First, let me start by wishing you all a Happy New Year!  Borrow From None is back after a short hiatus for the Christmas holiday…thanks for stopping back.  It was a great break and I hope that you and your family had a great end of the year as well!

I do not usually make New Year’s Resolutions

I can’t remember the last year I made a new year’s resolution.  I know they are very popular, but I just don’t make them.  I guess I’ve always kinda felt it was hokey to make some big "resolution" on December 31st that you know you’ll probably break by January 4th.   I guess that’s why I never went for them.

For some reason, however, this year I felt led to make one.  Probably it was because I had a resolution that I felt was actually worth keeping (I wonder what percentage of all of the resolutions are to "lose weight" or "stop smoking?").

My 2009 Resolution: Be Generous

I am not a naturally generous person.  I think the main reason is that I am somewhat selfish.  It’s not something of which I’m proud…I’m just being honest.  Also, I am especially not generous with others outside of my family because I’m preoccupied with saving/spending/investing for my family and myself.  So, for 2009, I am going to force myself to be generous.

Not only force myself to be generous - but w0rk to internalize that generosity

My wife is a very generous person.  Whenever she sees a need, she immediately tries to figure out how she can help meet that need.  She always volunteers to take meals to friends.  She always wants to buy gifts for other people.  She immediately thinks about being generous and then figures out how to make it happen.

To be blunt, I do not think that way.  I worry about how being generous will affect me and my family and my finances, etc.  So I do feel that this resolution is a good idea for me (and hopefully for others around me) but it will certainly take some effort on my part

So, the first thing I will do to change my resolution from idea to reality is to force myself to be generous.  I will keep telling myself, "be generous…it’s ok, be generous."  That part is fairly easy.  But internalizing that and making generosity a natural response for me…well, I don’t really have a plan for how to make that happen yet.  I’ll figure that out later (hopefully).  You have any suggestions?

What about you?  Are New Year’s Resolutions a part of your January 1st routine?  Have you made any good ones this year?

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We recently (at least it seems like it was recent) celebrated Thanksgiving and now we’re into the hustle and bustle of the Christmas season.  Christmas shopping, Christmas cards, Christmas programs for the kids (my daughter had one Sunday, another tonight, a play next Friday, and my son has a play next Thursday) and so on and so forth.  It is also time to check all our account balances and update our net worth for the month. Check out this page if you want to see the spreadsheet I use to track it and a video tutorial on how to create and update it .   This post mentions some online tools for tracking your net worth .

Our assets dropped 1.6%

Just like last month, I expected our assets to drop more than they did.  At least for that month, the rate of descent of our assets has slowed.  The biggest mover was my stock options which have dropped another 14.5%.  Since August, they have dropped a total of 85%!  (wow, that’s a lot).  The other accounts, even those with stock market exposure, did not drop a tremendous amount.   Our retirement accounts only dropped 2.3% and our taxable investments dropped less than one half of a percent (How crazy is that losing 2.3% of your retirement account value in one month is not that bad anymore!?!).  In fact, my daughter’s 529b plan actually increased almost 4%!  It was a tepid month for all accounts, I think, as even our liquid accounts, which were increasing over the past few month, only grew by a little over 1%.

Our liabilities decreased by 0.5%

Our liabilities dropped the typical monthly rate of about 0.5%.  I’d love to get rid of that mortgage payment…but the principal balance is so high that I can’t foresee doing anything about it in the near future.  I’m still thinking about it though.  Usually I would say every little bit helps, but when throwing a little extra cash at it each month wouldn’t reduce the length of the loan significantly, is it really worth it?

Our net worth decreased approximately 3.6%.

Well, we’ve experienced another drop in net worth this month (that’s starting to become a habit).  At least the downward rate has decreased again this month (last month it was a 4.5% drop)  Most of this is out of my control still (stock market losses and house valuation declines), so I try to focus on what I can control, which is mainly the liquid savings and liabilities.  So, since our liquid savings were up slightly and our liabilities were down slightly, that’s good news from my perspective.  Of course, Christmas brings with it a lot of extra expenses (gifts, travel, food, etc) so it will be interesting to see how we end up 2008 (of course, if you use a credit card for some expenses, then you don’t really get hit until January)

Merry Christmas!!

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It has been a struggle lately to keep my head above water on this site.  I have dropped down from five posts a week to three in the hopes of getting back on track.  Alas, I am still quite busy with other projects (that make more $ than blogging currently does) and family life and still haven’t been able to get ahead on this.  I will keep trying…maybe next month!!

One exciting thing for BFN is that I am tantalizingly close to hitting 100 RSS subscribers!  It jumps around from day to day but I am hoping it will stabilize above 100.  Then I can put one of those feedburner dealies that show how many subscribers you currently have (I’ve decided to not post one until I hit triple digits).

Again, I’d like to give a big "thank you" to all of those in the blogosphere that have been referring traffic my way.  I appreciate it greatly.  Hopefully I am sending traffic back your way as well.

My top 10 referrers (is that a word?) this month:

1. Bible Money Matters
2. ChristianPF
3. Gather Little By Little
4. FinansAdrian - Mot rikedom (It’s good he reads English because I surely can’t read Swedish - and I’m not even sure it’s Swedish)
5. The Passive Dad
6. Spilling Buckets
7. Engineer a Debt Free Life
8. Free Money Finance
9. One Caveman’s Financial Journey
10. The Apostle of the Turtle

Top 10 posts for the month:

1. Warren Buffet’s 10 Ways to Get Rich
2. 45 Ways to Earn Some Extra Money
3. Preparing for Black Friday via BlackFriday.GottaDeal.com
4. Making Money Spotlight: Using CashCrate to Earn Some Extra Money
5. Biblical Financial Lesson from the Book of Acts
6. The Bible and The Bard Agree on this Financial Principle
7. Politics: An Historic Result
8. Is Giving Really that Important?
9. Where’s My Bailout?!?!
10. The Lesser of Two Evils: Determining Which Loan to Pay off First

Interestingly, most of the most popular posts this month were written months ago.  Numbers 1, 2, 4, 5, and 8 are showing great staying power, I guess.  Now I just have to focus on knocking them down with better posts…

Amidst the preparations for Christmas and the holidays that mark the end of the year and kick off the beginning of 2009, I hope that you are able to enjoy the last few weeks of 2008.

