Saturday Links! July 25, 2015

I have been trying to live a simpler life in order to make room for things that matter. Turns out a lot of other people have, too! I’m on vacation now, so this is a little shorter than normal, but I’ll be back soon!

The Four Horsemen of the Financial Apocalypse, retire29.com. An interesting take on four things that you should never do in the financial world. I’m a little torn on student loans because I have them, but I find them to be pretty manageable. The other three I am definitely on board with!

Why the Founding Fathers Were Broke, femmefrugality.com. All of the founding fathers lived hundreds of years ago, so it’s sometimes hard to put their lives in context since ours are so radically different. This article does a great job of it, though.

Add carvings of Outkast to giant Confederate monument, says petition, theguardian.com. Nothing really to do with minimalism, but this was just hilarious. I love Outkast, and I would definitely go to see this if Andre and Big Boy were on the side of a mountain.

BONUS! My favorite local band from Charleston, South Carolina!

Photo: My Beetle was in a classic car show! I actually caused a little bit of a ruckus here because I was all the way in the back talking to some hilarious Brits with classic Range Rovers when the show ended. They shut down the street for this, so when it’s time to go you have to be ready or you’ll be blocking everyone else from leaving. I had to run all the way back up to the front and strap the surfboards down before everyone else could leave! My Beetle isn’t exactly “showroom condition” either, so everyone who drove past me asked me if I had broken down. I hadn’t, I just thought the show ended an hour later than it actually did. 

How I Plan to Pay Off My Student Loans… Maybe?

There’s a student loan bubble! Maybe? There’s also a group of people trying to get student loan debtors to go on a debt strike against the evil lenders, except that movement isn’t really gaining steam. I don’t really know how much of a problem there is overall, but I can at least share my part of the story and why I’m skeptical about paying them off, but why I still might do it anyway.

Also, I’d like to note how much minimalism and finances seem to be intertwined, at least for me. The fewer things I spend my money on, the more secure I am and the less mental clutter I have. I worry about fewer things. To me, paying off loans is akin to cleaning out a closet.

So! I graduated with about $40k of student loan debt. I went to a public university but didn’t get enough scholarships to pay for it all. (I went to high school in North Carolina which has a miserable education system with basically no money for college students, unlike South Carolina or Georgia. But that’s a whole other can of worms.) So I’m not in the worst situation ever, but not the most ideal either. Compounding the problem was the fact that 18-year-old me viewed community college as something disdainful so I didn’t get my easy credits and transfer in to a univeristy to save money. I was a very traditional four-year type, and turned to loans as a very feasible way to fund my engineering degree.

I also graduated as somewhat of an outspoken Libertarian who viewed debt as something evil that must be exterminated at all costs. (My political activism has greatly waned since then.) I paid off all of my federal student loans with a signing bonus from my first job, then made higher-than minimum payments on my state-funded loans. I also flipped a house and put my profits to paying down another chunk of my loan, and after everything I’ve done I have slightly under $18k left to go.

WHY I HAVEN’T DONE MORE

On to the excuses! I was a pretty typical 20-something that spent a lot of unnecessary money on fast cars. And lots of eating out. So I probably could have them all paid off if I was still driving my car from high school (except that didn’t have AC and I live in south Florida). But I’m a little torn on this, because I don’t want to be someone pinching pennies eating ramen but I also don’t want to be someone who’s racked up all kinds of debt chasing a lifestyle. I think there’s a good middle ground, and getting my mistakes out of the way early helped me discover what that is. I’m a big fan of budgetsaresexy; the way he tackled his debt is very inspirational, but I don’t know if I want or need to do this.

The other part of the problem is that my three student loans outstanding have interest rates of 3%, 3%, and 0.08%. That last one isn’t a typo. With rates this low I could make a better return putting my money to work elsewhere. I started doing this recently, actually. I figure that if I open an index fund and hold it for five years, I could have enough money to cash it out and pay off my loan. I’d have made maybe 5% in the market this way (hopefully!) and therefore I’d be out on top.

