this blowout trip around the US. Many in the travel-hacking community chirp the mantra of “earn and burn” or “churn and burn,” because there are constant devaluations occurring in the many points & miles programs. But for someone like me, there were zero opportunities to use the points/miles over the past 3 years (except for a few quick trips “home” to Indiana for the holidays) so the points were worthless to me until I could actually use them. And it was SOOO worth it once I could actually use them on a trip that will be in my memory bank until the day I die.
Can you believe that 2018 is already half over? It’s been a really busy year for me so far (details below), so time has just been flying by! I started this blog on January 5th 2018 with a post about writing down goals so you can track them, and I figured 6 months later it was time to follow up on my progress. So here they are again, with individual updates below:
lose weight, obv
achieve 1/4m NW
draw down my travel miles/points through actual travel, not point expiration
give up unhealthy/unproductive habits (especially driving for Uber)
actively meet new & interesting people (Hello #FinCon18)
begin a creative pursuit
1. I do not have good progress to report on this one. I actually have no idea what my starting point was for 2018 (bonehead move, Josh). But I recently started a new job that provided an opportunity for a Health Reimbursement Account (up to $500/yr in tax-free money to spend on health-related costs), but I had to go through a health assessment and have blood work done to set a baseline. I weighed in at a whopping 365.8 lbs. That’s 40 pounds more than Vince Wilfork and 30 pounds more than William “Refrigerator” Perry. So obviously this has sparked a renewed vigor in my daily actions to try and move the needle downward and make my weight loss goals to achieve that free $500. Wish me luck!
2. I have made progress this year on my net worth goal of $250,000, but in the past month it seems to be disappearing. I reached $245k in late May, but sit around $235k right now. Main culprit appears to be that Zillow has dropped my house value by $11k in the past 2 months. I also missed a few weeks of getting paid while I was between jobs.
3. Speaking of being between jobs; I was able to draw-down some of my travel points balances on a 13-day trip around the US from April 30-May 12. I had to turn in my work vehicle and computer equipment to headquarters in Tallahassee, so I decided to start my “Freedom trip” and used various points/miles from Delta, IHG, Hilton Honors, Hyatt, and JetBlue. I spent less than $217 out of pocket for a trip to Tallahassee, Atlanta, Los Angeles, Seattle (by train), Boston, and back home to Fort Myers, FL. Across those 5 programs, I spent a total of 206,940 points/miles, keeping in mind that not all points and miles are valued the same. I estimated a total cost savings of $3,596 by using points & miles. And I still maintain almost 700,000 across various programs for future travel!
4. After writing a 3-part series on the ups and downs of driving Uber as a side hustle, I picked up the habit again. I did it, in part, because Spring Break is the busiest time of year here in Southwest Florida, and also because I knew I had the job change coming up and needed to stash some extra cash to help ease that transition. I’m happy to say I’m now done with Uber (caveat: I turn on the app during my ~1 hour commute, each way, which earns me enough to cover my fuel expenses).
5. I’m still super stoked for #FinCon18 but I have been trying to meet new people in other settings, as well. I recently had the opportunity to attend a national conference of the Association of State Floodplain Managers (yes, I’m a total geek), and I gave a presentation on a one-of-a-kind project I worked on for the past 3.5 years. Having that platform, while slightly terrifying, provided an opening for me to share how much I love being an expert in my field and that I relish in the opportunity to help others. I had people from all over the country come up to me throughout the rest of the conference and try to pick my brain or otherwise engage in conversations about their own programs. It was such a great week, even though it was Phoenix, in June!! I’m also getting ready to attend the annual ESRI User Conference in San Diego on July 9-13. I have never been to this conference before, so it will be eye-opening and another opportunity to meet complete strangers.
6. Creative pursuit!! As you can now see, I have migrated this simple WordPress-hosted blog onto my own domain! www.joshovermyer.com belongs to me for the next 10 years, and I just paid to migrate it to a business page on WordPress for the next 2 years, so I am going to have to put some more effort in over here now. I should have the extra time, now that I’m done with Uber (again, for emphasis). I also still have some amazing creative ideas for items to bring to FinCon, so I will need to explore ways to make those ideas in my head become a reality. If anyone wants to help me make my sparks of creativity become actual things, I would love to talk to you about them.
On the evening of January 5th, 2018, I posted this Tweet and it generated higher-than average interest, including a request for a blog post to explain what all of this means:
So, due to a request from Penny at ShePicksUpPennies.com, I’m writing this post on my re-launched blog to help explain what all of this is about, and why I would introduce so much additional hassle into my everyday transactions.
