Friday, March 30, 2012

Friday Links

Hank Coleman wrote about creating passive income with a laundromat.  My grandpa owns a laundromat, and I think this is a great idea (assuming you can afford the start up costs).

W at Off-Road Finance wrote an article a couple of months ago that is amazingly thorough in its recommendations for how to plan a Las Vegas trip.

Zero Hedge posted a series of graphs comparing how the young and old have done in saving money between 1984 and today.  In short, the young are saving less, and the old are saving more.  It's eye-opening stuff.

Splitsider posted a history of the old television show "You Can't Do That on Television."  See, I knew Canadians were good at something because creating Shopping Detox and Financial Uproar.

Finally, Cracked has a great list of five ways modern men are trained to hate women.  There's a lot of truth here, even if it's written for a comedy site.

Wednesday, March 28, 2012

Mega Millions, Probability, and You

If you haven't heard, this Friday's Mega Millions lottery jackpot, which already has an estimated pay out of $500 million, will be the largest lottery prize ever won (assuming somebody hits all six numbers).

It's hard for me to fathom that much money. That's half a billion dollars, just for matching numbers. Incredible.

Now the odds for winning that prize are a little more than 1 in 175 million. This got me thinking, if the jackpot has a larger number than what the odds are, shouldn't every person have a reasonable positive expectation if they played the lottery? But, you can't really ever expect positive returns from a lottery, right?

As math is a fuzzy subject for me, I deferred to my buddy the math whiz (he wrote a post for me on the NBA lockout a few months ago). Here's what he had to say.

"Hey Bry,

Great question.  Some of the math of probability isn't super fresh in my mind (though I'd say it's one of my favorite areas of mathematics), but I'll offer what I can.  First, I would say that what you said isn't wrong, but the situation is more complex.

It's important to remember that there are both helpful and harmful nuances to the system that affect the expected return on a lottery ticket.  On the helpful side, you have opportunities to make money without hitting the jackpot (if you get x, y, or z numbers right).  On the "harmful" side (as it relates to expected return), you could win the jackpot but end up having to split it with another winner, or two other winners, etc.

Let's pretend that those nuances weren't there.  (You may know all of what follows in this paragraph, but I'll just cover the bases.)  If you were to buy 175,000,001 lottery tickets for $1 each, you'd of course spend $175,000,001.  Odds are, 175 million of those tickets would not hit the jackpot and thus would give you no money.  The remaining ticket would hit the jackpot, which we'll pretend is $350 million (not far from the actual current situation, right?).  That means your profit from buying all those tickets would be $175 million (rounded up $1). 

The thing is, you're obviously not going to buy that many tickets, and that's where expected return comes in.  To find the expected return on a ticket, I believe you would divide the profit by the cost in the above scenario (at least in this case, because the number of tickets purchased is equal to the $ spent).  So, yes, you'd have a positive expected return of $1 for every ticket purchased (ie, a *profit* of $1 for every ticket purchased).  However, the concept of expected return isn't very helpful on an all-or-nothing investment with incredibly long odds.  The reality is that there is a very high chance of you winning absolutely nothing, and that only changes if you buy an incredible number of tickets.

Then, the math would be further complicated by the nuances mentioned above."

What do you think? Will you be trying to win Friday's prize?  Let me know in the comments.

Photo by cpradi.

Tuesday, March 27, 2012

"Southland" Personalities and Money, Part 3

This article is a continuation of the ongoing writing that Jana at Daily Money Shot and I have been doing about the television show "Southland."  If you haven't been watching the show, you'll have several months to catch up before a new season starts in the fall (hint: don't get too invested in Detective Lydia Adams' partner(s) as they all, well, you'll see).

Today, I'll be focusing on Officer Sammy Bryant.

Personality Type:  The still-young veteran.

Background:  Sammy worked as a detective for the first few seasons of the show, where he investigated narcotics and gang activity.  After his partner was killed in front of him by a group of gangbangers, Sammy kidnapped and nearly murdered the person that he thought was responsible for his partner's death.  He realized that his conscience wouldn't let him murder, and, as a result, he requested a change from being a detective to being a training officer.

This past season, he's been paired with Officer Ben Sherman, for whom he played an appropriate foil as Sammy had gone through and dealt with many of the same strong, angry emotions that Ben portrayed in the last few episodes of this season.  Tragically, Sammy's experience couldn't deter Ben's inexperience, and season four ended with Ben shooting and killing the object of his fury.

