Jason Moran
Thursday, July 27, 2006
Get Out Of Debt
I have lost my list of financial pointers, so I'm gonna have to wing it and probably only give out a couple of good pointers. I already gave the disclaimer that this was going to be a very short list of a few "common sense" items that could help some people.
Just like losing weight, where the only way it will happen is to consume less calories than you use, the only way out of debt is to make more money than you spend. Why is losing weight so hard? Because it's so much easier to just eat whatever sounds good. Why is is so hard to get rid of debt, because it's so easy to buy all the cool stuff you want. It is desireable to be grandiloquent.
Step #1 (the most important step): Do not get any more debt. I could tell you about starving children in Africa or homeless folks everywhere to scare you with the "why would you buy an iPod if some people live in a cardboard box" argument, but I'll do even less. Do you need to buy a car more than once every 10 years? Do you need to even own a television? Do you need to update your wardrobe every year? Is it just because everybody else goes into debt to get ahead now? The quote to apply here is "Live like no one else now so you can live like no one else later."
To go along with that just remember that 60 years ago there were no credit cards and department stores ADVISED AGAINST CREDIT/LOANS. Also, if you are, say, 23 years old, out of college and on your own now, then let me ask a question. Why would you try to have the same quality of life as your parents? It took them 50 years to get where they are! How can you expect to have all of that stuff NOW?
Anyway, step 2 is the snowball method for debt elimination (idea from Dave Ramsey). You take all of your debts and order them by how much money you still owe on them. What you do is you pay the minimum amount on every debt except for the smallest of them. Pretty soon that small debt is payed off. You don't get a break in how much you pay now, instead you take that entire payment and "put another layer on the snowball" and make a higher payment on the next highest payment. If you are keeping to the plan and not taking on any more debt, then you can get on top of things after some consistency.
I do, however, have to admit that the snowball method is not mathematically consistent. The reason it works is because it gives periodic psychological micro-encouragement after each debt is eliminated. This helps a person to stay with the debt elimination plan.
However, if you are a "strong enough person" to stick with maximizing how much money you will throw at debt to eliminate it all, you will most effectively eliminate all of your debt by always making your maximum payments on the highest interest rate debts. I will follow with some examples:
The total minimum monthly payments are $1975. So, if you can spend $2000/month, and you start out by NOT buying your new outfit for $75, you will have JC Penney paid off after the first month. Now you can add what you used to pay to JC Penney to the next payment.
I will play devils advocate and show you what happens by paying the higher interest rates instead (using $400 applied to the two credit cards every month).
DEBT SNOWBALL PLAN: PAY THE LOWEST BALANCE FIRST
Card A: $8,000 at 19.8% at $160 per month Card B: $6,000 at 5.9% at $240 per month Total payments equal $400 per month
Card B is paid off in 26.74 months. At that point in time, Card A has a balance of $7,068 to which we start applying payments of $400.
Card A is paid off in another 21.06 months.
Total payoff time is 26.74+21.06=47.80 month
Total payoff cost=47.80 x $400=$19,120
That's $19,120 out-of-pocket cost for the Debt Snowball.
PAY THE HIGHEST INTEREST RATE FIRST
Card A: $8,000 at 19.8% at $280 per month Card B: $6,000 at 5.9% at $120 per month Total payments equal $400 per month
Card A is paid off in 38.96 months. At that point in time Card B has a balance of $2,124 to which we start applying payments of $400.
Card B is paid off in another 5.39 months.
Total payoff time is 38.96+5.39=44.35 months
Total payoff cost=44.35 x $400=$17,740
That's $17,740 out-of-pocket cost paying the highest interest card first.
CONCLUSION
"Debt Snowball" costs $19,120 "Pay highest rates first" costs $17,740
Additional cost for the Debt Snowball is $19,120-$17,740=$1,380 (because it takes over three months longer to repay the debt using this method). ¶ 8:10 AM 20 Comments
Just like losing weight, where the only way it will happen is to consume less calories than you use, the only way out of debt is to make more money than you spend. Why is losing weight so hard? Because it's so much easier to just eat whatever sounds good. Why is is so hard to get rid of debt, because it's so easy to buy all the cool stuff you want. It is desireable to be grandiloquent.
Step #1 (the most important step): Do not get any more debt. I could tell you about starving children in Africa or homeless folks everywhere to scare you with the "why would you buy an iPod if some people live in a cardboard box" argument, but I'll do even less. Do you need to buy a car more than once every 10 years? Do you need to even own a television? Do you need to update your wardrobe every year? Is it just because everybody else goes into debt to get ahead now? The quote to apply here is "Live like no one else now so you can live like no one else later."
