Red hates happiness

I have some very disturbing news to share with you all. I just found out my home girl Red, who blogs at Girl With the Red Balloon, hates happiness. She probably also hates puppies, rainbows, and babies, but I’m yet to confirm that. I came to this conclusion after reading this sentence in a recent comment Red left

[…] shouldn’t you be advocating for the most responsible ways to get out of debt? Would you tell a family that is $28,000 in debt to take a vacation? I hope not!

Alright Red, I’ll play your game. Would I tell a family with $28,000 of debt to take a vacation? While I don’t know if I would necessarily beg them to go to Fiji, I probably wouldn’t tell them not to either. I don’t have the authority to tell people what to do with their money. Vacation away my friends!

To be perfectly honest, debt freedom isn’t really that different. Sure, it’s nice not having to send Sallie Mae a check each month, but other than that, nothing’s really changed. I’m still frugal. I still drive the same car. I still buy used furniture off Craigslist.

Don’t get me wrong, being debt free is cool and all, but really it’s just a tiny piece of the personal finance puzzle. I mean how depressing would my life be if my biggest financial milestone is debt freedom? I want more. I want to  have a million dollars in the bank. I want to send a bunch of underprivileged kids to Young Life camp. I want to buy a shark and a pony, force them to make babies, and be the first owner of a ShaPony. I have bigger goals than just paying off a few creditors.

If someone, who has a car payment and a Sallie Mae loan, wants to go to visit friends in France for a week, who am I to tell them not to? Heck, who am I to say taking such a trip would be financially irresponsible? If they make all their payments, I could care less what they do, how quick they get out of debt, or how many vacations they take.

For some (like Red and myself) we wanted nothing more than to pay off all of our creditors. While others might be just fine making minimum payments. And so now I ask you… What’s your debt strategy? Are you keeping some low interest student loans or car payments around? Or did you drink the kool-aid and want nothing more than to scream “I’m debt free”

p.s. I love you Red 🙂

No spend challenges are for wussies

If you read other PF blogs, which I hope you do, I’m sure you’ve seen various bloggers participate in no spend challenges. These challenges come in all shapes and sizes, but the general premise is pretty simple; Don’t spend you’re money on frivolous things. No Starbucks. No dining out. No clothes, movies, or gadgets. At the end of the day, week, or month, you’re suppose to feel like a financial rock star. But I’m here to make you feel like a wussy. Yeah, a wussy, welcome back to third grade!

Why anyone would want to participate in one of these challenges is beyond me. If I said, “Hey guys, let’s not eat food for a month so we can lose weight” would you join me? Heck no you wouldn’t. So why would you join me if I said let’s not spend our hard earned money on things that bring us warm fuzzy feelings? Things like chocolate, Dr. Pepper, and Finding Nemo (a delightful combination might I add).

If you want to lose weight, you don’t stop eating, you eat healthier. If you want to stop spending like a hot mess, you don’t stop spending, you learn to spend responsibly. Why does it have to be all or nothing? Instead of no spend challenges, why can’t we have spend only $50 or spend only $150 challenges?

Personally, I think these no spend challenges are for wussies. Or at least for people who need a false sense of self-control.

But hey, who am I to judge? Oh wait, that’s right. I’m a freakin’ ninja! I’ll judo chop your face off if you join any of those silly things.

Now it’s your turn to get even No Spend lovers. Tell me why they’re so great!

Have you ever participated in a no spend challenge? Was it the most incredible thing you’ve ever been a part of? Anyone else think they are just an excuse for people to pat themselves on the back?

note: Of course I’m being a drag drama queen. I don’t really think No Spend Challenges are as evil as I make them about to be, but they are definitely not for me 🙂

Lovin’ 2010

Seeing that 2011 is rapidly approaching, it’s time to see how the last 12 months treated the Ninja household. If you’re too lazy to read through, I’ll just tell you. Spoiler Alert: It kicked major butt!!!! Here were my original goals…

I love looking at that thing. It’s funny how much can change in one year. According to that chart I should still have about $12K owed to Sallie Mae. Praise baby Jesus, that’s not the case! Here’s a look at where we currently stand.

