Out of town for a few days

I'm not quite sure that I have any regular readers, since I've only been maintaining my site for a couple of weeks. Michelle and I are leaving this afternoon for a pre-wedding honeymoon to the Pacific Northwest. Later today, I'll be in Seattle. It would be kind of neat to run down to the ocean today (which is about five miles from my house) so I could see the Atlantic and Pacific oceans in the same day...never done that before!

I have set a goal for myself to visit all fifty states before July 15, 2009 -- my 26th birthday. That way, I can say that I've been to all fifty states by age 25. We fly into Seattle tonight and will rent a car. We'll drive as far east as Glacier National Park in Montana and as far south as Salem, Oregon. The big triangle will give me two new states (Washington and Oregon) and complete the lower 48 for me! I'm very excited to know that by Saturday, I'll only be two states away from my goal (Alaska and Hawaii).

I've never actually met anyone that has been to all fifty states. Well, I'm sure that I have, but I certainly didn't know about it. My grandma's friend had been to 49, missing North Dakota, and my friend's dad, Bob, has been to all but Alaska.

I'll try to post from the road. Time to go pack!

The benefits of creating a simple budget

For some of us, especially those just starting out, financial planning can be difficult and may seem like a low priority. Living on our own, being truly independent, and cashing a nice fat paycheck every week is quite a change from the lives that we lived back home when maybe we didn't have to worry as much about making ends meet. Hell, I know it happened to me when I first graduated. When making any sort of financial decision, I'd greet it with a touch of arrogance: "I make x-amount of money per year! I can afford to buy a new phone/camera/television/car/house!" or "I make x-amount of money per year! I can afford to go out with my friends to the bar/restaurant/vacation!" Though it was true that I was earning a decent living and that I didn't have to live like a pauper, I hadn't really evaluated the minutia of my transactions to understand that though I could afford a new camera/phone/night out with friends, I couldn't do it every day and expect to not start living in the poor house.

I don't remember where I got the idea or what exactly made it sink in, but I'm glad that the forces that be let me implement it and stick with it. I came up with a budget. My budget is important in my life, and now guides my wallet based on rational and sober decisions. The monthly allowances are prioritized based on my need, and have a mechanism to measure their adherence over time. Following is a brief step-by-step description of how I came up with my budget, how I learned to live with it, and how it has affected my personal spending habits.

1. Start to measure - Your budget will never work if you just come up with arbitrary numbers for your monthly allowances. This whole process will be a lot easier with some personal accounting software that looks at all of your spending from each bank account, credit card, and other source of money. Personally, I use Bank of America's free online banking software called "My Portfolio" which allows you to enter in your non-BOA credit cards' login information to see their transactions in a common list. Every day I can log in to BOA and see a single list of transactions that I made, regardless of the debit/credit card I used. Each transaction is then categorized (which can be changed by you).
   
2. Improve your transaction details - Once you start measuring your transactions, maintain them. Computerized software helps a lot, but will most likely need some guidance from you. Don't just stick everything into a miscellaneous category. Really try and understand where your money is going. Differentiate from a weekend binge and a meal at a restaurant (both of which may purchased from a restaurant). Differentiate purchasing a tank of gas on a vacation from a tank of gas at home. This will let you know if your daily commute is costing you an arm and a leg or all those road trips to the beach. The deeper you go with the level of detail of the transactions, the more accurate your budget will be.
3. Analyze current spending - Once you figure out where your money is currently going, you can start setting goals for how much you want to spend. But don't automatically take your current spending as the budget; use it as a guide. Sum up your spending for the last month and compare that against your income. If you realize that you spent $4,000 last month and your income is only $3,000, figure out why. Did you take a trip or purchase Christmas gifts? It's OK to have some months where you spend more than you make. But if you're consistently spending more than you make on stuff that's in your control, you've got some changes to make. If you brought home $3,000 last month and spent $4,000 on restaurants, electronics, going to bars, and other things that should be prioritized lower, consider it in your analysis.
4. Budget first for the bare essentials - Certain items included in your monthly spending are the bare essentials: rent/mortgage, utilities, car payments, groceries, etc. First, separate your bare essentials into those whose amounts will vary from month-to-month and those whose will not. Your rent/mortgage, car payment, and car insurance will most likely stay the same. Then look at your grocery and utilities spending and figure out what to expect from those categories each month. Each category should have a monthly spending limit. If there are certain items that are not paid monthly (like 6-month car insurance premiums, bi-monthly water bills, etc), put them in terms of cost per month. Subtract the sum of your monthly bare essentials from your monthly take-home pay. The difference is what you have for everything else.
5. Set spending goals for non-essentials - If you're working in Excel, put the rest of your categories below the essentials, in order of priority. These will include things like restaurants, home improvement, personal care, clothing, entertainment, travel, and yes, savings. Savings are a non-essential item, but should be placed at the top of your non-essential list. There's no rule of thumb as to how many categories you can have, but make sure that any time you spend money on anything, you can place it in a category. When coming up with your monthly goal, don't short yourself, but don't put an unreasonable number down, either. After all, what's the point of setting a goal you can't achieve? Don't put zero dollars down for restaurants, because at one point or another, we all eat out.
6. Measure adherence monthly - If the budget you created measures spending monthly, make sure to check your adherence every month and adjust your spending goals accordingly. I make it a habit to do it on the first of the month. And when you monitor your adherence, keep a running total of your spending for each category (the sum of all monthly variances, positive or negative, for each category). If you budgeted $150 per month in gas and are consistently going over budget, you'll have a negative running total and may need to change your allocation to $175 or $200. Similarly, if you have been consistently under budget with home improvement or spending, you can have a month where you go way over budget. The running total helps you understand where you stand with each category. I budget about $200 per month for travel, even though I don't go on a trip each month. But every six months or so, I'll have 1,200 guilt-free travel dollars to play with!
   