God bless…

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Everybody likes getting gifts, and most people like giving them as well (c’mon, admit it, don’t you love it when you have that perfect gift for someone…for me, it doesn’t happen too often but when I have that awesome gift, I’m practically more excited for them to open it then they are!)  Of course, buying gifts for the people you care about takes time and money, both of which are finite resources.  The best way to allocate your time is to get started Christmas shopping early.  Funny, starting early the best way to get good gifts without spending a ton of money as well…but it’s way too late for that now!  A good way to have the money for your Christmas gifts is to set a budget and save up for it throughout the year (but it’s way too late for that now too!)  Ok, so maybe you didn’t do that this year (we did…sorta - we started saving in September after paying off my wife’s student loans).  If you did not, make sure you set it up for next year (heck, go ahead and do it now even if you don’t schedule your automatic transfers to start until January or February).

Now, if you don’t have a big stash of cash saved up for gifts, I’d like to suggest some ways to show you  care for your friends and family without going into debt.

1. Do a Gift Exchange

Instead of everyone in your family buying for everyone else, pick names and have each person buy gift(s) for only one other person.  We’ve done this on my wife’s side of the family for a few years and I think it really works out well.  Instead of having to stress over the time, effort, and money to buy everyone gifts, you can focus your time and money on getting a really good gift for one person.  As a result, each person gets some good gifts and everyone saves money.

2. Make a game out of it

On my side of the family, we’ve done a "gift game" for a number of years.  The basic idea is that each person brings a gift to put into the game (when we do it, each family contributes three gifts).  There are variations to how it is played, of course.  My mom usually hands out a number of little slips of paper with different numbers on them and then draws numbers from a hat (bingo style!).  When your number is called, you can pick a gift from the pile or take one from someone else.  When you are out of numbers, the gift you have is the one you keep.  It is not as personal as doing a gift exchange, but it is a way to save money and have a little fun.

3. Do an ornament exchange or card exchange or <insert item here> exchange

Instead of gifts, decide beforehand that everyone will be exchanging some item like ornaments.  You can then try to find some meaningful ornaments for each other.  Everyone saves some money while at the same time getting a gift that adds to their Christmas decorations.  Maybe the ornament idea wouldn’t work very well if you have a uniformly decorated like my parents.  (My parents literally took home the display model tree with the lights and ornaments already on it - man, talk about convenience setting it up each year!).  If not, try to get each other some really cool Christmas cards.  You should be able to get some really fancy cards without spending as much money as on small gifts.

3b. A Photo-Exchange

My wife’s family also does a photo exchange with their extended family (My wife’s maternal aunts, uncles, and cousins).  Someone agrees to be the point-person and buys (and maybe decorates) small albums that are provided to each family.  We typically get the really inexpensive albums where you just slide the pictures into the plastic sleeves.  Everyone then sends out a picture of each person in his/her immediate family to everyone else in the family.  I think this is a really neat and inexpensive way to keep up to date with the extended family.  We’ve done it for a few years now and it is fun to look back at some of the earliest pictures.  (As a side note, my 19-month old loves grabbing the albums and sitting down on her little chair and paging through them.  It is hilarious to see even though, as you might imagine, she has destroyed most of the albums).

4. Create Homemade gifts

A great way to give unique, useful and/or enjoyable gifts that show people you care about them without spending a ton of money is to create your gifts.  Food is always a good bet: create a pancake mix kit, roast up some almonds, bake some cookies (always a big hit), cupcakes, or brownies, make some buckeyes (yummy - if you don’t know what a buckeye is, you gotta find out - I was turned on to them by my wife when we first started dating.  She’s from Ohio, so I’m sure they’re called something else in other parts of the country/world). 

You’re only limited by your imagination here.  Be creative and make it fun - you’ll save money while simultaneously creating an out-of-the-ordinary gift. This can be extend to all kinds of areas beyond just food.  Create small gift baskets of lotions, bath salts  (not sure what that is…my wife gave me the suggestion), etc.  Create a small personalized picture album.  Buy a plain photo frame and paint it or decorate it.  Again, the options are endless!

5. Save on shipping

I like buying gifts even though I don’t like spending lots and lots of money.  I do, however, get really annoyed at having to pay exorbitant shipping fees to get the gifts to out of town friends/relatives.  (I’m spending almost as much on shipping as I did on the gift - what a waste!)  So, if you do end up buying gifts for people out of town, here are some tips for saving money on shipping.

Take advantage of free shipping offers

Obviously, there are numerous retailers that will provide free shipping on certain orders.  This is a great place to start…but don’t get carried away.  Remember that the point of this exercise is to save money…it doesn’t help to get free shipping if you have to buy more than you wanted to or if the cost of the item is more expensive than getting it somewhere else even if you do have to pay shipping.  Check out sites like FreeShipping.org to see the different retailers that offer free shipping deals.  ChristianPF provides some other tips on saving money while doing your Christmas shopping .

Shop and ship early to avoid crazy shipping costs

Another obvious way to save money is to shop early and use lower cost shipping options.  So, that means, get out there and get your shopping done…today!  It is getting late, but you still have some time, depending on where you are shipping, to ship your packages at lower rates.  If you wait too long, you will be shocked by how expensive it will be to ship your packages 2-day air of (gasp!) overnight!

How about a gift-buying exchange

Instead of buying presents and shipping them to a friend while he/she buys gifts and ships them to your family, try a gift-buying exchange.  Decide what you want to get for your friend’s family while he/she (he/she is so onerous….let’s just pick "she" for this section) decides what to get for yours.  Then exchange lists and you do her shopping and wrapping while she does yours.  My wife has done this a bit in her family and it certainly saves on shipping.  If you choose to do this, be considerate.  Don’t just tell them to "buy something nice."  Instead, tell them exactly what you want to buy and where to find it.  Of course, it isn’t much fun to say, "go buy yourself a new sweater."  So, still shop and ship your friend’s gift but exchanging the purchasing for everyone else in your respective families should save a bunch of money in shipping costs.

