Category Archives: money

Your Money Or Your Life, Step 1.5

[This is part 1.5 of a 9ish part series on the book Your Money or Your Life. See my original post about the book. Step 1 was too long for one blog post, so here’s the second part.]

In the first part of Step 1, I dug through records and receipts to figure out the total amount of money I’ve ever made. In my case, I found it was almost a million dollars! Of course it’s not possible to keep it all.  Which is where the next exercise comes in:

What do you have to show for it?

In this exercise, you’ll figure out your current net worth.  We do this because it’s a fundamental practice for any business—and you are a business. Also, it’s good to know your net worth, since you might be closer to Financial Independence than you think!

Your net worth is all your assets (money and belongings) minus all your debts. Finding the worth of your belongings might take a while but it’s good to be thorough.

The cash component of your net worth is the value of all your bank accounts and investments, plus the cash you have on hand. If someone owes you money, you can count that here too. If you use personal finance software like Quicken or Mint, this should be quick.

The “stuff” component isn’t so easy to figure out. You’ll need to take stock of all your belongings and discover or estimate their value. You’ll begin to see the burdon of owning material possessions that don’t bring you fulfillment. On the bright side, perhaps you own an antique or other item that has a lot of value!

I went through each room of the house and added the value of every item in the room. Then I looked outside, and also factored in the value of our car and scooter.

Next is debts, to banks or people. Count your mortgage here too. Add them up, and subtract your debts from your assets. That’s your net worth.

This took me a full afternoon, but it was well worth the time. I admit I wasn’t totally thorough. For instance, I estimated the value of all the items in the kitchen together, instead of going spoon by spoon.

After I added everything up, I found it to be around $150,000. At first I was proud of the fact that I have some savings. But then I looked back to the first exercise, and realized that for every dollar I’ve ever received, I managed to keep less than 20 cents of it!

The book calls this making peace with the past, and that’s the attitude you should have while doing this and the previous exercises. You can fold up the paper you used into a paper airplane and toss it into the recycle bin, because you’re about to have a total rebirth, when it comes to how you view your personal finances.

Stay tuned for Step 2!

Finally, a solar power option for renters*

* in Seattle, anyway

One of the few drawbacks of renting is that we’re limited in the modifications we can make to the house. Even though I know it makes long-term financial sense and it’s in line with my values, converting the house to solar power is out of the question!

I almost fell off the couch with excitement when I got this in the mail:

[Seattle] City Light is offering customers the opportunity to participate in Community Solar at Jefferson Park. When you enroll in the program, a portion of the electricity generated by the project will be credited annually to your power bill. Your name will become a permanent part of the ground-breaking Community Solar installation. And you’ll be pioneering a bright, new energy future for Seattle…

Each solar unit is estimated to produce 50 kWh of electricity per year through June 2020 when the program ends. The one-time, up-front cost is $600 per solar unit.

If you read the fine print you’ll find that the solar panels don’t fully pay for themselves in electricity bill credits. Even so, it’s an opportunity to make a local investment in sustainable energy and send a message to the rest of the country that our community is ready for renewable power.

If you live in Seattle, spread the word and consider signing up! My goal is to ensure that all 500 solar units are purchased.

How we got paid $200 to fly to San Francisco

This week, Venessa and I are taking a short trip to San Francisco. We don’t travel often, especially not by air. It’s bad for the environment, I don’t like what the government has done to our freedoms, and there are so many places in the Pacific Northwest that I haven’t explored yet, it seems like a shame to go somewhere else.

Largest caggage at the local fair

But every once in a while we get a travel bug that can’t be satiated by our environs. This one was prompted by some junk mail I got a few months ago. It was one of those frequent flyer credit cards offering a 50,000 point signup bonus. Equivalent to two free flights, they said.

A side note on credit cards: I have 2 rewards cards (REI and Amazon) and a Schwab cash-back card that just got bought out by Bank of America so I’m going to cancel it. Trent from The Simple Dollar has two good rules governing rewards cards:

1. It doesn’t matter what rewards card you have if you’re carrying a balance. If you won’t be able to pay your balance in full every month, cut up that card.
2. The best rewards program is the one that most closely matches what you buy and where you buy it.

Since I don’t buy airplane tickets very often, why’d I sign up for this card? Here’s the story:

I looked at the airline’s website and saw how many “points” out of my signup bonus a trip for 2 to San Francisco would cost. Then I looked at the same trip in dollars. It was $600, more than twice as much as the cheapest flight to San Francisco from Seattle, offered by Virgin America.

So here’s what I did. I signed up for the card anyway, and got the 50,000 points. Then I went over to the “other ways to redeem your points” section of the website, and spent all the points on $500 worth of Amazon.com gift cards. (I can’t believe they let you do this.) Amazon is a big enough website that their gift cards are extremely liquid, and we use it frequently enough that the cards about have the same value as cash for us anyway.

We booked the Virgin America flight for $300, and pocketed the $200 difference to use as spending money on the trip. After the gift cards came, I called the credit card company and canceled the credit card. I’m sure my credit score took a hit for this, but I don’t plan on borrowing money any time soon (if ever), so it’s not a problem. I even got the yearly card fee refunded since I had the card for such a short time. Never hurts to ask.

I might take a break from posting here since I’m not taking a laptop on the trip. See ya!