Why I’m Not Rushing to Pay Down Loans

When I first started on my personal finance journey years ago, I was 100% in agreement with everything Dave Ramsey taught. I was firmly anti-debt, swearing off any type of loan, no matter its rate or purpose. I was only ever going to pay cash for a car. I told myself that when I have a house, I was only going to take out a 15 year mortage and I would try to pay it off as quickly as possible.

As I progressed in my journey and we solidified our long-term goals, however, I’ve come to believe that debt isn’t really as black-and-white as I once thought. As heretical as this would sound to myself a few years ago, I don’t think all debt is bad if it’s used responsibly and if it is in line with long-term financial goals.

You see, in our current post-recession economic climate, the Federal Reserve has kept interest rates for Treasury bonds intentionally low in order to stimulate the economy. Interest rates on things like car loans and mortgages are based in large part on these Treasury bond rates, so we’re seeing some of the lowest interest rates in recent history for many types of loans.

What does all of this mean for us as individuals? Well, it means that the decision about whether to pour loads of cash into big purchases is less cut-and-dry. The reason is that opportunity cost is a much bigger factor for consideration now. Opportunity cost is the loss of potential gain from alternative choices when one choice is made. If we apply this concept to the purchase of a car, let’s imagine that you were going to buy a $15,000 used vehicle. You could pay $15,000 in cash to purchase the car outright, or you could take a loan with a $3,000 downpayment and a 2% interest rate for 4 years. The average expected rate of return for index funds in the stock market is around 8%. So, if I take the cash I would have put toward the car and instead invest it in the market, I can likely get a 6% greater return on my cash.

There are, of course, some caveats to this way of thinking. First, you must have enough cash on hand to cover emergencies like a job loss or major car/house repair. If you take on a car loan or a mortgage that completely depletes your cash reserves and then encounter an emergency that costs several thousand dollars, you’re going to end up financing your emergency with high-interest debt, completely reversing any advantage you might have gotten. Secondly, if you’re not actually investing the difference in the market, then this approach is nothing more than an excuse to spend more.

In my case, my future plans involve reaching financial independence at as early an age as possible. Because of this goal, the future value of our cash is more valuable than 2%. So, I’m okay with not paying down our 2% car loan if it means I can instead invest that cash in the market and build a bigger nest egg more quickly.

I do find myself flip-flopping a bit on this whole thought process, as there is a definite psychological win in having a paid-off house.

What do you think? Where do you fall on the debt-aversion spectrum?

Stocks, Mutual Funds, and Retirement Accounts: A Beginner’s Guide

Often, I believe, the greatest barrier to entry into investing is not knowing quite where to start. There are all these different kinds of accounts and acronyms with their own advantages and disadvantages. It all seems overwhelming and everybody recommends doing different things. So, where to begin?

Let’s take a step-by-step approach and work our way through all the basics. By the time you reach the end of this post, the goal is that you’ll feel confident enough to actually open an account somewhere and start investing.

First, let’s start with stocks. When you put money into a stock, you’re buying some number of “shares” in that company. When you buy shares, you really own a small piece of that company. And by small I mean a tiny fraction of a percent of that company. But it’s yours. If the company does well, earns profits, and grows, so does your piece of the company pie. On the flip side, if the company tanks due to a scandal or bad performance, the value of your shares decreases along with it.

For example, let’s say you own shares in Apple. Apple owns factories, store buildings, inventory, patents, a reputable brand, etc.. All of these things, combined with the assumption of future profits, is what makes Apple valuable. When you own shares in Apple, you essentially own a small fraction of all these things. The value of your shares is partially based on all of these, but is ultimately determined by what other people are willing to pay for it.

Companies will usually pay out to shareowners some portion of their profits each year to keep investors interested. These payouts are known as dividends and they also play a part in making a stock valuable.

Putting all of your money in one company can be really risky, though. On the risk-reward spectrum, buying stock in one company is near the farthest end of “High Risk, High Reward.” If you were lucky enough to have bought stock in Google back in the ‘90s, you’d probably be rolling in piles of money as you read this sentence. However, if you’d bought another web company like Pets.com or any of the hundreds of others that went bankrupt during the tech bubble of the early 2000s, you’d have lost all your money.

