guest post

My blog has been hijacked for the day…

It’s Jenna, the former Community Manager at Adaptu.  (Can’t get rid of me yet!)  Ninja has graciously allowed me to steal some of his space on PDITF to tell you about an awesome new project I’m working on and how you can help me.

See, Ninja and I have a lot in common, we both like personal finance, we both live in the Pacific Northwest, we both love burritos, and we both love Jesus.  But while he is off using mad Ninja skills helping people destroy their debt, being a secrete government spy and taking high schoolers out for Blizzards and to awesome summer camps.  I’m making delicious beer, helping clients sell cool technology, and trying to build a mobile medical clinic for Portland’s homeless.

Yes, I’m trying to raise $27,000 by August 27, 2013 – my 27^th birthday!

(Are we the same age too Ninja?) <—yes we are 😉

This money will go to fund a mobile medical clinic to serve Portland’ homeless.  You see I’ve been volunteer with Bridgetown Inc, a non-profit focused on homelessness, for over a year and a half now.  Every Thursday night, Night Strike happens.  We work with over 150 volunteers to serve roughly 500 homeless guests, serving hot meals, cutting hair, showers, clothing and feet washing.  You name it.  We do a ton of stuff every week, which is awesome.

The thing is, Night Strike needs a mobile medical clinic to take our services to the next level.  And I’m committed to helping make this dream a reality.  But I need some help.

Here’s how PDITF readers can help:

1. If you live in Portland (or ever come visit Portland) consider coming to volunteer at Night Strike.  Seriously, we would love to have you.  Leave a comment below and let me know.
2. Donate.  Come check out my blog, beyondthebridgepdx.org to donate, get updates and learn more about homeless issues.
3. Serve others.  Can’t come to Portland and volunteer and can’t give financially right now?  That is totally fine by me.  I challenge you to do something for someone else this week.

Have you done something awesomely generous before?  What was it?  Leave a comment below so we can celebrate with you!  Going to take me up on my challenge – what are you going to do this week?

Ninja’s comments: Portland is the JV version of Seattle. That is all 🙂

(guest post by William Cowie) 

Debt is nothing but impatience.

To prove this mathematically is easy. After doing that we’ll look at some of the intangible costs and what to do about them.

A.  The Math

1. Interest

Let’s say you want to take a cruise and it costs $5,000.

Let’s say your budget allows you to pay $200 a month. If you save with zero interest, that’s 25 payments, a little over 2 years. If you put in on a credit card, it will take you more than 30 months to pay it off — 5 extra months of making payments. Only because of interest.

Note the only difference is time: cruise now or cruise later. Same cruise. The only reason you’d spend an extra $1,000 is impatience.

2. Other Money

It’s not just interest you save with patience. A year ago the iPhone 4S was the hot thing. It was a good product last year and it hasn’t changed. The only thing that changed is what we think of it. Last year we thought it was hot stuff. This year it’s passé. But cheaper.

Same with movies. If you wait a year or two you can see today’s hot movie for a dollar instead of $20. The popcorn is a lot cheaper, too. The only difference is time.

B.  Intangibles

1. Freedom

So, impatience is expensive. It gets worse.

If your mindset is “buy now, pay later,” you never do it for only one thing. You’ll do it for more than one item until your life consists of “making payments.” Every month it’s the bills, and: can I make it?

What if your job sucks? Can you afford to quit and look for a better one?

No.

Why not? Your freedom to do the thing you want is gone. Because you need to make the payments.

2. Opportunities

Foregone opportunity is another hidden cost of impatience. For example, a neighbor is forced to sell their home while the market is really bad. You know, everyone knows, the market will recover, because it always does. If you jump you can get a killer deal. But if you’re in debt you can’t. You miss out on the opportunity to make another $50,000 or more, without any extra work. Because you were impatient.

These less obvious costs of debt are often a lot bigger than the obvious ones.

But they all boil down to one single thing: impatience.

Debt Is Nothing More Than Impatience

How impatient are you? Chances are the answer will tell you how much of a problem you have with debt and spending.

It’s a lot easier to catch a snake if you cut its head off. Same with debt. If you punch impatience in the face you have a much better shot at killing the debt monster.

Remember: it’s the same payment every month. Either you pay a bank or you pay it into your own savings or investment. One way is the way of freedom and the other is the way of servitude. Same payment. The only difference is impatience.

Don’t you want to have more money and have more freedom? Without having to win the lottery?

Punch impatience in the face.

How do you do that?

