Chaos is Money

As some of you might know, I work for a community-based financial institution as what one might call a "financial analyst. What might surprise you is, my position has nothing at all to do with telling you how to manage your personal finances, or where to invest your money in the market.

I only do that here, on this website. If I did that for a living at my dayjob, I'd have a clear conflict of interest in writing for this lovely blog you've happened upon. 

But I do work with these types of people--the ones who like to go out with their crystal balls among my company's unwashed masses, telling them where the stock market is supposed to go, when it's going to happen, and what's surreptitiously causing it. They tell people what to do in the market when things aren't looking so rosy in the near future.

If you've been reading very long, you know my opinion about most wealth advisers such as these. It's not entirely positive.

You also know my position about stock market prognosticators--no one can tell you with any certainty where the market is going, when you'll see it happen, and identify with any absolute certainty what's the catalyst. But some people do try--in fact, lots of rich people out there think they know exactly what the market is going to do. This year, they think it's not looking too rosy. In fact, things look downright chaotic. And that's fine.

I don't try to prognosticate or predict market movements--most of what I do is much more simple, and not even very sophisticated. In fact, it's surprising to me how many people take me seriously. Most of what I know can be gleaned on your own in the vast world of the internets.

Oh, I guess this is the internet.

What Do I Do Here?

On top of extolling the virtues of cultivating good personal financial habits, and railing on general financial stupidity I see around me in the world, what I most enjoy writing about on this site has to do with investing--growing and preserving wealth. It's what I'm most passionate about. Investing puts the "giddy" in me.

What I do in that regard is simple. I research companies, sectors, commodities, and funds which I perceive as safe, solid investment opportunities ("rosy" investments), and build "shopping lists" of sorts from which I craft successful long- and short-term opportunities for profit. 

The strategy from there is simple. I keep this "shopping list" in the back of my mind, and wait for "hiccups" to occur in the market, which causes fear for most investors, and temporarily skews the prices of these different investment vehicles into territory favorable for comparatively high returns and low risk. 

Not surprisingly, the best opportunities in the market arrive when there is absolute pandemonium  in the streets of the financial world--when things are all but "rosy." The chaos which ensues when market participants panic is what creates these money-making opportunities. It's a time when money and wealth are shifting from the foolish and finicky, to the patient and prudent.

What else characterizes market panic such as these?

Investors become willing to pay outrageous prices to "insure" their investment portfolios (using stock options and other instruments) against the losses they're likely to incur on the risky investments they've jumped into in the months leading up to the chaos, positions they most likely only entered because the rest of the thundering herd couldn't stop talking about it at the water cooler, or on CNBC.

I know what happens to herds. There's an entertaining little biblical account about one such herd of pigs which ended up diving off a cliff after being possessed by what I can only assume were the ghost ancestors of today's foolish market participants. Those hogs drowned, and the spirits were left without a pit to piss in. 

Watching the Market Pigs Drown

Watching the pigs of the market drown (i.e., watching fools lose money) is a fascinating, but harrowing and enriching exercise. In the second week of August earlier this year, I wrote about how most of these market pigs (or ostriches, pick your favorite animal) had their head in the sand about the actual condition of the financial markets, and warned that soon we'd see a market correction precipitating a larger eventual financial meltdown, and that most were going to be taken unawares.

Just seven short days later, the market experienced its biggest drop in over three years. 

Nobody likes to watch pigs get slaughtered, but the reality is, this is inevitable. If you can handle the stench of chaos, and have the guts and gumption to step into the chaos and pick up the bargains you know exist, you can make a killing. 

That brings me to today. I recently sat down with one of the financial advisers where I work for a friendly market conversation. 

Surprisingly, he echoed sentiments similar to much of what I see being talked about by the only sources I trust in the financial world. Despite recent pullbacks, today's markets are still a bit frothy. There's not much room for upward momentum for stocks in the coming year. Couple that with a few  other things--such as bubbles in auto loans and student loans, not to mention the breakdown of the junk bond market--a precursor to absolute market disaster--and we both arrived at the same conclusion: we MUST remain cautious, but bullishly so.

This surprised me, and honestly it restored my faith somewhat in some advisers. For once, someone who gets paid money to manage other peoples' money, actually agreed with me (me, being someone who makes their own money grow regularly).

I mentioned to him briefly my involvement in using alternative investments--stock options, which I talk about a lot on this website--alongside traditional equities (stocks), in order to generate above-average market returns. 

His response was typical. "That's risky stuff. I'd advise you to stay away unless you really know what you're doing."

I couldn't help but laugh on the inside. First of all, because he has to give this advice. It's his job to try to keep people from things he perceives as risky. Pity... it also showed me how little he knows about the best investment vehicles in the market. But secondly, I had to laugh because...

Remember that little market downturn I mentioned earlier? While the rest of the world was losing money hand over fist, my own portfolio was up--doubling the market returns year to date.

And here I was, getting told I'm risking my financial future with speculation!

Using options is easy, and it makes sense when the markets look chaotic and un-rosy. Options are meant to be used as portfolio insurance to protect what you currently own.... but also to generate income that even historical market returns in the long run simply can't touch. I use them in the way they're intended---mainly to pad my regular returns, not to speculate wildly or try to predict market movements with certainty.

Here's what I'm doing with options today to make some money going into the new, chaotic, un-rosy year of 2016.

I'm Net Selling You a Bridge

I've been watching the company Chicago Bridge & Iron (CBI) for a while now, and I'm finally ready to pull the trigger.

This company doesn't build bridges, and it isn't in Chicago. The company actually builds energy infrastructure all over the world. It's a 100+ year old company with a safe balance sheet, low debt, and half a billion in free cash flow sitting around. 

But the company's shares are 33% off their highs from earlier this year. What's up with that?

Investors have been worried about a big portion of CBI's business, its nuclear construction division. It's been involved with some troublesome projects across the US, and recently decided to take a big loss and sell off this less-efficient portion of its business. 

This was announced in October, and the stock had already been run into the ground by that time. It's even cheaper now, having had ample time to work off the news of the sale of this part of its business.

From a fundamental perspective, CBI is beautiful, as I said before. No revenue slowdowns or balance sheet issues. And from a technical perspective, the setup looks solid.

Here's a recent chart of CBI, which shows what I mean from a technical perspective.

Over the past several months, the stock has been been bumping up against a price "support" of around $37. "Support" is an indicator telling us the lowest price at which investors are willing to sell the stock.

Price floors give us a safe range to peg down a safe purchase price for the shares of a company or fund.

I've indicated that price floor with a red line here. As you can see, when the price did temporarily go below that area, investors were willing to jump back into the stock and buy, causing the price to rebound. And subsequently, anytime we've seen the stock price approaching this area, the same has occurred twice--even as recently as the last week.

Right now, CBI is trading around $39.10. Here's what we'll do to make a killing in just one month's time.

I'm willing to buy 100 shares of CBI right now, and sell a January 22 $40 call option against those shares. Right now, I'll get $1.25 per share for the option, for a total of $125. 

Here's what this means for the investment. Selling the covered call option means I buy 100 shares of CBI at $39.10 today and if the stock is trading above $40 on January 22, I'll be obligated to sell the shares for $40, earning $.90 per share, or $90 in returns, plus the $125.

Taking into account the capital gains and options premiums I collected, minus commissions on a standard brokerage account, I could net up to about $174.28 on this trade on a $3910 obligation in 30 days, or 4.43% in just 30 days. On an annualized basis, that's an astounding 52.2%.

That's why I'm giddy!

The option premium of $1.25 per share lowers our cost basis on the stock to $37.66, meaning by entering this trade today, I'm actually taking on less risk than if I simply bought shares of CBI outright at $39.10, because the price of shares can decrease by 3.7% from today's price before I even begin to lose money. 

If CBI is trading for less than $40, I have no obligation, I keep the $125, make 2.65% in one month (31.23% annualized), and next month I can either dispose of my shares at whatever the price is at that time, or I can sell another option against the shares for even more income--the more likely alternative.

Summary

It's important to understand opportunity cost when selling call options against shares of stock we own.

What I mean is, you have to understand that if CBI is trading above $40, we're giving up any amount of money we would have made by simply buying the stock by itself. It's completely possible the shares could make it all the way back up to $43 or $44, which is the current "resistance", or price ceiling for the stock, in which case I'd be forfeiting almost $2.75 per share, or $275 in additional gains.

Something similar happened to me several months ago with Intel, Inc. I made over 2% in one month by selling covered call options, but the stock appreciated substantially over one month's time, and I forfeited 10% in gains on the stock.

I don't worry too much about this, because of the "bird in the hand" principle.

No one can predict with an surety whether the future of a company's stock price is going to be rosy, or chaotic. So, instead of making predictions, I take calculated risks.

I'd rather guarantee at least the 2.65% gain over the next month which I get by selling the call option (the bird in the hand), than to sit back and hope that the stock appreciates by a few extra percent (the two birds in the bush, which I haven't caught). Sitting with that extra gain in my pocket, while the rest of the market tanks, would make me downright giddy.