This is where mutual funds come into play. Instead of buying one company’s stock, you can pool your money with thousands of other people and invest in a “mutual fund” comprised of hundreds of different companies. Some of the stocks in that fund will do really well, and some will do poorly, but the idea is that because you’ve spread your money across all these companies, you’ve also greatly reduced your risk. Overall, the goal is that the fund will slowly but reliably increase in value over time.

This goal isn’t some pie-in-the-sky, unsubstantiated dream, either. If you look at a graph of the Dow Jones Industrial Average, which represents the average performance of stocks over the last 100+ years, you’d see that there’s no single 15-year period where the stock market has lost value. You’ve got your spikes and valleys, to be sure, but note that none of them seem quite so bad when you look at them in context. Notice that big drop near 2008 when the housing market fell apart, banks were being bailed out, we entered a big recession, and everybody lost their minds? Did you notice that about a year later, the market blazed right on past its previous high and continued to go for a huge climb for the next 5 years?


There are two kinds of mutual funds: actively managed mutual funds and passive index funds.

As the name suggests, an actively managed fund is run by a portfolio manager with a team of analysts and researchers who try to select which stocks will outperform the average return of the stock market as a whole.

The other kind of fund is an index fund, which bases the stocks it holds on some standard list of stocks rather than a person selecting stocks. To understand what an index fund is, we should take a step back and look at what an index is. In the investment world, an index is a list of stocks that meet some criteria. The S&P 500 (Standard & Poors 500) index contains 500 large companies. The performance of this index is closely correlated with the performance of the stock market as a whole. An index fund invests in the stocks that make up the index on which it’s based. So, an S&P 500 index fund is a mutual fund that holds the 500 stocks that make up the S&P 500.

Now you’re probably asking, “which is better, an actively managed fund or an index fund?” You might tend to think a portfolio manager with a PhD in finance, decades of experience, and a team of researchers all devoting their careers to studying companies would be able to pick out a portfolio of stocks that performs at least slightly above average. The problem is that research tends to find that the majority of actively managed funds actually underperform the market average. In addition, actively managed mutual funds charge much higher fees than index funds because you’re paying for the salaries of dozens of people. Essentially, you’re paying more for less in most cases. Picking a portfolio manager who can consistently outperform the market average is as difficult as picking an individual stock that can do that.

Personally, I invest all my retirement money in an S&P 500 index fund. The fees are incredibly low and the performance is best-in-class. In fact, one of the world’s greatest investors of all time, Warren Buffett, recommends this kind of index fund for the average investor. If it’s good enough for Warren Buffett, it’s good enough for me!

Since we’ve got the concept of stocks and mutual funds under our belts now, we’ll want to take a look at the different kinds of retirement accounts you can choose from. For this post, we’ll consider the 401k, Traditional IRA, and Roth IRA. If you’re a teacher or government worker with a 403b, substitute 403b in anywhere you see 401k, since they effectively work the same way.

Think of these types of retirement accounts as buckets inside of which you invest in mutual funds. They aren’t really “accounts” at all, but they simply designate how your invested money should be treated from a tax perspective. The government wants to incentivize people to be responsible citizens who invest for their own retirement, ultimately requiring less outside support in the future. They create these incentives  through tax-advantaged accounts.

A 401k is a retirement account that’s run through your employer. If you invest in your company’s 401k, you get to take a tax deduction at the end of the year on any money you put in (up to $18,000). For example, if you earned $50,000 this year and contributed $10,000 to your 401k, you only have to pay income taxes on $40,000 at the end of the year. Often, employers will match some portion of what employees contribute to their 401k as a benefit, but this is gradually becoming less common.

A Traditional IRA is similar to a 401k, except that it is not through your employer and you can only contribute up to $5,500 per year to it. The tax advantage works exactly the same way, though.

There’s another type of retirement account called a Roth IRA, which is different from the 401k in a couple of key ways. First, this account is not tied to your employer in any way. It’s your own personal account, just like a Traditional IRA. This means you have more freedom in terms of what you invest in, and what financial institution you go through. Secondly, and most importantly, instead of getting a tax deduction in the year you invest in your Roth IRA, you get a tax deduction when you withdraw the money in retirement. So, if you make $50,000 in a year, and you contribute $5,500, which is the maximum you can contribute per year, you will still pay taxes on the whole $50,000, However, once you reach 59.5 years of age, you can start withdrawing from your Roth IRA and you won’t have to pay any taxes on your earnings at that point like you would with a 401k.

