Category Archives: Financial Success

To Invest In A Pool, or Not?

To be clear, the jury is still out in my mind as to whether a pool is an investment, or not. I guess we’ll find out when it comes time to sell our house.

In the meantime…

Back in the late ’90’s my wife REALLY pressed me on getting a pool. While it sounded nice, I wasn’t yet fully convinced. We were still having fun with our young tikes running around the yard with super-soakers and playing in the sprinkler.

Over time, though, this got old. So, in the summer of 2001 we pulled the trigger and purchased an above ground (18′ x 33′) pool. We “rationalized” the expense with the following statements:

  • It would save us money vs. going on vacation. Reality: This is NOT true ūüôā
  • If we have such an attraction in our yard the kids would be more apt to hang out here (under our purview) than someplace else (thus “reducing” the potential trouble they could get into).
  • It would be a lot of fun, right in our own backyard!

After 14 years of pool ownership (and being the family “pool boy”) I can tell you first hand that the latter 2 statements above are 100% true and good reasons to get a pool. However, doing so does NOT save ANY money. Instead, it represents a whole new category of expenses, including:

  • The increased electricity usage to run the filtration pump
  • The chemicals needed to keep the pool clear and balanced
  • The equipment which corrodes and/or otherwise breaks down and needs to be replaced
  • The water to fill it each year (after the thaw and when evaporation takes more than Mother Nature puts in via rain). We are fortunate to have a well, which provides free water. However, when you need to put in 10,000 or more¬†gallons it is safer to have a water truck come by for the fill-up to avoid draining the well.
  • The TIME to maintain what I would consider an ongoing science experiment ūüôā

What do I mean by a science experiment? For pool owners, you know!

On one day the pool water may be absolutely crystal clear and beautiful. Turn your back and the water is dull, cloudy and milky green.

WHAT HAPPENED THIS TIME ?!?! I thought I was following the prescribed regimen to the “T”.

Off to the pool store with a water sample. Always an experience…

One of the local pool supply companies is managed by what we call a “Pool Nazi.” This guy cuts you NO breaks. We ask what we “think” is a simple question and he hammers on (thinks he is teaching about) the proper care and feeding of a pool to maintain the perfect pH balance, etc.

And, regardless of the pool supply store you go to for a water clarity issue, you’d better have room in your vehicle as they are going to LOAD YOU UP with lots of chemicals. Cha-ching!

That said, once you dump the chems into the pool (according to their carefully prescribed directions) the pool invariably clears within 24-48 hours. This process has been required¬†“at least” once a year for us…

As you might imagine, an above ground pool is more of a temporary structure vs. an in-ground pool. Even so, with good care, it can last for many years. Assuming this, we put in a very nice deck to enhance the backyard experience.

Due to the HEAVY snowfall this year our pool liner failed us. We observed this several weeks ago as the winter cover and snow on top slowly descended into the pool, until it was laying on the bottom. This wasn’t a total shocker, since pool liners are typically only warrantied for 10 years and we got 14 out of ours.

At time of writing, Daigle Servicing Company (NOT the company with the Pool Nazi, mentioned above) just completed the installation of our new liner. And, I would highly recommend them.

While we still need to do a bit of spring cleaning, it is pretty much lit-up and ready for swimming. Although, if you jump in right now you’ll get an ice cream headache as the water is frigid ūüôā

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Once we sell the house I’ll let you know if this “investment” served as an attraction or deterrent to would-be¬†buyers.

All the best!

Mind the Finances – Use Protection

This continues our discussion on Mind the Finances, as a key step in creating a life of effortless abundance for ourselves, our families and others!

In this post we’ll cover the topic of using protection.

There are many risks to our financial standing that we can protect against. This includes unanticipated costs associated with:

  • Healthcare
  • Accidents and the resulting liability to others
  • Disability
  • Death

Let’s briefly cover each…

Healthcare

We all need it at some point in time. And, you will now be fined¬†if you don’t have adequate health insurance coverage.