Gains we have in hand are worth more than gains we are hoping for. But opportunity cost is the price we pay for growing our wealth little by little, in which process we win financial freedom in the long run.

If you have any further questions about how any of this works, drop me a line at thevillageid-vestor@gmail.com.

Live long and invest,

Jeremiah

The Village Leader's 2016 Debt Revolution

Put Together Your Own ''Stop Being Poor'' Goal for 2016

It's crunch time, friends, with no time to waste! The New Year is fast-approaching, and if you plan to succeed this year in becoming more independent financially by knocking out your debts, you have to start planning now. I've got a plan of my own which I want to share with you now. I think you'll like it.

It involves using a few little-understood strategies for paying down debt and building wealth which you've probably never heard of, and I hope it will inspire you to do something just as dramatic as what I'm planning.

If you've been reading along with this blog for a while, you know my long-term financial plan is simple:

"Gain complete financial freedom."

(i.e., Escape a Sociopathic Financial Life)

Every big goal you have in life naturally breaks down into smaller, incremental ones... in this case, one of my incremental steps happens to be paying off debt---a crap-ton of it---as quickly as possible.

And therein lies the rub--doing this proves to be somewhat difficult when your current savings plan and budget look you straight in the eyes and say "F You, That's Freaking Impossible."

This is an interjection which I promptly and utterly reject. I don't get talked down to like that by anyone, and I won't take it from an inanimate budget, either! The budget is not my boss.

What I'm Going to Accomplish

Here's a a high-level view of what I want to accomplish:

• Pay off my remaining student loan debt
• Make extra payments on my mortgage, in order to reach 20% equity, so I can cancel the Private Mortgage Insurance on my home--this will allow me to reallocate funds from Expenses every month (PMI) to Savings (and Investments) by about 5%-- about $171.

Now, what's my time frame?

I've been pretty judicious about paying down the student loans since I began repayment three years ago, and the same with the mortgage, which I entered about the same time. That being the case, 24 months's worth of time to complete these goals seems realistic.

You might think these goals are lofty, even devious and intricate, but my plan has been working so far--inasmuch as I dutifully complete the steps along the way. If I'm going to make it happen, here's a further breakdown of what I have to do:

• Stop wasting money on things I don't need to (be even more careful with everyday spending)
• Crank up my savings rate another 5% of gross (goal is 25%)
• Relentlessly use extra money at the end of every month to make extra payments where I can
• Use windfall payments to further reduce debt loads
• Continue growing my wealth safely and successfully, as I have in the past

If you're doing this exercise with me at home, do what I've just done. Decide what your long-term financial goal is, break that down into a couple of short-term goals, and decide what specific action you have to take to make them happen. This will involve, ultimately, arriving at a number you need to contribute each month toward meeting that goal.

How Much Debt I'll Pay Down On Average Per Month

So, back to me now. I've determined that by December 31, 2017, I need to put away a total of $22,296 to meet my two intermediate goals. That comes down to $11,148 per year, or an average of just $929 per month.

"Hmmmm... I don't think I have that lying around in my budget anywhere close... nope, don't think so. Well, screw that, I guess."

This is what the average financial weakling's thought process is like. But I'm not average by any stretch of the imagination.

Although it's true that I don't just have that pile of money lying around, my approach to this dilemma is a bit different than the above. I tend to avoid asking myself dead-end, binary, win-or-lose questions like, "Will this work?"

Instead, I ask myself questions like, "How can I make this work?"

And the answer is: "With a vengeance."

Let me show you how it's done. Take some notes.

Figure Out Your Expenses Using a "Budget"

First, I'll look at what money is lying around in my regular budget before I take this extra $929 into account. To do that, I need to know my spending. Here are the items in my own budget, probably similar to yours.

• Housing $1085
• Mortgage (Principal, Interest, PMI, Escrow--insurance, taxes)
• Utilities $295
• Gas/Oil (Heating), Water, sewer, garbage, electricity, internet, cellphone,
• Gasoline $110
• Auto Loan or Maintenance  $100
• Clothing  $30
• Charity Donations  $600
• Christmas/Birthday/Special Occasion $50
• Entertainment $20
• Student Loans $300
• Auto Insurance "Bank"  $60
• Food/Groceries/Restaurants  $450
• Misc Home Necessities  $100
• Kids Activity Spending (if applicable) $30

• Total Budget Spending Allowance:    $3230
• Additional Proposed Debt Payments/Savings:  $929
• Total Monthly Proposed Expenses for 2016-2017:  $4159

OK, now let's see if I make enough money to wipe out this debt:

• My Income:  Net Income After Savings, Taxes, and other Deductions: $2980
• My Awesome Wife's Income:  Net Income after taxes, etc:    About $860
• Total Combined Income:  $3840
• Income Minus Proposed Extra Expenditures of $929:  -$319

Crap! We're short. I don't make enough money to do it! My plan is foiled... or is it?

Find Your Extra Sources of Income, Which We All Have

At this point, ask yourself this question: "Do I have any extra sources of income that I haven't taken into account?"

And the answer is: "Of course, we all do!"

For a refresher on one major source of hidden money in your life, see THIS ARTICLE I wrote on how to make your budget MAGICALLY give you some bonus paychecks every year--at least TWO, to be exact.

Then there's this article about windfall income, similar to the above but with a few more details on other types of free money you get out of nowhere.

After reading these articles, you should understand that everyone has spare money lying around if they choose to... so we can proceed.

Using just the Bonus Paycheck method,  I should be able to rake in at least an extra $2900 next year, and the year after  in "bonus" paychecks (that's not even counting my wife's income, which will produce about $1600 more). I'll take that extra "magic" money, and toss it into the annual money pit of $11,148, and suddenly, the amount I need to be spending "out of budget" every month to pay off the debt becomes just $687 ($11,148 minus $2900, divided by 12 months). Unfortunately, I'm still short -$77 in my budget. I'll be getting poorer every month if I make all these payments/savings deposits.

Using the Windfall method, every April, I'll get a Tax Return. Everyone does, as long as they have a mortgage, a student loan, contribute to tax-deductible charities, or produce some extra offspring during the course of the year. Properly applied, that lump sum tax return of about $1200 goes straight into the $11,148 money pit, too.

Most people don't think about a tax return as a source of income, because they blow it on non-value-added things, like toys. Well, in the Village, we only buy toys when we've disposed of our other toys, and sold our old dusty junk we don't use on Craigslist.

Having applied all of this spare money, my annual "out of budget" payments are down to just $7048, or $588 per month. I'm now actually ahead by $23. That's great news... but I'm not done yet! I have one more source of income.

As it turns out, as long as I perform well on my job at work, I can get an annual performance bonus of up to 8% of my annual salary.

My bonus for the year was just deposited yesterday and looks like it comes to about $2700. If I take that amount and toss it also into the $11,148 money pit, that brings my annual "out of budget" extra debt payments to just $4348, or just $362.33 a month.

Can I afford that?

Well, it turns out, yes, I can!

Since I'm netting $3840 a month with my normal paychecks, and I only spend $3230, I end up making my extra debt payments each month, I can max out by budget spending, and still have $247 to spare!

Awesome! This plan just keeps getting better and better!

The Only Things You Need to Do to Make This Debt Debt

Some observations on this plan. The keys to making this work are:

• Learning to live on 28 days' worth of pay over the period of 30-31 days of every month using my Budget Magic Trick. When you do that, you'll always have extra money lying around for emergencies, or for paying off debt.
• Not blowing your tax return on useless, depreciating garbage, like a new car or other fancy toy. Use it to kill debt, which will give you more money at the end of each month
• Finding and holding a great job that incentivizes me to work productively and efficiently

Many of you out there might not get bonuses at your employment. That's fine... you can still put together an awesome debt-killing plan using your windfall payments, and by budgeting better.

Whatever it is you need to do, get on it now! Toss out the TV that's stealing your evenings, nights, and weekends, and do something that's going to pay off for you in the long run!

The last thing I didn't mention which will make this plan even more powerful, and help you execute it even more smoothly, includes maximizing you 28 days' worth of pay by cutting down expenses.

The idea is to go line by line through your spending and see what you can reduce, cut back, or eliminate entirely. I've recently written extensively about tons of ways to do this, even giving you over 40 ways, in detail, to cut waste out of your life. Read through that information, and make the changes.

As you can see, even on the meager salary I bring home, my household is fully capable of indiscriminately knocking out the life-sucking debt in our life--but this can only be done if I have a plan, I'm disciplined, and I'm motivated to see it happen.

Put together your own plan right now... don't waste another minute.

Live long and invest,

Jeremiah 

Getting Ravaged Everywhere You Go

It ends today...

In Parts 1 and 2, I introduced the truth of the world to you.... which is, that you're living in a world of shysters who are constantly groping for a chunk of your wallet at every turn. This series concludes today, with the rest of the details below...
___________________________

The truth is, we're living in a world of shysters who are constantly groping for a chunk of our wallet at every turn. And it's always been my opinion that if you get taken advantage of, frankly, it's your own fault for not doing your "homework."