To go along with that just remember that 60 years ago there were no credit cards and department stores ADVISED AGAINST CREDIT/LOANS. Also, if you are, say, 23 years old, out of college and on your own now, then let me ask a question. Why would you try to have the same quality of life as your parents? It took them 50 years to get where they are! How can you expect to have all of that stuff NOW?
Anyway, step 2 is the snowball method for debt elimination (idea from Dave Ramsey). You take all of your debts and order them by how much money you still owe on them. What you do is you pay the minimum amount on every debt except for the smallest of them. Pretty soon that small debt is payed off. You don't get a break in how much you pay now, instead you take that entire payment and "put another layer on the snowball" and make a higher payment on the next highest payment. If you are keeping to the plan and not taking on any more debt, then you can get on top of things after some consistency.
I do, however, have to admit that the snowball method is not mathematically consistent. The reason it works is because it gives periodic psychological micro-encouragement after each debt is eliminated. This helps a person to stay with the debt elimination plan.
However, if you are a "strong enough person" to stick with maximizing how much money you will throw at debt to eliminate it all, you will most effectively eliminate all of your debt by always making your maximum payments on the highest interest rate debts. I will follow with some examples:
| Debt | Rate | Minimum | Payments Remaining | Total |
| JC Penny | 7.90% | $17 | 13 | $117 |
| Credit Card B | 5.90% | $120 | 60 | $6,000 |
| Credit Card A | 19.80% | $160 | 64 | $8,000 |
| Car | 8.50% | $400 | 30 | $9,000 |
| Student Loans | 6.00% | $178 | 175 | $18,000 |
| Mortgage | 8% | $1,100 | 342 | $148,000 |
The total minimum monthly payments are $1975. So, if you can spend $2000/month, and you start out by NOT buying your new outfit for $75, you will have JC Penney paid off after the first month. Now you can add what you used to pay to JC Penney to the next payment.
I will play devils advocate and show you what happens by paying the higher interest rates instead (using $400 applied to the two credit cards every month).
DEBT SNOWBALL PLAN: PAY THE LOWEST BALANCE FIRST
Card A: $8,000 at 19.8% at $160 per month Card B: $6,000 at 5.9% at $240 per month Total payments equal $400 per month
Card B is paid off in 26.74 months. At that point in time, Card A has a balance of $7,068 to which we start applying payments of $400.
Card A is paid off in another 21.06 months.
Total payoff time is 26.74+21.06=47.80 month
Total payoff cost=47.80 x $400=$19,120
That's $19,120 out-of-pocket cost for the Debt Snowball.
PAY THE HIGHEST INTEREST RATE FIRST
Card A: $8,000 at 19.8% at $280 per month Card B: $6,000 at 5.9% at $120 per month Total payments equal $400 per month
Card A is paid off in 38.96 months. At that point in time Card B has a balance of $2,124 to which we start applying payments of $400.
Card B is paid off in another 5.39 months.
Total payoff time is 38.96+5.39=44.35 months
Total payoff cost=44.35 x $400=$17,740
That's $17,740 out-of-pocket cost paying the highest interest card first.
CONCLUSION
"Debt Snowball" costs $19,120 "Pay highest rates first" costs $17,740
Additional cost for the Debt Snowball is $19,120-$17,740=$1,380 (because it takes over three months longer to repay the debt using this method). ¶ 8:10 AM 20 Comments
Tuesday, July 25, 2006
Get Rich Or Die Trying
50 Cent's first mainstream album title is what the average American spends much of their life trying to do. The rich seem to stay rich and the poor stay poor. I just read an article which talks about the "Ghetto Tax". What it basically talks about is how expensive it is to be poor. Insurance is higher, you pay premiums on mortgages and car loans, check cashing stations charge a 500% APR, rent-to-own places are a ridiculous rip off, the "hood" has no quality food stores, overdraught fees at banks are crazy expensive (and it's only the poor who are usually in trouble of overdraughting, making it a catch 22 that keeps you poor!).