Oh, also, Sammy's ex-wife was maybe the most annoying character on tv.  I was not unhappy that she didn't appear in this last season.

Analysis:  It is telling that Sammy was pushed to the edge with grief over his partner's death, but he still couldn't let himself murder whom he believed to be the guilty party.  While Sammy made mistakes by going rogue and kidnapping the gang member, he stopped short of murder, and, in doing so, was able to turn his life around.

Money Personality:  Though it is not a matter of life and death, many people out there have made a series of bad choices in their lives when it comes to money.  However, it is only a fortunate few who have had the gumption to say, "Enough!" and to then resolve to make better choices and to lead healthier lives when it comes to money.

In particular, I'm thinking of Andrea at So Over Debt, Annabelle over at Shopping Detox, and, of course, my "Southland" buddy, Jana at Daily Money Shot.  I love reading about how they're working to turn their lives around when it comes to money, and I think you will too.

Thursday, March 22, 2012

Real Answers to Money Questions, or Why I Hate the Radio

Trust ye the voices that come from this?
Do so at your peril!
As I was driving to work this morning, I was switching between my preset radio stations.  One thing that adds to the pain of my morning commute is that most of the music stations that I listen to don't actually play music in the mornings.  What they play instead are these annoying morning shows where the local talent, scrambling for something to talk about, comes up with incredibly stupid things that I can't believe anybody would want to listen to.

Perhaps you're familiar with shows like this too? The ones that make you want to merge across 6 lanes of traffic and take out as many people as you can? No? That's just my own murderous rage? Good to know.

With how little I think of these programs, you can imagine my surprise when I heard that the station was going to have a segment where people could call in and get answers to their money questions ... by some guy who was adopting a Boston accent.  I say "adopting" because he didn't keep the accent up the whole time.  That should have been my first clue that I wasn't going to like the segment.

Having said that, let's take a look at the callers' issues and see if I can provide better answers.

Caller 1:  This guy's issue was that he had received a speeding ticket, and he had not paid it on time.  Because of this, the original cost of the ticket ($391) had increased to $700, and he wanted to know what to do about it.

DJ's Advice:  On his way to the courthouse to pay the fee, the DJ recommended that the caller should keep an eye out for change that was minted prior to 1965 because of the higher silver ratio that this change contained.  At one point, the DJ referred to pre-1965 coins as coming from "the early nineteenth century, " ostensibly to clue listeners in to the fact that he was dropped repeatedly on his head as an infant.
Pictured: Money from the early 1800s.
Never mind the obvious date.
And that was it.  That was the actual advice given.  While I consider myself to have a pretty good sense of humor, even in humor of the irritating and the absurd, I wanted to reach my fist into the radio, have it travel through the airwaves, and punch this mouth-breather right in the back of the head.

REAL Advice:  In the first place, don't be the moron who doesn't pay his ticket on time (also: don't be the moron who speeds).  But since this caller was already past this, the only reasonable advice I can give would be to get into contact with the county clerk to see if you have any options.  Beyond that, you might attempt to appear in court and explain your situation and throw yourself at the mercy of the judge.

However, because our friend the speeder is already late in payment, I suspect that he'll have to pay the full amount.  With that being the case, I'd advise him to sign up for traffic school if he's eligible, so that he can get the ticket off of his record to ensure the ticket doesn't affect his insurance.

Caller 2:  From a theoretical standpoint, this question was more interesting to me.  This person asked if he should save money for retirement by putting money into a 401(k) or a Roth IRA.

DJ's Advice:  The DJ told him to put money in the 401(k) because the caller would not have to pay taxes on that money.

This is absolutely not true!  Money is put into a 401(k) pre-tax; that is to say, you don't pay taxes on the money right now (and money contributed lowers your current tax obligations), but you will have to pay taxes on the money when you take it out.

REAL Advice:  A frequent benefit of 401(k) plans is that your employer will usually match what you put in, up to a certain amount.  Because of this, if you can swing it, you should max out what you put into your 401(k) to ensure a full company match.  When you do so, you are receiving a 100%, immediate return on your money.  You can put up to $17,000 into your 401(k) for tax year 2012 (up to $22,500 if you're older than 50).