Turn on your TV, swipe open your tablet, walk out your front door, or drive down your street. Individuals, businesses, and organizations are bent on getting as much of your hard-earned greenbacks as possible using advertising, psychology, convenience, bright signs, and even fear to coax you into having or buying things that won't lend you freedom, security, or give you lasting satisfaction.

The bamboozling cacophony of voices have no shame at all in making sure you stay poor, stupid, and chained down to a lifestyle you probably never really wanted. It's sickening to think about.

There are hundreds of them out there, barely perceptible... it's like a living conspiracy theory. And the more stupid, ignorant, and lazy you are, the easier it is for you to get hoodwinked into forking over your wealth to some conniving shyster who doesn't deserve it.

These are the "taxes" I'm referring to--"tolls" you pay for making poor choices, or falling for wealth traps.

Not long ago, I read that many wealthy people making over $1 million a year pay absolutely zero in income taxes. Why is that?

They've figured out how to legally play the system in their favor, in order to avoid getting raked over the coals by the same machine that keeps the average Joe in the poorhouse.

Basically, they've learned how to avoid taxes on stupidity, ignorance, and laziness.

I want the same for you. You may not be wealthy yet, but someday you will be, if you play your cards right by making smart money decisions.

And after today, your eyes will be opened to ways the world takes advantage of you, the middle class, and keeps you poor in a micro-spending level. Consider this a wake-up call for ditching that lifestyle like a bat out of hell, and starting down the road to wealthiness by saving better, spending less, and investing your money like smart people do.

Here's a list of what I'll talk about in this, the conclusion of this article series:

• Taxes on Personal Finance Illiterates
• Taxes on the Poverty-Minded

Time Value of Money (Reviewed from Parts 1 & 2)

As I continue to address all of these things, remember what we talked about in part 1 and 2 about the Time Value of Money.

If you have a $5 bill in your wallet right now, it's worth just $5. But what's it worth next year if you put it in a savings account or investment?

A savings account would make that $5 worth $5.05 next year. In an investment account, if we estimate an average yearly return of 12% (the return of the standard stock market index over approximately the last 70 years), your $5 is actually worth $5.60 one year from now. If you take $5 every year then, and invest it in the market, $5 per year over 40 years is worth $4295.71. Crazy, right?

That's the concept of "time value of money" in a nutshell.

We'll be putting all of the below "taxes" into this same lens to determine how much wealth you might be foregoing over for each of these areas over the course of 40 years.

Taxes on Personal Finance Illiterates

Banking Overdraft fees

For a very short time last year, I worked on the front lines for a big "retail" bank, the banks designed to serve consumers like you and I by providing checking and savings accounts, issuing CDs, and originating all kinds of loans from mortgages, to auto and home equity loans.

When I say these institutions want to "serve" us, I really mean most of them want to "screw" us by taking as much of our money as possible in whatever way they can. 

It's true... most retail banks' revenue generation strategies are fee-focused. They seek to generate as much revenue as possible simply by charging you fees on money which you're lending to them in your checking account, which they turn right around and loan out to someone else, charging interest and earning profit.

They charge fees for checking, fees for saving, fees for loans, fees for investments, fees for credit cards... the list goes on. They're relentless about gutting you everywhere possible, and they'll rarely refund you a single penny of what they've charged you unfairly.

These are the sharks of society--but let me point out that not all financial institutions act this way. But for those which do, one of their biggest sources of revenue, by far (I know this because I've seen the "books" of revenue) are overdraft fees. An overdraft fee is what you get charged if you spend more money than what's currently in your checking account.

Due to recent changes in consumer financial protection laws, banks are now required to ask your permission to "opt you in" to overdraft fee collection when you first open an account with them. If you don't opt in, the bank will not allow transactions to go through at the supermarket if you spend more than what your current account balance is. 

This gets dangerous for people who don't pay attention. They can get charged up to five $20 fees per day for subsequent transactions on an overdrawn account--$100 a day!

You can "opt out" of allowing transactions to go through if you don't have enough funds, but you still get charged $20 per overdrawn item. That hasn't changed.

Let's say you're irresponsible in keeping your checking account high enough to cover any purchases you make from day to day. How much is it costing you a year? $100? $200? Please don't tell me it's higher than that.

Even $100 a year, taking into account the time value of money, costs you $85,914 in wealth over your lifetime. Don't get shanked by the sharks of society in this way.

Checking Account Fees

I'm sure you have a checking account, everyone does. But is yours free? The bad news is, most institutions are moving away from offering free checking accounts. With interest rates as low as they have been for the past decade, their appetites for greed are no longer satisfied by lending out your money to someone else and charging what essentially amounts to usury (excessive interest). They want FEES, too! (see above)

Many institutions still give free checking, but only if certain conditions on the account are met, like having a regular direct deposit, keeping a minimum balance, use of mobile banking, having a debit card, and receiving electronic account statements. Anytime these conditions aren't met, you get dinged.

This happened to me a few months back. My minimum account balance is set at $500, but I went down to $400 by transferring too much out of the account. At the end of the month, since the balance read $400, I got dinged with a $5 fee.

Good institutions will waive this kind of fee as a courtesy when you call them up if it happens just once, but like I said... most banks are gunning for every penny they can squeeze out of you, so they won't hesitate to tell you to "take a walk."

If this is happening to you every few months, and you have several accounts for different purposes, it could be costing you $50 a year. That's $42,957 in foregone wealth during your lifetime. That's not chump change. That's your freedom getting flushed down the drain.

ATM Fees

Who deals primarily in cash anymore? No one under the age of 40 with an ounce of sense, I'd wager. We much prefer the convenience of paying with cards, collecting rewards points, etc.

But occasionally, we do need some cash for whatever reason, especially for small things like paying another person money we owe them, making donations for charity, contributing to group gifts, or buying and peddling in used items, like I do. Cash is easiest and most trustworthy for this kind of stuff.

The problem is, many people make the mistake of not having cash when they need it, and end up having to use ATM's owned by their non-institution to withdraw cash. When they do this, they are charged a fee. Fees range anywhere from $2-5 per transaction. That's not even counting the use of foreign ATMs, which many have to use while on vacation or business--and fees are much higher overseas, usually around $20 per transaction.

If you spend even a dime on ATM fees, change your behavior right now! Don't spend that extra $40 a year on wasteful fees... that adds up to $34,365 over your lifetime.

Here's what I do instead of paying fees:

• I keep a stash of a couple hundred dollars in cash at my house for when I need it at home. I keep it all in small denominations like 5's, 10's, and 1's.
• I plan ahead if I'll be traveling abroad--I stop by my bank to withdraw as much cash as I'll need for the entire trip, if I need any at all. Credit Cards with VISA on them are accepted worldwide, usually with no fees.
• For unexpected times when I need cash and I'm not at home, I stash a $20 bill in a wallet pocket I almost forget exists. I keep one there for emergencies--in fact, a couple times when I've needed it, I really did forget it was there.
• I store cash inside my phone, in case I forget my wallet on quick trips to the store. I flip open the battery case in back, and put a $20 bill there, safe and sound. If you own an iPhone and the back of the phone doesn't open, stash it in the phone's protective case, most of which these days actually have credit card slots for storage. 

Credit Card Interest

I've paid credit card interest only once in my life, and I vowed never to do it again. 

It was the third month of my marriage, and I got the billing statement from the financier on my wife's engagement ring. I thought I had 12 months interest-free to pay off the ring, but I was shystered by the jeweler into paying accrued interest on a balance I was given a "deferral" for paying for the first three months. Lesson learned!

I paid $150 in interest that month, and after berating the financier's customer service reps, I found out that I would not be granted any mercy for my stupidity. We paid off that ring the very next month--problem solved.

Credit cards are a gigantic wealth trap of stupidity. You should NEVER be carrying a balance, not even for "emergencies." A proper emergency fund is CASH, which is free to hold, not credit cards which cost you MORE money than you already don't have in an emergency.

The only thing I use credit cards for is rewards points. I've earned nearly $600 in the last 18 months, the only time in my life I've had and regularly used a credit card. It's been a great scam! And it feels great taking advantage of the credit card companies which unconscionably take advantage of the poor of our society with these wealth traps.

Not a dime in interest paid... the credit card companies hate people like me. They love the people they scam month after month, and that sure isn't me (anymore).

The key here is to only use the credit card to spend what's within your budget, and set up auto-pay every month to pay off the balance.

What does it cost you in wealth to carry a credit card balance? The average credit card household debt in the US is around $16,140 for 2014. At interest rates approaching 15%, that's $2421 a year, or $2,079,983 over a lifetime. That's an insane amount of wasted money.

I know a few people foolish enough to use credit and carry balances. They frequently "refinance" their cards with consolidation loans, only to rack up more trouble for themselves. I'll talk about these next.

Consolidation Loans

When you've got a ton of high-interest debt at different lenders that's getting out of hand (like credit cards, auto loans, student loans, payday loans, etc), it can be tempting to consolidate, or combine it, all under one roof to simplify your life. But, this may not always be a great idea. 