Since creating my budget, though I don't make any more money, I have less financial pain in my life. The other day, I was considering buying some new clothes for work. Though I had plentyin the bank to pay for them, I consulted my financial plan (which took about two minutes). "Well, it looks like I went over on my clothing budget last month (which gave me a negative running total), so I guess I can wait until next month to buy the new work clothes." Or, when planning my meals for the current week, I can consult my restaurant budget. "It looks like I've already used half of my monthly restaurant budget this month, so I'll try to buy enough groceries to last the whole week." It sounds simple -- almost juvenile -- but it works. By putting a little bit of thought into everyday transactions, I was able to maintain my lifestyle and not be surprised at the end of the month when I received my credit card bill!

Hopefully with some discipline and effective measurement of your spending, a budget can be an easy way to get back on track or stay on top of your finances.

Apple vs Google: World War 3.0?

For the past couple of years, Apple has been pushing for sales of its .Mac service, which is soon becoming MobileMe, an online service that integrates with Apple's desktop software, keeping everything up-to-date.  Mac users are able to easily publish the websites they created in iWeb, share the photos they organize with iPhoto, and synchronize the contacts and emails that they store in Apple's Address Book and Mail.  This seems like a valuable service to be paired with the iLife suite, and not necessarily a bad deal at $99 per year.  But even for Steve Jobs, it's hard to compete with free.

And that's just what Google has been offering: the ability to easily publish a personal websites, share photos managed by a desktop application, and store contacts from multiple sources in a single repository...all for five cents less than a nickel.  Even though I'm sitting on my couch typing on my Mac, you might be able to tell by my website where my online loyalty lies.

I use Gmail because it has a terrific interface, some bonus features that I like, and is free.  I use Blogger because it's highly visible, easy to publish to, and allows me to maintain a professional-looking site without spending much time designing style.  Oh, I almost forgot: it's free.

I use Apple's computers because of their simple design, their lack of major technical issues, and their comfortable OS.  For those reasons and many others, I expect to be a supporter of Apple's products for a while.  But as Google improves its product suite and offers more integration with Mac applications (you can already upload to Google's Picasa from iPhoto), I see Apple's hundred-dollar-a-year software becoming obsolete in a hurry.  After all, why pay $99/a year for something if a perfectly comparable substitute is available for free?

Photography: the relationship between ISO, aperture, and shutter speed

I helped offset the costs of college by doing some professional photography and video production. I enjoy photography, but try not to give myself too much credit for my photography skills because if you've got the right equipment, taking great pictures can be relatively simple.

When I got my first SLR camera, some of the things that that often confused me were the definition of and relationship between ISO, aperture, and shutter speed. I knew that these items were related and affected the overall quality of pictures, but I didn't really understand how they worked until I read this article a few years ago (or some derivative of it). The author compares taking a picture to filling a bucket with water. In order to have a photo that is neither washed out nor too dark, you will need to fill that bucket with water, ensuring it is full to the top and not overflowing. In his analogy, the water represents light, the amount of time the faucet is left on represents the shutter speed (how long the light is exposed to the film/sensor), the strength to which the faucet is adjusted represents the aperture, and the size of the bucket represents the ISO. This article effectively describes the relationships. I, however, have an example of my own.

Photography, after all, is simply the capturing of light and manipulating it so that it is directed to a special surface (film or digital) that can 'remember' it. Do this for a moment: look at a bright light, wide-eyed, for half a second (not the sun -- you'll go blind) and then close your eyes quickly. Do you see how that light has burned a faint image into your eye? Your eye was just acting like a piece of film (or a digital sensor), capturing the light. Now look into that same bright light for about two seconds; close your eyes. Does that same burned image look a little brighter now? I'll bet it does. Because your eyes (which are similar to a camera's shutter) were open longer, they let more light into your eye (the sensor), thereby creating a brighter image.