SportClips is my go-to place when I need to get a professional-looking haircut. Sometimes I cut my own. As the name implies, SportClips allows the customers to watch sports while getting their haircut, so their clientele is majority male. They continue the sports theme with their pricing scheme, a standard haircut is the Varsity, while kids are Junior Varsity. The MVP treatment includes the Varsity haircut, plus a relaxing shampoo in a massage chair, and a neck and shoulder massage with a hand-held massage tool.
J.P Morgan Chase (Chase) is my favorite banking institution, but it has very little to do with their brick and mortar locations or their banking procedures. Chase issues some of the most-rewarding consumer credit cards, with their Chase Sapphire and Chase Freedom “families” of cards. The rewards earned with Chase Sapphire (Preferred or Reserve) cards are called Ultimate Rewards, and those points are able to be transferred to nearly a dozen travel partner airlines and hotels. Chase Freedom and Chase Freedom Unlimited only earn “cash-back” value, but if you have a Chase Sapphire Preferred (CSP) or Chase Sapphire Reserve (CSR), you can transfer that “cash-back value” into Ultimate Rewards, and then the points can be transferred to airline and hotel partner programs.
Chase Freedom Unlimited is easy to understand; all purchases earn 1.5c per dollar spent, on every purchase with no limits on the cash-back bonus. Chase Freedom earns 1c per dollar spent, with the exception of a specific category that changes each quarter. Those quarterly categories are worth 5c cash-back, up to a maximum of $1500 per quarter, which means $75 cash-back can be earned each quarter with the Freedom card.
CSP and CSR have access to the Chase Ultimate Rewards travel portal, where the cardholder can book travel directly through Chase, just like they might from other OTA sites like Expedia or Priceline. CSP provides a value of 1.25c per Ultimate Reward point (URs) when booking travel through the travel portal. CSR provides 1.5c per UR in value.
Getting back to the Tweet in question, I used my Chase Freedom card to earn 5% back in the first quarter of 2018 by making the purchases via a mobile wallet (AndroidPay in this case). All of the various mobile wallets work for this category, including ApplePay, SamsungPay, AndroidPay and Chase’s own ChasePay. I just received an email this week that AndroidPay is being changed to GooglePay in the coming weeks. By transferring the 5% cashback value earned on my Chase Freedom card to my CSR (remember, 1.5x value), I effectively turned that 5% category into a 7.5% category for the MVP haircut on Jan 5th. For the $23 haircut and $5 tip ($28 total), I earned $1.96 in value. This compares favorably against a 2% cashback card ($0.52 that I would have earned).
Rounding out the Tweet, I frequently use different credit cards to purchase gift cards at grocery stores, Best Buy or Walmart to maximize limited-time offers such as 10% cashback for purchases with ChasePay in December for holiday shopping at Best Buy and Walmart (2 separate offers). Now I am sitting on a hoard of gift cards to restaurants, gas stations, Walmart, Starbucks and Lowe’s. I decided to pick some gift cards out of the drawer and enjoy a meal at Chili’s and a hot beverage (Caramel Apple Spice) at Starbucks without spending any additional dollars on my credit cards.
With one of those 10x offers at Best Buy, I bought $300 in gift cards, earned 10c back per dollar spent, and then transferred that cash-back value to my CSR for 1.5x additional value towards travel. Therefore, I earned $30 x 1.5 = $45 in travel for purchasing $300 in gift cards for future purchases that I will use throughout the upcoming year. 15% back for just knowing how to do it, where and when = win! 🙂
There comes a time in every new investor’s life when they become disenchanted by the “boring” returns of blue-chip stocks and government bonds. Sure, those are known for modest growth potential and steady dividend payments (income), but they are boring! They are what your grandpa invests in! I want to do something cool, and get rich quick!!
Enter Penny Stocks.
Penny stocks have an air of mystery about them. As the name implies, these are companies whose share prices trade in the pennies or fractions of pennies, compared to one share of Apple which is now $215 per share or Amazon which is $1900+. That’s a pretty high barrier to entry for a novice investor. The problem is, buying just a few shares of a no-name company doesn’t get you anywhere, so the novice will still throw a good chunk of change at a penny stock and wind up with thousands of shares of these companies.