First, how does it work? Let's say you have a credit card balance of $7000 with Chase, a Payday Loan with Check City for $1500, and an auto loan with Low Book auto for $16,000. You could approach your bank or credit union, get a loan for the balance, $24,500, and your bank will write a check to each of the other lenders to pay them off, leaving you with just one clean balance to pay off with the bank. What downsides could there be to this?

Typically, these consolidation loans are an interest trap.

In order to find out if your is, you have to know how much interest you were paying on the other three loans combined, and compare that with the interest you'll be paying (both monthly, and in total) with the new loans.

The bottom line is, will the new loan cost you less in interest every month, or in total for the long run? In many cases, the answer could be "yes", especially if you have high-interest debt like Payday Loans and Credit Cards, because the consolidation loans are usually much lower, somewhere in the range of 8-12%. Do the math, and figure out if it makes sense.

The bad news is, many institutions offer consolidation loans, not to lower your interest, but to lower your payments, which does nothing more than spread out payment of principal and interest over a longer period, costing you MORE money than before.

The institution where I work (a credit union) does a lot of consolidation loans, but operates honestly and transparently.  I have assisted them in developing our systems to more accurately calculate whether a proposed loan consolidation is in the best interest of our members. When it's not, we don't do it. But, I have seen many loans held at other institutions where this was not the case.

I've observed that on average, my company saves members around $100 a month in interest by bringing over these loans. If that's standard across the industry, and you have consolidation loans currently outstanding, these could be causing you to forego $1200 a year, or $932, 473 in established wealth over a lifetime.

Again, this isn't chump change we're talking about. 

Credit Reports and Scores

Keeping a good credit score isn't essential in today's society, but it does simplify things for you, and allows you to live life on the cheap, especially when it comes to auto loans and home mortgages. Keeping a good score requires not only good financial habits, but also credit history and score monitoring.

Have you paid recently to get a copy of your credit report, or your credit score? Well, you shouldn't have. Both can be had for free. These two things (the report and the score) are actually separate, and it's important to understand the difference.

A Credit Report lists any accounts or loans you have open under your Social Security Number. You should check this report at least once a year, to make sure that no one out there has opened any accounts in your name without authorization. And it can be obtained FREE once a year. You are legally entitled to this. Go to https://www.annualcreditreport.com/ to get your report from all three Credit Bureaus. It is FREE ONCE A YEAR.

Here's a tip from the Pro's:  even perform the check for your kids. Theft of child social security numbers is on the rise, and it could be extremely damaging for a child to try opening his first credit card at age 18, only to find out someone has been tainting their credit history for a decade.

Now for Credit Score. Have you ever paid to get it? If so, you probably got ripped off. Did you know that your bank can actually provide your credit score for free to you, almost anytime? Most financial institutions where you hold loans, or even checking accounts, typically pull your credit score every few months to make sure the risk on any accounts they have with you isn't increasing. You can sit down with a banker at your institution, and it's likely they have it available to you right there on the spot. No Questions Asked. I know that to be the case where I bank, which is the same company I work for.

If you currently pay for credit reports, stop it now. By law, companies cannot charge you more than $12 for your credit score and report. That's not much, but still--if you do that every year, you've forfeited $9,324 in wealth.

Taxes on the Perpetually Poverty-Minded

Letting someone else manage your money

I've extolled the virtues elsewhere on my site about the necessity of learning to manage your own money and grow your wealth. If you're paying someone else to do it, you're likely making costly mistakes, forfeiting timeless knowledge and wisdom, and taking avoidable risks with your wealth.

Never trust your wealth to someone else. They don't care as much about your financial freedom as you do--and they charge you an arm and a leg to do it.

If we stick solely with the fees associated with letting someone else manage your wealth, we could easily assume you're going to save thousands of dollars per year--and that number will only climb once your wealth becomes more substantial. But for the sake of illustrating for this article, let's stick with a nice, round number of $2000 per year.

By managing your own money, you'll keep $1,554,122 over the course of your lifetime.

Read the articles I have on learning to invest, and you'll be two steps away from complete independence from incompetence.

Playing the Lottery

I covered gambling briefly in a previous entry in this "70 Taxes" series. Give that section a skim, then consider that you're never likely to win the lottery. 

Spending $5 a week on the Quick Pick is akin to whistling money into oblivion. You might as well light a Five-Dollar bill on fire on your front lawn. It's just as fun as purchasing a ticket and never winning it big.

Did you know that the average lottery ticket only pays 47 cents on the dollar? For every dollar you dump into your state lottery, in the long run, you'll make 47 cents back. That's a 57% loss on your money. That's one of the worst investments I've ever heard of.

Five dollars a week on lottery tickets comes to $260 a year, or $202,035 in wealth which you could have accumulated simply by buying and holding stocks long term over your lifetime.

Not Putting Your Savings on Auto-Pilot

If you aren't automatically putting a portion of your money away via Direct Deposit in order to build up your wealth reserve, you're making a huge mistake. Even if you never learn to invest--a huge mistake in and of itself--you can still get rich in the long term by establishing a habit of automatically saving a large proportion of each paycheck you receive.

An even bigger savings mistake most people make is not accepting FREE MONEY when it's offered to them--in the form of Retirement savings.

I'm talking about 401k and other retirement account matching most employers offer. Many companies will match--dollar for dollar, up to a certain percent of your paycheck--any money you contribute to retirement. This employer match is a 100% RETURN ON INVESTMENT. Guaranteed. You will never find a better way to make money than that.

How much are people giving up by not taking advantage of employer matching? At an average salary of $52,000 a year, with an employer match of 5%, many are forgoing $2600 a year, or $2,020,359 in FREE MONEY.

But be careful--don't put more money into your retirement account than the match. After that amount, you're better off putting any additional savings into an account you can access, like an investment account with a broker. You can't retire early if you can't access the money you've saved.

Not Learning to Invest Yourself

This goes along with what I mentioned above about learning to manage your own money... but there's more.

The easiest and most profitable strategies for growing wealth are undertaken by individual investors, investing in things like bonds, individual stocks, and STOCK OPTIONS.... I've written repeatedly about how this works on other areas of the site. Read those articles, and learn how to double the market returns, year after year. Mutual funds, the investment vehicles used mostly in your retirement accounts, can never match that kind of wealth accumulation.

Unfortunately, there's simply no way to estimate how much more wealth and freedom you can accumulate by being a savvy investor--its more money than you can imagine.

Conclusion

That was quite a list! If we include parts one and two of this article, I could have written and sold a small e-book to get this knowledge out there! Luckily for you, I offer it for free.

Let's recap the amount of wealth we've decided not to forego with today's article.

• Shun overdraft fees:  $85,914
• Maintain your checking account fee-free:  $42,957
• Stop paying ATM fees:  $34,365
• Ditch Credit Card interest:  $2,079,983
• Consolidation loans:  $932, 473
• Get free Credit Reports and Credit scores:  $9,324
• Learn to build wealth on your own:  $1,554,122
• Quit playing the lottery:  $202,035
• Put savings on auto-pilot:  $2,020,359
• Invest like a pro:  ???

Part 1:  $7,276,070
Part 2:  $4,512,645
Part 3:  $6,961,532

Total:  $18,750,247

I know what you're thinking... that looks like a ridiculous amount of wealth, and it sure is. But it's just an illustration of what can be accumulated if we cut out "the fat" in our lives.

If nothing else, these three articles you've just read should serve as a lesson in opportunity costs. By giving up one thing in life, you gain another.

I hope that you have a bit more of a perspective on this concept now, and a few ideas you can use to make your life more full, more free, and more simple. That's the true reason I maintain this site... not only to help you all attain true and lasting freedom, but to make sure that's something I keep focused on myself.

Live long and invest,

Jeremiah

Getting Ravaged Everywhere You Go, Part 2

In Part 1, I introduced the truth of the world to you.... which is, that you're living in a world of shysters who are constantly groping for a chunk of your wallet at every turn. This series continues today, in greater detail below...
_________

As I pondered the comic on the left, I got to thinking about how much of a lazy sucker Calvin is, and how badly he's going to fail in life. He's as spoiled a child as they come.

Turn on your TV, swipe open your tablet, walk out your front door, or drive down your street. Individuals, businesses, and organizations are bent on getting as much of your hard-earned greenbacks as possible using advertising, psychology, convenience, bright signs, and even fear to coax you into having or buying things that won't lend you freedom, security, or give you lasting satisfaction.

The bamboozling cacophony of voices have no shame at all in making sure you stay poor, stupid, and  chained down to a lifestyle you probably never really wanted. It's sickening to think about.

There are hundreds of them out there, barely perceptible... it's like a living conspiracy theory. And the more stupid, ignorant, and lazy you are, the easier it is for you to get hoodwinked into forking over your wealth to some conniving shyster who doesn't deserve it.

These are the "taxes" I'm referring to--"tolls" you pay for making poor choices, or falling for wealth traps.

Not long ago, I read that many wealthy people making over $1 million a year pay absolutely zero in income taxes. Why is that?

They've figured out how to legally play the system in their favor, in order to avoid getting raked over the coals by the same machine that keeps the average Joe in the poorhouse.

