On Home Buying

One big step in life is buying a house.  Most people that have the ability to read this have purchased a home at some time or another in their lives or will be doing so at some point in time.  There was a question on a forum that I belong to as to when does someone know if they’re ready to buy a house and what considerations should be kept in mind for this monumental task in one’s life.  A well known forum member answered as did I.  Here are those answers (slightly altered to fit outside of the home forum).

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Posted by Alex from Fifty Week Vacation:

It is awesome that you are considering looking at buying a personal residence. As a disclaimer, I own a home but personally am not the biggest advocate on home ownership. Hey, it’s a personal decision and I want a happy wife for a happy life, hence for us, we bought a home in the area we wanted to be.

——– As an example for this comment, let’s assume the house will be roughly $225k. I am going to use roughly a $200k loan at 4.25% which has a $1,000 mortgage payment each month. Again – I chose this amount as it’s close to that and keeps the math easy. These are all estimates since it makes a huge difference [depending upon location].

0 – You can “write off your mortgage interest” is a load of crap for most people. Don’t buy a home for this reason. It’s like spending a dollar to save $0.25. Sure you can itemize, but you already get a ~$12k standard deduction which minimizes [the] effects. A whole article [could be written] on this.

1- Are you sure it is cheaper to buy than rent in your area? Remember that the mortgage is just the start. You might have a lawn, a $300 HOA, trash services and have to pay for parking.

2 – Things break. I had a lovely $1,300 water issue recently. Are you prepared for things like that after the home purchase and the car breaks? For rental property it’s common to use 1% of the purchase price for repairs over the long term and I think that this is a decent gauge for a residence over the long term. However, home repair does not like to come in a consistent basis, it’s more like $1-5k chunks.

3 – Take your time when looking and don’t fall in love with the first place. There are lots of homes, do your homework and get an inspection. You learn so much about your home through this process. I really can’t imagine why you would not get an inspection. They are $300-$500 which is nothing in the scheme of home buying. It is crazy that people [would consider buying a home] without inspections, however it shows you how hot the market is.

4 – Consider the type of residence you’re buying. New homes tend to have less issues up front but cost more. Older homes can cost less but have more issues. In my area, condos are cheaper than single family residences but have really high HOA fees. I have friends that have $700/month HOA fees. $700!!!! On the other hand, single family homes are more expensive than condos but have little to no HOA fees. Townhouses are usually in the middle.

5 – Check out SOFI for loans. With 10% down you can avoid PMI on a personal residence. If you have to pay PMI on our example home here it’s going to be about $150/month.

6 – Get an inspection. Yes, I am repeating this.

7 – Consider the taxes for home ownership. Taxes can be – 0.5% – 1% of the purchase price easily and it is a decent estimate for a home. $225k home would be $100 – $200 per month. (Again rough numbers here)

8 – Are you going to stay in the house for at least 10 and probably 15 years? It’s all interest up front on the loan and it costs money to get in and out of a house. On our $200k loan after 10 years you would have paid only $41,000 in principal, yet $71,000 in interest. The 15 year story is not a whole lot better. Your principal can be greatly reduced if your home falls in value and you sell, or with closing costs. (See below about closing costs)

9 – When buying and you aren’t paying closing costs, you still have a loan origination fee, lawyer fees, deed fees, you might have an HOA initiation fee, etc. On the way out you having closing costs and a few fun fees. Sometimes buyers will pick them up depending on the market and how bad they want your home. If they don’t, hello 6% of your home sale (At least in my area unless you can negotiate a better deal). On a $225K home that is $14k.