The article: The High Cost of Being Poor
After reading the article I also noticed some great feedback that was thought provoking (Here are a few):
I'm white and well educated. I also spent six months six years ago living in a transient motel. I enjoy watching people and finding patterns and links. Here are a few:
1. The poor often make bad decisions, period. Having a TV seems to be a priority, and it better be big and with cable. Expensive Nike's, high alcohol consumption, and drug usage are way too often part of the lifestyle. As someone notes here, they buy cars that both buyer and seller know will be repoed within two months, wasting incredible amounts of money that could go towards necessities.
2. Once upon a time if you had $25 or $100 you could walk into a bank, open an account, and pick out your check pattern. For 25 years now almost all banks have a minimum creditworthiness to become a customer. Once, when I worked for a bank I was refused an account! This is the real reason all those payday loan and pawn shops have popped up like mushrooms after a rain.
3. Rent to owns are a rip, even the customers know that. But ego and desire overwhelm common sense. No RTO store has ever forced a poor customer to sign a contract, it's all voluntary.
4. I have had low income people ask me if they could have a computer free (I was rehabbing them) at the very same moment a cable installer was there to start a $60/mo habit.
5. Boy, how true about no grocery stores or gas stations nearby! Where I used to live has lost the one gas and repair station for miles around. And my insurance dropped $200 a year when I left the hood!
I guess I'm saying that there are some issues which are the poor's fault, and there are some issues that they can't help. Like so much in life, it ain't simple. As The Duke said, "Life's difficult, and being stupid makes it more difficult."
Here is one more:
The reason that the rich were so rich, Vimes reasoned, was because they manged to spend less money.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, where they were sort of OK for a season or two and then leaked like hell when the carboard gave out, cost about ten dollars. Those were the kinds of boot Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes 'Boots' theory of socio-economic unfairness.
--Terry Pratchett, Men At Arms, pg 35
For my next post I am going to give three or four (out of the hundreds of possible) examples of how to get out of the poorhouse. My only problem is that I am not ever good at following the advice I dish out. I don't think that changes the quality of the advice, though. Check back next time for some good pointers (backed by tried-and-true financial advisors). ¶ 9:13 AM 22 Comments
The article: The High Cost of Being Poor
After reading the article I also noticed some great feedback that was thought provoking (Here are a few):
I'm white and well educated. I also spent six months six years ago living in a transient motel. I enjoy watching people and finding patterns and links. Here are a few:
1. The poor often make bad decisions, period. Having a TV seems to be a priority, and it better be big and with cable. Expensive Nike's, high alcohol consumption, and drug usage are way too often part of the lifestyle. As someone notes here, they buy cars that both buyer and seller know will be repoed within two months, wasting incredible amounts of money that could go towards necessities.
2. Once upon a time if you had $25 or $100 you could walk into a bank, open an account, and pick out your check pattern. For 25 years now almost all banks have a minimum creditworthiness to become a customer. Once, when I worked for a bank I was refused an account! This is the real reason all those payday loan and pawn shops have popped up like mushrooms after a rain.
3. Rent to owns are a rip, even the customers know that. But ego and desire overwhelm common sense. No RTO store has ever forced a poor customer to sign a contract, it's all voluntary.
4. I have had low income people ask me if they could have a computer free (I was rehabbing them) at the very same moment a cable installer was there to start a $60/mo habit.
5. Boy, how true about no grocery stores or gas stations nearby! Where I used to live has lost the one gas and repair station for miles around. And my insurance dropped $200 a year when I left the hood!
I guess I'm saying that there are some issues which are the poor's fault, and there are some issues that they can't help. Like so much in life, it ain't simple. As The Duke said, "Life's difficult, and being stupid makes it more difficult."
Here is one more:
The reason that the rich were so rich, Vimes reasoned, was because they manged to spend less money.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, where they were sort of OK for a season or two and then leaked like hell when the carboard gave out, cost about ten dollars. Those were the kinds of boot Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes 'Boots' theory of socio-economic unfairness.
--Terry Pratchett, Men At Arms, pg 35
For my next post I am going to give three or four (out of the hundreds of possible) examples of how to get out of the poorhouse. My only problem is that I am not ever good at following the advice I dish out. I don't think that changes the quality of the advice, though. Check back next time for some good pointers (backed by tried-and-true financial advisors). ¶ 9:13 AM 22 Comments
Friday, July 21, 2006
I Got Hacked
My home computer got hacked.
This is devastating because I am, as others call it, a "computer nerd". I run a firewall with most of the ports closed. I also have a windows firewall for a second-tier "just in case" protection. I use a password on the only administrator account that exists and all other accounts are limited.
As it turns out, those limited accounts are exactly what saved me from even more trouble. Well, that and "nice" h4x0rz.