6. Skip the gifts and apply the money to a reunion later in the year

For those families that can’t be together but would like to be together, you could try skipping the gifts (or cutting down on them) and agreeing to save that money to create a vacation where you can get together later in the year.  Maybe not as fun at Christmas time…but I’m sure that a vacation together would be even more fun that opening some gifts from far-off friends at Christmas.  Memories make really good gifts.

Hopefully this post has provided some good ideas or inspired you to create your own.  If you have some great ideas, please share with us!

Here are some more tips on this topic from ChristianPF and BibleMoneyMatters and some tips for being prepared for next year from Gather Little By Little .

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This is such a busy and hectic time of the year as we prepare to wrap up 2008.  In the midst of the Christmas season, there are so many things going on.  One of the more time-consuming (and money-consuming) tasks is, of course, gift shopping. Since our young kids started preschool a few years back, their teachers have been added to our list of people for whom we’re buying gifts.

Giving homemade gifts

In the past, we’ve tried making our own gifts for them to make them a bit more personal and to keep the cost down.  One year, for instance, my wife found a great recipe for wholegrain pancakes.  She then bought some decorative glass containers and layered the ingredients in them and attached a copy of the recipe.  I thought it was a pretty neat idea and it was a little more personal than buying a trinket plus it was less expensive.  The trade-off, of course, was that it took much more time to prepare.

Who doesn’t want to get a goat for Christmas?

For the last few years, we’ve taken an entirely different approach for these gifts.  We have started buying more "useful" gifts for them like goats, chickens, sheep, blankets, etc (You should see the look on their faces when they see the goat!).  Ok, so obviously we don’t actually give any of the animals to the teachers.  We purchase them in the teachers’ names to be given to needy people in various parts of the world.  The organizations provide gift cards to give to the recipients that inform them a bit about the organization and what was purchased in their name and what benefits it will provide.

There are a number of organizations that utilize these "gift catalogs" to make giving donations more real and tangible.  For the past few years, we have been buying these gifts through World Vision’s Christmas gift catalog .  We have sponsored a child through World Vision for a number of years, so it was natural for us to buy these gifts through them.  Gospel for Asia also produces a gift catalog with the same idea in mind.

Do you think your teacher would like a water buffalo?

We usually allow the kids to pick out what they want to give each of their teachers so it’s a little bit of fun for them too. I actually find it quite interesting to see what they pick ("And why do you want to get a llama in Mrs. X’s name?").  There are other gift options as well.  Beyond animals, for instance, World Vision has categories for food, shelter, HIV prevention and AIDS care, health care, education, and others.

Of course, these gifts are much, much more expensive than creating homemade gifts or even giving "normal" gifts.  So, though these take a lot less time to purchase, you will probable end up spending more money.  We feel it is worth the extra money for a few reasons, however.  I really feel that it is a more meaningful gift for the recipients. In fact, we have gotten very good feedback from all of the teachers to which we’ve given such gifts.  Maybe I am being naive, but how many mugs does a teacher need to get each year?

What other gift can do as much good for someone who needs it?

Also, I believe this is certainly one of the most useful gifts you can give. You are directly impacting a family’s life somewhere in the world by providing the ability for someone to feed his/her family and earn some money for other expenses and also, if you use one of the Christian organizations, to hear about the gospel and the love of Jesus Christ.  They also open up your children’s eyes to the great need that exists in our world and ways that they can start being generous to others.

So, yes, these gifts are more expensive.  At the same time, I do feel that they are great gifts to give in honor of someone.  They are meaningful and beneficial for a number of reasons.  I encourage you to take a look at the catalogs and to read about the impact these organizations have on the lives of people in need around the world.

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It’s just common-sense….right?

It is just commonsense to stop buying more stocks and mutual funds while the price is falling, right?  right?  Well, I know it’s a bit different, but why do people get up in the middle of the night and fight the crowds to buy a big HDTV on Black Friday - because the prices are higher or because they are drastically reduced?

Of course, we buy most items when they are on sale…so why do we not want to do the same with the stock market?  Have you ever heard someone say, "hey Bob, did you see that the prices of computers have been going through the roof lately, I’m gonna go buy me one!"  I’m sure, however, that you’ve had someone tell you that they weren’t going to buy any more stocks until they started going up in price again (or worse yet - they buy gold when it hits a 20-year high!).

Obviously, it would be awesome if you could easily time the market and know when the peaks and valleys were so you could sell at every peak and buy back at the bottom…but let’s assume we all live in reality for the rest of this post.

Buying things for less money is good

Since the stock market has dropped A LOT in the last year or so, the prices of mutual funds are much cheaper than they were.  If you do not believe this is the end-times, then you probably assume the market will recover at some point.  In that case, this is actually a great time to invest more in the market.  Sure, it will probably go down more, but you’re still buying shares "on-sale."  So, when is the best time to invest?  As soon as possible.  Don’t try to time the market or wait for the perfect time, stocks prices are down so just start some regular investing.

Dollar Cost Averaging

The easiest way to invest money (assuming you can’t time the market perfectly and you probably can’t), and probably the most common, is to employ an investing technique called dollar cost averaging.  Employing DCA is quite simple, you just invest a certain amount money at set intervals.  If you are setup to have money automatically invested into your 401k each pay period, then you are already employing DCA.  Most mutual fund companies or brokerage companies make it easy to sign-up to have money automatically taken from your banking account and invested regularly.  I personally feel this is a very simple and effective way to carry out your long-term investing strategy.

The effects of Dollar Cost Averaging in various markets

I think it’s common perception that you make the most money when the market goes up.   But I’d like to look at some basic scenarios to see the effect of dollar cost averaging under different circumstances.  Let’s take a look at these scenarios:

1. The market is flat
2. The market goes down and back up to original level

This will be a very simple example to simply give you a feel for the numbers.  I won’t be including dividends or anything like that.  Let’s say that for 12 months you invest $100 each month.