Basically, they've learned how to avoid taxes on stupidity, ignorance, and laziness.

I want the same for you. You may not be wealthy yet, but someday you will be, if you play your cards right by making smart money decisions.

And after today, your eyes will be opened to ways the world takes advantage of you, the middle class, and keeps you poor in a micro-spending level. Consider this a wake-up call for ditching that lifestyle like a bat out of hell, and starting down the road to wealthiness by saving better, spending less, and investing your money like smart people do.

Here's a preview of what's in store in this and the next (and final) article on this topic:

• Taxes on the Unknowledgeable

• Taxes on Big Ticket Spenders

• Taxes on the Easily Entertained

• Taxes on the Impulsive

• Taxes on the Technologically Impaired

• Taxes on Personal Finance Ignoramuses

• Taxes on the Poverty-Minded

Time Value of Money (Reviewed from Part 1)

As I continue to address all of these things, remember what we talked about in part 1 about the Time Value of Money.

If you have a $5 bill in your wallet right now, it's worth just $5. But what's it worth next year if you put it in a savings account or investment?

A savings account would make that $5 worth $5.05 next year. In an investment account, if we estimate an average yearly return of 12% (the return of the standard stock market index over approximately the last 70 years), your $5 is actually worth $5.60 one year from now. If you take $5 every year then, and invest it in the market, $5 per year over 40 years is worth $4295.71. Crazy, right?

That's the concept of "time value of money" in a nutshell.

We'll be putting all of the below "taxes" into this same lens to determine how much wealth you might be foregoing over for each of these areas over the course of 40 years.

Taxes On the Unknowledgeable

Home and Auto Repairs

Have you ever thought about what the actual, tangible cost of ignorance is? I know I have, many times. In fact, it wasn't long ago that I learned a $200 lesson in ignorance. 

My wife and I bought the home our family currently lives in about three years ago. During this time, I've learned a lot about the cost of owning a home--from home repairs to renovations, maintenance, and everything else you can probably imagine.

One of the things I didn't know anything about was a furnace. But lo and behold, fate presented me with an opportunity to learn about it. I was laying in bed one night, and smelled the scent of something burning. I jumped out of bed, worried my family was going to either die in a fire that night, or asphyxiate from the carbon monoxide that was somehow, for some reason, circulating throughout the house.

But through all my searches, I found no fire, no smoke, nothing. Then I realized the scent might be coming from the furnace itself--great, even worse! My furnace is dying. I switched it off for the night.

The next day, I called my home warranty company to have a technician come out and look at my furnace. It turns out, some wires within the furnace were in contact with a very hot circuit board on the guts of that thing, and the circuit board was getting charred... aha, the source of the scent! The technician took the liberty of replacing the circuit board and resolving my issue--at the cost of over $200. Luckily though, the home warranty I had in place covered the incident at only about $60 out-of-pocket for myself.

When, or if, this happens again, I'll know where to look, what to do, and how to fix it. Since this first incident, I've had a few other issues with the HVAC in our home, and I've learned how to investigate on my own before calling a contractor to fix my problem. So far, it's saved me hundreds of dollars.

I've taken this same lesson to heart in other aspects of home ownership.

As I mentioned before, there were quite a few things we wanted to do with our little home to make it more "ours." I refrained from called in contractors on first point, because contractors are expensive--a ten minute job, simple for them, can cost you hundreds of dollars. Imagine having them finish an entire basement, doing things you can easily do yourself, legally without a permit--putting up drywall, replacing light fixtures, installing tile ceilings, painting, carpeting, and so on. I learned how to do all of these things myself.

It may just be my personality, but I'd much rather spend an hour learning how to do something online, and spend a day completing it myself, than pay a team of contractors the equivalent of $300 per hour for them to do it. This same principle applies to other things I do in life--simple, routine maintenance on my car (oil changes, filters, spark plugs, etc), plumbing issues, and other similar things. Learning about these things will save you thousands of dollars in the long run, and ensure that your wealth isn't sucked away from you unnecessarily.

How much do you estimate you pay per year for contractors or "experts" to fix things in your home or on your car, which could be done by you at a fraction of the cost? A couple oil changes a year, simple automobile maintenance, a plumbing visit to unstop your shower drain, and routine maintenance on a furnace or A/C unit, if all hired out, would probably cost you at least $400 a year.

What's that going to cost you in wealth accumulation over the course of your life? About $343,656 in foregone retirement wealth.

Think about other aspects of life's maintenance you could add to this list--money is wasted every day by lazy people on things like electrical work, yard maintenance, pest control, and even home security. Learn to do them yourself, and you'll be much more wealthy in the long term.

Taxes on Big-Ticket Spenders

Getting Bankrupted By Weddings

Is there any easier way to blow $30,000 in one day and have nothing to show for it, than by having a big, expensive wedding?

As I was researching this topic, I wanted to throw up when I read that the average cost of a wedding in the United States sits near $25,000. In most cases, parents who think their daughter needs to be spoiled have just blown the cost of a meager college degree in order to celebrate the giving away of their child to a young man who is probably not worthy of her (what man is better than a woman?), and done so in the course of just 24 short hours.

In worse cases, young couples pay for the wedding themselves, when they can't even afford it. It's not like young couples have $25,000 just lying around. Most will get a loan or put the wedding on a credit card, and will have to think about that wedding once a month for the next five or ten years while they amortize the loan they got suckered into.

Is there a worse way to start a marriage, than to have a $25,000 debt hanging over your head? Opt instead for a cheap but respectable wedding for a couple grand, go on a sweet vacation with some cash you've saved up, and enjoy each other's company instead of the threat of bankruptcy. Or elope!

A $25,000 wedding amortized over the course of your 40-year working life will cost you $625 per year, or $536,963 in foregone wealth.

Not Haggling on Appliances and Other Furnishings

Do you realize how fluid and negotiable prices on used items are? What about new items? 

Yes, it's true... even prices of "new" items are negotiable. Think of every big-ticket store you walk into as a bustling marketplace full of people who are ready to make a deal with you!

As I've written before, my wife and I are bargain shoppers. When we need something, we usually start at the bottom of the price spectrum at "used" and then move up to "gently used" before we even consider buying something brand new.

If you've never realized how important haggling and negotiation are, it's time to change your mindset. It's a given that if you're buying something used, and the price you're offered is higher than you think it should be, you should ask if the seller they will take less. But did you realize this can be done with new items as well? Here's an example.

About a year ago, we decided to get a chest freezer. We couldn't find anything used that looked reliable, so after exhausting those resources, we opted to look at Home Depot. 

We found a unit we wanted to buy, and the store offered free delivery. But their competitor, Lowe's, offered the same unit, without delivery, for about $40 less. After speaking with the store manager, I was able to price-match the item to what the cost was at Lowe's... and saved 25% off the sticker price, while getting free delivery.

This can be done anywhere, especially places where the sales people are paid on commission. They want to make you a deal, so they can get paid. Don't waste money by foregoing negotiation on appliances and furniture. If you shop around, and know you can get the item elsewhere, but like the store you're shopping at, find a sales rep and see how they can get you a discount by being loyal to them.

Haggling on a couple appliances or some furniture might save you an average of $200 a year in the long term, or $85,914 over forty years.

Education

This is another HUGE area where it's easy to make gigantic, life-altering, regretful financial decisions in just a short time.

Education is expensive. There's no denying that. So, think about ways you can get the training you need without spending your prime of life (or middle age) doing it.

You can get a formal education online now with the few clicks of a button, and at a fraction the cost of a full-time, in-person degree. And while some employers ridiculously look down on online degrees, this can be overcome by going to a "satellite" campus, where you still get name recognition, cheaper education, and the degree you need.

Speaking of name recognition, some very prestigious universities are actually beginning to offer FREE BEGINNING COURSES in a variety of fascinating fields. Picking up these courses will give you some skills you can use to pad your resume, even to the point where you might not need a degree to get the starter job you want because your skills overcome the deficiency of the "piece of paper" (degree).

In fact, some big employers are beginning to realize that degrees are becoming more and more useless as time wears on, and have begun to strike the requirement of a degree for potential job applicants. I think this is a fantastic development, and could change the culture we have which places too much emphasis on traditional college.

If you're dead set on some kind of training, consider trade schools instead of formal universities. The cost is lower, and the return is often much higher and much quicker.

Another way to save on formal education is to attend a 2-year college whose credits transfer to the university where you'll ultimately graduate, and once you're done there, you an transfer. You'll save 50% off the tuition cost of a major university this way, at least for the first two years.

Overpaying for education has huge life implications. At an average cost of $42,000 for a bachelor's degree in the US, if you can cut that in half, you'll save $500 a year over forty years, or $429,571 in foregone potential wealth.

Taxes on the Easily (and Foolishly) Entertained

Lots of Ways to Burn Money on Entertainment

Everyone needs ways to relax and recuperate from the stresses of daily life--entertainment is a good way to do that. But many look for entertainment and diversion in all the wrong money-sucking places.