A general rule of thumb is that if you’re early in your career and will be making significantly more in the future, a Roth IRA is a good way to go. If you’re nearing retirement or are on the later end of your career, a traditional 401k and/or traditional IRA can make more sense. It all depends on your plans for the future, so it’s worth doing some thinking and research about your specific situation.

15% of your gross income is generally a good number to shoot for, although you can bump that percentage down a few points if you’re young and can’t quite make 15% work. I’d personally try not to go lower than 12% if you can help it. Conversely, you might want to push that percentage up if you’re getting a later start in life. The most important thing is that you’re putting some amount away for retirement, you’re building the habit of investing, and you’re shifting your mindset to be more future-oriented rather than paycheck-to-paycheck. If you can do this, you’re already ahead of the vast majority of your fellow Americans.

I hope this has all been helpful. If you have any questions at all, please don’t hesitate to drop a comment and I’ll answer it to the best of my ability.


Insecurity is an Expensive Flaw

Last week, my wife and I enjoyed a week in the tropical Punta Cana, located in the Dominican Republic, with another couple. We sipped Piña Coladas and relaxed on the white sandy beaches, occasionally immersing ourselves in the clear blue ocean water that puts our American East Coast beaches to shame. Thanks to a Groupon all-inclusive deal, we lived a week of leisure at the resort without worrying about paying for food, drinks, or anything else except tips for the workers who helped make our stay so enjoyable. I’m happy to be feeling refreshed and ready to jump back into a routine.

On the shuttle ride from the airport to our resort, my wife and I, along with the couple we vacationed with, got to talking to an older couple in the seats near us. We found out that they had been married 27 years and they’d vacationed a time or two on other islands. They asked how we’d found out about the deal, and we mentioned we’d found it on Groupon as they had. We told them we like to find good deals for traveling, like when we used a site called Slickdeals to find crazy-cheap flight tickets for another trip. As the conversation moved along, the husband then mentioned that he works for a factory that makes foam for diapers which are used somewhere near where we were vacationing. We talked about that for a bit, then after a bit of pause, he asked me (seemingly out of nowhere), “You drive a Jaguar?” Chuckling, I say, “Nah.” “Mercedes?” “No,” I say, “I just drive a little Mazda3.” Thinking maybe he’s a car guy who was trying to transition into a topic he was interested in, I asked him what kind of car he drove. I think he said he drove a Nissan Maxima, but he didn’t say anything more to express interest in cars. “Oh, nice, that’s a good car.” I replied, not sure where to go from there. It’s a fine car, but not in the same category as a Jaguar or Mercedes, so I was still puzzled by his question. That was the end of that exchange.

When we got off the shuttle, the four of us talked about how weird and out-of-the-blue the question was. If you know the way I dress and present myself, you know I’m unfashionable and I’m certain I’d never give the impression I drive a fancy car. As I thought about the question for another second and about the kind of false bravado his personality seemed to exude, I wondered aloud to the others: “If he would randomly ask me, a guy he’s just met, if I drive a Jaguar, status must be something he values about a person. He also talked about taking his wife out to eat every night when they were young, that she never had to cook. Since he’s a factory worker, maybe his income is a bit on the lower end. Nothing wrong with that, but maybe he feels some kind of pressure to overcompensate, to make himself out to be a wealthy guy by making comparisons. He seems like the kind of guy who’s really insecure about himself and about his financial situation, and as a result tries extra hard to keep up with the nonexistent Joneses.”

The next morning, my buddy tells me “I ran into Jaguar guy at the gym this morning. What you said about him being insecure definitely seems to be true. I was benching and this guy goes, ‘How much you benching? I bet I can bench that’. He did like 2 reps and then gave up. ‘You’re a big dude, I’ll give you that.'” My friend was pretty annoyed by this grotesque show of one-upmanship and tried to ignore him the rest of the time at the gym.

It was now so obvious that this man was an insecure mess, trying to prove his manliness and status by talking about cars and daily restaurants, and trying to prove his strength at the gym. The need to try to compare himself favorably against other people to puff himself up was painfully apparent to us.

I have to imagine this guy was probably in a load of debt as he tried to hold himself up to a standard of living and status that nobody else actually cares about. It seemed like his whole sense of self depended on his ability to spend on luxuries he likely can’t afford, thinking others are going to be impressed.