But with the rates that low, why would I cash out the index fund at all? Why not make minimum payments on a loan that basically amouts to free money? I know a lot of people with mortgage rates higher than this and they’re doing virtually nothing to pay them off early. The answer is 100% psycological. I still have that libertarian-leaning attitude that debt is generally bad, even if it’s paid for something good like a house or an education. When I’m free of my loans I’ll simply feel better. Even though they’re low interest loans, it’ll still be nice to keep more of my paychecks every month.

But I still have the battle, because the rational part of me knows I could do better things with the money, and the emotional part of me wants to be free of debt at any expense. Like before, I think a middle ground is warranted. I’ll probably end up paying them off early, but not as early as to sacrifice some of my lifestyle. So I might pay off my student loans early. Maybe. Depending on which part of me wins out.

SPEAKING OF WHICH…

I recently started kiteboarding (video below for those who live inland!) which isn’t a particularly cheap hobby, and I don’t want to sacrifice my entry into the sport to pay down loans marginally faster. It’s all about tradeoffs and maximizing happiness! I’ll be writing a little about this sport in the future, though, because it’s crazy amounts of fun. The reason I live by the beach is so I can do things like surf, paddleboard, and kite. It’s not an expensive lifestyle, but it’s not the cheapest, either. At least I’m not into jet skis and swamp buggies.

I’m also going on vacation to my semi-hometown of Charleston, South Carolina this week. Pictures of this will follow as well!

Continue reading How I Plan to Pay Off My Student Loans… Maybe?

A Minimalist’s Social Networking

I’ve had an off-and-on relationship with Facebook since it was just for college students from select schools. The first time I got it, I was a wide-eyed high school graduate about to start life in a new state. I didn’t want to lose touch with all of my friends from high school, so when one of my friends showed me this new thing called “the facebook”, I signed up.

When I was a junior in college I stopped seeing the appeal. I wasn’t really friends with any of my “friends” on Facebook (they dropped the “the” in front of their name by then) except for about three people, who I talked to and saw in real life. All of my friends from college I talked to and saw in real life as well, and I decided to cut my ties with Facebook at the time because it felt a little redundant.

I signed up for it again after graduating college. I moved to Tennessee, another place where I knew absolutely no people. Since I didn’t want to lose touch with my college friends, the same cycle repeated. I only keep in touch with about five people from college, and (like before) I see and talk to them in real life, making Facebook redundant again. I cut Facebook out of my life for the second (possibly final?) time about a year ago and haven’t felt the loss.

That’s the feeling I get from a lot of my minimalistic endeavors though: I realize once I get rid of something that I feel lighter, and I find out that I didn’t really “need” that thing in the first place. Not only that, but getting rid of Facebook freed up some time for me as well since I don’t compulsively check it to see if anyone’s posted a funny article or something for me to waste time on.

Losing touch with Facebook also makes my social life feel a little more natural. There’s a theory that humans can only maintain relationships with about 200 people. If true, that means that a friends list of anything over that amount is mental clutter that is impossible to maintain. For me, that clutter is just as bad as an overflowing closet of things I’ll never use. The people who add value to my lives add value with or without Facebook, which is a good indicator that Facebook isn’t really relevant to me anymore. If we value a relationship with someone, we shouldn’t need Facebook to maintain that relationship.

Facebook can be used for good, but in my experience the “good” is harder and harder to find. For me, it was mostly a vehicle for drama between my friends and between my family. (Relevant XKCD.) I think that social networking of a general nature should happen face-to-face. Don’t get me wrong, I’m a huge fan of the internet and what it does for making connections between people with specific interests (like minimalism!). But “friendships” of the vague and nonspecific kind that I’ve always had and seen on Facebook seem to be counterproductive.

What I am curious about, though, is whether or not Facebook can still be a useful tool for minimalists to connect with each other. It seems like most people use Twitter or something else, but Facebook does still have a place for the time being. While it probably won’t see any light in my personal life anytime soon, there could be hope for its use in my professional, online life!

Saturday Links! July 18, 2014

For Americans Seeking Affordable Degrees, German Schools Beckon by Soraya Nelson, npr.org. Why hasn’t the United States been able to figure out education while almost every other first-world nation has? It’s mind-boggling, and also sad because I’m one of those millions with student loan debt.

