Not much to say about why I’m switching other than to direct you at the upper left corner’s of the two images in this post.  The top one is taken from my iPhone which uses AT&T Wireless.  The bottom one is taken on my wife’s iPhone which uses Verizon Wireless.  In case you can’t read it, mine says “No Service”, my wife has 4 bars of 3g.  We live about 15 minutes south of Chapel Hill, NC.  In other words, not exactly the boonies.

Add on top of it, whenever I complain to AT&T about the lack of service at my home, they tell me I should buy a micro-cell. I’m sorry, but you want me to pay more money to you just because you can’t bother to improve your network? I’ve been pretty patient, too. I’ve been two years in my current location before making the switch (I don’t use my cell that much) and have sat and watched countless adds from AT&T wireless saying “we’re upgrading our network to make it faster” for more than a year now. No such luck in my area.

I run a fair amount (3-5 days a week).  I also travel a fair amount.  Therefore, I do a lot of running in different cities.  In fact, one of my favorite things to do is to go running in a city on a Sunday morning.  In most cities, it’s a completely different experience that allows one to explore without worrying so much about being hit by a car!   I’ve run through the empty, historic streets of Prague and Amsterdam as well as down the middle of beer/vomit soaked Bourbon St. in New Orleans on quiet Sunday mornings.  It’s a surreal experience.

In all of my running in all of these cities, I’ve started to compile my all too subjective rating of the friendliness of a city/area.  The test is actually quite simple.  Given a relatively deserted stretch of road/sidewalk where two strangers (me and someone else) are passing by, what is the likelihood that the other person will:

1. Acknowledge my existence by responding to my greeting of “Hello” or “Good Morning”
2. Avoid eye contact
3. Make eye contact, but not respond (the worst of the three in my opinion)

What’s Coming in Solr 3.1 and Lucene 3.1? | Javalobby.

Here’s a recent interview I did w/ DZone.  Note to self, don’t wear checked pattern shirt on camera next time.

Hesitation

It’s with quite a bit of hesitation that I sit down to write a post on our financial makeover, but after having thought about it for a while and having talked it over with my wife (Robin), we think it is worthwhile to share.  My hesitation comes from a number of things, but most notably:

1. What will my family/friends/coworkers think?  Money, and especially the mistakes one makes with it, is not something one is supposed to talk about.
2. I consider myself pretty smart, so to say I followed a book (more later) geared towards “other people” by a guy who sometimes comes off as a loud mouth is a bit humbling.
3. Even more humbling is the fact that I/we knew everything in the book already (all the “Baby Steps”), we just never executed on the ideas until now.  But hey, you gotta start somewhere.

On the positive side, we’ve shared our story now with a few friends and family members and it seems to resonate, even if it is a bit weird to hear.  Moreover, after 10 years of marriage, this single book and the ensuing process has radically changed our marriage for the better and I think that makes it worthwhile to share.

A Little Background

Robin and I have always made decent money.  Not the stuff of retire-at-45 dreams, but still, good money such that all of our needs are met and most of our (reasonable) wants.  Like most Americans, we had a few credit cards, car loans, mortgage, etc.  When emergencies came up, we put ‘em on the “card” or scrambled somehow to put together the money.   We’ve had some small windfalls from time to time which either paid off debt or went towards a house or vacation or some other major purchase.  I don’t think we ever had more than $10K in credit card debt  (until recently) and we’ve managed to scrape together some decent retirement money.  At the end of the day, we kind of planned our money, but we were never really on the same page about money.  Robin did the day to day money stuff and I did the strategic investing (if you can call it that, mainly I insisted that I put money into our 401Ks.)  For a long time, we’ve had an undercurrent of not wanting credit cards and debt, but it was always kind of a love-hate thing.  As for Robin and getting rid of credit cards, she’d always pull out the old saw of “Everyone has credit cards; I’m not going to live like that.” and I would back down.  Finally, I think we both treated each other, in regards to money, as if the other person was somehow making it harder for us to get the things we wanted.  My fixation was (is) on travel and her’s is on the house and decorating (and travel.)  Neither are cheap interests.  I can only imagine how much worse it would have been if we made less than we did at the time.

The Fall

In the Fall of ’08 is when things started to change.  We had started construction on our “dream” house back in April of ’08 while still occupying our existing home, figuring we could put it on the market 4-6 months prior to completion of our new house.  Of course, as you all well know, that’s when the real estate market really started to tank (or at least it did in the Raleigh area, I know other markets started sooner.)  To make a long story short, our house didn’t sell for 16 months or so, meaning we had two mortgages for a good 10-12 months.  On top of the two mortgages, we put something like $10K into the house to update it and fix issues that needed to be addressed as well as moving expenses and some things for the new house.  Even with both Robin and I working, we needed to charge some of those expenses.  Things started to pile up. I don’t know if we could have foreseen this any better, but it still had a pretty dramatic effect on our finances.  One that we are just now getting out from under.