Scenario #1: The market is flat with no fluctuation

This one is easy, you invest $100 each month and the mutual fund doesn’t budge.  At the end of the year, you’ve invested $1200 and the total value of the shares you purchased is $1200.

Scenario #2: The market goes down and returns to its original level

Let’s say that the value of the mutual fund you are purchasing drops each month for six months and then increases and ends up at the same original cost of $50 per share at the end of the year.

Totals:
$1200 invested
24.62 shares purchased
Total value: $1231.15

As a general rule, going up is good and going down is bad, right?  I actually find it quite interesting to see these numbers and how it is possible to make money by dollar cost averaging through a down market that eventually rises again.  Even if the market only gets back to its original level, that is certainly not the same as investing in a completely flat market.  Both of these scenarios end with a mutual fund share price of $50, but we actually make an extra 2.5% because we continued to invest when the market was down.  Extrapolating this, I can even devise a scenario where you can make more money in a down and back up market than than you can in a market that just goes up.

Applying this to the current market

For a person with the money to dollar cost average and a number of years before needing the money, the best thing that can happen for your long term investing success is what is happening right now: an extended and drastic drop in stock prices.  As the market goes down and stays down, the same amount of money now purchases significantly more shares.  The farther the market drops, the more shares you are purchasing each period (think of how many more shares you are buying with each DCA purchase compared to a year or so ago).  Of course, this assumes that the market will eventually recover and start going back up…if it does, I think you will be glad that you continued to invest money when the market is down as it is now.

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In an earlier post, I mentioned the three things I had on my list for BF .  To summarize, I bought a vacuum on Monday.  I went online Thanksgiving evening and came across the Circuit City Thanksgiving Day sale.   There I found the camera I wanted for $10 more than the best BF deal I saw…..so I bought it (and I got a rebate for a free printer as well).  So my list was pared down a bit for the actual BF.  The only item left on the list was a laptop and I saw a good price on one at Office Depot.

Early Morning

I woke up to my wife nudging me (lovingly) telling me "that’s your alarm."  "What are you talking about?" I thought, "it’s always your alarm first."  Anyway, I got up, got dressed, and headed downstairs and out towards the mall.  It was a few minutes before six when I passed Wal-Mart and I had an urge to drive over to the front of the store to check out the parking lot but I ignored the urge and continued on my way.  As I drove up to Office Depot and saw a line of about 100 or so people waiting outside the door, I decided that I wasn’t really in the mood for standing in line…so I continued to Best Buy where I figured I could kill a few minutes and then head back.

I drove around for a few minutes before finally finding a parking spot and heading in.  I was surprised that the lines to pay weren’t a lot longer.  I looked around for 20 minutes or so (didn’t find any laptops at the sale price) and then headed out to go back to Office Depot.  By now there were a number of parking spots available in the Best Buy parking lot.

At Office Depot, there were no more tickets for the laptop I wanted and I couldn’t find a display model of the LCD monitor I was interested in (and that is something I need to look at to make sure the image quality is good before buying).  I did find one ticket left for a laptop that was not one of the BF sales but was still a good price.  So I headed up to the register, making some impulse buys (sucker!) along the way (two kids’ DVDs at buy-one-get-one-free and some shredder lubricant).

Waiting in line

One interesting thing happened while I was waiting.  There was a man a few spots in front of me with a loaded cart.  It looked like he had 3 printers and some other smaller items as well.  When he got the total price at the checkout (> $2000) he seemed surprised by the amount.  I overheard the clerk mention "three laptops" besides what I could see in his cart.  Well, he decided to just leave it all there and not purchase anything.  It was interesting that he hadn’t realized how much all of his purchases would cost.  On the other hand, I thought it quite prudent that he stopped himself right then and there and didn’t follow-through with the purchase.  He was paying by check (what else am I supposed to do but people watch while standing in the long lines!) - I wonder if he would have gone ahead with the purchase if he had used a credit card instead?

Alas, I didn’t end up with a laptop as they only had one in the stock - the display model.  I didn’t think my dad would want a display model so I just paid for my impulse buys (sucker! yes, yes, you said that already) and left.

It was daylight when I left out of the store

I then headed to Circuit City where it was still very crowded…but BF is always crazy at Circuit City.  It is virtually impossible to buy anything there on BF and, in fact, I don’t think I’ve ever made a purchase at Circuit City on BF.  Then I went to Staples and it was not crowded at all.  Next I went to check out Office Max (only Office Max now appears to be an American Family Fitness location) and then on to Harbor Freight.

After a small purchase at Harbor Freight, I headed over to ACE.  I found some good sales there so I picked up an extension cord, a yard stake outlet, and one of those Black & Decker Workmate benches (I’ve had my eye on one of those for a while as a "nice-to-have" but finally saw it at a great price - $10 after rebate).  I had to kill a few minutes before Costco opened, so I stopped to pick up a few needed items and breakfast at Ukrop’s.

Standing in line

When I got to Costco, they hadn’t opened yet so I stood in line (I was now actually in the mood to stand in line and see what that was all about).  So, I got in line and everyone seemed in a very congenial mood - laughing and talking.  I just ate my Iced Persian from Ukrop’s.  It took no more than five minutes to get inside when the line started moving.  As we moved through the line, we went in front of the store exit and I was amazed to see multiple people already checking out!

Anyway, I didn’t really want to buy anything at Costco…I guess I was just there for the experience.  I had the optical guy fix my glasses that broke that morning.  Then I looked around to get the feel for the crowd and to see if there were any good laptop deals and browse a bit.  Then I got some milk, nacho chips, batteries,  checked out and headed home.

Final Result

The original items on my list:

1. Vacuum - bought it on Tuesday and saved $100

2. Digital Camera - bought it online from Circuit City on their Thanksgiving Day sale and saved $40 and got a free $100 photo printer.

3. Laptop - Did not get one (yet)

Impulse Buys

I didn’t spend a lot of money this BF.  I bought some tools, some Christmas decoration stuff, and two DVDs for my kids.  In fact, I spent the most money in Costco and all of that was groceries!