To change the amount of light in our 'photograph,' we just adjusted our 'shutter speed.' Now let's adjust our 'aperture.' Look into the same bright light for about two seconds, but squint your eyes just a bit. Close your eyes, and I'll bet that the image that remains on your eyelids is more faint than it was when your eyes were wide open for the same amount of time.

This is because by adjusting the aperture (the degree to which our eyelids are open), we're putting a bottleneck on the amount of light that we're letting into our eyes. This is why we squint naturally when it's very bright outside. With a camera, if too much light is let in, the photo will get washed out. The aperture is the camera's 'squinting' mechanism. As humans, we're not worried about our photos getting washed out -- we're worried about damaging our eyes. When it's a very bright day or when someone shines a light in our face, we naturally react by adjusting our eyelids to let in an optimal amount of light -- kind of like a camera's automatic mode. ISO is a little more difficult to describe with this example and will be discussed later.

When taking a photo, a photographer (or camera automatic mode) needs to adjust the aperture and shutter speed to allow the optimal amount of light to be exposed to the film (in the digital world, the 'film' exists in the form of a CMOS light sensor). Aperture and shutter speed have a supplementary relationship; too much or too little of one can be made up by adjusting the other (think of it as a balance -- like the ones you see on flags in courtrooms). This is a key principle in photography. If your aperture is set very low (the eye is squinted), you can still get a nice picture if you let the shutter stay open for a little bit longer. If it's bright outside and your aperture is set high (the eyes are wide open, looking straight at the sun), the photo will be washed out unless the shutter speed is very fast (looking only at the image for a small fraction of a second).

Though aperture and shutter speed are supplementary, the artistic effects that can be achieved by adjusting them are different. Depending on the physical environment and artistic intent of the photographer, he or she may choose a slow or fast shutter speed or a high or low aperture. By doing this, the photographer will need to make up for any extremes on the other side of the balance. Here is an example:

I took this picture a couple of years ago in Montana. Do you see how the water is kind of blurry? I achieved this affect by holding the camera very still and letting the shutter stay open for .4 seconds. .4 seconds may not sound like a long time, but since the water was moving so fast, it captured a lot of movement for the amount of time the shutter was open. Now, if I hadn't held the camera completely still, the rest of the things in the photograph, like the rocks and bushes, would look blurry. But by holding the camera still, I was able to capture the movement of the only thing that moved naturally.

Because I took the picture of the waterfall at two o'clock in the afternoon, it was very bright outside. If I had left the shutter open for that long without adjusting the aperture, the photo would be washed out. Check out this example from a trip to Puerto Rico when I tried to capture the moving creek running over my feet mid-day. I captured the moving water by leaving the shutter open for almost a second, but because I didn't 'squint' the camera's eye enough, my image was washed out (a.k.a 'overexposed').

Adjusting the aperture for artistic value will affect what's called the depth of field (how much of what you see is in focus). Look at this picture of the hermit crab in Puerto Rico. Do you see how some things are out of focus? This is an intentional artistic modification to focus on only the subject. By zooming in and setting the aperture to as open as possible (eye as wide open as it can be), I was able to achieve this effect. But because my aperture setting was so wide open, I needed to set my shutter speed accordingly (which many camera's can do automatically).

Because of the definable supplemental relationship between aperture and shutter speed, digital SLR cameras have modes that will allow the photographer to set either the aperture or shutter speed and have the other variable set automatically. So if I'm taking pictures of a waterfall and want to leave the shutter open for a full second, I can set my shutter speed to 1" and let the camera adjust the aperture to whatever is appropriate for the given amount of light in the current environment. This setting will depend on how much light is present (what time of day, etc).

This relationship is also the reason that it's easier to take fast-moving pictures during the day when it's bright outside. Let's say we're taking an action photo of a boy hitting a baseball, wanting to capture him mid-swing. To stop his fast movements, we'll need to have a very fast shutter speed (something like 1/1000 of a second). But if our speed is that fast, we'll need the aperture to be set to be as open as it can be. If it is a bright day and there's lots of natural light around, then enough light should get into the camera during the brief instant that the shutter is open to give us a nice picture. But if we're trying to take the picture at night with a standard lens, with the shutter open for such a brief period of time, not enough light will get into the camera, even with the aperture set to be as open as it can be (unless you have a very expensive lens that lets lots of light in) to make a nice picture. In a dark environment, even with the aperture set to be as open as possible, the shutter will have to stay open longer to let enough light in, creating a blurry picture if the subject is moving. Therefore, when shooting at night, it is easier to take nice pictures of things that are still. Because photography is all about capturing light, you've got a lot more flexibility if you shoot during the day with lots of it at your disposal. You can always hide natural light from the camera; you can't add it -- that's why flashes exist!