I had a couple modest successes with penny stocks, and some utter failures! One company that you might remember seeing on TV commercials and sponsoring your favorite sports team (they literally had ads on hockey rinks, baseball stadiums, and agreements with several NFL teams) was “SpongeTech”. This was an innovative idea, where you would buy a normal-looking sponge for your household or automotive cleaning needs, but the soapy stuff was already inside the sponge! As they say – just add water! Well the idea may have seemed real, but the company wasn’t. I initially bought shares around 4.3c each, about 12 thousand shares for $500. Then the price dropped to around 3.5 cents a share, so I doubled down. Now I’m holding about 25 thousand shares of this “company” with a cool product, and with major endorsement deals all around pro sports. I was going to ride this rocketship “to the moon” (which is something all Penny stocks are supposedly going to do…)
The stock eventually took off. 3-4 cents suddenly became 7 cents. Then 12. Around 15cents per share I started selling some of my shares, to recoup my initial investment. But this thing just kept going and going, so I threw all of my money back into SPNG and was hoping to swing for the fences. I was going to place a limit sell order for 25c per share on a big lot of my holdings, and one day during my lunch hour it breezed past 25 and was at 27 cents per share! I had a public hearing that afternoon, so I wasn’t able to keep tabs on the action, but I had an excitement inside me to see if we would hit 30 cents per share by the time the hearing was over.
And that’s when my first major penny stock went bust. I entered my meeting at 27 cents per share (and holding about $15k in stock of a worthless company), and I left the meeting with about $4k in stock, in said worthless company. My heart sank, I had a lump in my throat, all of the cliche things that mean someone is having a bad day, happened to me that afternoon. I was freaking out! I *lost* $11,000 in one 2-hour meeting. And the stock would continue to bounce around, trailing ever lower as time went on. It turns out the CEO was a fraud, constantly offering up more shares, diluting existing shareholders so he could continue to fund his lavish lifestyle. SPNG eventually got de-listed and traded on Over The Counter (OTC) exchanges as SPNGQ (trust me when I say a Q in the stock ticker is bad, unless you’re invested in QQQ – the ETF that tracks the Nasdaq 100).
Meanwhile, given my early success with SpongeTech, I was constantly looking for another possible big winner. I grew up in Indiana, so when I found an Indiana-based company, I probably gave them more credence than I should have, because Hoosiers are known for being trustworthy, hard-working, honest folks. Environmental Enzymes Solutions (EESO) sold “green” cleaning products before that was a cool idea. They sold these chemical concoctions in gallon jugs, not anything that would look cool on store shelves, so they were going more for commercial and industrial cleaning companies.
What piqued my interest on EESO was a press release that said a South Korean company had offered to buy the company for 10 cents per share. Well, at the time I read that article, EESO was trading for 2 cents per share! I loaded up my proverbial truck and waited for word that the company would accept the South Korean offer. This was an easy opportunity to earn 5x my original investment!!! But as time went on, the share price dipped, so I bought more. Then it fell some more, and I bought some more. Eventually I could buy about 40,000 shares for a dollar, and I owned nearly ten million shares. Well the company was continually diluting and selling more shares. The buyout offer, if it was ever real at all, was for BEFORE the dilution started, so there was never any chance of receiving 5x my initial buy-in.
My EESO experience taught me two great lessons: Do your homework, and Beware of the Pump & Dump. Pump & Dump is slang for a news article or press release being sent out to pump up the share price with some exciting news about the company or stock, meanwhile earlier investors (who bought cheaply or just want to sell their stock) wait for the inevitable run-up from this press release, then dump their shares into the open market.
I bought some other penny stocks that were biopharma companies waiting on the coveted FDA approvals of Phase 3 clinical trial results (that would never come), in which case the share price would go up between 10x and 50x. Others were upstart (not startup) bank stocks, which was a pretty dumb moved while 465 banks were closed by the FDIC between 2008-2012.
All-in-all, it was a good education on the way individual stock trading works, but it was an expensive lesson for me at the time. Most of this happened in early 2009, when the stock market was just reversing and heading back up at the start of the current bull market. If I had bought undervalued REAL companies at that time, many of my investments would be up 10x or more, assuming I held them to present day. I pretty quickly got out of my fascination with turning a fast profit, and I actually got out of all individual stock investments a year later.
It wasn’t until I took Bridget Casey’s Six Figure Stock Portfolio course in 2017 that I bought another individual stock, as I attempted to earn some extra side income in the form of stock dividends. I’m an Index Fund investor for 99% of my invested funds, and will probably remain that way for a looooong time. But seriously, if you have any interest in investing in individual companies, or just want to understand investing better, hit up Bridget’s course and save yourself the THOUSANDS of dollars I spent on my penny stock investing fiasco. It will pay for itself hundreds of times over, in the long run. Even for index fund investors like myself, you will better understand asset allocations and having a plan as your portfolio grows.
