Refinancing my 2013 Toyota Prius

About two years ago I purchased a new 2013 Toyota Prius.  I immediately went down to my local credit union (Travis Credit Union) to refinance the loan, partly because I like to keep my business and money local to Solano County whenever possible, and partly because I wanted a slightly better interest rate than I was given on the initial loan financed at the dealership.

Now that I have had the car two years, I am again considering refinancing the loan, for several reasons:
  • Interest rates have dropped.  The interest rate on my current loan is 5.73%.  But Travis Credit Union is currently advertising refinance rates of 2.99%.  A lower interest rate means less money down the drain.
  • As I mentioned in a previous post, I am trying to prioritize my emergency fund.  Having a smaller car payment on a lower interest rate will free up some monthly funds for my emergency fund.
  • I have used my credit cards far too much the past few months, due to unforeseen expenses and cross-county travel for family obligations.  This is what an emergency fund should be for, so again having a lower car payment will allow me to direct more funds toward reducing/eliminating credit card debt.
Now the proverbial sixty-four thousand dollar question is whether I can refinance the loan right over the phone or whether I will have to truck myself down to Travis Credit Union to initiate the refinance application.

What You Can Learn about Money from Your Lower-Income Friends

There are many articles out there about what you can learn about money and personal finance from the wealthy; the habits of the wealthy, if you like.

However, I would like to focus for a moment on what you can learn about money from your lower-income friends and relatives.  I do not mean your friends who make poor financial decisions, such as buying a car with a $900/month payment without steady employment or having ridiculously high credit card debt.  Instead, I mean your friends who happen have lower income but know their financial limits and still live within their means.

Here are a few examples of things I have observed about my lower-income friends, perhaps lessons all of us can learn:

  • It is okay to have a paid-off older car that runs just fine; a shiny new car is a luxury often beyond reach.
  • A glass of wine or a cup of coffee at home is just as good as, even better than, an expensive outing around town.
  • An affordable pay-as-you-go phone/internet plan is just as good as an expensive mobile/iPhone service contract.
  • Living together with extended family can create financial stability compared to rugged individualism and living in your own house/apartment.
  • A lower-paying job, while creating some financial stress, can free up your mind and your off-hours for quality time with family and friends.
  • There are plenty of ways to get good entertainment besides an expensive Comcast or AT&T cable package: think Netflix, Hulu, and YouTube.

As I think about ways to downsize and to reduce my expenses, oddly enough I look to my lower-income friends as role models for frugality and living within one's means.  Of course, making more money is perhaps the easiest way to create some financial stability.  But making more money shouldn't be an excuse to be wasteful or frivolous with those hard-earned dollars.

Rounding Out Your Financial Picture: Prioritizing an Emergency Fund

One piece of my financial picture that I have been neglecting is an emergency fund.  In these increasingly uncertain times, I have decided to make building an emergency fund a financial priority.  Prioritizing an emergency fund means making some adjustments to my automated financial system, at least for the time being.

My modest emergency fund goal will be to save an amount equal to three months' salary.  Six months' worth might be smarter, but three months' worth is a more modest initial goal, and you have to start somewhere!  Here is my plan:

  • Reduce my 401(k) contributions to 4%, freeing up funds for my emergency fund while ensuring that I still receive the 4% company match.  (Free money is free money!)
  • Make minimum payments on all credit accounts (credit cards, mortgage, and student loans).  While the official financial advice is usually to prioritize high-interest credit accounts, temporarily prioritizing an emergency fund is better for my long-term stability and financial peace of mind.
  • Set up automatic deposits for a portion of my paycheck to go straight into my emergency fund savings account.  Automatic deposits/contributions are the hallmark of any good financial system.  Automating your finances makes your life easier and reduces your chances of deviating from your plan.

Alone in the Dark, Silent and Still

I've been trying to save money on electricity while I am home by myself.  This is difficult for me because I enjoy electronic devices so much (computers, game systems, mobile devices, ham radio, Kindle, and so on).

But as I write this, my laptop computer is the only thing in the entire house that is switched on.  Everything else, from electric lights to electric blankets, from television to Xbox, is turned off.  Indeed, I am alone in the dark, silent and still.  I am the zen master of my little green house.

Why do we modern people fear solitude and darkness so much?  Along with turning off the electronics comes a mental decluttering.  I can hear myself think more quickly.  I am more attuned to by body's rhythms (pulse, respiration, and so on).  I meditate on the whimsy of our cats' movements around the house.  And the pace of our modern electronic lifestyle seems instantly slower.