10 – Homeowners insurance – for our example home you might be around $100 (Round numbers for ease of calculating again)

Whew – Hopefully I didn’t lose you there. These are my thoughts and I hope that they are helpful. A home is a HUGE purchase and I want you to be aware of all the costs associated, and I think that I covered them all, but you need to do your homework, too. They are a lot more expensive than people think but want you to be aware of as many as I can think of. To recap you might have all or a few of these:

At time of purchase:
$300 -500 inspection
~$5,000 in loan, lawyer, etc. fees / escrow for 1st year of taxes / insurance
Down-payment – Assuming 10% you’re in for $22,500
Moving costs
Total on the way in – Roughly $28,000

Monthly on-going costs –
$1,000 mortgage
$150 taxes
$100 Homeowners insurance
PMI – $150/month for about 10 years unless you have a large enough down-payment.
HOA is a wildcard. It could be 0 or could be $700
Your bills might go up from renting or they might not. Another wildcard.
Trash/lawncare-more wildcards
Repairs – Here if you use the estimate of 1%/year it would be $188/month. It is never this smooth though.
Total monthly – $1,250 + Repairs and wildcards and PMI if you have it

At the time of sale:
6% – $14,000 (Again it all depends on your situation and the market.)
Some fees will be sprinkled in as well
Moving costs
Total on the way out – $14,000+ ( This eats into the equity you built up)

I think that this is a good start and will give you some things to think about. Hope it helps and good luck with the hunt. There are many wonderful things about owning a home and the intangible things that it can provide. At the same time they are not cheap, so take your time and do your homework.

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Here is some of what I added:

A few other things to consider:
You may need to furnish or otherwise customize or outfit your home (electronics, decor, painting, flooring, etc.)

Initial improvements/changes to the home (redoing/remodeling some small or large part of the house)
for example, we removed some cabinets in our kitchen and added a wall and door in the master bedroom’s bathroom to enclose it all before or shortly after we moved in.  Don’t be afraid to try to do these things yourself or help someone that really knows how to do these things.  Learning new skills is very good to do!

You may have some decent sized “down the road” expenses to save up for (often found in the inspection).  Use those to your advantage in negotiations as well as keep them in mind for actually saving the money for those items!
for example, we very recently had our roof redone ($6k-7k for us), will be having the house painted this summer ($3.6k), and in the next few years, our garage floor will have to be ripped out and redone ($10k-15k? – it’s looking like a sinkhole is forming under it!)

You may have some cool upgrades that you would like to have some time in the future as well.
for me, I’d like to have solar panels (~$12k) on our house and/or some kind of urban garden or permaculture type of thing in our backyard and/or basement.  There is money and time considerations with those types of things.

Things change.  I wasn’t a Mustachian in training or anywhere near it when we first got our house only three or four years ago.  If I knew then what I know now, I’d have opted for a smaller house and been a bit more picky on some aspects of the house.

Roommates or renting out an extra room to guests or something could help you offset some bills.  We don’t do this, but it’s something to consider.

Future children.  We’ve got two kids and they want for nothing (we spoil them).  It’s mainly my wife’s decisions there, but kids are definitely considerations and a big topic of discussion before & after they are around (basically always).

Always, always buy far less house than what the bank tells you that you can.  We made this mistake and purchased very near the top of our range.  Things weren’t too easy with our budget the first few years.  We’re now making a bit more money and thus have a healthier budget with more wiggle room, but if anything decently major would have happened the first two years or so in our house, we would have been toast.  I’d highly recommend having a real emergency fund of 3-6 months of expenses that you will not touch or even consider touching for normal house related things.  Have, at a minimum, $6k for true emergencies like HVAC or water heater or car replacement/repair, medical needs, etc.  If you need, get this money in cash and store it in a safe deposit box in a town 30 mins away.  Don’t consider that you even have it for anything house related.  Personally, we have trouble with this, but are working on it after the fact.  I’d strongly recommend that you don’t do it the way we are 😉

I hope that these things help out in addition to the list that Alex provided.

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Hopefully this advice and these considerations will find a good home in the minds of those looking to buy a home.  My advice actually mainly comes from the perspective of buying our second, larger home after selling our ‘starter’ home.

If you would have other advice, perspectives, or other commentary, feel free to reply.  Pearls of wisdom are greatly appreciated even though they may not be heeded by those in need of them 😉

Thanks much!
Geoff

So, about that debt!?!