Checking: $9,374

Savings: $13,616

Roth IRA: $21,087

TSP (401K): $19,765

Sallie Mae: $0

Total: $61,000

As you can see, things turned out quite a bit better for us than originally anticipated. This is either the result of setting the bar too low, or having a freakin’ fantastic (emergency free) year. I like to think it’s a little bit of both. Since I like to be as transparent as possible, here’s a little more about the income we made in 2010…

Blog Income: $4,592

Gift Income: $4,429 (yes I’ll admit some of this was gifts from Mom Ninja, but most was wedding gifts)

Interest Income: $170

Net Income: $46,400

Tutoring Income: $2,552

In the words of Jay-Z, “I’m a hustler baby, and I just want you to know.” Haha, my two side hustles (tutoring/blogging) brought home a cool $7,144. I’m hoping next year to up that to about $10,000. Who knows if I’ll actually make it, but it’s worth a shot.

How ’bout ending with some random statistics you probably care nothing about, sound good?

Total Spent on Groceries: $2,095

Total Spent Dining Out: $1,431

Blog Operating Cost: $190 (which means a 2,316% return on investment)

Rent Paid: $13,532

Twenty-ten was pretty darn good to me and Girl Ninja. I would be totally stoked if 2011 turns out to be an even better year (those goals to follow in a future post). Here’s to hoping! How did 2010 treat you? Do you set goals each year? Do you “hustle” (if so, how much did it bring you)?

The Marshmallow Test: A Look At Delayed Gratification

This guest post is from The Digerati Life, a personal finance site. You should check it out, ’cause it’s one of the most read personal finance sites on the interwebz.

marshmallows

In the 1960’s, an experiment involving a marshmallow and a child was conducted. In this experiment, a child was led to an experiment room, where a marshmallow was on the table. The child was told that the researcher would be out for a while, and if the child could wait for him to come back, he’d give him another marshmallow as a reward. But if the child decides to eat the marshmallow, he only needs to ring a bell and the researcher would return. In the event that the child rings the bell, the researcher won’t reward the child with another marshmallow.

This was the famous Marshmallow Test. The results of this test reported that those children who were able to resist the marshmallow and wait for 15 whole minutes for the researcher to come back tended to do better in school. The kids who were capable of waiting eventually ended up with SAT scores that were, on average, 210 points higher than those of kids who could not wait. The follow-up studies of the children who participated in the experiment showed how they eventually dealt with life. The kids who had greater patience appeared to have more focus and drive compared with the kids who were less patient.

This experiment became one of the most important studies on delaying gratification. Apparently, the ability to delay gratification is one necessary tool for success. The ability to put off one’s desires allows someone to work in a focused manner towards his or her goals. Distractions abound, but if one is able to control their impulses, he or she will be able to stay on track.

“So, what’s in this for me?” you may ask. Well, think of it this way. Has it been too easy for you to turn to your Mastercard credit card when you’re faced with a purchase? For instance, you may feel the urge to buy a new Gucci bag. Or worse, you may decide that it’s time to trade in your car. If you’ve got $4,000 in credit card payments to go, plus a $20,000 mortgage, then a new car purchase at this very moment could prove disastrous for your budget. So should you put off purchasing a new car or succumb to financing? Sure, you could try to get a personal loan here and there, get cash advances on your card, then pay in cash. But is that sensible?

A person who can delay gratification will typically wait until the debts are paid and the bills are addressed before he gets the car. He may figure that once the problems are gone, owning a car could be justified. Maybe he’ll even start a savings account for a car purchase as he pays off the bills. That way, he could kill two birds with one stone: get out of debt, while saving for what he wants.

On the other hand, a person who can’t wait, may do everything he can to get the car: apply for loans, pile the purchase on his credit card bills, possibly even borrow money from friends and relatives. Truly a recipe for disaster.

If you see yourself in the person who can’t seem to defer gratification, then don’t despair. Don’t think that this behavior is hard-wired. It’s something you can unlearn with a little bit of work. Here are our suggestions on how to beat this behavior:

  1. Make a list of those things that you believe show your inability to delay gratification. Work on unlearning one habit a month. If, for example, you tend to buy donuts on your way home from work, but you know that you really don’t need the extra calories, then scrap this habit. If you feel the need for munchies, then start buying organic fruits and vegetables instead.
  2. As you work towards beating one bad habit a month, make sure that you chart your progress. Use a to-do list to mark off the habits you’ve started to overcome. And as you make progress on changing your habits, reward yourself with little, inexpensive treats. Rewards for good behavior could include a book, a sinful treat you’ve done without for the past month, or even just taking an hour off of work and chores to enjoy the sunset. “Simple” and “affordable” are our bywords for these treats.
  3. As you make adjustments on your spending and self-indulgent habits, surely you should be able to save. Start a new account at your local bank or a top online savings bank like the Sallie Mae Bank. This way, you’ll be able to save for your major purchases; like that car, for example.