1.  Watch What You Watch

Yes, the new iPhone 5 is the hot thing and everybody’s talking about it. Everywhere you look there’s a new article about it.

Don’t read it. Why not? The more you read about it, the more you’ll want it. It’s human nature. Find other things to read and watch. Don’t make it hard for yourself. Just find something else.

2.  Change Your Interests

One of the big benefits of being patient and having cash is you can pounce on terrific opportunities. If you have cash you are in the minority, so there’s not a lot of competition where you operate.

But the nice deals aren’t on billboards; you need to hunt them down. By starting early and playing hard to get, you’ll eventually know where the good deals hide out. Start by going to foreclosure auctions. See how they work. Get a feel for what to expect, what’s reasonable and what not. Talk to the other people there. Find out where they go to find deals. After a few months of lurking at these places, you’ll begin to get a feel for what’s a bargain and what not. And sooner or later there will be one that others pass on because they have other interests.

Picking up a foreclosed home, then renting it out for a year and selling it for a $70,000 profit brings an entirely different class of jolly than having the latest gadget or putting a cruise on a credit card. But it takes patience. After you’ve done it a few times, you can take a cruise around the world on the QE2 and still have money in the bank.

If you still want to.

It All Comes Down To Redefining Fun

It’s very simple: impatience carries a premium, patience carries a discount. Which do you prefer?

And the benefits of impatience are often very fleeting, while the benefits of patience last a lot longer.

Punching debt in the face starts with knocking out impatience. Here are your gloves.

William Cowie is a retired businessman spending his time coaching everyone who wants to listen about managing their money on his Drop Dead Money blog. 

I’m out of town for the week taking some kids to Young Life camp so they can have the best week of their lives. Today I have a guest post from Jenna who works for Adaptu, a company whose goal is to provide a single source of financial information, money management tools and expert and community support to help their members transform their financial lives and live the life they want.

Do you have trouble managing unexpected expenses or resisting sudden impulse purchases?  If so, you are definitely not alone, 54% of workers are concerned about not having sufficient emergency savings for unexpected expenses.  We just added an exciting new feature to the popular Adaptu Mobile Wallet, making it even better with “Did You Know” alerts.  These personalized text messages include tips to help you stay on track and improve your finances.

What do to first?  Download Adaptu Wallet for FREE for the Android at Google Play here, in the Amazon Marketplace here and for the iPhone here.  If you already have an account on Adaptu.com all you need to do is enter your email address and password.  You’ll then be asked to create a four-digit PIN for extra security.  Give Adaptu Wallet a couple of minutes and your accounts information from Adaptu.com will show up.  If you’ve never created an account on Adaptu.com, you can still create an account on the Mobile Wallet, but I’d highly recommend creating it first on Adaptu.com.  Personally my fat fingers don’t do so well on touch screens and my banking passwords are complicated. It is much faster to set it up online.

On the home screen you’ll see the only mobile wallet app with a predictive view of your cash flow.  This exclusive Adaptu feature can plan and adjust for future spending and then view your cash flow in the past, present and future.  This is the first way Adaptu’s Mobile Wallet can help you save money right now: no more buyers remorse or accidentally going over budget.

Once you’ve got your financial accounts set up, add your rewards programs.  The is the second way Adaptu’s Mobile Wallet can help you save money right now, by tracking all your rewards points in one location, you can make more informed purchasing decisions.  For example, if you need to book a last-minute plane ticket, the Adaptu Mobile Wallet can tell you how many airline rewards miles you have on various carriers.

Good thing the Adaptu Wallet can tell you how much money you have in the bank, how much of that money has already been accounted for in future transactions, but also can tell you how many airline rewards miles you have on various carriers.

You’ve added accounts and rewards points.  Let’s lighten your physical wallet some more.  Clean out all those membership, rewards, business contacts and insurance cards, enter their information into the Adaptu Wallet; snap a photo and your good to go.  This is the third (and fourth) way Adaptu Wallet can save you money, security and time.  Need to make a quick stop at the pharmacy but don’t have your insurance card on you?  Not a problem, Adaptu’s Mobile Wallet has you covered.  Purse gets stolen?  No more worrying if you’ve forgotten a credit card or other identifying information, Adaptu’s Mobile Wallet has screen shots of all your cards to help your remember who you need to contact.

The final way the Adaptu Mobile Wallet can help you save money right now is with our new “Did you Know?’ Alerts, timely personalized messages to help you meet your financial goals. Examples include letting you know when you are at risk of negative cash flow (spending more than you have coming in), or congratulating you on positive cash flow (saving more than you spend). The goal of “Did You Know?” Alerts are to help you stay in control of your finances. Unlike alerts triggered by banking transactions, the ‘Did You Know?’ Alerts use proprietary logic to create custom text messages based on your spending patterns.