I was reading a nice article explicitly aimed at Millenials but really for anyone ( http://www.dailyfinance.com/2014/09/16/29-money-moves-that-millennials-need-to-start-making-now/ ).

The list has tons of great advice, but number 17 in particular caught my eye: “Visualize what debt-free will look like — then write it down”. Here’s my brief attempt at that and, for a follow-up, I’ll write a bit about how my year has gone as far as debt stuff.

Being debt free is becoming more of a reality nearly every single day. I imagine that life won’t be much different than it is now with one major exception; I won’t have to write a check or two each month that I do now. Instead, I will be investing in one form or another (self, IRA, sellable things, etc.). I also imagine that I won’t feel such a rush to sell some of the things that I have been to be able to pay off this debt. One more thing that I hope will be different is that my life at home will be a bit more full of things that I actually want to do instead of things that I have to do. I want to spend more time with my kids and family and friends and more time doing activities that I truly enjoy. I want to spend less time going through things to sell: taking pictures, typing descriptions, negotiating, etc. The thing that I will enjoy most of all is the added freedom. I will be much more free to do as I wish with my time and money instead of having to pay for someone else’s standard of living.

Year in Review – The Debt and Other Financials

I will be writing a check tonight to pay off one debt and another one closer to the end of the month for the interest on that debt. That will be the end of a whirlwind of debt repayment to the tune of $8k over the past year. One more debt to go. It’s a biggie, but very manageable ($15.5k). On the positive side of things, I started an IRA and long-term investment funds with Betterment (currently valued at $571) as well as seeing my 401k rise nearly $10k in value since January 1 (including my contributions of ~$3k + $1.5k match). This has been a great financial year and I am very much looking forward to the next. My student loans will be paid off in Dec. 2015 and I will hopefully be completely debt free within two years from now (Dec. 1, 2014).

I thank everyone that reads this for doing so and helping to keep me motivated. I give a great thanks to Mr. Money Mustache and Listen, Money Matters! for being a huge kick in the pants and excellent constant motivation. Have a great rest of 2014 and an insanely awesome 2015!

Thanks much!

A Better You: Goals and Priorities

Are you happy with the person you are? Chances are that you’re not quite the person that you’d like to be; most people aren’t. I know that I’m not. I have goals, aspirations and things that I’d like to improve about myself, my life in general, and the world at large, but getting there takes work. Goals take planning, working the plan, motivation, drive, and follow-through. Each of these things come differently to different people. Some people are naturally gifted in some or many of these areas, some are not. I’d wager that the majority of people fall into the latter category.

For me, I recall being more driven in my younger days. I am trying to improve myself by becoming more of the person that I want to be. I am setting goals; I have some long-term, mid-term, and a few short-term goals. I find that beginning with bigger, more long-term goals is easier and can also be worked into the shorter-term goals.

For example, if I want to have $600k in investments by mid 2029 (for early retirement), many things need to happen. This is a good goal because it has a time frame associated and can be easily measured; I will hit it or not. I can use some simple math and basic assumptions to figure that I will need to invest an average of between $19.5k and $26.5k per year in order to make this goal (spreadsheets rock!). The very first thing that I have to do is to pay off any debt as quickly as possible. This is a good idea because it gets the debt out of the way and I can then concentrate on the building of my investments without much worry. I’m very close to finishing up doing this, but I’m not quite there yet (this is a mid-term goal; generally one to three years or so). After that, one necessity will be to invest in addition to my 401k (the current max allowed is $17.5k per year). Thus, I will need to open and contribute to an IRA (a short-term goal; I’ve done this). There are many possible goals that I can add to make this long-term goal more concrete and have additional medium-term and short-term goals associated with it.