Observations

There were very different approaches among the various stores stores this year.  JCPenney’s, Sears, and Kohl’s sent out these huge ads in the newspaper (JCPenney’s even said that this year their BF sales would be "the most compelling Black Friday prices ever offered in the Company’s history").  In contrast, Harbor Freight and ACE didn’t even send an ad in the paper we received (ok, I picked up my in-law’s newspaper Thursday evening since they were out of town).  Last year, Harbor Freight had some tables set up outside their store with their big deals but when I pulled up this year I had to drive up close to the store to see if they were even open.

The stores did not seem as crowded as years past

It did not seem to me that the stores were crazy crowded this year.  I overheard a salesperson in Best Buy telling a customer it was lighter than they expected.  When I left there less than 1.5 hours after it opened, the parking lot was already starting to thin out a little.  Everything had died down at Office Depot by the time I left there.  Circuit City was still packed but I really think that was a product of how hard it is to buy something and get out of there.  Best Buy does a fairly good job of getting people out the door in a relatively organized fashion but it is ridiculous at Circuit City (it was obviously not designed for huge crowds).

From what I read, it was reported that BF did start off strong but retailers are still concerned whether the shopping will continue through Cyber Monday and the rest of the Christmas shopping season.  So, stay tuned for more good sales (I’m still looking for a laptop!)

Ukrop’s does not fool around when it comes to icing

The Iced Persian looked pretty yummy - I thought it was a cinnamon roll with a little icing on it.  Instead, it was a diabetes-inducing cinnamon roll seemingly covered in sugar, then glazed, then covered with a thick layer of icing with more icing added on top for good measure!  I did eat the whole thing though.

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Why didn’t we wait until Black Friday?

On the surface, this sounds pretty silly to go out a few days before BF and buy something you would probably find on-sale Friday.  Though a very similar vacuum will be on sale on Friday, it actually isn’t all that crazy (at least I don’t think it is).  Allow me to walk you through the steps we took.  First, we checked out Consumer Reports and targeted a few highly-rated vacuums and went to the store to touch and feel them.  Before leaving for the store, however, I checked a BF preview site and determined that a very similar model is going to be on sale at Sears for $230 (from $350).

When getting to the store, however, the vacuum that we were looking for was actually on sale right then for $250.  After deciding we wanted to purchase this specific model, we asked ourselves a simple question: Is the extra $20 savings worth the hassle of making a special BF trip to this store to fight the crowds and (hopefully) get the vacuum?  The answer (obviously) was no.  We got the vacuum we wanted for $100 off and now I don’t have to make a trip to that store on Friday morning (I personally consider that worth the $20).

Some other ways to grab BF sales without the BF stress

Here are some other ideas to help you get some good deals on your shopping while avoiding the BF rush and crush.

Big sales have already started

Why wait until Friday when you can start getting good deals today, right now, as we speak.  Circuit City has been running Daily Doorbuster deals for a few days already (the last one is today, I believe).  Also, Amazon.com sent me an email telling me that Black Friday shopping has already started there as well.  They have daily deals and limited-time offers already up and available.

Don’t spend Black Friday jostling for bargains and parking spots. Instead, visit Amazon.com for Black Friday specials and great deals all week long from the convenience (and comfort) of your keyboard.

Amazon also has an interesting gambit going on…it’s kinda hard to describe so allow me to let them do it:

Amazon Customers Vote is back for 2008 and voting has already begun! Customers Vote is a special end-of-year promotion where you can vote for the deal you’d like to buy at an amazing discount. There will be six rounds of voting with three products in each round. Beginning Thursday, November 27, 2008 each day a new winning product will be announced, and randomly selected customers who voted in that round will receive an invitation to participate in the race to buy the winning product.

These are just two of many currently offering deals - check out this page on GottaDeal’s site to see a much larger list of BF sale items from various stores that are available online right now.

Look for Black Friday deals you can get online

BestBuy will be offering some BF items in-store only, but they will also make some available on-line.  And what could be more convenient than getting a great BF deal from the comfort and convenience of your own home?  Sure, you may have to stay up late Thanksgiving evening or wake up really early the next morning to get online and get these deals, but that’s much better than camping out in the cold to fight a bunch of other people for them.  Check here for other BF sales that will be offered online .  If there is a store you are planning to visit Friday morning, you might want to search their website to see if they will have the items you want online also.  Just remember to check each site to see when the deals will be offered.  I’m sure they are all "while supplies last" so you may need to get out of bed early to get the best deals (but at least you’ll be in your PJs instead of your parka).

Just wait until things calm down

Like I mentioned in my previous post , from what I’ve read there will be significant sales going on throughout the Christmas shopping season.  As a result, getting a great deal on something you want is probably not a once and done, BF-only proposition.  If an item is on sale on BF, there is a fair chance that you will see it on sale again before Christmas.  So, if you want a take a slight risk, then sit tight on BF and wait until you see some follow-on sales.  You may get lucky and see your item on sale and you can pick it up when the stores are not nearly as hectic.

My standard disclaimer

I have put something like this in all my BF posts….if you are going to venture out or online for BF sales, make a list and stick to it.  Remember, spending money is spending money.  Spending money is not saving money.  A good sale is not an excuse for irresponsible spending (and no, not even a fantastic sale either!).  If you really want to leverage Black Friday to save money, then just stay in bed and relax Friday morning…that shouldn’t cost you anything.  Better yet, get up early and make your family a special breakfast - that won’t cost very much and will start the Christmas season off for your loved ones on a great note!

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1) Decide exactly what you are going to buy beforehand

Especially for more expensive items, I would recommend not being swayed by the ads.  Rather, decide what you want to get and then look for specials on those specific items.  For us this year, we want to get a new digital camera (the LCD no longer works on our current model), a new vacuum cleaner (our vacuum is currently in a few pieces in the back of our van), and a laptop for my dad (a fair one at a very low price).  I rely on Consumer Reports for most non-trivial purchases, so I have started my research there.