A person’s lack of impulse control should not determine his or her financial destiny. We believe that a person can and will be able to change. The first step is admitting that one needs to change. The second step is to figure out how to change. Then following through and working hard to be consistent with these changes should lead you to success. We can do this!

Ninja’s Questions: In what areas of your life do you struggle to delay gratification? What about areas that you can easily delay? Do you know anyone that has put themselves in a bad situation because of impulse purchasing? I personally am a sucker for electronics, if it’s shiny and new…I want it, and I want it NOW!

p.s. The winner for the T-shirt give away is….TRINA!!!! I’m a little disappointed right now because Trina has emailed me a handful of times, and I’ve learned she is a Washington State University Cougar fan… I hate the cougs. Im a Husky kind of guy (UW). But the Random Number Generator sought mercy on a Coug I guess. Congrats Trina! The proof….

winner winner chicken dinner

There’s always something

Random Note: I not really a big fan of calling Wife Ninja, Wife Ninja. I much preferred Girl Ninja (GN), and since this is my blog, and she is a girl, I’ve decided to reincarnate her title as Girl Ninja.

Ninja Mansion

I was talking with Girl Ninja’s uncle the other day about normal guy things (sports, money, unicorns, etc). We then started talking about housing and what that looked like for Girl Ninja and myself. I told him we were planning to save pretty aggressively so we could have up to $100,000 to use for a down payment. I told him “I feel like once we buy a house, I will finally relax and be more of a free spender. After all, a house is the last big purchase I have to look forward to…right?” Yeah, I know, I realize how stupid that comment was.

When I was paying off debt, I thought that becoming debt free would be my ultimate release from frugality. But then came a wedding and a honeymoon, so I focused on saving up for those expenses. Now, almost three months in to the married life, I’m all about saving for a huge down payment.

But, and this is a big but, I’m officially coming to terms with the fact that there will always be something. Once Girl Ninja and I ‘take the plunge’ and purchase our first place, we’ll just begin saving for our next ‘project’. A kitchen remodel, children’s college funds, a batmobile, etc. When will it end? Never.

Although this epiphany could seem depressing, it was a welcome (and needed) reminder. A reminder that I will never “have it ALL together” no matter how hard I try. A reminder that I shouldn’t put off having fun today, so that I can have fun tomorrow. A reminder, that I sometimes lose sight of what’s important.

I obsess over a stupid goal (like saving to buy a home), and allow that goal to distract me from a huge part of the personal finance puzzle. And that part, mi amigos, is spending. Sure, Girl Ninja and I could put every un-budgeted dollar we earn towards saving for the future Ninja pad, but what would that mean for the next few years of our lives?

I’ll tell you. It would mean a lot of not-fun-having! And last time I checked, we both like to have fun. So, while we will continue to work towards our goal of home ownership, we will also make a point to enjoy our journey through that process.

What is your current financial goal? Do you allow it to distract you from contentment, like I do, sometimes? Where is the balance between healthy focus and uber-awkward awkwardness?

On a FUN note, we just got our wedding pictures back. We haven’t looked through all 1,200 of them yet, but here are a few of our favorites!!!! (more to come later)


Is the reward system smart?

dont run with scissors

Wife Ninja and I have had some pretty interesting discussions the last few weeks, specifically in regards to establishing reward systems. And whether or not its a a good idea to implement one in the classroom? The conversation stems from her kindergarten teaching experiences. She has kids in her class that are demons from hell problematic, and others that are perfectly poised. Kindergarten is an interesting age as the kids are old enough to understand the difference between good and bad, but too young to understand that putting scissors in your mouth (or eating glue) is probably a stupid decision.

Wife Ninja is having a hard time controlling a few of her students. They wont follow rules, they constantly disrupt class, and have no respect for any authority figure (including the principal). WN has done everything just about everything she can to try and control these kids. They just won’t have it.

The other day, WN, came home with a bag of skittles. I figured she must really love me and wanted to get me a little treat. Wrong! They weren’t for me. They were for her kids.

Turns out, Wife Ninja’s school counselor suggested establishing a reward system in the classroom; making examples out of the good students, in hopes that the spawns of satan difficult children will model the angelic children’s behavior. Kids that show consistent “good” behavior will be given skittles randomly as a reward.

I get where the counselor is coming from, but should Wife Nija implement a reward system for behavior that, I personally believe, should just be expected? I mean, I didn’t get rewarded for making the bed this morning, it was expected of me. So why should Timmy be rewarded for keeping quiet when the teacher is talking?