Obviously, goal setting is very important to becoming a better you. Another thing that is very important is changing things that will keep you from achieving your goals. For my example, one possible thing that could keep me from reaching my goal would be that I end up spending money that I should otherwise be allocating to investments/savings. Currently I am nowhere near hitting $19.5k (or $26.5k) of savings for the year, but I do plan on increasing my contributions greatly until I am hitting and over that threshold (thus making it an average).

Another thing that helps to make a better you is setting priorities. In order to hit my aforementioned goal, I will need to keep my standard of living in check while, at the same time, working to increase my income. This is a good multi-pronged approach; concentrating on multiple complimentary ways to solve the ‘problem’ of hitting the goal.

One very real example that I have faced lately is spending vs. income generation. I need a new phone, so I decided to get the current latest, greatest thing (I don’t typically advise this). Since I am indulging in such a great luxury, I am working extra hard to ‘make up for it’ by selling some things on eBay and am also seeking additional ways to bring in a bit more income. I am fine with the splurge because I will make sure to more than make up the difference with additional income.

Here is some recommended inspiration:
A Lifetime of Riches – Is it as Simple as a Few Habits?
YOU’RE NOT GOING TO MAKE MONEY WITHOUT DOING THE WORK
BREAKING BAD HABITS
10 TIPS FOR STAYING MOTIVATED TOWARDS YOUR FINANCIAL FUTURE
J.D. Roth: How I learned to Stop Worrying and Love Mustachianism

Personal Finance Problems

I’ve found out that there is trouble in paradise! An author named Helaine Olen has written a book about the problems of the personal finance industry. Here are a few interviews/discussions:
– A shorter one (31 mins): http://youtu.be/ViaJQRbJrzg
– A longer one (1hr 7 min): http://youtu.be/MtaBXXCULMg

The author does seem to have some very valid points and makes good arguments, but I also feel that she is somewhat off on a few things. I just finished listening to the above interviews, but I haven’t read her book, so based on that, here’s some of the points and my thoughts on them:

  • Since the 70’s, the middle class has been having a harder and harder time ‘making it’. I do feel that this is overall very true. Overall, median wages in the US have been essentially stagnant for several decades while many essential costs of living have gone up. There are very few quick or simple answers to problems like this. I feel that the best approach is a multi-pronged, long view solution (I won’t expound on it here).
  • Pensions are gone and 401(k)s suck. Well, yes and no. Very luckily, my coworkers and I do still have pensions, but that is unfortunately a rarity. I do also know that many companies have very poor options when it comes to 401(k) choices (typically as high fee products that are offered to them). Again, this is where consumer education comes in (and an IRA). One of the bigger points in the book seems to be that people need to be taken care of for their future savings. While I agree that this was done well in the past, that time has gone the way of the pension. I would love it if I didn’t have to worry about saving for retirement and it would be done for me by the company that I worked for or my government, but, flatly, it’s not (or is done so in a supplemental way – i.e. Social Security). I’m totally for people getting together and petitioning the government and the places that they work in order to change things for the better (hey…that sounds like a union! Personally, I’m generally in favor of them.), but that is not happening on a large enough scale at the current time to change much at the time. Currently, it is up to the individual to do the planning, for better or for worse.
  • Financial advisers, investment ‘experts’, and Personal Finance gurus have their own interests in mind, not the consumer’s. While I mostly agree with this, there are exceptions and, in general, painting with a wide brush is ill advised. I think that this can be greatly solved with better consumer education. Generally, consumers see finance and investment as an extremely complicated and complex thing. Overall, this is somewhat true, but a slow, steady, informed approach should help consumers. The proliferation of decent to good advice on the internet from a variety of sources is also a good thing. The education that I would firstly give to consumers is something that I’ve stated before in a slightly different context, “Someone is always trying to sell you something or part you from your money!” Being an educated consumer about fees, pitfalls, stipulations, and ‘gotchas’ is the best way to save one’s self from bad experiences. Many advisers and experts charge fees of one sort or another. The same goes for wherever a financial product may come from. Finance gurus are usually peddling their latest book, conference, seminar, or whatever else that they are putting out. If consumers are aware of the offerings in the market, they will have a much better time knowing what is or isn’t a good deal for them.
  • “We were told that giving up our daily latte would lead to us being millionaires when we retire.” Well, it depends how expensive those lattes are 😉 Seriously, I don’t know who in their right mind would believe that $4 or $5 a day will make you a millionaire in 20 or even 40 years; though, over 40 years, $4 a day would get you around $275k and $5 would get you around $320k (assuming average annual return of 6.5% or so after fees and everything else). Not quite a million bucks, but still nothing to sneeze at! It looks like the magic number per day would be quite near $15.75 per day to hit a million dollars in 40 years, $32.22 per day to do it in 30 years, and $70.68 per day to do it in 20 years…
  • Consumers are basically helpless and easy prey to the financial professionals and gurus. Again, while I partially agree, education and interest in one’s own situation is key. Like in nearly anything, those that don’t know good products from bad or those in desperate situations can easily fall victim to incredulous people in the world. The best thing that someone can do is not to be a victim of the predators. Yes, bad and unfortunate things happen. We should have a bigger and better social safety net for those that run into bad times, but barring that, people need to also take at least as much responsibility in their own situations. There are many things in life that an individual has zero control over, but anyone has the power to change what they do have control over. It may not be easy or convenient, but it is possible to change things under one’s own control.