In only 8 weeks, I will be joining 2,000+ of my best internet friends in Orlando at the Rosen Shingle Creek, site of #FinCon18. FinCon is an annual gathering of self-proclaimed Money Nerds, and I cannot wait to attend for the first time this September 26-29th. I was stoked to hear that it is going to be in Orlando this year, since I live about 3 hours away from the conference hotel and will simply drive up after work on Tuesday to attend the conference for the rest of the week. No flights required!
One of the non-money topics that I have heard about (besides evening gatherings around craft beers), is that there are a lot of free t-shirts to be had, and/or cool t-shirts that attendees have made. I do not have a brand or much in the way of design skills, but I have a few ideas for t-shirts that I am going to have printed and will wear during the conference next month! Besides, I am 99.9% certain that nobody will have t-shirts printed in my size, so if I want to participate, I’m going to BYOT (bring your own t-shirt)
Pictured above is my first t-shirt idea. It’s not really that “I Love Vermont Sax” but rather “I love VT SAX” better known as Vanguard Total Stock Market Index (Admiral shares)
Also, has anyone had shirts printed lately? I must admit, this is something that I have never had done, so I am genuinely interested to know who does great prints, on quality shirts, for reasonable prices. My 2nd t-shirt idea will remain a secret, but I definitely have to print a couple of them to give as gifts to a couple blogger friends who are attending, so I want them to be nicely done.
I don’t know that this will evolve into any kind of side hustle, but I do love the idea of trying to come up with ideas and seeing how I can make them work. Any ideas for FinCon t-shirt ideas are welcomed…
If you’ve seen almost any headlines lately (and for the last 8 years, amirite?) the next big stock market pullback is just around the corner. Liz from Chief Mom Officer shared a headline recently that Morgan Stanley was predicting the biggest stock-market selloff in months! (insert scary music) Nobody should be afraid of a pullback that is the biggest when measured in Days/Weeks/Months…
With all of the gloom and doom in the news media, the links inevitably get shared across social media. These dark thoughts creep into our mind, and fear begins to set in. For those who are more risk averse, these feelings of impending doom may cause them to scale back their stocks and put more investable assets into bonds or cash-equivalents like a money market account.
I’m here to tell you, that’s the exact WRONG thing to do, just like trying to time the market.
First off, if you are reading my blog (thank you, thank you!), you are most likely in the wealth accumulation phase of your life. Due to your age and remaining years in the workforce, you should be heavily tilted towards stocks, rather than in “safe” assets like bonds and cash. Most of us can agree that cash is actually not a safe asset, since it is guaranteed to lose value due to inflation. Then what about bonds?
My problem with bonds is that the young investor investing in bonds is locking in a lower rate of return for the perception of additional safety from turbulent stock prices. When stocks run up double-digit percentages, bonds are earning a few percentage points. That’s 70% under-performance, if we’re talking 10% vs. 3%. And we all know that stocks go up over the long term, so why the fear of short-term losses with a portfolio heavily invested in stocks? Young investors should be giddy about lower prices, as long as they’re still putting money to work through workplace retirement plans, IRAs, HSAs and brokerages via dollar cost averaging. Who doesn’t love to buy their favorite things on sale?
So beware of the click-bait headlines, the talking heads shouting on TV, and the viral news stories. A successful portfolio has a well thought-out plan for the inevitable scenarios when stock prices do fall. A successful investor will stick with the plan, or make minor adjustments to their strategy given a changing marketplace. Chasing safety is just as bad as chasing performance, and in fact can do long-term damage to your portfolio advancement by causing you to lose years of compounded market gains during the accumulation phase of your investing career.
If you’re an older investor, it may make sense to have an allocation in bonds and cash-equivalents, but I hope you aren’t using the old “100 minus your age” allocation. That rule of thumb may have been appropriate in decades-past, but bonds used to return a solid 5% on average, and CDs used to return 8-12% in the late 1980s. Now, with rising interest rates, which means bond prices are falling, you’re lucky if you have a positive return on bonds at all. I hope you will consider adjusting the “rule” to 120 minus your age, or similar.
Fabled PF guru JL Collins has been early-retired for quite a few years now, and his portfolio remains at 75% VTSAX (stock index fund) and 25% VBTLX (bond index fund). If you look at the results of the Trinity Study, the 75/25 allocation yields one of the top overall returns, and yet provides a modicum of safety during downturns to smooth the ride.
Last on the agenda for sight-seeing was a one-hour harbor cruise around the Elliott Bay, which was full of opportunity to take more pictures of the Seattle skyline and enjoy the nice sunny day. The onboard bar didn’t hurt, either!