I have a very good idea of which digital camera I want to purchase.  I still have to complete researching the vacuums.  For the computer, the exact model doesn’t matter as much - I have a general idea of the specs that I want and will just choose the best one that meets the minimum requirements from the ads.  But for the digital camera and vacuum, even though I will have a good idea what I want, I still need to get out and actually touch them and play with them before purchasing one (don’t you hate the cameras that take too long to actually snap the picture after you press the button!). I am behind schedule, but my plan is to decide exactly what I want in a digital camera and vacuum by tomorrow and get out to the stores to confirm that before Thanksgiving.

2) Check out the ads as early as possible

Sometimes you can’t decide the exact model you want before seeing the ads.  For instance, if there are a few different vacuum cleaners that would be acceptable, the one I decide to buy will be the one (if any) that I can get for the best deal on Black Friday.  Thus I can’t wait until the ads are delivered with the Thursday newspaper since I won’t be able to get out and touch and feel them before Black Friday.  And the last thing you want to to in the stress and crowds of BF are to be playing around trying to decide which special deal you want to buy.  First, you just don’t want to deal with the hassle in the midst of the big crowds. More importantly, if you’re out to get a good deal but are still doing research that morning, the good deals might be gone before you are able to decide what you want.

In a previous post, I mentioned the value of black friday preview sites such as GottaDeal.com’s Black Friday site .  Using these sites is a good idea for you to be able to see if any of your prospective items are on going to be on sale.  Doing this early enough gives you time to get out to the stores and check out the specific items that will be on sale.  I guess I could go out and check out all the possible models that I would consider purchasing, but I don’t really have the time or inclination to do that.  So, I’ll pick a few options, check out the preview sites to see which will be on sale, and then get to the stores before BF to decide which one or two I really want.

3) Strategize

Next you want to plan out your BF shopping strategy.  If you really want to get some popular deals, you won’t be able to fool around browsing a bunch of stores - you’ll need to have a good idea of where you want to go and what you want to get.

There are two main criteria to consider during your planning:

• How popular the item will be
• How much you want to get that specific deal

I usually order the items I want to purchase by priority and then try to optimize my route to get as many as possible.  Even if you see a great deal that you want, you will need to be realistic about whether or not you are actually interested in exerting the effort necessary to secure the item(s).  For instance, if you are looking for that fabulous deal on the huge HDTV but there will only be a few in the store, that is obviously the place you will want to go first.

You can usually get a pretty good idea of which items will be the most popular via an educated guess or by checking out the BF preview site forums to see which sales are getting a lot of buzz.  For the really big deals, you’ll have to get there very early or maybe even camp out the night before.  If you are not willing to do that, you should be realistic about your chances of securing one of those huge deals.  Personally, I will not go that far (certainly not for a vacuum or laptop!).  I will still get up pretty early and head first to the store with the item I want to try my hardest to purchase.  After that, I’ll head the stores with items that I don’t want quite as badly as well as the ones with deals I expect to be available later in the morning.

Some other things to consider

Do not overspend in the frenzy of the day.  With all the people out early in the morning following seemingly unbridled consumerism, it is sometimes easy to get caught up and overspend your budget.  The best way to control this if, of course, to make a list and stick to it .

I mentioned above that you should not be swayed by the ads.  When it comes to big items especially, make your list before you start looking at the ads.  Just because something is a great deal, does not mean you should buy it (and it’s certainly a good bet you don’t "need" it).   Remember the old joke - how much money will you save by buying a $3000 HDTV at 60% off?  The answer, of course, is you haven’t saved ANY money - instead, you’ve spent $1200!

Of course, for smaller items I do not follow such a strict plan.  I will go ahead and check out all of the ads on Thursday to see if any smaller items strike my fancy.  But even small purchases add up, so make sure you keep track of what your overall expenditures will be.

Black Friday will not be the end of the sales this year

The economy is not doing so well this year (have you heard that?).  The stock market is down, housing prices are down, unemployment is up, and as a result people are not spending money like they have in years past.  What does that mean?  It means that retailers will continues sales up through Christmas to entice shoppers to spend.  In fact, you’ve probably already seen some really good sales before BF.  Walmart has been running big in-store and online-only specials for the past few weeks.  Circuit City is currently running Daily Doorbuster Deals through Wednesday as well.  And unless BF is crazy huge for some reason, I expect these deals to continue all the way up until Christmas.

So, I’ll be out there Friday morning, but I will certainly not be camping out or pushing and shoving to grab stuff.  I do expect the deals to be big, but as I also expect to see big crowds on BF and good deals up through Christmas, I do not feel the urgency to make all of my purchases on BF.

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Last summer my wife and I took off for an overnight getaway - just the two of us - and ended up in Staunton, VA near Charlottesville.  The draw to this particular place was the American Shakespeare Center’s Blackfriars Theater .  Here’s a blurb from their website:

The American Shakespeare Center is an internationally acclaimed theatre company that performs Shakespeare’s works under their original staging conditions — on a simple stage, without elaborate sets, and with the audience sharing the same light as the actors. Home to the ASC’s resident troupe, the Blackfriars Playhouse has been established as one of America’s premier Shakespeare destinations.

I was just searching for something to do and came across the town and the theater and was intrigued by them.  So we made some reservations and set off to Staunton to see Shakespeare’s Merchant of Venice . I was blown away! The theater experience was amazing and I had so much fun that evening!  If you are ever in the area, I would definitely recommend checking it out.

At the end of the play, I turned to my wife and said, "You know what the takeaway from this evening is?  Never cosign a loan!"

C’mon - what else would you expect from a guy who has a personal finance blog!

As a reminder, here’s a brief summary of The Merchant of Venice from sparknotes.com :

Bassanio is desperately in need of money to court Portia, a wealthy heiress who lives in the city of Belmont.  Bassanio asks Antonio for a loan in order to travel in style to Portia’s estate. Antonio agrees, but is unable to make the loan himself because his own money is all invested in a number of trade ships that are still at sea. Antonio suggests that Bassanio secure the loan from one of the city’s moneylenders and name Antonio as the loan’s guarantor.  Antonio and Bassanio approach Shylock, a Jewish moneylender, for a loan. Shylock nurses a long-standing grudge against Antonio, who has made a habit of berating Shylock and other Jews for their usury, the practice of loaning money at exorbitant rates of interest, and who undermines their business by offering interest-free loans. Although Antonio refuses to apologize for his behavior, Shylock acts agreeably and offers to lend Bassanio three thousand ducats with no interest. Shylock adds, however, that should the loan go unpaid, Shylock will be entitled to a pound of Antonio’s own flesh.