We hope you give the Adaptu Mobile Wallet a try, and if you do, we would love to hear how you use it to save money.

I’m out of town for the week taking some kids to Young Life camp so they can have the best week of their lives. Today I have a guest post from guest post from Doug Nordman, author of “The Military Guide to Financial Independence & Retirement“.

When you’re in your 20s, just starting out and perhaps punching some debt in the face, the military might seem to be a sweet financial deal.

Or maybe not.

Here’s our credentials for this debate: my spouse and I graduated from the U.S. Naval Academy. I retired a decade ago after 20 years in the submarine force. She served in Navy meteorology & oceanography and in the Reserves before retiring. Our daughter is attending college on a Navy ROTC scholarship (she listened to our USNA stories) and she’s thinking of joining the submarine force too (so maybe she didn’t listen very well). Collectively we have five decades of experience in military personal finances.

I can understand how the military looks like the road to riches. After you’ve read about it for a while, the answer seems so simple:

• Sign up at age 17 (or in your 20s or 30s).
• Endure frugality for a couple decades while exploiting your awesome military benefits.
• Retire (as early as age 37?) with an inflation-fighting pension and cheap health care.
• You’re set for life!

Upon further reflection, the military seems to be the perfect way to gain control over your finances. Who’s better at understanding how to optimize resources, save money, develop a disciplined goal-setting approach, foster teamwork, and maximize mission accomplishment?

Yeah, I know, you military veterans are laughing your assets off right now. Straighten up for a second while we try to get the point across to the impressionable young recruits.  If you’re not getting rich, then why would you put up with the martial life?

First we should explain the “riches”.

U.S. military pay tables are at this Department of Defense link. The benefits package includes “basic pay”, a housing allowance, a food allowance, and a clothing allowance. Pay is taxed but allowances are not. More pay and bonuses are earned for longer obligations, advanced training, combat duty, or volunteering for submarines or special forces. Some before-tax pay can be sheltered in the Thrift Savings Plan (the federal version of a 401(k)) but the military does not match contributions.

Military pay varies widely: the most junior enlisted (E-1) earn only $18K/year in basic pay, along with (mostly) free food, housing, and uniforms. Depending on housing expenses (which vary by location) the total compensation package is $28K-$30K. The first few promotions and pay raises are relatively rapid compared to civilian careers. After six years that E-1 has advanced to the E-5 paygrade and is paid ~$32K/year (plus the other allowances) for total compensation of $45K-$50K.

Officers (college graduates) start at a total compensation of about $55K/year. After six years, a submarine nuclear-trained engineering officer can volunteer for an additional service obligation that will raise their total compensation to just under $130K/year.  Ship drivers, aviators, and some other military communities have similar programs (with smaller bonuses).

Next there’s the benefits. Medical & dental care on active duty is free.  Family medical & dental insurance is cheap, as is $400K of term life insurance. Disability benefits are included. Vacation is 30 days per year. You get plenty of free training (frequently during off-duty hours!).  Active-duty benefits and the GI Bill will even pay for you or your family to get a degree.

Finally, how does this compensation stack up against a civilian job? For the first 20 years, about the same. The military compares its specialties to their equivalent civilian careers, and adjusts pay & bonuses to encourage retention. For most of the last decade, Congress required the military’s annual pay raises to close the gap between total compensation and the Employment Cost Index.  Today both officers and enlisted are in the 80^th-90^th percentiles of their equivalent civilian careers, and that’s expected to keep pace.

Yet after 20 years there’s still that righteous retirement, right?

Yes, but the pension only vests at 20 years– if you resign before then you’re not eligible. (But you keep your TSP account.) You can leave active duty to complete 20 years in the Reserves or National Guard, but that pension is much smaller and only starts paying when you turn 60. All pensions are calculated on basic pay, not total compensation. For most servicemembers it’s barely a quarter of their former compensation– and then more is deducted for federal taxes, survivor benefits, and health insurance. Yes, the retirement does have the same inflation-fighting cost-of-living adjustment as Social Security. Yes, Tricare retiree medical insurance is incredibly cheap (~$45/month) as long as your doctor accepts the reimbursement rate.