Jobs That Will Pay Back Your Student Loans, mrandmrsbudgets.com. If moving to Germany isn’t your thing, there are a lot of other options that don’t require you to graduate with crippling debt.

Perfection Is The Enemy Of Frugality, Mrs. Frugalwoods, frugalwoods.com. If perfection is the enemy of good, it’s also the enemy of frugality. Also remember: Advertisers create need, and that’s part of the problem for anyone trying to be frugal. The Frugalwoods’ (Frugalwoods’s? English is weird.) blog is one of my favorites and always a great one for inspiration on how to live contrary to how most people seem to live.

3 Ways to Get Help With Your Down Payment, femmefrugality.org. There are lots of ways to get a mortgage, and you absolutely don’t need 20% for your home, especially if you are a first time home buyer. I wish I had this information about four years ago!

BONUS: What I’ve been listening to this week:

Have I linked to Cobalt Cranes before? If so, they’re worth repeating. From California, but they recently made a stop through West Palm Beach. Pretty cool!

Photo: Think roaches are annoying? This is a Cuban Anole, a rather large, aggressive lizard that lives in my banana trees. This one is about a foot and a half long. When he shows up on the porch I have to chase him off with a palm frond which he usually attacks pretty viciously until I coax him away from humans. #tropicalproblems 

Wallets and Desks

When I moved into my house I found a really cool purple desk in the back room. I only need one desk, so I decided to sell my old desk and keep this quirky purple desk. A big part of the reason I favored the purple desk is because I can sit at the center of it. My previous desk had drawers on one side, so you had to sit to the left of center. This was sometimes frustrating when using large monitors or test equpiment, since I could only put things on one side of whatever thing I was working on. At lest I’m not left-handed!

Anyway, I finally sold the old desk yesterday. The picture above is all of the junk that came out of the desk’s four drawers. Granted, some of that mess consists of tools that I use all the time, tax documents, and writing implements, but a lot of it is just needless junk. For some reason there was a VHS tape in there! This definitely reinforces my view that the old saying “out of sight, out of mind” is not a very good maxim to live by. Just because we put something in a place where it isn’t seen doesn’t help us live any simpler. In fact, it exacerbates the problem because the mess and junk is lurking, ready to strike and frustrate us at any moment!

Putting the desk situation aside for a minute, the other thing that I’ve been considering lately is whether or not it’s possible to live without carrying a wallet. I recently stopped carrying keys (special wiring on my motorcycle and a keypad deadbolt on the front door) which was great because I don’t get a hole worn in my pants from a keychain anymore. The wallet problem seems to be a little tougher to tackle, but I had to throw out a pair of pants the other day because my wallet wore a hole through them. I also hate having to carry a wallet when I go surfing or out for a bike ride. This madness must stop! I’m just at a loss for ways to accomplish this, but I’ll keep brainstorming!

Saturday Links! July 11, 2015

I’m rich Baby! (And follow your Heart) by Mr. 1500, 1500days.com. How much money do you really need to be happy? What makes people rich? It’s certainly not a $700,000 kitchen remodel. At least, not in my experience. More stuff doesn’t necessarily equal more happiness.

The Health Benefits Of Early Retirement Are Priceless by Financial Samurai. I linked to a few articles last week about how great and non-boring it would be to retire early, and also it might be easy to just let yourself do nothing but watch TV all day if you retire early without anything to do. But consider that your job actually might be the thing that kills you, not the fact that you got out of it early.

A New Financial Reality at pewtrusts.org. A new study finds that “three-quarters of Gen Xers … have higher family incomes than their parents did at the same ages, but only a third have higher wealth.” Common explanations for this is the disproportionate increase in property values and education expenses, but I bet that spending habits play a huge part of this too.

BONUS! What I’m listening to this week:

I haven’t stopped listening to this album since it came out last year. Fantastic!

Photo: Last week, I showed you a picture of the pineapple I grew in my yard. Did I mention that I also have a grove of banana trees that make these cute little bananas? The only downside is that once the tree produces fruit, the tree dies and you have to cut it down. But these trees grow like weeds to it’s really not too bad!