The primary objective, in my mind, is knowing and controlling EXACTLY what the¬†TOTAL out-of-pocket expenses “could be” in a worse-case scenario. This includes the cost of the insurance, any deductibles and exclusions.

Too many¬†plans, promoted front and center, and subscribed to by many, simply do NOT provide this. Check your policy to confirm…While the plan may provide “adequate” coverage, it is often not possible to¬†lock-in the total out-of-pocket expenses that we may be required to pay.

It does not have to be this way…

We subscribe to a plan¬†offered by¬†Blue Cross Blue Shield, called Lumenos. In a nutshell, we chose a high deductible (the out-of-pocket expenses) that we’ll pay up-front (regardless of whether it all happens at once, or over the course of multiple healthcare-related transactions). Then, once this out-of-pocket is met any additional healthcare-related expenses are “all in” for the year.

For individuals (or families) willing to take on more of the up-front risk, insurance providers offer lower rates. The result: a lower cost insurance plan that covers us against the catastrophic healthcare-related expenses that could have a significant impact on the state of our finances.

Other plans charge a higher fee for¬†healthcare that may not be needed in a given year, and they don’t provide a cap on the maximum out-of-pocket expenses that we may be required to pay.

Bottom-line: Do some research to ensure you aren’t paying for more than what is¬†needed in a policy? And, determine if you can lock-in the “maximum” out-of-pocket expenses.

Auto Insurance

Do you know how much a telephone pole costs? We do ūüôā

A few years ago one of our sons used his car as a missile and clipped one completely off! Thankfully there were no “major” injuries AND we were completely covered.

Moral of the story: Do NOT skimp on auto¬†insurance. While some companies offer “name your price” insurance, the result does NOT guarantee that you have adequate coverage. At a high-level, there are 2 types of coverage available in an auto policy:

  • Liability – Coverage for what we may do to someone else and/or their property, with our car.
  • Collision – Covering the cost of repairing our own vehicle.

The most important portion is liability. Mistakes happen. And, they can become quite costly (in the 10’s if not 100’s of thousands of dollars). Check your policy. If you are not covered for “at least” $100k, your finances are at risk of significant / long-term impact.

If you are looking to save money on your auto policy consider a high deductible for collision. Then, if you are the cause of an accident you can tap your emergency fund (discussed in a prior post) to pay for the repair of your car.

Disability

At some point during¬†our¬†“working years” there may come a time when we simply cannot work due to injury or illness. And, just because work has stopped (including the associated income) does not mean the expenses stop. In fact, they may grow as a result of needing to pay for the related healthcare. As such, it is important to acquire disability insurance.

This is often offered by our employers. If so, subscribe. If not, contact an insurance company and obtain quotes.

If you are like me, in my younger years, I thought I was indestructible. I had a rude awakening when my motorcycle ride was abruptly interrupted by a driver not paying attention while making a u-turn – right in front of me. My velocity may have played¬†just a “small” part in this ūüôā

When I came to, me and parts of my¬†motorcycle were strewn all about the street. The result: I was laid-up for over 3-months. Thankfully, I had subscribed to my employer’s disability insurance, which helped me to continue to float the boat (make my¬†rent, car and motorcycle payments). Phew…

Death

I really don’t know why it is called life insurance. We are actually¬†insuring for the handling of our financial obligations after we pass to the other side.

Do you have ANY debt? Who is going to pay off that debt when (not if) you expire? A co-signing parent, spouse or significant other? Not fair!

Do you have children, who you are planning to help through college? Who is going to pay for that education if you were to evaporate?

Anyone¬†can obtain SIGNIFICANT life insurance at a LOW COST. Example: a¬†25-year old can¬†acquire a $100,000 term life policy for around $12 a month. As we grow older the costs do creep up, a bit, but until we reach our mid to late 50’s it is still very reasonable. And, at¬†that point, when the kids are on their own and our debt is paid off we really need very little (if any) life insurance…

If you have any debt, or children, it is your responsibility to acquire sufficient life insurance to handle YOUR financial obligations that will remain after you are gone.