ISO is also related to aperture and shutter speed. Essentially, ISO is sort of like the resolution of the photograph. By adjusting the ISO (also called film speed), you're affecting the amount of light required to make a nice photograph. The higher your ISO, the less light is required to take an optimal picture. By changing your ISO setting, you're effectively changing the capacity of the photo, which will also affect the amount of detail that you're able to capture. Ideally, if everyone took pictures of things sitting still in bright light, we could use a very low ISO all the time. That would provide the highest quality shots. But in reality, we shoot things that move and we shoot things in the dark. By telling the camera to use a higher ISO, we're basically saying "Just take the picture. I know there's not much light, so you don't have to give me as much detail." If given 'permission' to deliver a slightly more grainy photo, a camera can take photos that it normally wouldn't be able to with a lower, higher-quality ISO.

Consider taking a photo of friends sitting around a campfire. There is not very much natural light, and no matter how big you set the aperture (the lens has physical limits -- the bigger the lens, the bigger the aperture can be), the shutter is still open too long to take a non-blurry picture. So what do I do? I set the ISO to the highest value that I can. That means that the camera will require less light to take picture, but as a trade-off will deliver a more grainy picture. Because I don't have a lot of light, I realize that I'm either going to get a high resolution blurry picture, or a low-resolution crisp picture.

It takes a long time to really understand the relationships between the ISO, shutter speed, and aperture. But if you practice with a digital SLR camera and adjust one variable at a time, you'll see how it can affect the look and feel your photos and the moments you're trying to caputre. Once you get a feel for which types of changes create which types of effects, you'll be taking beautiful pictures in no time.

Good rules of thumb:

1. Always use the lowest ISO setting that you can to get crisp, non-blurry pictures. ISO 200 is a good setting to use on bright days (100 is even better if your subjects are relatively still). At night, if you don't use a flash, you might need to set it as high as 800, 1600, or 3200, depending on the capabilities of your camera.

2. To make artistically 'blurry' pictures, adjust the shutter speed to be open for longer. If it's bright outside, you (or the camera) will need to adjust the aperture to make sure that not too much light gets in.

3. To adjust the depth of field, try zooming in and adjusting your aperture. Aperture is measured in the terms of a fraction (f/5, f/2.5), with f as the numerator (standing for focal length) and the number as the denominator. The lower your number, the wider open the aperture.

All-natural vodka watermelon coolers...the next big thing

In the interest of your weekend entertainment, I'm posting a drink recipe that I stumbled upon serendipitously a couple of days ago.  The story goes a little like this:

Last Friday night, I saw that jumbo seedless watermelon was on sale for about $5.60 apiece; good deal!  I felt like I was lifting furniture when I placed my selection in the cart.  On my way home, I tried to think about how the hell my fiancee, Michelle, and I were going to eat the 25-lb monstrosity.

That evening I cut it in half (bisecting at the 'equator' rather than the 'poles') and then then prepared each half differently.  The first half I cut into slices to maximize the two-handed over-the-sink slurping that I love to do about as much as anything.  The next half was cut into cubes, green part be damned.  I placed the sliced wedges into a covered bowl in the fridge and placed the cubes into gallon-sized freezer bags.

The wedges went quickly and I was busting into my first bag of cubes by Saturday afternoon.  Michelle, wanting to celebrate the nice weather daiquiris, asked me to run to the liquor store.  After picking up a few essentials, I made her a daiquiri.  And seeing the fresh bottle of vodka on the counter reminded me that I had always wanted to try making a vodka watermelon.  I got to work...

I poured 8-10 shots of vodka into one of my full freezer bags, sucked the air out to ensure complete coverage, and stuck the bag back in the fridge.  The next day, I took a bite.  "Not bad," I thought, but I wasn't about to blog about it.  Over the next couple of days, I ate a couple pieces of watermelon here and there, but didn't make much of a dent in the bag (hey, these were weeknights!).  By Wednesday, the watermelon started to break down and look a little soft and questionable.  The bag that once held juicy chunks of watermelon now contained a pretty pink liquid with matching meaty pulp.  Then it hit me...

Now most of that liquid left in the bag is actually vodka.  It still smelled fine (well, depending on your tolerance for alcohol) and it looked pretty tasty if you could stop imagining the pulpy texture.  I grabbed a metal strainer and large measuring cup from the cupboard and called Michelle, who was on her way home from work, and asked her to pick up a two-liter bottle of Sprite.

What happened next will go down in the history of my drinking career.  I've always been a jeans and t-shirt beer-drinking kind of guy, enjoying the occasional mixed drink, depending on the situation...But the strained vodka watermelon pulp over ice and mixed with Sprite was a wild success!  The naturally flavored pink goodness gave the drink a beautiful color and w

as able to be mixed in to strengthen the beverage to taste.  Of course, the higher the watermelon juice-to-Sprite ratio, the pinker the drink became.