If you are reading this, I dare you (no, wait; I double dog dare you) to spend just 15 minutes alone in the dark, silent and still.  Can you even go 15 minutes, or has our modern lifestyle taken over your inner soul completely and silenced your inner voice?  Do you think more clearly?  Breathe more deliberately?  Daydream more peacefully?

Sit alone in the dark more often, like Descartes scripting his Meditations by candlelight, and try to recapture the power of the human mind left to its own devices.  See where your mind can take you.

Compound Interest Calculator - $1,000 Per Month for 30 Years Equals $1,468,150.42

The single most powerful tool I have found for motivating myself to take retirement investing seriously is a compound interest calculator, such as the one found here:

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

Let's do a sample calculation with the following assumptions:

  • Start with a $0 balance today
  • Contribution of $1,000 per month
  • Average annual growth of 8%
  • Compounding for 30 years

According to the compound interest calculator, this yields a future value of $1,468,150.42.

This number should surely grab your attention.  If this doesn't motivate you to start taking retirement investing seriously, I don't know what will!  Investing only $1,000 per month can make you a millionaire.

Now let's say you wait 5 years to begin investing, and you invest for only 25 years instead of 30 years.  This yields a future value of only $947,452.98

This is a dramatic difference.  Waiting five years to begin investing can cost you half a million dollars in your future retirement.  So, young people reading this: start investing now, right now, today!  You will thank yourself later.

Winter Electricity Savings

This winter, we have been making conscious effort to reduce our energy consumption at home. Here are some of the things we have been doing this winter to reduce energy consumption and save money on our electricity bill:
  • Replace old-fashioned incandescent light bulbs with energy-efficient Compact Fluorescent Lamp (CFL) or Light Emitting Diode (LED) light bulbs. CFL and LED bulbs use only a fraction of the electricity of traditional incandescent bulbs.
  • Use an electric blanket instead of the central heating to stay warm at night. Electric blankets use significantly less energy than central heating. And turning the heater off at night can actually help you sleep better and reduces snoring.
  • Dress warmly at home instead of using the central heating. Long-sleeve shirts, socks, slippers, and a hat can make you just as comfortable as blasting the central heating while at home.
  • Open the window shades and use natural sunlight instead of turning on the lights. Natural sunlight is good for you and may help cure those winter blues while saving you a few bucks at the same time.
  • Turn off or unplug appliances not in use. Examples: video game systems (Xbox and Wii, in my case), desktop computer, coffee maker, stereo system, and so on. While each of these may only save you pennies, you'll be amazed at how many things you have running simultaneously and silently behind the scenes.
Note that there is a difference between being needlessly ascetic or austere and being intelligently minimalist about reducing energy consumption. I am not suggesting freezing to death at night.  Like most people, I enjoy my creature comforts. But making smart choices, such as using an electric blanket instead of central heating, can give you those creature comforts while reducing your energy consumption and costs.

For further reading, here is the absolute best website I have found for tips on saving electricity: http://michaelbluejay.com/electricity/

Save Money and Get Your Body Moving with Tennis

I and my former boss and good friend Joe have taken to playing tennis at a local park on the weekends.  So why tennis?

  • First, playing tennis at a local park is essentially zero-cost, other than the occasional can of tennis balls and the initial need to find a tennis racquet.  In general, I am trying to find ways to simplify my lifestyle and save money.  Thankfully my hometown of Vacaville, CA has several places available to play tennis for free.
  • Second, tennis is good for getting the body moving.  My friend Joe and I each have computer-based desk jobs, which are good for the wallet but bad for the body.  Tennis on the weekends is a good way to counteract the effects of our sedentary work lifestyles.
  • Third, tennis is a sport in which you can genuinely shoot the breeze while playing.  Tennis lends itself to casual chit-chat, catching up, brainstorming, telling jokes, and so on.  For two jabber-mouths like us, tennis is a good chance to get a healthy dose of real social interaction after staring at a screen all week.
  • Fourth, a little friendly competition always helps people rise to the occasion to produce their best work.  For this reason, we force ourselves to play a full set or two of tennis, rather than merely lobbing tennis balls back and forth aimlessly.  It was true that competition made us perform better back in our RadioShack sales days, it's true in tennis, and it's true in any number of other spheres of life.  Competition is good for the spirit.
So if find that you are spending too much money on frivolous things over the weekend or in the evenings after work, try picking up a new sport that you can play for free at your local park, such as tennis or basketball.  Those of you in colder climates may struggle to find a place to play tennis, since tennis outdoors is essentially a nonstarter for several months out of the year.  But the principle is the same: find a zero-cost activity that gets you some quality time with a friend and that gets your body moving a bit.