A Washington here, a Lincoln there, every other day, and soon you've spent the equivalent of your monthly utility payment on various forms of entertainment that you'll hardly use, that will get broken, lost, or that corrupt your mind and body, and disrupt your sleep patterns. Here are the biggest taxes you'll pay by not being wise about your entertainment choices.

Television (Cable)

In the day and age of streaming entertainment, I honestly don't understand why anyone still has a regular cable television bill. When plans range from $60 anywhere up to $200 a month, and you only watch a few channels, a few hours a week, you have to realize how wasteful this is. Your television-watching could be costing you $5-10 per hour of actual watching!

What are the alternatives? Hulu, a television and movie streaming service, offers nearly ALL current television shows, with the exception of premium channels like HBO and Showtime--but who watches that trash anyways? Hulu gives you 90% of the good television shows out there for $7.99 a month. They also have steadily increasing movie offerings--even new movies!

That's not to mention Netflix, the leader in media streaming. Thousands of movies and television shows, new and old, at your fingertips for what, $11 a month now? There's also Amazon Prime, which has similar offerings of streaming TV and movies, for about $8.50 a month.

What if you like to watch sports? Isn't cable the only way? 

Heck no! Ever heard of Sling TV? It's $20 a month, and they often offer deals for less under promotions. You can pick and choose from the variety of sports and entertainment channels you want, no fluff! Less waste. Alternatively, consider MLB.tv, ESPN3, where you can subscribe just to one channel you like. Get an Amazon Fire or Chromecast stick for $20 and load the streaming entertainment on your phone or tablet, but beam it to your TV! Technology is unbelievable, and helps you live more financially efficient than ever before!

Or, you can be like me, and shun sports watching altogether. But then again, I'm antisocial.

Cut your cable NOW... save yourself an average of $57 per month, $684 per year, or $587,653 over a lifetime.

Movies and Music

Do people actually still buy music? Since the days when Napster was shut down in the late 90's, I've seen increasingly many free music streaming services like Pandora and Spotify popping up everywhere. 

These providers are basically a radio station that comes in over your internet connection (Wi-fi). You can choose your channel name, band, and genre.... so why would you ever buy music, ever again? Do you seriously go anywhere and listen to music where you don't have Wi-Fi? Don't waste money buying MP3's ever again! Never, ever, EVER again set your virtual foot in the iTunes store. What a waste!

And did you know that some cellphone providers, like T-Mobile and Verizon, actually let you stream Pandora content FOR FREE over their data connection, and it doesn't count against your data plan? Stream music all day at work, wherever you are! Look into it! 

Let's talk about movies. When was the last time you bought one? Where did you buy it? How much did you pay? How many times are you going to watch it?

If it's not a movie you're guaranteed to watch at least three times, don't bother buying it. Only stupid people become "collectors" of movies. 

You're better off waiting to watch the movie and pay $1.50 for it at Redbox for the night, or to do a digital rental for $1 or $2 online on sites like Amazon or YouTube. There are even sites like VidAngel, where you can digitally rent movies that are edited for content, for more family-friendly movie nights.

If you're even too cheap for that, just check the movie out from your local library FOR FREE for a week. You might have to wait a while for your turn if it's a new movie, but heck, it's freaking FREE.

Don't even get me started on how expensive regular visits to the movie theater can be. That would double our entertainment costs, so I'll be conservatives and won't even include it.

Entertainment wealth savings on movies and music:  $50 a month, $600 a year, or $515,485 over a lifetime.

Cellphone and Tablet Data Services

It's incredibly unfortunate that many don't understand the concept of data conservation. Teenagers who don't understand the concept of self-control will live stream videos on their cellphone data connections, and burn through a month's allotment in an hour!

There's no reason for this to EVER happen. In today's technological world, free Wi-Fi is almost literally EVERYWHERE. Public transportation, airplanes, airports, train stations, you name it. Some are calling the internet a HUMAN RIGHT for crying out loud!

It's likely your employer even has Wi-Fi for customers and employees to use. Log into that bad boy if you're going to surf the internet on your devices on your break, instead of using your own data connection. Save your money!

Do you have a data plan for your tablet? Get rid of it! That's a huge waste! Why? Because you already have one on your phone, that you can beam out for use on your tablet if you're out of range of Wi-Fi for some obscene reason. It's called a Wi-Fi teathering. It turns your phone into a mobile WiFi Hotspot, which you can login into from a separate device. There are hundreds of apps out there for it.

Cellphone carriers used to hate and block Wi-Fi teathering, because it meant you could use your data on more than one device, without having to pay them for a separate plan. Some would even block teathering on devices. But If I'm not mistaken, I believe there was a recent court case that now restricts them from doing that by law.

Need a cheap, awesome cellphone carrier with a cheap data plan? I use T-Mobile, have a prepaid data plan, and it costs me $28 a month per line. Service is awesome, reliable, and consistent. I share the plan with five family members. They just send me a check or some money via PayPal for the monthly bill.

Wealth savings on cellphone/tablet data plans:  $35 a month, $420 per year, or $360,839 invested over a lifetime.

Cost of the Apple Tax

Are you stuck as a slave in the world of Apple's entertainment and media trap? Everything the company does locks you into using their service--almost for life. The content you buy from them is not your own. They keep files you download from their store in a proprietary format, so they can't be dumped onto your computer and used on another non-Apple device.

Even the devices you buy are incredibly over-priced and carry a significant premium over comparable devices from other manufacturers.

Their devices, while user-friendly to the non-tech-savvy, are not friendly to those who like the freedom to share content they've legally purchase across their devices. They restrict content in the Apple store to verified publishers, and even selectively remove apps from their store at their leisure if they don't like you.

Everything you buy from Apple to entertain yourself can be had by Samsung, Android, or other manufacturers at a lower cost, with the same value. 

Getting caught in the Apple Traps costs you  AT LEAST $30 of your wealth per month, $360 a year, or $309,291 in the long term scheme of things.

Taxes on the Impulsive

Impulse is the lifelong enemy of money. The Archenemy, if you will. Impulse steals more money and wealth than you care to count or discuss. How so? Let's count the ways.

The Morning Coffee

A $3 cup of coffee everyday on the way to work costs you $66 per month, $792 a year, or $680,440 over a lifetime. All because you were too rushed in the morning, and needed a pick-me-up. Get a Keurig, you lazy mofo.

Rent-to-Own Stores

Oh, so you absolutely needed that new furniture for when the friends come over this weekend, but didn't save up the cash? Or that big TV so you could watch the big game this weekend in style?

RTO stores like to claim they're saving you from wasting time, money, and deprivation by offering you their crap to buy over time. Well guess, what? On average, you end up paying THREE TIMES the actual value of things pick up from these shops--all in the name of convenience.

People who buy at these stores are getting taken advantage of. Learn more about how they work byreading this article. They're buying fully into the "have it now" mentality. It's bankrupting them. It's costing them $200 a year, or $171,828 over a lifetime.

Fast Food / Convenience Food

How many times a month do you grab a pizza because you aren't in the mood to cook? Or how often do you grab food from a vending machine, the checkout line at the store, or the deli, because you don't have time to create a decently healthy meal for breakfast, lunch, or dinner?

In my case, it's more than I like to admit. Probably three times a month, and looking over my budgets, I would guess it costs me about $30 a month, $360 a year, or $306,291 in foregone wealth. And guess what? I like to think I'm much more frugal than most. I have a friend whose family eats out three times a week. They are wasting five or ten times the amount of money I am, since they live in a much more expensive neighborhood, and have more "refined" tastes than I do.

Taxes on the Technologically Impaired

Antivirus Software

Do you seriously, actually buy this? Most reputable modern operating systems, internet browsers, and email servers now have built-in antivirus detection software by default. And if you'd like an extra layer of protection, you can find plenty of free, high-quality anti-virus detection programs, or at least get a year's worth of free coverage when you buy other items from tech deal sites like Tech Bargains. Not knowing this could be costing you $30 or more a year, or $25,774 over forty years.

Internet Routers--Are You Renting?

Is your internet provider charging you a fee to "rent" their router every month? The router is the little box where your internet signal comes from.

There's basically nothing special about the router your service provider typically sends you when you begin service with them. In fact, usually, their router is sub-par. You can buy your own for $25-40, and it will last you for years. The one I have is about seven years old now, and works great. Over that period, I've saved $420 in router "rent." I could have bought ten routers by now.

Check the bill you are getting each month for this service charge--it's typically anywhere from $5-10 a month. This mistake could be costing you $60 a year at least, or $51,548 over your lifetime.

Computer "Cleanup" Charges

A lot of people pay through the nose to have their PC or laptop "cleaned up" every once in a while. Why do they do that? It's simple ignorance. And it's costly.

Look on YouTube to learn how to periodically clean up your computer, by backing up all the files, formatting the hard drive, and reinstalling the operating system. It's actually incredibly easy, and it's more effective than what the computer repair place does. It takes an hour. And it's free. 

Paying someone to do this once a year will probably cost you $75-100. I'm not kidding. That's $64,435 over your lifetime. If you need guidance on how to do this yourself, just ask me, and I'll send you some links and information.