We're having a huge July 4th BBQ next month, and you can bet that this drink will be in our coolers satisfying all.  Mom, your Kool-Aid has officially been replaced!  Oh, and in the interest of exploration, I have had a bag of strawberries soaking in some rum in the refrigerator for a few days.  Maybe we'll try that juice with some Sprite or Coke and discover another fruity delight.

A little loyalty goes a long way

A new marketing trend has emerged in the business world that targets consumers of all demographics: Travelers; shoppers; businesspeople; soda drinkers. Advertisements for large scale rewards programs have flooded department stores, online travel agents, hotel tent cards, and bottle caps for a few years, and their presence is only growing.

"Start earning big rewards with today's purchase!" reads the little card next to the counter at your local Macy's or Target. "Save 10% today."

Though in-store credit cards have high interest rates, low utility (you can only use it at one store), and are hardly ever a good idea, you should consider at least some corporate incentive programs, of which I'm an avid supporter. But be picky with which you use. Be sure to minimize the number of programs you participate in while maximizing your number of inputs into those programs.

If you're a disciplined spender, my recommendation is to get a rewards credit card that gives you rewards in a program in which you can otherwise enroll without the credit card. Furthermore, make sure the program is with a business that you patronize regularly (or could patronize regularly by shifting your loyalty). Good examples of these are the hotel and airline reward programs. Don't settle for the reward programs that only let you to purchase crap that you don't need from an overpriced catalog (like American Express). A good program will give you rewards that you will actually need and use -- something that is actually worth something to you.


A word of caution: Choosing a rewards credit card is only a good option if you can control your spending, as they tend to come along with a high interest rate. If you carry a balance on these cards, the interest you pay will most likely outweigh the reward that you receive.

If you decide to get the card, spend your money like it's cash (a.k.a. don't spend more than you've got), but use the card for everything. That's right, everything. If you've got a relatively low credit line and your monthly spending pushes you toward the limit, check your balance online and pay it off before your statement comes (if you're reading this blog, I assume you know how to do online banking). This will prevent the credit bureaus from thinking that you're maxing out your card.

My credit card is provided by Bank of America and earns rewards in the Choice Privileges rewards system with Choice Hotels (Comfort Inn, Comfort Suites, Quality Inn, etc). This is by far the best standalone rewards program that I have found; especially during their promotions. Here's an example:

Choice Hotels' current promotion is "Stay three times, earn enough points for a $50 gas card!" The way it works is you earn 10 points for every dollar you spend at a Choice Hotel. Every time you make three separate stays (regardless of the number of days), they will bump up your point balance so that it is at least 16,000 points higher than it was from when you started the first stay (which is zero if you're a new member). 16,000 points are the points required to redeem a $50 gas card. 16,000 points are also enough for up to two free nights in a hotel (free nights start at 6,000 points for a modest place off the interstate, up to 30,000 points for an oceanview room in Hawaii).

I'm going on a road trip next week in the Pacific Northwest, and will be staying one night each in different cities in my itinerary. Night one, I stay at a Comfort Inn in Seattle and pay $100 for the room. 1,000 points. Night two, $80 for a Quality Inn in Salem, OR. 800 points. Night three, Comfort Suites in Crater Lake for $120. 1,200 points. My current balance for the three stays is 3,000 points, which alone puts me at a stay-six-nights-earn-one-night rate -- not too bad. But with the promotion, because I stayed three times, they'll bump my points to 16,000, which means I get 13,000 bonus points. So for three nights and $300 in spending, I have earned at least one, maybe two free nights.

And because I have the Choice Privileges credit card and used it to pay for the room, I get an additional five points per dollar. So now, my point balance will be 17,500. Don't forget that with every monthly statement you are given two points per dollar into the program. It isn't going to make you rich, but it will pay into the program in which you already have a balance and will be sure to utilize.

That was just an example, but take this into consideration: During a recent business trip where I traveled every week for a couple of months, I amassed over 180,000 points, which is enough to spend a full month at a hotel for free. I really am about to go to the Pacific Northwest next week, and you can bet that I'm not going to pay a penny for a hotel room.

Cash back can also be nice, but the rewards grow so slowly, it takes ages of spending to get a substantial amount of money. You'll find that the less utility that a reward has, the higher percentage you receive with everyday purchases. For example, cash back has the highest utility, as it can be spent anywhere, but the slowest growth. A cash-back card might give you .5% back on purchases. On the other hand, a hotel rewards card has lower utility (points may only be redeemed for free hotel rooms) but will allocate points faster (equivalent of 2% cash on everyday purchases). I tend to opt for the higher reward-to-spending ratio, especially if the reward is something that I am almost guaranteed to use...like hotel rooms. With my current hotel rewards card, for example, for every $10,000 I put on the card for everyday purchases (which is about five to six months of spending for me), I earn enough points for about $200 worth of stays in the hotel chain. I travel from time to time, and it's always nice to be able to redeem those points when I would have otherwise paid for the room with cash.