RadioShack's New Niche: A Place for Makers

Sadly, RadioShack stock (NYSE:RSH) is now hovering at about $0.30/share and is in danger of being de-listed from the New York Stock Exchange.  I owe a lot to RadioShack, as my position as a RadioShack sales associate essentially put me through college, between 1995 and 2001.  I worked at RadioShack from my senior year in high school until I left for grad school, five and a half years later.  So I have a deep emotional attachment to RadioShack and its fate.

It's no secret by now that RadioShack has been largely unsuccessful in recent years.  But what went wrong?  RadioShack has been in crisis before, seemingly every decade or so when changes in technology have threatened to render the RadioShack product line obsolete.  But in every prior instance, RadioShack was somehow able to keep up with the times and eek out a new niche for itself, sometimes even being the leader in a technological revolution.  For example:


  • In the 1960s and 1970s, RadioShack was the go-to place for Amateur (Ham) radio and Citizens Band (CB) radio equipment and supplies.
  • When the CB craze died down and the personal computer revolution was at hand in the late 1970s and early 1980s, RadioShack developed its own line of TRS-80 computers and even opened Tandy computer stores.
  • As the personal computer market became saturated and bloated in the late 1980s and early 1990s, RadioShack again found a new wave to ride: the cellular telephone.  Before there were Verizon Wireless stores or AT&T Wireless stores, there was RadioShack.  And RadioShack was a leader in "bundling," the practice of giving away a cell phone for free, or at a reduced cost, with a signed cellular service agreement.
  • For a time, RadioShack was even a leader with its direct-order "Radio Shack Unlimited" (RSU) expanded product line, along with online ordering from RadioShack.com, anticipating the successful online ordering service that would flourish in companies such as Amazon.com.
But as the novelty of cellular phones wore off, and as innovations such as internet-enabled mobile devices (think iPhone) became the norm, RadioShack failed to carve out the next niche for itself.  This is for a number of reasons:
  • Wireless carriers such as Verizon and AT&T found that they could provide better service, and avoid having to give RadioShack a cut, by opening their own stores.  Suddenly, customers stopped going to RadioShack for their mobile phones and found themselves being helped by much trendier-looking employees at a corporate-owned wireless store.
  • Amazon.com became massively successful, essentially clobbering RadioShack at the online-ordering, direct-shipping enterprise that RadioShack had once been on track to building.
  • And most importantly, people just don't need the diversity of products that RadioShack had been offering any longer.  Open an old RadioShack sales flier and examine its various product offerings, and you will be amazed at just how many of those devices have been replaced by a single device, such as the "smart phone" or the internet-ready phone in your pocket.  The average customer just doesn't need a home phone, a camcorder, an answering machine, a pocket tape recorder, an alarm clock, a CD player or cassette player, a calculator, and so on.  The little phone in your pocket can even do many of the tasks for which you once needed an expensive desktop or laptop computer.
Because of the last bullet point above, it has not been clear since the advent of internet-capable mobile devices that there even would be another technology wave, since mobile-device makers seem to have made it their goal to pack every possible feature or tool into a single device, the Swiss Army Knife of modern technology, if you will.  And sadly, RadioShack was unable to beat wireless companies at their own game, essentially losing their stake in the major product line of our time: mobile devices.

So what is the answer for RadioShack, if it manages to survive at all?  I remember back in the late 1990s, RadioShack had begun an initiative that I remember being promoted internally as "Return to Mother," a return to an emphasis on the low-revenue but high-profit products that had been the staple of RadioShack for decades: parts, connectors, batteries, accessories, and so on. While it is true (perhaps sadly, according to a Ham Radio operator like me) that most people just don't need many of these items anymore either, there is a burgeoning new "maker" culture emerging, at least here in the Bay Area, California.

The maker culture is not limited strictly to electronics, as it also has elements of mechanical engineering, software engineering, chemical engineering, and so on.  However, in an age when it should be easier than ever to design and build something yourself (this was, indeed, part of the counterculture vision of technology innovators such as Steve Jobs), it is ironic that your average person has no idea where or how to go about making something themselves, designing a prototype of an idea, or inventing a device to solve a problem.

My vision of RadioShack's future, then, is for RadioShack to become the go-to place if you have any desire whatsoever to make or design something yourself:
  • Need materials?  Go to RadioShack.
  • Need components?  Go to RadioShack.
  • Need programming advice?  Go to RadioShack.
  • Need help with designs and plans?  Go to radioShack.
  • Need a distribution channel for a new invention?  Go to RadioShack.
  • And so on.
I am optimistic that a new niche could be found as a one-stop-shop for makers and their insatiable need for devices, tools, and materials.  The sad reality, however, is that RadioShack likely no longer has the capital to retool its entire product line and its several thousand stores.  RadioShack has essentially burned through its cash reserves to the point where it no longer has the flexibility to find its new niche for the 21st century.  Makers will always find a way; there is something in their makeup that keeps them driving to invent and innovate.  RadioShack could find its new niche by making life better for makers, and perhaps by ditching its attempt to be a Jack of all Trades, providing everything to everyone with an outdated product line that no longer serves any real purpose, even for its most loyal of customers like me.