I also looked at a few reviews on the book while writing this. Feel free to do the same if you’re so inclined.

Let your thoughs and feelings on this be known in the comments.

Work Hard(er)

Do you work hard?

Yes! Of course you do. Most everyone does.

Do you do work at home?

Sure, lots of people do. I do too. Unlike some, I don’t bring work home from my day job. In fact, the work that I do at home has little to do in relation to my day job. Personally, I have several potential income streams that I can utilize if and when I choose or need to. I run an eBay store selling collectable cards and occasional computer parts, I build web sites/apps, I can build and fix computers, and I make a great chili (At least IMHO. OK, I don’t sell my chili). I’m usually eager to use and expand my skills in my particular areas of interest and expertiece. I use my skills to create efficiency for myelf. For example, I have been able to blend my eBay ‘skills’ and coding skills to creating a ‘program’ that helps me to create an eBay listing in two or three minutes instead of five to fifteen minutes that it once took. Even if I had to work with someone else or even pay someone else to do this for me, it would have more than paid for itself. Over the past four to six years since I had kids, I’ve been able to put far less time into selling things and doing other work, but I am able to do a bit here and there (not zero, but pretty close). Just this year, selling cards has enabled me to pay off $6k+ in debt that I otherwise would not have been able to (my day job money is earmarked for the family budget). I’ve also padded the household budget when we ran into a few tight spots. The extra work does make for a few late nights here and there, but those are few and far between. Overall, I put in a handful of hours a week into the side work. The ROI of my efforts compared to the debt relief is more than worth the additional hours that I put in. I could do much, much more side work than I currently do. It would pay immense dividends and get me out of debt and into saving for FI much more than I am currently able to. I have a long way to go, but working hard(er) is definitely helping!

Do you do any side work or have any other income streams? Sound off in the comments!

Betterment

I just signed up with Betterment.  It’s an investment service that gives you an instant diversified portfolio, automatic rebalancing, automatic monthly deposits/withdrawals and more.  The first 30 days and the overall fees are very low (0.35%).  Use this link to sign up and you’ll get a free $25 in your account after you’re all verified (basically makes it free for a while): http://betterment.com/invite/geoffreypearson.  I decided to set up an IRA there, but may add additional ‘goals’ in the future.

Good stuff!

Framing the whole thing

image

A quick post on framing the idea of early retirement. The quick way to state the goal is to say that you want to retire early. The better, slightly longer way to put it is that you want to be financially independent; not be forced to work for the money. You want to be able to do as you please and not have to worry about how to pay the bills. You want to be free to follow your own interests whether they end up making money or not. You may wish to learn new skills or travel or take up new hobbies. You want your ideal life, not one weighed down by HAVING to work, but wanting to work (if you so choose).  You may not end up a millionaire, but you won’t need to be and you’ll be perfectly happy with what you choose to do in life.