At 20 years an enlisted servicemember can reasonably expect to be an E-7 earning $85K/year in basic pay & allowances, which would equate to a gross retirement income of about $24K/year. The submarine officer will get at least one more promotion (and several pay raises) to retire at $40K-$45K/year.

For a frugal lifestyle, especially with inflation protection, that’s more than enough.  Even if you’re not financially independent, you can choose a family-friendly bridge career or go part-time.

Yet consider these statistics: During most of America’s history, only 1% of the population has been on military duty. Today’s total active-duty force is only 1.4 million, and the services are starting another round of cuts which may drop that as low as 1.2 million. Only about 17% of the force stays for at least 20 years.

If the retirement system is so good, then why do five out of six servicemembers quit before 20?

Let’s look at the first glaring issue: workplace mortality. That pension looks pretty good because a few of your battle buddies aren’t going to be alive to collect it.

Next is “wear & tear”:  it’s a high-stress and physically-active lifestyle. Chronic fatigue is the norm, as are 60-hour workweeks. (No overtime pay, either.) Combat mortality may be at an all-time low, and servicemembers spend most of their time outside of a combat zone.  However they still risk their lives every day by training with high-power equipment, explosives, hazardous substances, and hostile environments. It’s not as bruising as construction or firefighting, but 20 years of daily abuse takes a toll. One moment of inattention can wipe out years of safety.

Although death and serious injury are relatively rare, there’s still the workplace environment. For example, submariners and aviators have less personal space than convicts in the federal prison system. Soldiers and Marines routinely live in harsh environments. There is very little work/life balance, let alone for a day off to take care of a sick kid. If you and your spouse are both military parents, you’re required to have someone else care for your kids when (not “if”!) you’re both deployed at the same time.  No waivers or unpaid leave.

If you’re not sure about joining your local police force, let alone cleaning toilets or doing other humbling jobs, then you probably don’t want to risk your health in the military either.

The military imposes strict rules of conduct that would be illegal in any Fortune 500 corporation. Servicemembers are required to maintain ridiculously high standards of appearance and fitness, including hair and body fat. They’re actively discouraged from smoking or chewing tobacco, tattoos or piercings, riding motorcycles, or drinking alcohol. Hair coloring, nail polish, and makeup are heavily regulated. Drug use is out of the question, even on leave or liberty. Military records are far less private than for civilians. Even families are subject to constant scrutiny by the chain of command– especially in base housing.

Maybe those five out of six servicemembers quit because they’d seen enough. Maybe the question should be: Why would you join the military in the first place?

For a few it’s the only way out of a bad life. Others didn’t know what they wanted to do, as long as it wasn’t school or shifts at Taco Bell. In my case it was the irresistible challenge: I could prove myself and be a part of an incredible team. Other veterans joined for the crash course in motivation, commitment, and self-discipline. You’ll have far more responsibility in your 20s (especially in the Marines) than most civilians will get in their 30s. Even better, you’ll have the training & experience to handle it. Recent college graduates manage million-dollar budgets and make life-or-death decisions before they get their graduate degrees.

Above all, the initiative and perseverance have to come from within. “Getting rich” will not fuel those drives through the first service obligation, let alone for two decades. You keep going because you’re “making something better of yourself“, and your military skills will also keep you on the track to early retirement.

The best reason to join the military is for yourself.

The worst reason to join is for the money.

Doug Nordman blogs at The-Military-Guide.com and also posts to a number of personal-finance forums as “Nords”.

About once a month I like to post up a submission from a Punch Debt In The Face reader so you can get a feel for how other people are doing. Last month’s story focused on a woman who was $63,000 in debt and trying to figure out how to get out. Today’s story, is much more upbeat…

Meet Mel.

I’m a married mom of two kids, who works full-time in Human Resources, and I’ve been following Ninja’s blog for at least a couple of years. When he asked for some of his readers to contribute their stories of how they’re doing, financially speaking, I thought it would be a good chance to submit mine, in the hopes that it might help any readers who find themselves in a mess, and are not sure if there is life AD (After Debt).

When I first discovered Ninja’s blog, it was some time in 2008. As a New Year’s resolution that January, I had decided to start budgeting and keeping track of expenses. Prior to that, for six years, we lived in ignorant bliss with respect to our financial situation. We each had a credit card that carried a revolving balance of approximately $10-$15K, as well as two car payments, and a mortgage. I had somehow convinced myself that everyone lives in debt – it’s no big deal. Now I look back at that person and want to give her a Ninja-Chop. That’s just crazy talk!