Another trick is to sign up for rewards that allow double-dipping in other ways. Credit cards are one, but Upromise is another.

Upromise is great because it partners with all sorts of merchants ( like Choice Hotels), and gives you a percentage back (to be transferred to a 529 college plan) on things that you buy online from partner retailers and even in partner stores and restaurants. In addition to the percentage (from 1-10%, depending on the retailer), you earn points by paying with your hotel credit card. So going back to my credit card example, in addition to the 180,000 points I earned for my everyday spending and staying loyal to a hotel, I earned $240 in free money from Upromise for almost no extra effort and no shifted loyalty.

So many companies are striving to obtain our loyalty with free rewards, be they points or dollars and cents. I say, if the system is free and has tangible, useful rewards, why not do it? My coworkers laugh at me when I hand the cashier my buy-8-and-the-ninth-is-free coffee card in the cafeteria, but every other week when I enjoy that free cup of joe, I smile and think, "money's money!"

Paying for college as an adult

I'm getting married in a few weeks to my college sweetheart, Michelle. Currently, she's working for NPR, teaching a film class, and going to grad school. I work for a government contractor doing various types of IT consulting, project management, and technical writing. We're trying to make decisions about how to pay for her grad school that won't put us in the poor house, which is easier said than done, considering the interest on student loans for our generation is sometimes more than double the rate that my GenX friends are paying.

Michelle took out loans to pay for her first year of grad school because that was her only option at the time. But now, a year later, we're both a bit more settled and have stable careers and a little extra income each month. She's in a three-year program, so we've got a bit more financing to do, giving us a few options to churn about. Should we:

1. Take all of our extra income and pay it toward her current loans?
2. Put it into a savings account and pay cash in August when her next tuition bill comes due?
3. Save our money, continue to take out loans, and hope we have enough cash when she graduates to pay off a substantial portion?
4. Utilize a more creative strategy?

We chose number four. After doing some research online, we decided to do two things with the disposable income we're able to dedicate to her education expenses:

1. Save enough in a high-yield savings account (E*Trade is what we use) to pay the accrued interest on her current student loans
2. Put the rest of our dedicated $$$ into North Carolina's 529 plan

Here's our logic:
Since interest rates on graduate loans are in the 8% range, we certainly don't want to increase the principal on which we pay interest if at all possible. I mean, the interest alone on a year's worth of student loan debt comes to over $100 per month. While she's in school, payments are deferred, but interest still accrues. We get our quarterly interest statements and are damn sure to pay every penny of it. Albert Einstein once said, "The most powerful force in the universe is compound interest." You certainly want the most powerful force working for you, not against you! By letting that interest build up over the years she stays in school, the total cost of her college would increase significantly.

After paying her student loan interest each quarter (which is usually a few hundred bucks, never more than $500 I don't think), we figured out how much more we could contribute toward her college expenses (around $250 per month). All of that money has been placed into a 529 plan. Here's why:

The account's funds, which may only be used to to pay only for the named beneficiary's college tuition and related expenses, has tax benefits which are two-fold (depending on which state you're in). In the state of North Carolina, contributors may write off up to $2,500 in contributions from their state taxes. Additionally, the investments in the plan grow tax free, as long as the money in the plan pays for qualified college expenses (sorry, beer and pizza aren't qualified).

529 plans are to college as Roth IRA plans are to retirement. Only after-tax money is contributed, but as long as it's used for its intended purpose, that money is never taxed again. The risk that you run with 529s is that the beneficiary never goes to college. With Roth IRAs, you run less risk because you're only betting that you're part of the human circle of life and will reach the qualified retirement age before you die (and if you die young, who cares about the money?). The nice thing about putting money into a 529 plan for someone that is about to start college or has already begun is that the risk of them not attending is significantly mitigated.

To recap the benefits of our college financing strategy, consider this:

1. All of the money we have saved for Michelle's college is growing tax free
2. Up to $2,500 of her out-of-pocket college expenses are tax-deductible (again, this depends on your state)

To read more about 529 plans, click here

Should I save my money or send extra money toward a loan?

About a year ago, I bought a new car. Not being too far out of college, my credit wasn't well established and I was forced to finance with what I'd call an affordable, but slightly higher-than-average interest rate.

Since buying my car, my fiance and I eliminated our credit card debt, bought a house, and started saving regularly. But after a few months of putting my money into retirement accounts that weren't really earning anything given the 2008 market conditions, I began to second-guess my decisions to save.

"Should I be putting money into a retirement account that is earning almost nothing? Or should I be sending that extra $$$ to my auto lender?"

I set out to find the answer. I considered the tax benefits of putting money into a 401(k), an IRA, or a Roth IRA. I took into account my current tax bracket, my future tax bracket, the current interest rate of my loan, and the expected rate of return on my retirement account (average rate during the term that my car loan is still active).