If you have more money that you'd like to invest for retirement beyond maxing out the company match with your 401(k) (and if you'd like to have a comfortable retirement, you should pretty definitely do so), I recommend looking into a Roth IRA, assuming you are not making too much money to contribute.  You can put up to $5,000 a year into your Roth for tax year 2012 (up to $6,000 if you're older than 50).  Studies have shown that people who have both a Roth IRA and a 401(k) tend to have more retirement savings than those who only have one account or the other.

I guess the real take away for this article is that, if you have a money question, you should NEVER CALL IDIOTS ON A MORNING RADIO SHOW.  Search the internet instead.  Google is your friend.

Photo 1 by infousX.
Photo 2 by Kevin Dooley.

Tuesday, March 20, 2012

"Southland" Personalities and Money, Part 2

This is the second part of a series that examines the characters on "Southland" in terms of what they can teach us about our own financial behaviors.  In honor of the season finale that airs tonight, I'm teaming up with Jana from Daily Money Shot so that you, gentle readers, can get as much "Southland" exposure as you can stand.

Can you stand it?  CAN YOU STAND IT!?

Last week, I started the series by taking a look at Officer Dewey (and no, not the moron police officer from the ScreamScary Movie franchises).  Dewey is one of the secondary characters on the show, and today I thought it would be good to examine a more central character. Let's take a look at Officer Ben Sherman (as played by Ben McKenzie).

Personality Type:  Semi-Jaded Optimist.

Background:  Ben Sherman is a rookie cop. The first seasons showed his training and early partnership with John Cooper, though he now partners with Officer Sammy Bryant.  Ben grew up in an affluent family, which was a popular topic for insults from his training officer.

In a recent episode, Ben claimed that, while he used to care more about the people he was serving when he first started, he now views his work as something to do solely by the book, divorced from emotion. Even so, the last few episodes of the show have shown Ben's interest in saving and protecting a prostitute and her daughter, including enacting some off-the-clock vengeance on the pimp.  His actions show that he cares more than he lets on, and they underline his belief that he can be a positive force in the world.

Analysis:  An episode of the show from a few weeks ago started with the narration, "The average street cop in Los Angeles makes $75,000 a year.  It's not enough."  While that may seem like a lot of money, it stands to reason that Ben could have used connections that his family had to land and much more lucrative (and safe) line of work.  Nevertheless, he felt compelled to join the police.

Money Personality:  In Ben, I see an example of the struggle that people have between choosing their passion as a career choice versus choosing something that will help them pay the bills.  Even though Ben makes what is, by most accounts, a healthy salary, he is putting his life on the line every time he goes out on patrol (especially on this show), and Ben is leaving money on the table by not pursuing a higher-paying career.

This character hits home for me in some ways because, as I wrote about recently, I'm faced with the decision between keeping a good, high-paying job or going back to grad school to pursue that which I am passionate about.

Have you ever followed your own passions at the expense of the opportunity to land a more secure job?  Let me know in the comments.

**Update 03/27/2012** After talking with my brother (the police officer), I was told that the show got the salary information incorrect.  Based on the actual year that the show started, Ben Sherman would probably have earned $60,000 a year as a rookie, not $75,000 as the show claimed.  Additionally, since Sherman started, the LAPD has slashed wages to the point where new cops only earn about $48,000 a year to start out with.

When you compare $48,000 a year versus the amount Sherman could have (conceivably) earned by using his family's connections, I think the point that I make above is a little better made.

Thursday, March 15, 2012

People with Both 401(k) and IRA Save the Most

According to a recent analysis of its customers by Fidelity Investments, those people who had both a 401(k) and an IRA had more money saved for retirement than those people who only had either a 401(k) or an IRA.  How big of a difference are we talking?  Those with both types of accounts had saved 2-4 times as much money as those with only one type of tax-advantaged retirement account.

While this correlation might be explained by simply realizing that with more funded retirement accounts comes more saved money, I suspect there's more to it than that.

One possible explanation that I find plausible is that it stands to reason that people with both types of accounts may have spent more time thinking about retirement (such as figuring out that there are different tax implications for a 401(k) than a Roth IRA, for instance).  If these people have thought more about retirement, it stands to reason that saving for retirement is a higher priority than those with just one account, and as a result, these people stick more away for their golden years.

What do you think?  Why do you think there's such a marked difference between the two groups?  Let me know in the comments.