You see, this hacker got in via a program running on my computer which allows somebody from a remote location to see what the computer would display on the monitor and for that remote mouse and keyboard to interact with my home computer.
What is lucky is that when the hacker got there it was at the login screen. The administrator account has a password, so he used Kelly's limited account. The saving grace is that Kelly does not have the privileges of installing anything. Therefore, the hacker was not able to install a keylogging, backdoor, trojan, etc program to further screw around with our computer.
Furthermore, the hacker left extremely obvious traces that he had been there. If the hacker had quietly gone on and off and we never noticed, then perhaps at a later point in time the hacker could have gotten on when my administrative account was currently logged in (and wreaked havoc). However, this h4x0r wrote disgusting phrases regarding Kelly and put text files in various places talking about files/directories he found being "awesome" or "good" or "gay".
Anyway, I took some strong initial steps...but I don't like my computer to be so locked down that I can't do cool things with it. Therefore I plan on taking some time to put the proper levels of protection on my computer in the next few days. ¶ 4:02 PM 10 Comments
This is devastating because I am, as others call it, a "computer nerd". I run a firewall with most of the ports closed. I also have a windows firewall for a second-tier "just in case" protection. I use a password on the only administrator account that exists and all other accounts are limited.
As it turns out, those limited accounts are exactly what saved me from even more trouble. Well, that and "nice" h4x0rz.
You see, this hacker got in via a program running on my computer which allows somebody from a remote location to see what the computer would display on the monitor and for that remote mouse and keyboard to interact with my home computer.
What is lucky is that when the hacker got there it was at the login screen. The administrator account has a password, so he used Kelly's limited account. The saving grace is that Kelly does not have the privileges of installing anything. Therefore, the hacker was not able to install a keylogging, backdoor, trojan, etc program to further screw around with our computer.
Furthermore, the hacker left extremely obvious traces that he had been there. If the hacker had quietly gone on and off and we never noticed, then perhaps at a later point in time the hacker could have gotten on when my administrative account was currently logged in (and wreaked havoc). However, this h4x0r wrote disgusting phrases regarding Kelly and put text files in various places talking about files/directories he found being "awesome" or "good" or "gay".
Anyway, I took some strong initial steps...but I don't like my computer to be so locked down that I can't do cool things with it. Therefore I plan on taking some time to put the proper levels of protection on my computer in the next few days. ¶ 4:02 PM 10 Comments
Wednesday, July 05, 2006
Guide To Getting Huge II
You aren't huge yet? Well let me tell you about a little bit more to get you over those hurdles.
I will cover these 3 areas:
Omega-3 Fish Oils, Flaxseeds Oils and other fatty oils/lipids. These are commonly deficient in many people. They encourage healthy cell membranes and are good for your brain.
A daily multi-vitamin. These are essential as they will actually help your body to assimilate the protein and creatine you might be taking. Most studies have shown that removing the daily multi-vitamin greatly reduces the effectiveness of most other supplements.
Caffeine. This doesn't mean go and drink coffee non-stop. You can take caffeine pills to stimulate your muscles. Do you ever have days when lifting is "easy" and other days when you just don't have it? Caffeine will help to get rid of those drowsy days.
Glutamine. Most heavy lifters operate in a deficient state of glutamine, which is a conditionally essential amino acid. It is used during lifting, and overtraining can deplete your levels. By taking a little glutamine to aid your natural stores, you should have more energy to lift weights. Amino2222 and others will also help with your amino acids.
Lastly, some people put their faith into Animal Pak, claiming it is the ultimate muscle gaining supplement out there. Animal Pak is loaded with like 8 million different things, but somehow it scares me. I'm also scared of Uni-Liver. I mean, when you take a freshly slaughtered cow's liver, flash freeze it and put it into pill format...why would I want to take it? I mean, sure, putting a bunch of highly concentrated animal hormones into my body might make me HUGE...but I dunno if I want to try it.
Cycling:
Whether it is taking supplements or lifting weights, true gain will only last a short while. After a little bit of time your body gets used to the things you are feeding it, and your muscles get used to the workouts you are making them do. Therefore, you should cycle after a while. Maybe 6-8 weeks. Once your body gets shocked with new supplements and a radically different pattern in working out you'll keep it guessing and your muscles will keep on growing. I only discovered this truth very recently, but it is this fact that has helped to push me past a plateau I've been stuck at for months.