I assumed that I was going to pay at least the regular car payment for the next 3.8 years, and would have a few hundred bucks to put away, either in the tax-advantaged retirement account or toward my high-interest car loan (at about 8%). I wanted to see how much money I would have at the end of the 3.8 years that my car loan expires.

Keep in mind, I can either pay nothing extra toward my car and put my extra money in my retirement account. But if I send the money to the auto lender and pay off the loan early, I will be able to put both my extra money and the regular car payment into the retirement account for the amount of time that I would have been paying off until the loan was originally set to expire. Let's say that my loan matures in four years, my normal payment is $500/month, and I have $250 to play with each month. If I send that $250 to the lender every month and pay off my loan in three years instead of four, for that last year, I can put both the $500 and the $250 into my retirement account.

So assuming that once the loan is paid off I will put my money into the retirement account, I calculated what the value of the retirement account would be at the time of the loan's scheduled maturity for both the accelerated loan payoff and the normal loan payoff.

I created a spreadsheet to help make an objective decision regarding loans vs savings. All yellow cells are variables. Do you have any outstanding loans or credit card debt? Do you save money each month? If the interest you're earning on your savings is low enough and the interest you're paying on loans is high enough, maybe you should pay it off early. But maybe not!

Use my spreadsheet calculator to help find out.

Also, the second sheet of the spreadsheet tells you whether you should put your money into a traditional IRA or a Roth IRA, based on how much money you have to save. Turns out, the more money you're able to save each month, the more sense it makes to put it into a Roth IRA. The less money you have, the more sense it makes to put it in a Traditional IRA. This is because you may contribute up to $5,000 per year (2008) to either, and since the Roth is after-tax money, you can really contribute more (because after-tax money is worth more than pre-tax money).

Post a comment with any questions.

Pizza on the grill

Alright, this will be the last pizza post for a while. But I had to show how I used the second half of my dough and sauce to make two 8" pizzas on the grill.

The first time I tried grilling pizzas, I followed a bad recipe which burned the pizzas. This really stunk because I had company over and was forced to watch them try and choke it down while telling me that it was good. Imagine watching someone take a big bite out of a lemon and then saying with that lemon-ish look on their face, "No, it isn't sour at all!"

There are three important rules of thumb grilling pizza; follow these and your meal will surely be a hit:

1. cook them at low-medium heat,
   
2. add your toppings off the grill, and
   
3. close the top after the toppings are on.

There is no special dough or sauce required, but you cook it just a little differently. Follow these steps to guaranteed success:

Preheat the grill to about 275 degrees (low-medium heat on gas grills).

After your dough (recipe) has risen, cut it into pieces that, when rolled into balls, are about 2-4" in diameter, depending on how big you want your pizzas. I try to make them about the same size as a baseball.

Pound, flatten, roll, toss or otherwise shape the dough balls to thin, flat circles. Place them on a plate that has been sprayed with Pam.

Get all your toppings ready, but don't put them on the pizza yet...

Bring everything outside and toss all the dough on the grill. Grilling dough requires careful attention, so don't go inside and start watching television or anything. The dough will grill for about five minutes until the bottom is golden brown. Lift them every couple of minutes and look at the bottom for hot spots (some grills have spots hotter than others and may burn the dough). Rotate appropriately to ensure even cooking.

The top of the pizzas will start to fatten and bubble up when they're getting ready. Once the bottoms are golden brown and have some nice grill marks, remove the dough and place them back on the plate, cooked side up.

Place your sauce, cheese, and toppings to your liking on the cooked side of the dough, and then place everything back on the grill. Close the lid (or else the cheese will be rubbery).

These will cook for another five minutes or so. Check on them every few minutes, again looking for a golden brown bottom and a melted top. Once the cheese starts to melt, I recommend sprinkling a few pinches of oregano on top.

Once everything is brown/melted, take the pizzas off the grill, enjoy them, and be sure to brag that you just made pizza from scratch on the grill -- you'll be the coolest kid in school before you know it.

Gmail -- now with a dry sense of humor

As you may know, Gmail's computers explore our emails' content in hopes to learn more about us as consumers. Thomas Friedman predicted this type of marketing in The World is Flat by using the example of a young couple searching the internet for information about their soon-to-come first child. With their how-to results came customized ads for baby crap, like strollers, bottles, and toys. Friedman envisions these ads to eventually transcend the personal computer and find their way onto consumers' television and radio programs.

We're not quite there yet, but we're getting closer. But even though Google isn't laying down custom television ads, it is picking up on our sarcasm. Consider this:

Unlike me, just about all of my college buddies are single...I mean really single. And they all like to give me grief about my transition from a collegiate knuckle head to a domestic, engaged professional. There is, of course, some serious substance to their argument.

