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Archive for May, 2008

Sim City and Loans

May 27th, 2008 at 07:29 pm

One of my best friends waltzed in to my apartment yesterday and showed me the most beautiful guitar I have ever seen. I don't know much about guitars since I am a drummer, but I do know an $1,800 Gibson guitar when I see one. It was dark with a burnt-orange sunburst in the middle of the body. Did I mention that he put $1,000 of it on a credit card that he won't be able to pay back for a LONG time?

I often wonder what makes one person borrow $1,000 for a guitar and another person put $1,000 in a savings account. I guess that there are several reasons that I am of the latter type, but one sticks out above the rest: Sim City.

Did any of you ever play the Sim City games? I first started with Sim City 2000. You started with a set amount of money. With that money, you paid for different types of zones: industrial, commercial, and residential. After you built roads and supplied power to the zones, citizens would start building houses, businesses, factories, and everything else that makes our civilization what it is.

As the mayor of your city, you had unlimited power to create and destroy. Well, you had unlimited power as long as you had the money. There was a budget to balance, and if you didn't have the money to build a road, you couldn't build a road.

Well, there was one way that you could temporarily get yourself out of a financial jam: you could take out a loan. I remember when I first discovered loans on Sim City 2000. I immediately took out as many loans as I could (Hey, free money!) and began building with reckless abandon. That lasted until the interest on the loans forced my little town in to bankruptcy.

I learned one very important lesson from Sim City 2000: do not take out loans. I don't know if the game designer was trying to teach a financial lesson, but it was impossible to pay off a loan once it was taken out. Through classical conditioning, my pre-pubescent brain associated loans with very bad things happening. I pulled every trick in the book to get through my undergrad with no loans, and it greatly pained me to take them out for my M.A.

I don't really know the point of this entry. With so many people in so much debt, maybe we could use a little more Sim City 2000 in our lives?

The Grand Plan: Part I

May 22nd, 2008 at 07:34 pm

I am getting married on May 31st. My fiancee and I are extremely excited, have known each other for a long time, have similar interests and values, and all of that other good stuff. One thing that I think is going to help us avoid a lot of fights is that we have similar values when it comes to money.

With that being said, I want to lay out our plan for the next five years to see what you all think. First, between the two of us, we have saved roughly $17,000 since we graduated from college. That is somewhere between nine months and a year of living expenses for us. With that safety net in place, we can proceed to debt.

In terms of debt, all we owe is for student loans. I currently have $9,200 and will only have a few thousand more to complete my M.A. I get a $4,000 raise when I complete my M.A., so we plan to throw all of that on to student loans until they are paid off. DF, soon to be DW, (If I understand correctly, DW means "Dear Wife"? Going on this assumption, DF is "Dear Fiancee.") is starting an M.A. in college administration, so that will ultimately throw $18,000 to $20,000 more in student loans on top of that.

Our plan is to live only on my salary and save all of DF/DW's salary. Assuming she makes somewhere around $30,000 each year, which is low-balling it, we could have $80,000-$100,000 saved up in five years.

If this does come to pass as planned, we have a couple options. The first option is to throw all of it on a house. The second option is to max out a Roth IRA and throw that rest on house. Beyond that, I don't really know. Any suggestions? Is this plan feasible?

Make Money from $4 Gas

May 21st, 2008 at 05:46 pm

Most of us are seeing the effects of $4 gasoline. I have a 30-mile commute to work each day, so on Quicken, I keep seeing the "Fuel" section of the pie chart gradually eat up the other pieces of the pie. While this may seem like a bad thing, it has the potential to shower financial benefits.

Okay, maybe "shower financial benefits" is a bit too strong, but I believe that we can make money or at least pay less for gas now than we were a year ago. $3.30 seemed to be the tipping point for me. When gas rose above that price, a fellow teacher and I decided we would start carpooling. With gas around $4 per gallon, carpooling drops that price to $2 per gallon for my friend and me.

What are some other ways that we can benefit financially from $4 gas? Carpooling is an obvious choice, but I'd like to hear some creative ideas from you all.