The Simple Dollar Weekly Roundup: Garage Cleanup Edition

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Over the past few weeks, my wife and I have been doing a great deal of spring cleaning around our home: cleaning out my office, cleaning out some closets, and so on.

The biggest project, though, was our garage. I spent an entire day getting it into some sort of sensible order. As I moved forward, though, I couldn’t help but enjoy the sense of a job well done.

Why Goal Setting Is A Complete Waste Of Time (unless you do this) The argument here is that the traditional idea of a goal is littered with a lot of negative weight. I agree, but I think a big part of that negative weight comes from biting off more than the person can chew. (@ pick the brain)

Never Go to Bed Angry About Money I’d suggest going even further: never go to bed angry about anything. (@ dinks finance)

When an Adjustable Rate Mortgage Makes Sense This is a good argument, but I still believe that almost all of these factors involve predicting the future. I do not like to base my personal finances on predicting what I’ll be doing in five years – or what the economy will be doing. (@ my dollar plan)

The future of the library I would love a library like this. I would financially support a library like this. (@ seth godin)

12 Cases When a Pay Cut Might Make Sense Getting a higher-paying job often has other costs (doing work you don’t love, having all of your free time devoured, etc.). (@ pf advice)

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14 thoughts on “The Simple Dollar Weekly Roundup: Garage Cleanup Edition

  1. I disagree about going to bed angry. At night, you’ll often go over the same territory multiple times. In the morning, often the anger has dissipated.
    If you can resolve to not be angry even if you disagree, that’s great, but not every issue has to be resolved before bed.

  2. The goal setting vs promise thing just seems like playing with semantics to trick yourself into doing what you say you plan to do.

    And I agree with LeahGG – sometimes you will go to bed angry, and it isn’t a sign you’re a dismal failure at marriage.

  3. On adjustable rate mortgages – there is one situation that my parents found themselves in in which an ARM made a LOT of sense.

    My dad had taken a new job with a startup company 4 hours away. My mom’s job was flexible enough for her to work mostly from home (she teaches online classes for a university). She still had to be physically present for meetings 3-4 times per month, though.

    They refinanced their fixed-rate mortgage to an ARM to drastically reduce their monthly payment. The ARM was destined to reset after 3 years. This allowed them to keep the house while still afford to rent an apartment near my dad’s new job.

    My mom didn’t have to stay with friends or in a hotel every time she came back for her meetings – she could stay at their house, which made a lot more financial sense than $100/night and up for a hotel room (she usually is in town 2-4 days per trip, and the university doesn’t reimburse her, since she chose to move).

    Because my dad’s job is with a startup, they could only guarantee him a position for 6 months at a time, since that was how long out they had their funding. Selling the house and making the move 4 hours away a permanent one did NOT make any sense – they very well may have had to turn around and move right back 6 months or a year later.

    So I would say that an ARM can be a very useful tool for allowing someone to hang on to a house in an uncertain job situation much more cheaply without the hassle of renting it out (no way would Mom have been able to stay at the house if there were renters there!).

  4. RE: Adjustable Rate Mortgages:

    Trent writes :”but I still believe that almost all of these factors involve predicting the future. I do not like to base my personal finances on predicting what I’ll be doing in five years”

    While somewhat true, you are still predicitng what your future will be if you choose a fixed rate.

    When choosing a fixed rate you are simply paying for the stability in the form of higher interest.

    Since the average homeowner moves every 7 years, and the haverage home LOAN exists for 4 years, paying for the priveledge of haveing a fixed rate for 30 years makes little sense for most people.

    In fact…most people who have financed any thype of home loan in the past 8 years would have been significantly better off by choosing an adjustable rate mortgage.

    First, those ARMS have actually decreased when the adjustment comes due. They went down.

    Second, most everyone who had a fixed rate refinanced when rates dropped in 2009. They refinanced to another fixed rate. Then they refinanced that rate in 2010 when rates dropped even further. To another fixed rate

    Take a guess on what rates are likely to do later this year. And those peole will refinance again. To another fixed rate.

    Paying for insurance you don’t need or won’t use.

    Ask yourself since you have had any type of home loan how often you kept the same loan, ans how often you kept the same house. Average it out.

    4 & 7 will likely be the answer.