The budgeting process was difficult at first to get expenses on track, and see where we were spending our money. We cut where we could, and buckled down, and at the end of each month, I took whatever was left and paid it down towards the debt. After 6 months, I made the final payment to the credit card company, and kissed our credit card debt goodbye. It felt so good! In that time, my husband got a new job, where his car was paid for completely, and our other car payment had been fulfilled. In less than a year, we had been able to reduce our debt to just our mortgage, and as a bonus, began making extra payments to reduce the principal amount.

Fast forward to the nearing the end of 2011. I am happy and proud to say, that the only debt we continue to carry is our mortgage. We are able to contribute to vacation funds, and savings accounts for expenses that pop up above and beyond the monthly budget (Hockey fees for my kids, brakes for the car, etc). Additionally, we were able to take some equity from our existing property, and purchase an investment property in Arizona this past year. And as someone who lives in Toronto, and spends frigid winters in the North, I’m very excited to have a getaway where it’s warm!

Not only have we remained out of debt, but we have fulfilled other areas of financial responsibility:

– We are both contributing to our retirement
– We have an education fund that we contribute to for our children each month
– We have a healthy emergency fund that currently covers three months expenses that I’m hoping to grow to six months
– My husband and I both have life insurance policies, and even more importantly, critical illness insurance.

My friends tease me for loving me some spreadsheet action, but it feels so good to be in charge of your finances, and being able to do what you want with your money, rather than being held tight to the banks and the credit card companies.

Ninja’s Comments: Mel freakin’ killed it, and I’m glad that I may have been a small source of inspiration for her. What inspired you to punch your finances in the face? What part of personal finance turns you on (spreadsheets, investing, paying down debt)?

This is a guest post by MoneySupermarket.com

This summer, as in the previous four or five summers, the multiplexes were once again awash with blockbuster superhero movies. Caped crusaders are still very much en vogue, and publisher DC Comics recently decided to reboot 52 comic series in order to cash in on that popularity.

The names of superheroes and their mild-mannered alter-egos are perhaps better known now than they have ever been. With that in mind, I’ve been thinking about superheroes and their alter-egos, and what financial lessons we can learn from their alter egos.

Can a superhero teach you how to make money? Let’s find out.

Peter Parker (aka Spider-Man)

They don’t come much milder-mannered than the bespectacled Peter Parker. He’s a science student and amateur photographer by day, web-slinging crime-fighter by night.

In the comics and movies, Peter’s often portrayed as a down-on-his-luck geek, but he does have steady income from the Daily Bugle, where he serves as a freelance photographer.

If we have any particularly specialist skills, like photography or web design (pun intended), perhaps you could make some cash by freelancing in your spare time.

Bruce Wayne (aka Batman)

When he’s not fighting the criminal underworld on the mean streets of Gotham, Bruce Wayne is usually found schmoozing with Gotham’s rich, powerful and elite, attending various benefits and pledging his cash to save the city.

How did he get so rich? Well most of us know he was the heir to the Wayne family fortune, and so he inherited all of his wealth. By day he acts as CEO to Wayne Industries, before donning the cape and cowl each night to take on his infamous rogues’ gallery.

We obviously can’t all inherit a fortune from our parents, but Wayne is all about clever investments – and that’s something we can do. We can all invest in savings or bonds, even if we don’t have billions to play with.

Steve Rogers (aka Captain America)

The Cap’ starred in perhaps this year’s biggest superhero movie, and has seen a resurgence in popularity as a result. Captain America’s alter-ego Steve Rogers is a puny would-be recruit for the US Army, until he becomes a candidate for a super soldier experiment which turns him into the Captain.

What can Steve teach us about making money? Well, Steve volunteered. Volunteer work can help you to network and make connections which can lead to paid work. It can also boost your resume and potentially land you a higher paid job in the future.

Tony Stark (Iron Man)

Billionaire industrialist Iron Man uses his resources to build himself the Iron Man suit, allowing him to take on a colorful cast of foes. Again, we’re not all lucky enough to inherit a fortune from our fathers, but Tony is a great example of being resourceful and inventive.

Think as inventively as you can about ways to make extra money, sell your possessions, your skills, your time or whatever else you can think of to see if you can earn some money. Don’t forget saving money too, ever heard of contents insurance? Protecting valuables is pretty important, especially to people like Mr. Stark.

Do you even like superheroes? What other heroes/villains can we learn from? Who is the closest representation of a modern-day superhero you can think of… Ryan Gosling (have you seen that body), Steve Jobs (everything that he touched turned to gold), or perhaps Kim Kardashian (she could fart and for some reason the whole world would care)?