We are all going to leave this place (for a better one ūüôā ). When we go, let’s leave behind good memories, untarnished by a pile of financial obligations that we didn’t handle¬†while we were¬†still able to fog a mirror.

More to come!

Mind the Finances – Pay Ourselves First

This post continues the series on Mind the Finances, as a necessary step to creating a life of effortless abundance.

We will now cover the topic of paying ourselves first.

This begins with¬†putting aside funding for the inevitable emergencies in life. The rule-of-thumb is to have 3-6 months of our take-home pay tucked away and available for¬†immediate access. Since we’ll want this money guaranteed to be available, the best place to keep it is in a savings account that is not touched until / unless there is an absolute emergency. Becoming twitterpated over a bright, shiny new object does NOT qualify ūüôā

Examples of what¬†does qualify, for the use of our emergency funds, would be paying for normal living expenses during a (temporary / short) period of job loss, disability and/or an unanticipated bill (auto repair, healthcare expense). An emergency fund let’s us¬†absorb the “majority” of these situations without compromising our long-term financial plan, including having to take on debt or selling assets at a discount, when under duress.

If we should have to consume some or all of our emergency fund the first priority is to then replenish this as quickly as possible.

Once we’ve established our emergency fund we can now begin putting money away for the longer-term. The goal is to save “at least” 10% of everything we¬†earn. The higher we can make this percentage¬†the sooner we¬†will become¬†financially independent. When we get started we may only be able to put away 5% because of other obligations we’ve made for our income (living expenses, debt payoff, etc.). Several months later we may receive¬†a raise. When this happens we have a couple of choices:

  • Immediate gratification, which could increase our¬†ongoing financial obligations ¬†(thus consuming the raise)
  • Shortening the timeline to our financial independence

At this point it may be time to reward ourselves. And, this is encouraged. However, if we do so, let’s try to avoid¬†increasing our ongoing obligations,¬†thus consuming the¬†increased income, we have worked so hard to earn. Instead, we can¬†decide to splurge on something “with cash” (e.g., a new toy, vacation, etc.), then use the increased funding on an ongoing basis to accelerate the payoff of debt and increase the amount we¬†save¬†for the long-term. The result, we are shortening the timeline to our financial independence.

By¬†consistently taking this approach, while balancing the realities in life (yes, there will be¬†times when we’ll want to increase the obligations for our income to move into a larger home as our family expands, etc.) we can absolutely achieve financial independence WAY BEFORE normal retirement age.

The alternative, which many in our society take, is that of paying expenses first and then saving / investing anything that “may” be left over. Taking this approach, quite simply, continuously delays (if not prevents)¬†the realization of our goal of becoming financially independent.

Finally, if all we do is store-up extra funds for ourselves we are stopping the flow in the universe. Consider the Dead Sea. Know why it is dead? While the Jordan River is the source of water in, there are no outlets. The water is stagnant and cannot support life. Not the result we want from our finances ūüôā

As such, do not forget to contribute to worthy causes. This could be giving at your place of worship and/or funding a cause that will make a real difference in the world. Have you ever given a SIGNIFICANT tip to a waitress who you just learned is a single mother, struggling to get by? I don’t mean 20% vs. the customary 15%. What about slipping her a $100 bill, on a $25 lunch? Trust me, the transaction is just as good for you as it is for the recipient. You, your significant other, the recipient and their family will remember it for years – and feel really good about it!

In closing, paying ourselves first does not suggest that we should be stingy with our money. Far from it!

It means consciously directing our income towards paths that will improve the quality of life for ourselves, our family and others, prior to it being consumed by frivolous expenses that have little, if any, long-term value.

More to come!