  5. #7. Your second point is incorrect. Most everyone did not refinance in 2009. Underwater homeowners (in my area more than 1/3 of homes) are not able to refinance, and are stuck with whatever their ARM or balloon mortgage goes to.

  6. Yeah, I’d love a library like that too. But Godin has his head up his rear if he thinks that is how it is going down. There are already libraries that have eliminated librarians, and have a drive-up “boxes” where you can pick up the DVD/ CD or whatever you ordered online. No human interaction at all.

    In tight financial times, providing an abundance of computers, and retraining staff to be web and data gurus, is a fantasy. First, there will be a huge decline in LS, then all “current” (non-public domain classics) will be sold as downloads or as subscription services. And just as poorer areas and schools now have old textbooks, they will not be able to afford the latest subscriptions of information, as long as it is profit-based. (Look at radio and TV to see the template.)

    Beyond that, eventually the microprocessors that run artificially limbs will have foretold microchips you can implant in the brain, to receive bought information. Money will control not only information, but level of data in the brain- what some would call intellect. Creativity will be the one commodity those not born wealthy can sell. That and physical labor. I see this coming in about 50-60 years.

    When I attended the 8th annual conference on nanotechnology years back ( as an interactive media arts grad student interviewing scientists for my instructional DVD game-grad thesis) there were many who did not even see the need for humans n the instructional process at all. The idea of intellect-implants was a no-brainer, pardon the pun. These were the top scientists in the world. Artificially induced sentient thought was a huge debate after Kurzweils’ address- most expect it within 50 years.

    So, I suggest paying more attention to GREAT thinkers (not Godin, for goodness sake) like Feynman, and reading “The Meaning of it All”, and his thoughts on the responsibility of society to decide what will be the priorities for us all to pursue, and not just flail blindly toward some amorphous unconsidered “future”, with a rosy Kumbayah fantasy like Godin’s data hub library as a siren’s song.

  7. Troy,

    I agree with Jacqui and I am curious as to where you are getting your data about people being better off selecting an ARM during the past 8 years. Much of the housing crash was attributable to ARMs that reset after 3 to 5 years to a point where the homeowner could not afford the payment yet also was not able to refinance since most were now upside down in their homes. I remember several friends who obtained an ARM telling me that they would refinance into another ARM or a fixed mortgage when their interest rate reset…and of course their houses were guaranteed to appreciate so refinancing at the point would be a slam dunk.

  8. My ARM has been great! It was a low rate for 5 years & now resets every year – LIBOR +1.75% (currently 3%). Each year being lower than the last (so far). If rates start to go up, the ARM cannot reset & increase more than 2% at one time -max 10% over the time of the loan (would take 5 years of 2% increases). I can have the house paid off in that time. I cannot think of one valid reason to refinance. I don’t intend to live here in 5 years (but I said that 5 years ago too). All ARMS are not bad, just read & understand the terms BEFORE signing.

  9. ARMs themselves aren’t bad necessarily and can provide some important benefits in a lot of situations.

    Trouble was caused by people spending more than they could afford on their houses, not because their mortgages happen to have a variable rate.

  10. Julie,
    Paragraph two of the article gives an example of the people you are referring to and then continues to list 5 good reasons to consider an ARM. The ARM is not the problem,people using an ARM to buy more house then they can afford is the problem. Then, when it adjusts(as spelled out in the contract) and that bag of money didn’t mysteriously fall out of the sky they realize they bought more house than they could afford. Many families could still be living in their homes if they would have planned for a rate increase when it adjusted.. and then likely would have seen a rate decrease in following years as Kari points out.
    This is just another example of people putting themselves into situations they had not researched or having stars in their eyes when that slick salesman told them they could afford that McMansion while actually working at McDonalds.

  11. There is a major flaw with Godin’s vision of future libraries, and that’s the assumption that everyone is computer-literate. They’re not. My mother teaches at an inner-city public school, and 75% of her kids don’t have computers at home.

    If libraries become completely digital before our schools do, then a lot of people are going to be left out. And that defeats the whole purpose of the library as a resource for the poor.

  12. I think Godin’s idea of a library is weird. I don’t see how he thinks it’s inevitable that we’re moving in this direction? Librarians as jacks of all trades?? Maybe non-fiction books will be different but novels? How will we read/get novels?

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