So not only has Antonio cosigned the loan for his friend Bassanio but he has also put his life on the line for it!  Of course, in the end things do not work out as bad as it could have been for Antonio…but if you want to know the entire story and experience it in a supremely entertaining way - go check out the Blackfriars Theater! (though that particular play is not playing there any more, I’m sure any of them would provide a wonderful evening)

The Bible cautions against cosigning loans also

I was amazed to learn that God actually talks about co-signing a loan in the Bible.

My child, if you have put up security for a friend’s debt or agreed to guarantee the debt of a stranger.  If you have trapped yourself by your agreement and are caught by what you said—
follow my advice and save yourself, for you have placed yourself at your friend’s mercy.
Now swallow your pride;  go and beg to have your name erased.  Don’t put it off; do it now!  Don’t rest until you do.  Save yourself like a gazelle escaping from a hunter, like a bird fleeing from a net.  Proverbs 6:1-5 (New Living Translation)

Again, cosigning a loan for someone is not a good thing to do.  The Bible informs that you should "swallow your pride" and "go and beg" to have yourself removed from the loan.  And don’t even wait until tomorrow it urges - "do it now!"  This is serious and urgent advice!  It certainly does not appear to me that cosigning a loan is something you should do.

Why does someone need a cosigner?

Remember, the reason that your friend needs a cosigner on a loan is because the bank (or whoever) is fairly confident that your friend will pay back the loan. If they thought your friend was good for the money, they would not have required a cosigner.  And if you friend does not pay back the loan….guess who will be.  So, my advice is (obviously) do not cosign a loan for someone else.  And if you do consider cosigning a loan, assume that you will be the one who has to pay back the loan.  Make sure that your finances, your family relationships, and you relationship with your friend will survive the probable event that you will be paying for it.  It might be hard to say "no" to someone asking you to cosign for them, but that still might be a lot easier than doing serious damage to your personal finances and serious damage to your relationship with your spouse and/or family!

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I love efficiency.  I love doing tasks in such a manner as to reduce the overall time it takes or the effort exerted.  This manifests itself in a number of different ways depending on if the task in question is a household chore or home improvement project or shopping trip, etc.

I also love accomplishing things.  I am a list maker and I feel great when I get to cross items off the list when completed.  In fact, if I do something that wasn’t on my list, I will add it to the list and then immediately cross it off to get that feeling of satisfaction!  (Do other people do that?)

Anyway, so with those two things in mind, This is what I did one afternoon last week:

• I returned some pillows we had purchased
• I got four new tires put on my wife’s "ivic"
• I had an eye doctor appointment
• I bought some milk
• I bought some compact fluorescent lightbulbs for my dad (he was along for the trip)
• I filled up the car with gasoline

The interesting thing about this day was that all of this took place at the same store .  For accomplishment’s sake, I was able to do a ton of things in a very short period of time.  For efficiency’s sake, I was able to get them all done very quickly with no extraneous driving around from store to store.  I also was able to overlap waiting for the tires to be installed with the eye appointment and shopping.

What has the world come to where you can buy milk, get new tires installed on your car, and get an eye checkup at the same place? Though maybe this is actually more like how shopping used to take place years and years ago when a town would have only a general store to get everything you needed (or at least everything that was sold in a particular town)?

Though I do love efficiency and I do love checking things off my list, it is true that I don’t really love spending lots of money.  So, from that standpoint, it was somewhat of a downer of an afternoon as an eye doctor appointment and four new tires are quite expensive nowadays.

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The US government is going bailout crazy.  Once they loosed the genie from that particular bottle, everyone and their brother is showing up at the trough hoping to get a bite.  Who knows anymore what the original intent was -  a banking bailout, a wall-street bailout, a bailout of AIG, isn’t it supposed to have something to do with a housing bailout, and now the domestic auto companies and even credit card companies are clamoring for a piece of the pie (I think that sets a new personal best in the category of "most cliches used in a single paragraph!").

Some people actually acted responsibly over the past few years…

All of this, as might well be expected, has a number of people up in arms.  Even in the midst of the housing craziness of the past few years, there were actually some responsible people who bought a house based on how much they could afford to pay for it as opposed to how much loan they could get (no stated income, interest-only, negative amortization anyone?).    These silly people actually eschewed irresponsible purchasing and did not buy a McMansion because they held to some crazy belief that you should be able to afford the things that you purchase.  And what do they get to show for it?  Nothing (maybe even worse than nothing!).

And now you get to pay for the people who did not

The government has swooped in to save the day and take care of those who overspent and overindulged while the responsible pay for it through their taxes.  Some of the responsible could swallow the original argument that it was for "everyone’s good" because eventually all the foreclosures and their resulting effect on the economy would bring down the value of their home as well and possibly cost them their job.  So, they swallowed the bitter pill and moved on.  But now they are talking about bailing out people who ran up too much credit card debt - this is getting ridiculous!

So, what can you do?

Well, nothing really.  Let’s be blunt: you are going to get screwed.  The government is handing out their candy to everyone else except you.  (Isn’t it interesting that if do something stupid and mess up, you have to deal with the consequences.  But if enough people do something stupid at the same time , the government will come in and clean up the mess). The obvious answer is to get involved politically.  Call you representatives.  Tell them how you feel.  Get involved in whatever way you can.

Your only consolation is that at least you did the right thing

I agree that it stinks that the foolish are bailed out by the prudent (and by "prudent" I don’t mean the government).  It is annoying how, in this situation, stupidity is seemingly rewarded at all levels (buying a $650,000 house with a salary of $55,000? Well, the bank wouldn’t let you do it if they weren’t confident you could repay it so you must be able to afford it!  You’re going to give a $650,000 loan to a person who makes only $55,000?  Sounds like a good idea to me - so what are you going to spend your commission on?  You really think buying a whole bunch of irresponsible loans will make all the risk go away?  You fancy finance guys sure are smart!  Better yet - why don’t you borrow a bunch of money so you can buy even more of those loan package deals and greatly multiply your gains!)