Yesterday, I emailed Steve (website) and mentioned a new piece of furniture that my fiance and I bought for our house. In the nature of giving me a hard time for being 'domestic,' he sent me a very simple, sarcastic reply:

"Well isn't that just adorable."

I shook my head, accepting his remark, but then looked closely at the ads on my screen. One read (and I'm paraphrasing because I can't directly copy an ad), "Dry sense of humor? Check out our funny, sarcastic t-shirts."

How about that?!? Their marketing campaigns have actually evolved from looking from key words to key phrases. Is it possible that they're only looking at those key phrases stated by one man to another? Now I'm curious to know if I would have had the same result if a woman had said that to me. Steve is a registered member of Gmail, so I assume they would have access to his name, maybe gender, and other demographic information.

In all seriousness, this would be an interesting move for Google and its advertisers: evaluating phrases and the context of the conversations in which they are used. I have never had a male friend of mine say "isn't that just adorable" without risking a shoulder punch. But if my great aunt Evelyn said that about a picture of my dog, it would be a different story.

Extracting the context of phrases based on the demographic using the phrase...now THAT's something! I guess they could also extract a searcher's location (based on IP) and give custom results based on local dialects.

I'll be interested to see where Google and custom advertisers take this...

Apple's creative fan base

In a recent article on wired, some of the more impressive and humorous dreams of Apple's iPhone consumers are displayed. Check out #4, the iPhone Shuffle, which calls people at random, or the iPhone air, which puts Motorola to shame.

Pizza update

The pizza last night was delicious. Topped with shredded chicken, red peppers, and mushrooms and with some ranch on the side (which I recommend for any type of pizza), we can hardly wait to eat the leftovers for lunch.

The homemade sauce is really what made it special...

The dough recipe didn't permit great hand tossing, but it rolled out nicely with a rolling pin

Using chicken as a topping is a delicious heart-healthy alternative to pepperoni or sausage. Simply put a boneless skinless breast in a small saucepan with a couple cups of water and put it on low heat for a few hours until the chicken falls apart. Strain it, and store it until you're ready to use it as a topping.

Old fashioned cooking

As some of you may know, I'm somewhat handy in the kitchen and enjoy trying new recipes. In addition to new things, it's fun to cook normal food items in a different way.

I've successfully migrated from microwave popcorn and now make my favorite snack stove top with kernels and oil.  Homemade tortilla chips are easy and tasty: find your nearest hole-in-the-wall Mexican tortillaria, buy a pound of corn tortillas, bring them home, quarter them, and fry the chips for about 30-seconds apiece in half an inch of whatever oil you have in the kitchen (NOT the garage).

This morning, I tried out a new recipe for from-scratch pizza sauce. I haven't made the actual pizza yet, but the sauce smells great!

Next time you're planning your meals, consider cooking the old fashioned way. It's healthy, inexpensive, and a good way to relieve stress. Plus, you really become familiar with the intimate details of the ingredients (think you know tomatoes? Try skinning, coring, and seeding them!).

Any good from-scratch recipes are welcome!

Odd Gmail ad logic

If you use Gmail, you know that as you're reading your email, ads are displayed that are related to the content of your message. A normal example of this was when a friend and I were discussing a wiffle ball game we were planning, and an ad was displayed for sports equipment; effective logic if you ask me. But sometimes it's not so simple...

During Memorial Day weekend, some of my friends from Virginia Tech came to visit. We went fishing on the continental shelf and caught some nice Mahi Mahi (aka Dolphin -- (no, not like Flipper)) and Albacore Tuna. On the way back in to shore, the seas got a little choppy and we were all tossed around a bit on our little 25-foot boat.

My friend Steve hit his side on a metal piece sticking out of the side wall of the boat and injured his ribs. A week later, his ribs still hurt, and he made it his duty to tell me about it. As we discussed his ailment, I was puzzled by the ads being displayed; they were for barbeque sauce...

One thing that you can do right now to start improving your life

A few weeks ago I started regularly reading a new blog: Dumb Little Man. I discovered it after a colleague of mine passed along a link to a post that identified a few 'keyboard kung-fu' strategies for Windows, Internet Explorer, Firefox, and Microsoft Office. Delighted with the article, I started reading other posts and have been hooked ever since.

The site claims to save you money, increase your productivity, or simply keep you sane; I couldn't agree more. And when I sit back and think about it, I realize that while my fiancee (I'm excited to get married just so I can stop saying that word) goes to church on Sunday, I get my fill of humanity, self-help, and practical advice from this stupid blog.

I've halted the onset of afternoon fatigue; I've been getting up earlier; I've adjusted my personal goals in many different categories.

What makes the site so addictive is its practical, simple nature. Everything is broken down into a quantifiable list with a clear objective: 10 simple things that you can start doing right now to make your life better...

Check it out -- it'll take five minutes of your time and will be a terrific start for any upcoming self-help initiatives you're planning.