Backing up a little bit, and this truly was a mistake, we screwed up on the mortgage for our new house.  Kind of, anyway.  Here’s the thing:  I was an independent contractor at the time, meaning we needed to set aside money for taxes, which we dutifully did.  We also set aside money for the down payment for our new house.  I think you can see where this is going.  We put both of those monies into the same savings account.  So, when we went to buy the house, we looked in our savings account and said “Look at how much we can put down” and off we went to get the cashiers check!  A few weeks later, we dutifully did our taxes.  Sh*t, we’re $20K short (there were probably a few more expletives in there too.)  Where did it go?  You guessed it, into our down payment.  Stupid, stupid, stupid.  It is hands-down the biggest financial mistake we’ve ever made.  We simply forgot about taxes for that one week of time where we went to buy our house, caught up in all the frenzy of the closing.  Thankfully (I never will be able to truly express how meaningful the gesture was to me) a friend of mine bailed us out with a short term loan.  No lectures, no arrogance, just an offer to help.  Talk about humbling and uplifting all in one situation.

Flash Forward

With the house finally sold (we lost $30K!  Yipee!) in December of 2009, we took out a HELOC (home equity loan) and a 401K loan and paid off the friend and got rid of some other debt.  It wasn’t ideal, at this point, to trade one debt for the other, but it made a bit more sense financially since at least we would get a tax break and the 401K loan meant we were paying ourselves interest (at the cost of lost market opportunity.)  At this point, I’d say we had about $50K in total debt (credit cars, HELOC, 401K.)  Adding to the situation, Robin lost her job.  Bam, there goes half our income.  Still, on paper we were OK, especially if we cut back on some things and thankfully we didn’t have 2 mortgages anymore.

Me, Robin and Dave

I first saw Dave Ramsey on Fox one late night at a hotel on a business trip, flipping channels to fight jet lag.  For some reason, the show caught my eye.  Maybe it was the people on the show blowing up their credit cards.  Or maybe it was Dave’s tough talk.  I don’t know, but I filed it away as something to check out later.  A month or two later (June 2010), I happened on Dave’s “Total Money Makeover” at Target and plunked down $15 for it (we have not bought any of the related materials and frankly, I don’t think most people need to, either.)  It was by far and away the best financial investment I’ve made in my entire life and that includes buying Apple at $16 per share back in 1998 or so (I believe it has split twice since and is now in the $350/share range).  But that’s getting ahead of myself.

I brought home the book and started in on the first chapter and talked about it a bit with Robin.  She was tepid at best, but in her defense, I’m often a bit stubborn when it comes to something that gets in my brain and getting rid of debt was in my brain.  She didn’t want to have to live like she was poor and go without.  I agreed, but I also showed her how much money we were paying in interest and if we had all that interest money we could buy the things/experiences we wanted with cash.  Then, something magical happened.  OK, so it was actually quite mundane, but the result has been amazing.  We drove up to NY in July of 2010 to visit family and friends (want to guess how we paid for it?).  The drive from NC to NY is about 12 hours.  Typically, I do most of the driving, but on the way back, I was tired of driving and Robin took over.  I relaxed into the passenger’s seat and pulled out Dave’s book and started to read.  I’ll never know what prompted it, as we’ve never done it before, but Robin suggested that I read it out loud.  So I did.  I read a chapter and we discussed it.  I read another chapter and we discussed it.  Lather, rinse, repeat.  We probably read/discussed for 4-5 hours that drive home.  My voice was almost hoarse by the time we stopped for dinner.  The damage, however, was done.  The gears were turning.

Over the course of the next week or so, we read a chapter together every night and then discussed it.  We hashed through whether it was even possible. We argued a little bit and there was definitely some tension as to how far we should go, after all Dave preaches an all-in or don’t-bother strategy.  However, several things really clicked:

1. Dave doesn’t say you can’t spend any money.  He just says you need to put a label on absolutely every dime you take in and if you can’t afford something, you can’t buy it yet.  We had budgeted before, but we always just left a bunch of money as “miscellaneous”.  Now we sit down and plan out the month ahead and, often times, several months ahead.
2. Dave aptly points out that most things that most people categorize as emergencies are not emergencies.  Your car breaking down is not an emergency.  It’s an inconvenience, no doubt, but it is not an emergency.  Your child needing clothes for school is not an emergency.  Birthdays come every year at the same time.  As does Christmas.  They are not emergencies.  Plan for them.  Seems obvious in retrospect, but I can’t tell you the last time we planned for any of those things beyond the week or two before they happened (or maybe the month before in the case of Christmas.)
3. Pay your smallest debt first.  Most advice is to pay the highest interest rate first, but Dave, rightly so, focuses on the emotional side of the equation.  Get a win by paying off something and it will further motivate you.  Success breeds success.