Money in Boxes

Even before I had heard of minimalism I noticed that I had a tendency to hoard certain things. Let’s call it “collecting” to make it sound a little less terrible. The particular things I “collected” accumulated throughout the years, and when I got new ones I’d put the old ones in boxes. By the time I decided that I had enough of moving things around that I never even used, I had collected 16 of them.

Sixteen video game systems, and all of their associated games, controllers, and addons. And the mental clutter that went along with keeping up with all of these things.

Towards the end of high school and into college I got this idea in my head that it’d be a good idea to start collecting video games. I had money, so why not? Most of them I never played (Sega CD anyone?) so I don’t even know why I thought this was a good idea. I think I sold a game that I really liked to a store once, and regretted it almost immediately. The regret haunted me enough to decide that I’d never sell or trade a video game ever again. Hence the obsession.

Seriously though. I had sixteen systems! That’s crazy! Even if I still thought it’d be cool to have a video game room in my house with all of these systems wired up and on display, it’d be logistically impossible to hook them all up. If you don’t believe me, just try and hook up an Atari from the 70s to the same TV as a Playstation 3. Almost impossible.

So I started selling them off last winter. I’ve saved my favorite systems for last (mostly my Super Nintendo; I sometimes joke that I was put on this earth to pwn at Super Mario Kart). There’s no reason to have them around, and even the ones I like I can just emulate on a computer if I really really want to waste my time on a video game. Not to sound too much like an old man, but I’ve wasted a lot of time and money on video games that would have been better spent elsewhere.

There is a silver lining here, though. It turns out that some of the systems and games I’ve been holding were worth quite a bit more than I paid for them, and so far I’ve had over $1,500 boxed up in my closet for the past ten years.

As a disclaimer, I don’t advocate for video games as an investment. There’s too much storage space required, and they have to be held for a long time before they’re worth anything. For example, I came across a Virtual Boy about ten years ago and bought it for $20 from a friend who was selling a bunch of her stuff to help pay for college (at MIT, no less). I probably wouldn’t have bought it but it helped her out a little bit. Anyway, the Virtual Boy was a commercial failure, and Nintendo stopped making them about a year after they started, sometime around 1996. In 2005 when we were all about to go to college, the Virtual Boy hadn’t yet achieved the status of weird nostalgic collector’s item yet, and was still pretty much worthless. Now, in 2015, finding a working Virtual Boy is a lot harder and for this reason the costs have skyrocketed. But gameplay is still horrible, not to mention the fact that the system is downright unusable, so I put it up on eBay.

I wasn’t expecting what I saw though. I thought maybe, just maybe, someone would pick it up for $40 and use it for parts or just find it a curiosity of the 90s and want to see what it was like. But no. When I saw that they were going for $150-$200 I was just shocked. But I ended up selling it for $150, making 750% on my initial $20 investment. But I did have to haul a box around through 16-ish moves, which isn’t exactly suited to my current minimal lifestyle.

The Virtual Boy was a diamond in the rough, though, and not all of my systems had such great success stories. My first-generation Playstation only sold for $12, and I only bought it to play Final Fantasy 7. That’s a very popular game which can be played on a PC or an emulator very easily. I probably paid over $30 for the system alone, all for a game that I already owned on PC.

There were some other gems in my pile though. I sold six games for the Virtual Boy at an average of $20 each. Those are collector’s items too I suppose, and when you count those I made over 200% on my original $20. Not bad! I made some money on a Sega Dreamcast too, but I think that all-in-all I’ll probably lose money.

The worst of it is the brand new Playstation 3 I bought because I thought it would be cool to have a Blu-Ray player. I never used it, it was just part of my quest to get more stuff in a time when I thought that “more stuff” meant “more successful” or “more happy”. It doesn’t, it just means more stuff, more things to take care of. And ultimately, that’s why I’m selling all of these things. They’re just things, and they were taking up space in boxes. Maybe someone else will get value out of them, but I won’t.

It’s been a relief to get rid of them, too. Not only was the money nice, but they had been taking up an entire closet. As of this writing I only have my Super Nintendo and my Atari left (which are going to my sister and parents, respectively) and it feels like a weight has been lifted off of me. Which, I suppose, it has.