Lifting:
Lastly, the style of lifting you do changes what impact it will have on your body. Remember how I said testosterone helps stimulate your muscles? Well, lots of people only focus on their upper body. The two best excercises for overall strength are squats and deadlifts. Those two exercises stimulate natural releases of testosterone, making all of your other lifting more effective.
Whether you are doing lots of repetitions or maxing yourself out after only a handful or reps makes a difference in how your body responds as well. Strength and size come primarily from low rep lifting, while leanness and cuts often come from higher reps and less rest in between sets.
All in all it depends on what you want to achieve and what body type you have (ectomorphs, mesomorphs, and endomorphs.)
Ectomorphs – have short upper body, long arms, legs, and has very little fat storage. The chest and shoulders are generally narrow with long, thin muscles.
Mesomorphs – have large chests, long torso, solid muscle structure, and can gain muscles quite easily without putting on too much extra body fat.
Endomorphs – have wide hips, round face, short neck, and can gain and store body fat very easily.
Most people are combinations. I, myself, am about a 75%-25% mix of Mesomorph and Endomorph. If only I had less Endomorph and more Ectomorph. Sure, I'd have trouble gaining muscle, but at least I wouldn't be so fat. (Tony and Jean have mostly Ectomorphic bodies). ¶ 9:03 AM 26 Comments
I will cover these 3 areas:
- More supplements
- Cycling
- Lifting
Omega-3 Fish Oils, Flaxseeds Oils and other fatty oils/lipids. These are commonly deficient in many people. They encourage healthy cell membranes and are good for your brain.
A daily multi-vitamin. These are essential as they will actually help your body to assimilate the protein and creatine you might be taking. Most studies have shown that removing the daily multi-vitamin greatly reduces the effectiveness of most other supplements.
Caffeine. This doesn't mean go and drink coffee non-stop. You can take caffeine pills to stimulate your muscles. Do you ever have days when lifting is "easy" and other days when you just don't have it? Caffeine will help to get rid of those drowsy days.
Glutamine. Most heavy lifters operate in a deficient state of glutamine, which is a conditionally essential amino acid. It is used during lifting, and overtraining can deplete your levels. By taking a little glutamine to aid your natural stores, you should have more energy to lift weights. Amino2222 and others will also help with your amino acids.
Lastly, some people put their faith into Animal Pak, claiming it is the ultimate muscle gaining supplement out there. Animal Pak is loaded with like 8 million different things, but somehow it scares me. I'm also scared of Uni-Liver. I mean, when you take a freshly slaughtered cow's liver, flash freeze it and put it into pill format...why would I want to take it? I mean, sure, putting a bunch of highly concentrated animal hormones into my body might make me HUGE...but I dunno if I want to try it.
Cycling:
Whether it is taking supplements or lifting weights, true gain will only last a short while. After a little bit of time your body gets used to the things you are feeding it, and your muscles get used to the workouts you are making them do. Therefore, you should cycle after a while. Maybe 6-8 weeks. Once your body gets shocked with new supplements and a radically different pattern in working out you'll keep it guessing and your muscles will keep on growing. I only discovered this truth very recently, but it is this fact that has helped to push me past a plateau I've been stuck at for months.
Lifting:
Lastly, the style of lifting you do changes what impact it will have on your body. Remember how I said testosterone helps stimulate your muscles? Well, lots of people only focus on their upper body. The two best excercises for overall strength are squats and deadlifts. Those two exercises stimulate natural releases of testosterone, making all of your other lifting more effective.
Whether you are doing lots of repetitions or maxing yourself out after only a handful or reps makes a difference in how your body responds as well. Strength and size come primarily from low rep lifting, while leanness and cuts often come from higher reps and less rest in between sets.
All in all it depends on what you want to achieve and what body type you have (ectomorphs, mesomorphs, and endomorphs.)
Ectomorphs – have short upper body, long arms, legs, and has very little fat storage. The chest and shoulders are generally narrow with long, thin muscles.
Mesomorphs – have large chests, long torso, solid muscle structure, and can gain muscles quite easily without putting on too much extra body fat.
Endomorphs – have wide hips, round face, short neck, and can gain and store body fat very easily.
Most people are combinations. I, myself, am about a 75%-25% mix of Mesomorph and Endomorph. If only I had less Endomorph and more Ectomorph. Sure, I'd have trouble gaining muscle, but at least I wouldn't be so fat. (Tony and Jean have mostly Ectomorphic bodies). ¶ 9:03 AM 26 Comments