Once these items clicked in, we both fed off it and worked hard to stick to it.  Heck, we even sacrificed.  Not in any big way, but in a lot of little ways that adds up pretty quickly.

Baby steps

Dave’s step one is to put $1K of cash in an emergency fund so that you don’t have to use the credit card if something comes up.  We did that relatively quickly, figuring we could dip into it if we had to for those typical non-emergency emergencies.  Turns out, though, as Dave says, that step alone makes you realize most things aren’t emergencies.  Next, we set up a plan to pay off our consumer debt using the “snowball” plan.  The snowball is simply applying the money from the debt you just paid off (the smallest one) to the next smallest debt, while paying the minimums on all others.

Over the past 6 months a strange transformation has happened.  Every month, we’ve sat down together in front of a spreadsheet (we share it on our computers so we can access it separately as needed) and we plan out all of our income and all of our expenses.  We talk about it in a real, direct way.  What do we owe, what do we want, what debt can we pay off now and what will have to wait.  Lay it all on the table.  Rarely do we fight over money now during the month because we have it all allocated up front and we both agree on it.  Agreement is critical.  The meeting isn’t over until you both agree.  If something comes up, we sit down and review where we are and figure out how to change it and still meet our goals or forgo.   We also forgo buying things we want until we have cash for it, but I think both of us would agree we don’t feel like we are living without.

This new communication has bled over into other parts of our marriage as well.  It’s so much easier to be real with each other when you are both working towards mostly the same goals.  I say mostly, because we both also know that part of this new found capability involves letting the other have their piece of the pie to do as they see fit without begrudging them.  Dave helped us see this because it gave us something outside of the two of us to talk about.  It wasn’t me versus her, it was us, discussing Dave.  He was the genius or the idiot, not me and not her.  It was almost academic in nature, like studying for an exam.

Debt Free (almost)

As of today, I am happy to say we are free of all of our credit card debt and the 401K loan ($30K paid off in about 7 mos all on 1 income and some unemployment.)  That leaves us with 1 car payment and the house as our only debt (mortgage plus HELOC).  The car will be taken care of by July of this year.   As for the HELOC, well, I’ll come back to that.  In the meantime, this is the first year ever that we planned and saved for Christmas and purchased everything in cash.  Furthermore, neither one of us has used a credit card in 7+ months (although I still use one for work and get reimbursed from my employer.)  Not only that, but in addition to all the extra Christmas expenses, the month of December brought on an emergency visit to the Vet ($600) due to our dog swallowing a friend’s prescription meds as well as $1300 in car repairs.  All paid in cash.  We did dip into the $1K emergency fund for the dog, but we’ve already paid it back.

As for the HELOC, well, we’ve decided to sell our house.  Yeah, the one we had built, more or less, to our spec. two years ago.  Could we afford to keep it at this point?  Yes, actually we could, but it takes up too much of our income relative to what our priorities are.  It was not an easy decision.  I really love the house and the neighborhood we are in, as well as the peace and quiet it brings being out in the country a bit, but we both feel more opportunities are out there if we can increase our monthly cash flow and the house is the biggest impedance to that.

We still don’t know how the house stuff will all turn out, of course, and I don’t know if what we’ve done will work for you, but I hope that by reading this it might help.  If nothing else, try picking up a book with your spouse and reading it out loud to each other.  You can thank me later.

Running and me have a long history.  As a kid/teenager, I hated it.  Running a mile then felt like running 50.  It wasn’t that I was out of shape, I just didn’t see the point of slogging along at a slow pace without some sort of objective like scoring a touchdown or a goal or hitting a gapper for a double.  That all changed after college (at around 23) when I would look down at my desk and at my growing belly (I wasn’t playing sports much at the time).  I knew I had to do something and it had to be now.  So, I started running.  And I liked it.  Then, I got competitive, thanks in no small part to Jack Daniels.  No, not that Jack Daniels.  I mean Jack Daniels, the running coach from Cortland State and specifically his book Jack Daniels’ Running Formula.  Just as I felt I learned to swim for the first time with Total Immersion, Jack taught me how to run for real. Don’t get me wrong, he isn’t a miracle worker.  I’m still a 6′ tall guy weighing in about 195, so it’s not like I all of a sudden ran sub 16 minute 5K’s, but his book did help me put up a PR of 18:50 and run a sub-5 minute mile.  Not bad for a kid who coaches always put on defense in hockey because he was bigger and slow.