Photo: A man plays a Virtual Boy at a kiosk in a store. These things were ridiculous. Photo from Wikimedia Commons. 

Saturday Links! July 4, 2015

Mortgage as a Forced Savings Account to Build Wealth by Financial Samurai. An interesting way to think about your mortgage is as a savings account that you absolutely have to put money into. An upside to buying a house is that your asset will probably appreciate as you’re saving, but the downside is that your savings account probably isn’t very liquid.

What Would Happen If We All Stopped Paying Our Student Loans, Together? by Jennifer Schaffer, Vice. An interesting take on the student debt problem wich involves forming what looks like a “debt union”. Really, it’s about using a “debt strike” as a tool to promote social change, because there is definitely a problem that no one seems willing to address on their own.

Yo ho, yo ho, an FI life for me! by Mr. 1500, 1500days.com. “FI” stands for “Financially Independent” in case you were wondering; Mr. 1500 is on a 1500-day mission to build a portfolio large enough to retire on. He touches on one of my pet peeves about retiring early: people asking you if you’ll just be bored once you don’t have to work anymore. ABSOLUTELY NOT. There’s so much to do! I think people that are afraid of this are more likely to have this happen to them.

BONUS! What I’m listening to this week:

The late-90s Britpop resurgence had some gems in it, and not all of them were Oasis.

Photo: I grew this pineapple in my back yard. It’s huge! It’s almost like I’m living in Hawaii!

Windfall Profits From Selling My Truck

OK, so I didn’t exactly make money from my truck, but I did sell it. My plan was to take this sum of money from the sale and purchase an index fund (and also use some of it to pay off some extra principal on my mortgage). Index funds are great because they’re not actively managed. They don’t try to beat the market, they just try to match it. You save a lot on fees (versus mutual funds) and you still get the great return-on-investment that the stock market generally provides. At least as long as you don’t panic.

I’ve had luck with a particular index fund in the past. After I sold my first house, I put most of the money I made from that transaction into a fund. Otherwise, it would have just sat around in my savings/emergency account doing nothing. I got pretty lucky, purchasing the fund back in October at a low point in the market and then selling them off in January at a high point in order to put a down payment on the house I’m currently living in. I made 5% on this investment in just over three months. Pretty solid!

This time around, I invested in the same fund but seem to be having opposite luck. I bought it last Monday, right before the stock market took a huge plunge. It’s recovered some, but I lost almost 3% right off the bat. It’s recovered some since then, but if I know anything about these types of funds, it’s this:

DON’T PANIC.

Index funds are good long-term investments, so while they do go up-and-down with the market, they’ll generally make you money as long as you wait it out. The market has already recovered, but it’s still down. I actually took the stock market decline as a sign that I needed to buy more, so I consider this volatility more of an opportunity than a disaster.

My plans for this fund, though, are more medium-term. I still have about $18,000 in student loans (down from $40,000 originally) that I’m trying to eliminate. $16,500 has an interest rate of 3%, and $1,500 has an interest rate of 0.08%. The plan is to put money that I’d use to pay off the loan into the index fund (while making minimum payments on the loan) because the index fund will probably do better than 3% growth. Once it reaches a point where I could pay off the entire debt, I’ll sell the index fund to pay it off.

I’m hoping this strategy gives me the best of both worlds. I’ll get the better return-on-investment by investing in the index fund instead of simply paying off the loan. I’ll have extra capital (from capital gain on the index fund) to pay the loan off. And I’ll eliminate a debt, which is my #1 financial goal at this point. (Not to mention the fact that my cash flow situation will improve without this monthly payment.) To me, this seems win-win. I just have to hope that we’re not actually in a bubble that’s about to burst. If we are, though, I’ll just have to take my financial advice from the most successful book ever to come out of the great publishing corporations of Ursa Minor!

Photo: Who needs a truck when you can have a Volkswagen and an index fund? I used the Beetle last week to take two people and one dog on an adventure in the Intracoastal Waterway. We took my paddleboard and a kayak and tied them both down to the roof. It was actually easier than getting both of them in the bed of my truck! The Beetle did great, too!