Here’s how I like to envision things. When I have Kid Ninja’s they will be assigned chores. Things like walking the dog, taking out the trash, keeping their room clean, etc. Will I pay my kids an allowance for doing these things? Absolutely not! They are members of the ninja household, and as such, need to pull their weight. I don’t want them taking out the garbage because they will get $5 for it, I want them taking out the garbage because it’s part of their familial responsibility. I’m not going to reward behavior that is expected.

That said, there will be opportunities for them to perform “extra tasks” for an allowance. Things like pulling the weeds, washing the ninjamobile, filing daddy’s taxes for him. You know, things that are above and beyond the family expectations.

It’s these same beliefs that lead me to conclude the counselor’s Skittles strategy is flawed. If I was the teacher, they’d only get delicious treats if A) I hadn’t eaten them already (which I probably would have), or B) they did something out of the ordinary to deserve them (things like organizing the classroom library, helping the teacher hand out materials to other students, etc). Not for things like being quiet.

Ultimately, Wife Ninja will do what is best and what works. She knows her classroom and kids better than the school counselor and better than myself. My wife is torn. She doesn’t believe the skittle technique is the best option, but right now it might be her ONLY option as she HAS to find a way to get these kids to behave! Nothing else has worked.

How would you deal with the hard kids if they were in your class? Do you think the counselors Skittle method is as jacked up as I do, or are skittles the solution to all our world’s problems?

For you parents (or future parents), how do you implement rewards and allowances in your house? What behavior should be expected of a five year old and what should be rewarded?

EDIT: Understand that Skittles was just the example given by the counselor, not necessarily what Wife Ninja would use. She could use stickers/pencils/silly bands etc as rewards. It seems many readers got hung up on Skitlles and missed the point of the article. It wasn’t to focus on what the rewards was, but rather should a reward even be given. Sorry for not making it more clear in the original post.

P.S. Make sure to look at my other post today as I’m giving away one of the sickest PF shirts you will ever see. Ever!!!!

Excusing bad behavior

One of my favorite things about personal finance is hearing all the crazy excuses people use to justify bad decision making. For example my friend pulled the, “My transmission just went out so I HAD to buy a brand new car” Since when did a little car work, justify the need for a new car loan? Maybe it’s a sense of entitlement, or perhaps a lack of responsibility? Maybe I’m crazy, but I think it’s time we slap our peers back to reality and remind them that financing a boob job (wonder how many pervs are gonna click that link) is a terrible idea. Here are some of the most common “crappy excuses” I’ve come across…

Car:

The only thing stupider than financing a new car, when your old one is broke, is financing a new car when there is nothing wrong with your old one. Seriously people, cars are not like shoes. They do not need to match your outfit. I know at least three people who sold there, perfectly fine, cars for some type of hybrid or ‘fuel efficient’ car. Ummm, really? You are going to sell your $8,000 Toyota Camry that gets 25mpg, and go finance a $30,000 Prius that gets 47mpg? Did you know, that prius will only save you about $600 a year in gas? Which means it would take more than 20 years to actually save money. Fuel efficiency is NOT a valid excuse for financial stupidity. (I’m not talking about people who can afford Hyrbids, so all you hyrbid owners can stop foaming at the mouth.)

Tax Deductions:

Similar to the hybrid model above, I can’t believe how many people used the $8,000 tax credit as their excuse for buying a home. Since when did getting $8,000 from the government, warrant spending $300,000 of your own? Seems a bit crazy to me. Again, if you were already looking to buy a home and had adequate liquidity, then you made a smart move by taking advantage of the low market and the tax credit. Something tells me, however, a bunch of people went and bought homes they couldn’t afford, just because they felt like they were suppose to. Do you know anyone that took advantage of this credit or any other credit, that should not have?

Sales:

This is probably the excuse that makes me want to punch a baby the most frustrated. You know exactly what I’m talking about, and sadly, some of you are probably guilty of it. I’m talking about the woman, who after complaining about how broke she is, goes and buys a pair of boots from Nordstrom because they were on sale. Or the unemployed dude who puts rims on his car because he got four rims for the price of three. You know the guy. He loves to say “I saved $300 buying these rims”  when the truth is he SPENT $900 to get them. There is nothing wrong with looking for a good deal, but there is absolutely something wrong with buying crap you don’t need just because “It’s on sale!”

Man oh man, the list goes on and on and on. I can think of at least three more categories I could rant about (balance transfers, student loans, unemployment) but for the sake of not offending everyone, I’ll bite my tongue and call it a day. I’m sure many of you come across excuse makers every day. Care to share any of the ridiculous things these people come up with?