Down and dirty changes and plans

Debt is an emergency!

I have bunches of debt and limited income from my job that I can devote to paying that debt off.  I do have a pretty good way of coming up with money in order to make the payments on that debt that I’d like to (selling Magic cards and other things on eBay and Facebook).  Since December 2013, I’ve gotten serious about paying off my debt by substantially increasing my monthly payments and have been keeping track of my progress.  Before that point I was making normal payments for quite a while, but they were ‘only’ $300 a month.  Since starting to keep track (100%), I’ve been able to take my total debt down to nearly 74% since then.  I hope and fully expect to have one of the main debts squashed out by the end of 2014.  Doing so will leave me with around 62% of the beginning debt.  The remaining debt has low/no interest, so I will be taking two years or so to pay it off.  Also, I do have some school loans that are being paid off as well, but the interest on those is pretty much zero, so I’m in no hurry on those either (the balance is less than $2k and they’re automatically taken from my account).  After the first debt is gone, at least $100 per month will go to investments and when all of the debt is gone, everything ‘extra’ will go into investments.

I have changed my 401(k) from Roth to Traditional and increased my contribution from 7% to 10%.  This does not change my take home pay and should work out well in the long run since I should be in a much lower tax bracket when I ‘retire’ in 2029.

I have already made one decent change in our household spending in that I have eliminated cable and slightly lowered our internet speed thus lowering our bill by $15-20 per month.  I plan to switch my phone plan to Ting wireless or Republic Wireless.  With Ting, you need a phone (or can buy one from them or elsewhere), but their service uses a pay for what you use model.  Republic offers two or three phones for as little as $150 and the monthly bill can be as low as $10 to $25 depending on the plan.  Both services look to be significant savings over my current Sprint bill, but I’m part of a family plan, so getting out of it is a bit more difficult.

The goal

In order for me to hit my goal of retiring on July 1, 2029, beginning January 2015, I will have to average around $2200 invested per month (assuming an average 7% rate of return and 4% safe withdrawal rate).  Currently, I’m not on track to hit this, but this will be the goal average.  This roughly includes a two-and-a-half year payoff of the mortgage after I have hit my dollar goal for being able to retire (~$600k).  In order to do this, I will need to max out my 401(k) (currently capped at $17.5k w/o match) and also max out an IRA (curretly capped at $5.5k per year).  These figures should increase in the future, but for now this nearly matches my goal of getting $26.5k per year into investments, so I shouldn’t have to go into tax-disadvantaged accounts in order to hit my goals, but I’m fully prepared to do so if need be.

Now you see my situation and plans. If you have a plan, let me know!

Investing is how the rich get that way.

I was listening to a podcast episode of Listen, Money Matters called 21 Reasons You’re Broke.  One of many that really stuck out to me was the 18th reason that you’re broke.

You’re broke because:
“You don’t invest or pay yourself first.  Investing is how the rich get that way.  If you don’t pay yourself first, you won’t have anything to invest.”

Cutting expenses is fine and good, but not doing the best thing possible with the ‘saved’ money is a big no-no.  The entire reason for cutting expenses is to use that money for saving and investing (or paying off debt quicker).  Personally, I’m still on the point of paying off debt and am doing a pretty decent job, but as of late, motivation and impulse buys have been a slight distraction for me.  If I see that I am getting distracted, I must seek motivation.  This motivation reminds me of my goals and that I need to act now in order to meet them.  The motivation that I use is reading blog posts & articles, and listening to podcasts that give ideas, advice or basically reinforce what I’m doing.  Simply reading about or hearing about what others are doing or have done gets me pumped up to do the next step and get back on what is going to be a long road to my goal of ‘retiring’ around 48 years of age.