Wednesday, March 14, 2012

"Southland" Personalities and Money, Part 1

I don't know about you, but I am a huge fan of the television show "Southland."  Part of my interest undoubtedly stems from the fact that my brother is a police officer in the Los Angeles area (though he's not specifically LAPD). More specifically regarding the show, I appreciate the gritty realism that comes from showing the very humanly-written characters perpetually not meeting up with the idealistic standards that we place upon police service; the cognitive difference between idealism and reality keeps drawing me back.

As I've been watching the show and learning more about the characters, I have realized that many of the characters' personality types shown on the program run parallel to personality types that real people have, particularly in regards to money.  This article is the first in what will be a series of analyses of some of the major and minor characters on "Southland," and what these characters show us about how people respond to money.

Our first stop:  Bill "Dewey" Dudek (as played by C. Thomas Howell)

Personality Type: Nihilistic Opportunist

Background:  Dewey is a police officer and a recovering alcoholic.  He also has an abrasive, grating personality, and he frequently proves himself to be racist and sexist.  His disease was at one point so out of control that in a fit of alcohol-fueled rage while on-duty, he seemingly intentionally wrecked his police car, which caused injury to himself and his partner.  After he completed rehab, he was welcomed back onto the force, and he was placed on active-duty.

What I find most interesting about Dewey, however, is something he said a few episodes ago.  In the episode, Dewey notices that one of his colleagues (Officer Jessica Tang as played by Lucy Liu) is about to have a meeting with her superiors to discuss her involvement in the shooting of a teenager; Tang was considering lying about the event, and she eventually chose to do so.  The teenager had been holding a gun, which caused Tang to fire; however, after she got to the victim, Tang realized that the gun was only a toy with an obvious orange piece of plastic on the tip.  In a quick act of desperation, Tang broke the orange tip off of the gun, so that it was now entirely black and therefore looked more like a real gun.

Dewey, who claimed to have been before disciplinary committees three times and who had nevertheless held onto his job, offered the following advice, "You can't change what happened; it's between you and God.  If you can live with it, nobody can stop you."

Analysis:  Dewey is an example of a Nietzschean superman at its finest.  The philosopher Frederic Nietzsche believed that nearly everybody on earth was bound by some form of morality, and Nietzsche opined that those who realized this could live above morality (or beyond good and evil) and that these people, these supermen, could also take advantage of the herds of people who were bound by morality.  For Nietzsche's supermen, as for Dewey, life becomes a profound quest to find out what "you can live with."

Money Personality:  The most obvious parallel to Dewey when it comes to money are those who enrich themselves with little to no regard for how their actions affect others.  In fiction, examples include Mr. Burns on "The Simpsons" and Ebenezer Scrooge in A Christmas Carol.  In real life, these are the Bernie Madoffs, the energy traders at Enron in the early 2000s, and, if these recent articles are to be believed, the present-day executives at Goldman Sachs and Google.

While it might be easy to point the finger at the super-rich, I'd like to suggest that this line of thinking can affect those of us with more modest means as well.  To the extent that any of us looks at having more money as life's key goal, and to the extent that we're willing to do whatever it takes to achieve that goal, we're taking steps towards being like Dewey.  And while I still don't know about you, I'm pretty sure the world doesn't need any more Deweys.

Don't get me wrong: earning and having money is a good thing.  However, inasmuch as money becomes the only thing for any of us, we've taken a precarious step down a slippery slope.

What do you think?  Are you a fan of "Southland?"  Let me know in the comments.

*Update* Goldman Sachs has responded to the above criticism.

Friday, March 9, 2012

Friday Links

Here's what I been reading and enjoying over the last week.

You can win up to $1,000 over at Wise Bread.  I don't know about you, but I could sure go for winning up to $1,000.

The author of Well Heeled Blog discussed what losing weight has taught her about money.

Andrea at So Over Debt gave her reasons why she turned down a part time job.

Annabelle from Shopping Detox is in print.  Literally!

I am so jealous of how much the author of Money Beagle was able to get done around the house in February!  Would that I were so motivated!

Lindy from Minting Nickels brainstorms some ways she could make extra money if she needed to.

Emily at Cash Money Life described the five worst money mistakes married couples make.

Michelle from Making Sense of Cents opined on a similar topic.

Finally, Welcome to the Official Kickstarter Page for Greece!