Internet Providers - Switch Up Often

Don't get suckered into paying any more than $50 a month for internet. There are much cheaper options out there.

I get 25 MBPS internet every month for $30. It's part of a "promotional" plan I've been on with my provider for the past three years. Every twelve months, when the promotional period is about to expire, and my internet cost is about to double, I call up my provider, and tell them I like the service, but I'm looking at comparable plans that are cheaper. They offer to keep my on the promotional plan for another 12 months at no extra cost. If they ever tell me they can't do it, I'll go to another provider, and get on the other company's "promotional" plan that's cheap and effective for the next twelve months.

If you save $20 a month on internet, you're keeping $103,097 in retirement money. It all adds up!

Online Bill Pay & Check Deposit

Are you still wasting money every month on postage to pay your bills? Do you know how much money you're wasting, and how insecure it is to send checks these days? Doing things online is actually much safer, quicker, and cheaper. In fact, it costs nothing.

Set this up for all utilities, mortgages, cellphones, and student loans. Never have another late payment again. Never worry about forgetting to pay and having the lights go our. Save yourself the $4 a month on stamps, save on buying checks from your bank ($25 a year), and save yourself the time of having to fill out those bill slips and send them off. 

Also, do you waste time driving around to deposit checks? Ever heard of mobile deposit on your phone? You can deposit a check sipping lemonade by your bedside at night with today's technology. It takes 30 seconds and it's always free. Download your bank's mobile app onto your phone or tablet.

The savings on postage and checks alone lets you keep about $30 extra per year, or $25,774 in accumulated wealth. That's not to mention the time you save.

Summary - Rescued Wealth Saved So Far--And More to Come!

Let's recap. Here's a summary of even more wealth we've decided to NOT forego by avoiding taxes on stupidity, laziness, and ignorance in our lives:

• Learn Home and Auto Repair: $343,656
• Elope in Vegas:  $536,963
• Skip traditional college: $429,571
• Cut the Cable:  $587,653
• Stream movies and music instead of buying all the time:  $515,485
• Be smart about data usage and cell phone plans:  $360,839
• Shun the Apple Tax:  $309,291
• Get a Keurig coffee maker:  $680,440 
• Save money to buy your crap instead of Renting to Own:  $171,828 
• Make your food, quit being lazy:  $306,291
• NEVER buy antivirus software:  $25,774
• Quit renting your router: $51,548
• Fix your own dang computer:  $64,435
• Ditch expensive internet:  $103,097
• Use the God-given gift of Online Bill Pay and Check Cashing:  $25,774

Total Savings from Part I:          $7,276,070
Total Savings From this Article: $4,512,645

Grand Total so far:  $11,788,715

Are you feeling rich yet? I know I am!

Stay tuned for Part III!

Live long and invest,

Jeremiah

You're Getting Ravaged By Stupidity Everywhere You Go. Defend Yourself!

One of the most fulfilling things for me personally in the financial journey of my life has been experiencing what it's like to buck a system which I know is designed to take advantage of me... in essence, "sticking it to the man" who's waiting around every corner to "stick me up" and steal my wealth and livelihood.

The truth is, we're living in a world of shysters who are constantly groping for a chunk of our wallet at every turn. And it's always been my opinion that if you get taken advantage of, frankly, it's your own fault for not doing your "homework."

Turn on your TV, swipe open your tablet, walk out your front door, or drive down your street. Individuals, businesses, and organizations are bent on getting as much of your hard-earned greenbacks as possible using advertising, psychology, convenience, bright signs, and even fear to coax you into having or buying things that won't lend you freedom, security, or give you lasting satisfaction.

The bamboozling cacophony of voices have no shame at all in making sure you stay poor, stupid, and chained down to a lifestyle you probably never really wanted. It's sickening to think about.

There are hundreds of them out there, barely perceptible... it's like a living conspiracy theory. And the more stupid, ignorant, and lazy you are, the easier it is for you to get hoodwinked into forking over your wealth to some conniving shyster who doesn't deserve it.

These are the "taxes" I'm referring to--"tolls" you pay for making poor choices, or falling for wealth traps.

Not long ago, I read that many wealthy people making over $1 million a year pay absolutely zero in income taxes. Why is that?

They've figured out how to legally play the system in their favor, in order to avoid getting raked over the coals by the same machine that keeps the average Joe in the poorhouse.

Basically, they've learned how to avoid taxes on stupidity, ignorance, and laziness.

I want the same for you. You may not be wealthy yet, but someday you will be, if you play your cards right by making smart money decisions.

And after today, your eyes will be opened to ways the world takes advantage of you, the middle class, and keeps you poor in a micro-spending level. Consider this a wake-up call for ditching that lifestyle like a bat out of hell, and starting down the road to wealthiness by saving better, spending less, and investing your money like smart people do.

Here's a preview of what's in store in this and the next two articles on this topic:

• Taxes on the Weak-Minded

• Taxes on Lack of Self-Control

• Taxes on Impatience and Lack of Discipline

• Taxes on the Unstructured

• Taxes on the Unproductive

• Taxes on the Unknowledgeable

• Taxes on Big Ticket Spenders

• Taxes on the Easily Entertained

• Taxes on the Impulsive

• Taxes on the Technologically Impaired

• Taxes on Personal Finance Illiterates

• Taxes on the Perpetually Poverty-Minded

Time Value of Money

As we go into all of this, you'll be learning about a concept called the "time value of money," and how it factors into how much in "taxes" you're paying by making money mistakes in life. If you've never heard of this concept, don't worry... it's a lot easier than it sounds. Here's how this works.

If you have a $5 bill in your wallet right now, it's worth just $5. But what's it worth next year if you put it in a savings account or investment?

A savings account would make that $5 become $5.05 by this time next year. That's a horrible return.

Alternatively, in an investment account, if we estimate an average yearly return of 12% (the return of the standard stock market index over approximately the last 70 years), your $5 is actually worth $5.60 one year from now. If you take $5 every year then, and invest it in the market, $5 per year over 40 years is worth $4295.71.

This is the concept we'll use to determine how much you're getting taxed over your lifetime by the shysters of society.

Addictions - Taxes on the Weak-Minded

Alcohol

You can deny this if you want, but excessive alcohol consumption is an addiction, plain and simple. The reason alcohol producers are so successful is because they play upon the weakness of our population, and their desire to drown out the suckiness of their lives with a conveniently inebriating substance.

We could talk all day about the woes alcohol brings on society, particularly the death and suffering brought about by its abuse. But let's just talk today about the woes on your own wallet.

The Washington Post (if you trust it) conducted a study recently which basically tells you how much more alcohol you douse yourself with compared to other upstanding members of society.

According to the study, if you drink less than 80% of America, you still down about 6.25 drinks a week. What's the average cost of a drink?

That depends on where you get it. If you're doing all your drinking socially in a bar with friends, or to find "dates," you're probably paying around $5 a pop. Crazy! 6.25 of those bad boys every week costs you $31.25 a week, or $125 a month! That's $1500 per year, or $1,288,713 over your lifetime.

Even if you just pop for a 12-pack at the gas station, the average cost is around $1 each. That's $325 per year, or $279,221 in foregone wealth over your lifetime.

We're talking about just the cost of cheap stuff here--not even the expensive liquors.

Tobacco

What I said above about alcohol being an addiction and a trap for losers, the same goes for tobacco users. Are you dumb enough to actually smoke cigarettes? I can't even fathom what goes through someone's mind when they consider picking up this ridiculous money- and health-sucking habit.

According to the Bureau of Labor Statistics, the average smoker (with a median income of around ($59,000 a year) spends about $390 a year on the wide range of tobacco products out there--cigarettes, e-cigarettes, cigars, chew, snuff, whatever.... that's about .7% of their annual gross income.

If you're an average smoker, and smoke all of your life, you're giving up $335,065 in wealth and freedom over forty years.

Do I have to mention the health and social costs of tobacco use? Smoking-related illnesses take a toll of about $300 billion a year in the US economy. That's an average of $3533 per smoker. Smokers pay more for health insurance, they pay for the diseases of body rot internally and externally, they pay in social costs (nonsmokers don't tend to hang out with smokers), and they ultimately pay with their lives. Enough said?

Gambling

I've never pulled a slot machine in my life, but I'm sure many of you have. For some, gambling is a huge problem--especially online gambling.

The gambling industry revenues in the US total about $80.45 billion annually. That's saying a lot, considering that the only state where gambling is legal is in Nevada. With just under 80 million people reportedly visiting casinos last year, it's estimated that each person walking in donates about $1000 to the casino. Donald Trump thanks you for your campaign donation!

But let's assume you aren't that big into gambling, and you spend just $200 a year. That's still $171,828 in foregone wealth over 40 years. What could you do with a pile of money like that?

Automobile Moneypits - Taxes on Low Self-Control

The Mistake of Buying New

There's enough to be said elsewhere on this blog about getting sucked into buying a brand-new car, that I won't go into it here. But I encourage you to check it all out.

Suffice it to say that I almost cried recently when a relative of mine told me she had just bought the first "new" car of her life--a 2015 Toyota Something-Or-Other.