And you’ll probably try to do the right thing tomorrow too

Let’s be honest here…you, as a fiscally responsible person, will not learn your lesson.  Tomorrow you will go out and attempt to make more responsible decisions.  You will even try to learn from the borderline decisions you made yesterday.  And after you purchase big items, you will probably pay back the money that your borrowed, right?  For those of you making such "foolish" decisions, remember this:

The wicked borrow and do not repay, but the righteous give generously.  Psalm 37:21 (NIV)

Remember, it doesn’t matter what everyone else is doing.  It doesn’t matter who is not paying for what they bought nor whether they experience any ill effects from it.  The Bible tells us to be responsible in our decision making and then to honor any debts or obligations we undertake.  While we’re on the subject, here’s another thing to remember:

In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.  Psalm 21:20 (NIV)

So, what have we learned?

When you were younger, I’m sure your mother told you not to do something just because everyone else was doing it ("If Johnny jumped off a bridge, would you jump off one too?").  So, we need to continue to follow that advice now.  Continue on the path of financial responsibility because you know it is the right thing to do.  Continue to not spend more than you earn and continue to pay off any debts you have incurred (and try to stay away from any new debts).  It might not work out optimally for you in all cases (as current events are showing) but when you go to sleep at night, you can rest comfortably knowing that you are attempting to follow God’s mandates for living responsibly and being a good steward of your resources.

Do not be bitter that your neighbor has all those fancy toys that he put on a credit card and/or a home equity loan and now he might get some help from Uncle Sam to pay them off.  Bitterness will certainly do you more harm than good.  Do not covet what your neighbor has, for along with the mortgage and credit card help will come the trashed credit score - and I’m sure you don’t covet that!

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Stuff costs money

First of all, money is required to purchase a lot of this technology which hurts our finances.  Cell phones typically cost money upfront and on a monthly basis.  There is always the pull to get a newer and fancier model with a more expensive monthly plan as well.  I currently have a basic cell phone, but most phones nowadays enable the user to check new and even stock prices through them.  In fact, Etrade recently released a mobile platform that you can access from a smart phone.

There are also costs associated with getting online to do all the tasks (and more) I listed above.  Of course a computer is required and high-speed internet access (I couldn’t imagine going back to dial-up now).  If you use a laptop, you’ll probably want a wireless router as well.  All of this costs money…and the more money you are using to purchase new technology, the less you get to keep.

This technology provides convenience and knowledge

With that being said, there are still many tangible advantages that comes along with all this technology.  If I am not sure what my checking account balance is at any hour of the day, I can check exactly how much the bank thinks I have in less than a minute (3 minutes if I have to boot-up the computer).  If I forget to mail a check to pay a bill, I can log into my online banking account and have the bill paid more conveniently, in much less time, and with less risk (and less expensively) than filling out a check and dropping it into the mail.  From a purely financial standpoint, a cost savings in envelopes and stamps is realized and that doesn’t even take into account the time savings which is typically much more significant.

Also, current technology provides many tools for managing your finances (yes, I know for some a pencil and calculator work just fine, but maybe others of us need a little more help)  There are numerous net worth tracking tools available online to help you stay on top of  your financial situation.  Also, there are many budgeting software options to facilitate managing and tracking your income and expense.  These are just but a few of the advantages that come along with these technological advances.

Investing is much easier though that is good and bad

It is also much easier to invest money in stocks, mutual funds, and options via online brokerage accounts and in US Bonds at TreasuryDirect.com.  A wonderful byproduct of these advances are that online brokerages have driven the cost of investments down drastically.  Whereas in the past you would have to call up your stock broker and pay who-knows-how-much to request a trade, you can now buy and sell stocks for $5 online (or even free in some cases).  On top of this, the internet provides an amazing wealth of useful information on investing to educate you how to invest.  As such, there is really no excuse for someone not to be able to invest in mutual funds and/or bonds for long-term growth.

On the other hand, the easy availability of this information and the ability to trade can be a negative as well.  Sure, it is easy to invest in stocks, bonds, and mutual funds, but on the downside, it is easy to invest in stocks, bonds, and mutual funds!  Making careless decisions because it is cheap and easy can lead to real difficulties down the road.  I’m sure you’ve seen the ETrade television ads of the baby buying stock - maybe this is becoming a little too easy (and that spit-up one is nasty).  This can lead to irresponsible day trading and the real possibility of losing a lot of money. It seems so easy to try to time the market and make a big score and it only costs $7.99 per trade!  I personally think this might be too enticing.

Furthermore, not only is there a generous amount of information related to finances and investing on the web but there is also a wealth of bad information out there.  There are numerous online investing newsletters available to help you under-perform the market.  I’m sure a simple search would return plenty of websites eager to hawk penny stocks in an attempt to have you make them a bunch of money.  Even from reputable sources like online magazines, too many of the articles are geared towards enticing you to stray from your long-term plan to try to time the market.  Already I’ve seen an article for the best stocks to buy during the Obama presidency.  You can always find articles on "the hottest six stocks for next month" and "where to put your money for 2009."  The point is to be very cautious in the information you rely on.

Overall I feel technology has a beneficial effect on finances - if we use it responsibly

Of course, there are pitfalls, but when you look at the big picture, I think we are much better off due to the advances of banking, investing, and personal finances compared to a few decades ago.  If you can resist the urge to drift from your long term investing plan, there is great convenience and cost savings to be had making use of the internet.  I love my online banking and being able to access my Vanguard account online.  Setting up automatic transfers from my checking account to a high-interest savings account at a different bank and to my Vanguard account makes it very easy to setup and stick to a savings and investing plan.  Technology will always advance, so we might as well figure out what pitfalls to avoid and what advances to embrace to make it easier to realize our goals.

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