What’s working against you?

Change Anything: Blind and Outnumbered
http://youtu.be/3rj4pMdCosI

Everything in the world is hoping to part you from your money!

  1. Just a sample
    Sampling something before you buy.  How many times have you been in the grocery store and gotten a sliver of a pizza slice or a few of the newest chips handed to you or some other goody, then picked up one of the stack of product sitting next to the person handing it out?  You were just a victim of the free sample.- THE ALTERNATIVE –
    Pass up the sample or take the sample and don’t feel obligated to buy.  They’re giving it away!
  2. What’s personal finance?
    Tracking expenses, keeping a budget, and keeping your personal financial wits about you is not complex or complicated.  In order to survive, you need to do it and stick to it.  These basic skills are unfortunately deeply lacking in the general population.  People not knowing the basics of personal finance is at least part of the reason why the country has a debt problem :/- THE ALTERNATIVE –
    Find out about and know personal finance.  Keep track of your spending and keep a budget.  Set limits and stick to them.  Keep yourself and others accountable.
  3. Keepin’ up with the Jones’
    This is a two-for.  Peer pressure and bad examples.  Bob down the street just got a shiny new car, now your few year old car is ‘old’.  Time to upgrade!  Bob’s also got a new computer that takes 10 seconds to start!  Yours takes a whole 30 seconds!!  Time to upgrade!  Jack next door just got an awesome new home addition!  Now you’ve gotta build one at least as good!
    Hold on!  Cool it!  Wait up! … Guess what Bob and Jack also have now?!?  $30k in debt that’s going to take years to pay off as well as tens of thousands of dollars in interest!  Do you want that?????  Didn’t think so.- THE ALTERNATIVE –
    Maybe get different friends?  Look at Bob or Jack’s new stuff and ask yourself (or even them) how long is it going to take them to pay that off?  What opportunity cost is there?  How could the money have been better spent?  Perhaps a nice $10k gently used car and $10k into the Freedom/FIRE fund?  Perhaps get rid of a few things so that your space is more spacious?  Point these things out to Bob and Jack.  Maybe it will help them in the future 😉
  4. My money is plastic
    If you’re not very, very careful, spending with credit can really come back to haunt you.  Until you become disciplined enough to use credit (or even a debit card), don’t use one.  Believe me, I know.  I did it…twice!  I’m still paying back for my past mistakes.  If you do get into trouble, it’s an emergency!!  Tackle the debt with the highest interest rate first.  I’ll have another post on my troubles with this later.- THE ALTERNATIVE –
    Yes, I somewhat already answered this, but this is a biggie with me.  Be accountable to yourself and others, especially a spouse.  Admit if you have difficulties or simply be transparent with your personal finances.  Cut the plastic up and throw it out.  Use cash only if you need to.  I feel that I would now be disciplined enough to be able to use a credit card properly, but I would only want a joint card with my spouse and complete transparency.  I would refuse to carry a balance month-to-month.  Paying 12-24% interest or more on any amount of money is simply asinine and asking for trouble.
  5. Advertisements work!
    It seems that just about everything out there is an ad in one way or another.  You are being sold to at all times.  Ads are everywhere; keep that in mind at all times…CONSTANTLY!  You are being sold to right now by something or someone.  In reality, TV shows are just ‘filler’ for ad spots.  How does the almighty Google make it’s money? Ads.  There is likely an ad right under this posting (I have no control over that at this time – feel free to donate).- THE ALTERNATIVE –
    Ignore the ads as much as possible.  Notice the small “ADVERTISEMENT” at the top of magazine ‘articles’.  Turn off the TV and/or pay for ad-free stuff on Netflix, Hulu, Amazon or other such services.  I can all but guarantee that it will save you and your family more than the cost of the service in even a short time frame.

In marketing classes, all of these ways and more are plainly spelled out.  It is up to you yourself to know and keep these things in mind.  If you are aware of them and actively avoid or turn them into forces in your favor, they can be overcome.