Tuesday, March 6, 2012

Update on February Goals

Maybe my problem is that I have no "Degaree."
If you haven't noticed, February has ended.  I guess I didn't notice, because I haven't updated you all on the goals that I set for myself in February.  Let's rectify that, shall we?

1)  T-Shirts - Pass! - I'm on a strict no more than two t-shirts a month diet.  In February, I purchased three; this is okay, though, because in January, I only purchased one (so the extra shirt rolled over into February).  Frankly, I'm fairly happy just pinning t-shirt designs that I like on Pinterest (as I discussed in a comment over at So Over Debt), so my t-shirt quota may go down even further in coming months.

2)  Books - Pass...ish! - I was to purchase no more than two physical books and five ebooks (both for money reasons and for my-condo-is-the-size-of-a-shoe-box reasons).  For my part, I succeeded (though I did buy an extra book for my wife that I don't think counts for the purposes of this challenge).  Also, I realized that even though I thought this goal was very specific, there was actually a good amount of gray area (should magazines be considered books?  How about scholarly journals?).  In short, I got more printed words than I probably should have, but I was technically correct in following the challenge (technically correct being, of course, the best kind of correct).

3)  25 Item Challenge - Crash and Burn FAIL - In between prepping for my grad school interview, rehearsing/learning lines for two plays, and auditioning for another show, I didn't have/make a lot of free time to get rid of 25 items from my house in the way I intended (read: selling them on eBay).

With that said, all three of the above personal challenges are being rolled over to March.  Let's see if I can keep my spending down!

Photo by Sean MacEntee.

Monday, March 5, 2012

6 Things You Don't Know About Me

1)  My dog's name is Scrabble.  When we got him, his coloring was black and tan, which I suggested looked like Scrabble board pieces.  He has since turned more gray and tan, but we don't hold that against him.  Here's a picture:
2)  My first roles as an actor were a munchkin, a poppy, and a flying monkey in a production of The Wizard of Oz at a local college in 1991.  I was 9 years old.  I think close to 200 kids tried out for that production, and I was one of the 15 or so that they chose.  I'm pretty sure that I got cast because my tap shoes were too slick for the dance floor at the audition, and I managed to take a massive tumble on my butt part way through the dance routine they taught us.  The choreographer thought that was pretty funny, and I got the part.  Lesson: it's a good thing to get noticed.

3)  I wrote a full-length oratorio for my senior recital in college (I was a music major).  I also played several songs on the piano, and sang several classical songs (all pretty well, I might add).  For my efforts, I was rewarded with a C grade.  As the senior recital is meant to be a culminating experience, my self-worth was thrown for quite a loop.  Silly as it may seem, it took me a couple of years to get over what I viewed the experience as (a failure).

4)  My middle initial is also C, which I took as some pretty heavy-handed cosmic foreshadowing after the events of #3 occurred.

5)  Still, going to that college and getting that degree were super worth it because it was through that institution that I met my wife.  She and I met and sat next to each other in our very first class freshman year (Music Theory I).  She's pretty much the best, ever.

6)  When I was a little kid, I was jealous of my cousins because they liked black olives.  My jealously stemmed mostly due to fun they would have by sticking them on their fingers.  Obviously, because I never wanted to eat the olives, my parents wouldn't let me just play with them.  To this day, I'm still not a fan of the taste of olives, which is too bad, because a lot of restaurants down here in San Diego like to stick olives in a variety of dishes that I might otherwise enjoy.

Friday, March 2, 2012

Friday Links

It's been a couple of weeks since I've posted one of these, so I can only imagine that all of you are nail-bitingly curious as to what I've been reading lately.  In the interest of your nails, please proceed.

Erika at Newlyweds on a Budget wrote about how she made extra money during February, to the tune of close to 900 bones.  I just don't get how to secret shop.  Whenever they ask me what I want, I always just scream, "It's a secret!"  I don't make any money (or friends) that way.

Add Vodka posted a list of 10 things life is too short to do.  I especially liked #9 (Make Reasonable Meal Choices), and I cited the post when the drive-through person at Jack in the Box refused to serve me my pterodactyl egg omelette.

Ninja from Punch Debt in the Face created a new site called Manteresting, which is basically Pinterest for boys.  While I wish him well, I don't see how posting pictures of unicorns/bazookas/memes on Pinterest is any less manly than posting it on any other site.  Oh well.  I guess I don't get the internet.