For any makers who stumble on this blog post, what would you like to see RadioShack become?  What kinds of products or services would appeal to you most as a maker?  What do you struggle to find as a maker that RadioShack could provide if it were miraculously able to reinvent itself and become a maker store?

I wish RadioShack well.  We parted on good terms the first time, and I even went back to work for them once when I was teaching philosophy down at UC Santa Cruz.  (Hey, you can't be too proud about how you earn your extra funds!)  RadioShack has always been in the back of my mind as a place to land if other career options don't work out.  I was always amazed by the interesting and intelligent and insightful people that were somehow drawn to working at RadioShack in its heyday.  Perhaps there is hope for RadioShack yet, if the handwriting of its inevitable demise isn't already on the proverbial wall.

The Indirect Rewards of Writing and Blogging

Bloggers often face the question of how to monetize their blogs.  They often waste countless hours on  seemingly endless blog redesigns, incorporating Google AdSense ads, and a host of of other desperate attempts to make money blogging.

There are at least three problems with this approach to monetizing a blog:
  1. You will write better if you are writing because you are passionate about the subject matter, and not because you are trying to game the system for an easy buck.
  2. Most of these attempts at monetizing a blog are an enormous waste of time and energy and rarely produce any real return for your time and effort.
  3. The benefits of blogging often come in the form of indirect benefits and opportunities, not direct monetary benefits.
Let's look at #3: the indirect benefits of writing and blogging.  This blog itself is an interesting case study.  While I have spent more money on this blog than I have seen come back to me in the form of advertising revenue, I have benefited from this blog indirectly.

Some years ago, one of my colleagues found this blog around the time that their team was considering creating a new personal finance product. I happened to be between projects at the time, so I was asked to help out authoring personal finance course materials and online content for college-level personal finance courses.  

While I do not have any formal training in personal finance, I trusted my ability to read, learn, and teach, and so I accepted the challenge and spent the next five months authoring personal finance content professionally, all because I had started a blog to teach myself personal finance and investing, and because this blog created exposure at the right place and time.  

Because of my experience with that project, I am able to proudly claim that I was paid as a professional personal finance author for several months at a major publishing company.  This professional personal finance authoring opportunity certainly would not have come to pass had I not created this blog some years beforehand and had I not taken the time to teach myself a new subject area outside my normal comfort zone as a writer.

So if you are reading this as a blogger (personal finance or otherwise) desperately trying to monetize your blog, stop wasting your time with blog monetizing methods that continue to disappoint you.  Keep writing for its own sake, teach yourself something new that you are passionate about, and be on the lookout for indirect and easily-missed opportunities created by your ever-growing experience as a writer.  You never know when an indirect reward or opportunity for your effort is just around the corner.

Cancel Your Unnecessary Monthly Subscriptions for Increased Financial Peace of Mind

There is nothing that companies like more than to find a way to get subscription-based monthly revenue out of your wallet.  From video games to mobile devices, from banking services to the wine-of-the-month club, your five or ten or fifteen dollars per month, combined with those of other subscribers, are worth countless millions of dollars of monthly revenue to almost any industry you care to name.

If you take the time to add up each and every one of your seemingly inconsequential monthly subscriptions and auto-debits, you might be shocked how much you are really spending.  Each of these mini-subscriptions is like a tiny crack in your financial dam, a leak in the holding tank of your financial peace of mind.

So what is the answer?  Pull out an old-fashioned piece of paper (really!), make a list of each and every one of your monthly subscriptions fees and auto-debits, and start taking a proverbial red pen to the ones you really don't need or want anymore.

For example, I had recently been paying $25/month for a cellular data plan for my old iPad 2, which has remained quietly stowed away and undisturbed in its carrying case for the past 9 months.  Since purchasing my iPhone 5c a few months ago, I had barely touched my iPad (a noteworthy piece of Apple  user experience data in and of itself), but for some reason I just never got around to canceling the iPad data plan.  So this morning I charged up my iPad, logged in to the cellular settings, and cancelled my unnecessary data plan subscription, saving myself a nice $25/month in the process.

Don't let these greedy corporations continue bleeding away your hard-earned money, especially on monthly subscriptions that you no longer need or want.  Find a better use, any better use, for that money, reduce your monthly expenses, and reclaim a little peace of mind in the process.

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