Fast forward to now, I still love to run, but I’ve been busier with work and life and only do it to stay in shape or to run the occasional 5k.  Moreover, in my neighborhood, there really isn’t much choice for running routes on the pavement, so it’s a bit hard to get variety without jumping in a car.  That is, it was hard, until I decided to combine interval training with trail running.  I would call it primal running, but that seems to be taken by the barefoot crowd, so I’ll just call it “running through the woods like you’re being chased by a tiger”, or simply Chase Running.  You see, in my neighborhood we have a trail. Well, let me clarify that; the Developer of the neighborhood calls it a trail.  The people who live here call it putting up markers on trees.  At best it is a hiking trail and it has some pretty rough spots in it for a supposed walking trail.  Don’t get me wrong, I absolutely love this trail and it has gotten better with use.  It serves as my morning commute to work (Work from Home!) and it’s great technical singletrack and it fits in perfectly with the fun that is Chase Running.

The basic premise of Chase Running is simple.  Find yourself a trail.  (It doesn’t really have to be a trail, but…)  Next, Warm up.  Then, as you run, every so often, put the fear of god into yourself and run all out on that trail.  This not for the faint of heart, as there are lots of things that go wrong.  Here’s some tips that might help:

1. I highly recommend you wear sunglasses or protective eye wear.  You will spend much more time looking down at the trail immediately in front of you than you normally do, which means you may not notice tree branches around your head as much.
2. Watch out for rocks, trees, etc.  Duh.
3. Be agile and be ready to jump, duck, cut, sidestep, stop, turn and pretty much whatever other motion or contortion you might need to make.
4. I also highly recommend you start by running on a flat, relatively easy section of trail, but as you get used to it, you can graduate to more difficult sections and maybe even go off trail (only do this in an area where it is allowed.  A lot of parks don’t like people going off trail.)
5. Check for ticks when you are done
6. Screw the watch/timer, GPS and heart rate monitor.  Your ancestors didn’t have them and they lived.  Or maybe they didn’t.
7. Don’t blame me if you get hurt.  Ankle turns are not uncommon, nor are the occasional scratches from a tree branch.  It’s called being alive.
8. Mix things, up, too.  Pretend the Confederate army (heh, I live in the South, y’all) is chasing you from multiple sides and you need to backtrack, sidetrack, whatever.
9. Be a kid.  Combine your imagination with fear to produce speed.

One of the coolest things I’ve noticed about this type of running is your brain and body goes into absolute focus mode.  I often find my body reacting to things (tree branches especially) that I didn’t even have time to consciously think were in the way (whereas when walking the same trail I notice them well in advance.)  I also find I am more agile than I ever was on the football field.  High stepping, side stepping, jumping, cutting, it’s all good.

Moreover, the rest of life just fades into the background.  There is no time to think about job, bills, money, relationships, etc. like you can when you are slogging along at 8 minutes/mile pounding the pavement, not that I do anyway, but I know others do.  After all, you’re being chased by a tiger.  Or was it a bear?

Most Americans say tax rich to balance budget: poll – Yahoo! News.

I wonder how the poll defined “rich”.  Me thinks most people don’t really know what “rich” is.   It reminds me of a question by a Political Science professor of mine back at Amherst College (a small, liberal arts school with a fairly wealthy student base) who poised (to paraphrase) the following two questions:

1. How many of you pay full tuition at Amherst (at the time it was roughly $25K)?
2. How many of you would characterize yourself as Middle Class?

For the first question, I’d say roughly 10% of the class raised their hand.  For the second question, pretty much the whole entire class raised their hands, including one chap who’s Father was the CEO of a large multinational corporation and was well documented as a multi-millionaire.  All of the “full tuition” ones did as well.   Needless to say, none of those people were middle class by the real definition.

I’m not saying we should or shouldn’t tax the rich, I just think it is a slippery slope as to how one defines rich and my guess is most of those people who say “tax the rich” could very well fall into the category of rich if we were just to look at, say the top 10% of all earners in the US.  I also think if you tried to tax only the uber-wealthy (say the top 0.1% or even 0.01%) it wouldn’t be enough to cover the budget anyway. Happy to see a more thorough analysis.