Automobile depreciation is one of the biggest money pits the middle class throws themselves into. A new car loses roughly 25% of its value the first year, another 20% the second year, 15% every year thereafter. This means a car purchased for $25,000 has lost over 60% of its value in five years, or $3150 per year over that period. 

$2,706,298 over a lifetime.

NEVER BUY CARS BRAND NEW. 

Drive Responsibly

But even if you are smart enough to buy used cares, don't be stupid in how you use them. Follow speed limits, parking rules, etc, and save yourself some cash. One in six Americans gets a speeding ticket every year, at an average cost of $150. If this is you, every year, you're forfeiting $128,871 in wealth during your lifetime.

And if you get a lot of moving violations (speeding tickets), expect higher insurance costs. A single ticket can cause premiums to rise by as much as 22%. With the average insurance cost sitting at $1080 per year for full coverage, you're wasting $237 per year, or $203,616 in wealth.

Downsize Your Gas-Guzzler

The last low-hanging fruit on the automobile tree is your monthly automobile gas bill. Do you drive a gas guzzler? How much could you save every year by downsizing if you always don't need to drive a tank around?

I sold the truck I owned about six months ago. I'm saving 50% a month, or $40, by driving around my sweet Toyota Camry instead of the Dodge Ram--and that's not including insurance costs on the larger vehicle, which was higher. That's $480 a year, or $412,388 invested over forty years.

Loan Interest - Taxes on the Impatient or Undisciplined

I work in the finance industry, so I think about loan interest all the time. I also see plenty of loan stupidity happening around every corner.

The Ignorance of Auto Loans

Financing automobiles when interest rates are as low as they are right now is very tempting.... but it won't be as tempting when rates begin to rise. If you're a subprime (bad credit) auto financee, you're already paying outrageously high rates, for something you probably can't afford. In the worst case scenarios I've seen, people take out loans on $45,000 vehicles, with interest over 5%--that's $180 a month in interest alone!

Even buyers with good credit can get loans for just 2.24%... interest on a $25,000 vehicle is still $47 a month, $564 a year, or $484,556 over a person's lifetime if that person always has a car loan under their belt.

The Stupidity of Payday Loans

What's a Payday / Title Loan? It's what irresponsible people get because they need to pay rent on Wednesday, but their paycheck doesn't come in until Friday, so they pay a $25 fee for an extra $50 now to cover their rent until the end of the week, then they should pay back that principal. But most don't, because they aren't disciplined. The interest just stacks up, week after week, until things get completely unmanageable. How unmanageable?

Payday Loan shops charge interest upwards of 500% per year, or six times the value of the borrowed money! Would you give a friend $100 if they promised to pay you back with just $20 by the end of the week? Heck no! That's what's happening when you get Payday Loans. They're the mark of irresponsible, undisciplined individuals.

Even one $25 fee per year for a Payday Loan will cost you $21,478 in foregone financial freedom. Frankly, if you have no debt at all, including a mortgage, that amount is enough to get you by for a full year of living.

The Truth About Home Equity Loans

The allure of home equity loans is strong, I can assure you. Unscrupulous bankers convince you to "upgrade" your home (which isn't going up in value) by "tapping into" the cash in your home, with "interest-only loans." 

Home equity loans allow you to take out loans on the equity, or ownership, you have in your house, and you pay just interest on any outstanding amounts you use for usually the first ten years of the loan. After that, you MUST pay down the principle. 

This can seem convenient, but there are several problems. First, they loan is adjustable-rate. Getting a loan at a low interest rate now will begin to cost you more in the future as rates rise.

The second problem with a home equity loan is the allure of taking much more than you need. The HELOC, as it's called, seems like free money, so you aren't as judicious in dispersing the funds for home improvements. You take out much more than you need, and it ends up costing you more down the road than you think it will. 

Lastly, if you decide to move before the loan is paid off, because of the HELOC, you have much less equity in your home to put toward your next one.

The best idea is to just save up the cash and pay for the upgrades outright.

Not taking out these loans can save you a few hundred bucks a year, or $257,742 over the long term.

Disorganization - A Tax on the Unstructured

How many times have you looked around your home for something you needed, but you couldn't find it, so you went to buy a new one, and found the old one a week later? This used to happen frequently in my home, especially for my own things (tools, electronics, etc), until I began to discipline myself and organize my life.

If you don't know what you have in your home, you won't use it, and you'll waste money buying duplicate things.

What if you scrapped this bad habit of disorganization, and saved yourself $100 a year in tools, office supplies, or even groceries? You'll be $85,914 richer in retirement.

On a much more exciting note, I also read an article claiming that being organized is a great indicator for a healthier intimate relationship with your significant other. As it turns out, clutter can wear you down physically, psychologically, emotionally, and intimately!

Bad Health - Taxes on the Unproductive

No, the government isn't taxing you for being overweight.... yet. But I'm sure it's only a matter of time. After all, they're taxing basically everything else.

A startling little statistic from the Center for Disease Control told me that 68.8% of adults in the US are considered obese. Holy crap batman! This isn't a condition which I've had to battle myself, but I do have loved ones who have, so I have compassion for those struggling. But do people realize the financial toll which being obese (or even just unhealthy, really) takes on a person's wealth? Let us count the ways.

Career Prospects

Did you realize that your level of health and you appearance has a great deal of effect on your job performance and earnings in the long term?

If you're unhealthy and feel crappy all the time, how do you think this affects your long-term job performance? You miss work more, you naturally like your job less, and this affects how co-workers view you.

The old moniker of "Dress for the job you want" really is an extension of the fact that if you are healthy, look healthy, and exhude the persona of a competent and confident individual, people trust you more in the workplace. They are more likely to rely on you.

The more trust and confidence people have in you, the more likely you are to advance in your career.

How much can good health affect salary and wages? Let's say it's only marginal--2%. That small percentage is life-changing for you. Earning just 2% more per year on a starting salary of $52,000 nets you $1040 more per year, or $893,508 over a lifetime into the old retirement account.

Insurance

Just because Obama outlawed insurance companies from denying coverage to people with pre-existing conditions doesn't mean it's not illegal for insurance providers to discriminate in coverage for people who are unhealthy.

Numerous previous employers I've had required medical screenings in order to determine insurance coverage costs. Things like smoking, excessive alcohol or drug use can cause you to be placed in the "base" categories--the most expensive coverage levels.

I remember that the "base" category of my plans in the past were nearly DOUBLE the premiums each month. By staying out of the base categories, I saved $70 per month, or $840 per year, or $721,679 over my lifetime.

Depression, Anxiety

I also sympathize with loved ones over the toll which anxiety and depression can take in life.

Many of these conditions, while not completely curable, can be lessened by eating right, getting exercise, and living an active lifestyle.

If you can abate the effects of these conditions, you abate the costs, such as medications and medical consultations.

A $14 prescription every month to deal with symptoms comes to $168 a year, or $144,335 over a lifetime. That's a lot of money you're tossing out the window, which could be saved if there are "free" treatments to your conditions--like living an active lifestyle.

Doctor Bills

If you're healthy, you generally don't require medical visits to your doctor. By eating right, getting enough sleep, and exercising, your body has a better ability to ward off sickness and disease.

Given the skyrocketing cost of even basic health checkups and medicine these days, consider saving yourself $500 or more per year just on medical consultations for your family. That's $429,571 for a lifetime of health.

Treatment for Injuries

When you live a more active lifestyle, you are a lot stronger and more agile. Your muscles and joints are much more likely to take abuse from falls, trips, other accidents, and lifting things. 

Consider how much it would cost you in physical therapy if you were injured from a fall and had to undergo that treatment at your own expense. Thousands? I don't know. What I do know is that the healthier you are, the less assistance you need to live independently.

Money Savings Summary So Far

Let's recap. Here's what wealth we've decided to NOT forego in this article by avoiding taxes on stupidity, laziness, ignorance, and unhappiness in our lives:

• Skip the extra alcohol/drinks:  $279,221
• Quit smoking and using drugs:  $335,065
• Stop gambling, period:  $171,828
• Stop buying new cars:  $2,706,298
• Don't get speeding or parking tickets:  $128,871
• Insurance: $203,616
• Trade out your gas guzzler:  $412,388
• Shun auto loan interest:  $484,556
• Avoid Payday loans:  $21,478
• Forget Home Equity loans exist:  $257,742
• Quit being disorganized:  $85,914, Plus a better SEX LIFE - Priceless!! :)
• Better career prospects of looking healthier:  $893,508
• Lower insurance costs by living a healthy life:  $721,679
• Lesson or cure you depression / anxiety:  $144,335
• Cut down on:  $429,571
• Avoid needing treatment for Injuries: ???

If you implement all my suggestions today, and take every drop of the savings to invest on great investment strategies, you'll be accumulating $7,276,070 more during your lifetime than the lazy, alcoholic, gambler, smoker, drug-using, interest-paying, speeding, disorganized, absentee, depressed redneck living next door to you.

Continue on to Part 2!!!

Live long and invest,

Jeremiah