While most of us aren’t so transparently insecure, we all are tempted at times to compare ourselves to those around us in order to gauge our success in life. We see on Facebook the cars and houses our friends buy, the careers or promotions they achieve, the trips they take, the weddings they celebrate, and we subconsciously compare ourselves to see how we’re doing. Since we’re seeing the highlight reel of everybody else’s life, this comparison doesn’t tend to work in our favor.

The important key, however, is to learn to celebrate these good things in other people’s lives, to share in their joys and to genuinely congratulate them on their achievements. Generally, I think the happier we are for others and the more excited we are for them in their triumphs, the happier and more excited they tend to be for us. Jealousy and envy are worse than useless. They only embitter the heart and lead to unhappiness, strained friendships, and poor financial decisions in an attempt to keep up.

Learn to be confident and content in your own income, your own house and car, your own relationship, your own accomplishments, and your overall situation in life. Live according to what’s wise and prudent for you, not what may be wise (or unwise) for somebody else’s financial situation.

Don’t worry about anyone else.

Don’t compare yourself.

Be content.

Enjoy life.


Work While You’re at Work

If you work a desk job like I do, it’s only a matter of time before you’re going to be tempted to surf the web and relax during your less pressing times. Maybe things are slow, you’re so overwhelmed you don’t know where to begin, or you look around you to see that your co-workers are taking it easy, so you don’t feel you should bother. But, I would argue your productivity and the long-term success of your career are dependent on how you use your so-called “down time” at work.

Now, I’m not saying that you shouldn’t take periodic breaks between blocks of work. I’m a firm believer in taking some time throughout the day to get up from your desk, walk around, and enjoy some time to yourself between tasks (if the nature of your work allows it). I think this helps improve productivity, as our brains need rest from mental exertion just as much as our bodies do from physical stress.

However, be careful that your breaks aren’t crowding out your best time, because in the end, you’re not gypping your employer, you’re gypping yourself of increased competency and skill, which translates to money. You won’t enjoy that time you’re wasting because it will catch up with you in the form of mediocre performance reviews or stagnation in your current role.

What if you spent the last hour of your work day studying a skill at which you’re less proficient than you’d like to be? Maybe you spend an hour organizing your plans for the week or brainstorming ideas for improving your day-to-day workflow, making you more efficient at what you do. Personally, I like to spend the slower times in my work day studying a new programming language or reading up on a technical concept I’m not familiar with.

The reality is that wasting time at work is extremely unsatisfying. You’ll feel guilty for doing it, you’ll stress about trying to hide what you’re doing or worry about finding excuses for not being as productive as you know you could be. Why put yourself through all this when you could benefit yourself so much more by improving yourself professionally? You’ll feel better about yourself as you work with integrity. More than likely, you’ll also find yourself naturally progressing in your career as a byproduct, since your boss and co-workers will notice. That’s a win-win!


Production Beats Consumption

This past Christmas, my younger brother decided he didn’t want his Xbox One anymore, so he generously let me have it. Having not played in at least 5 years, I was excited to buy the game “Halo 5”, to relive the fun of playing with my friends and other brother. I had played earlier versions of Halo in high school into early college, but eventually I had no time for games due to coursework and jobs. Now that things had settled down and I once again had a game console, I could enjoy the hobby again.

For the next month and a half, I played almost obsessively, passing most evenings after work playing online, enjoying the time as I expected I would.

As the weeks passed, however, I started feeling a nagging discontentment with the amount of time I was spending on the Xbox. Sure, I liked the game well enough, and the extra time hanging out online with friends I don’t get to see often was great. If I was just spending a half an hour or an hour per night playing, that would have been perfectly fine. But, I found myself hooked, sometimes spending entire evenings of 3 or 4 hours playing.

Eventually, I realized that this habit, if continued, would lead me away from becoming the type of person I wanted to be. It’s not that video games are somehow bad, it’s just that for me they absorbed hours I could have been devoting to growing as a human being. I wasn’t satisfied with being merely entertained night after night because it was leading me to feel justifiably melancholy. It’s as if our minds are attention-hungry toddlers that will lash back against us emotionally if we ignore them. So, I decided I would give myself a reading challenge to deviate my attention from games to a more intellectually productive endeavor.

This has been working well so far. I’ve read 6 books so far totaling over 2500 pages. More important to me than any quantitative accomplishment, however, is the deep level of satisfaction that comes from challenging myself to learn and grow. It’s a much more profound and holistic level of happiness than can be achieved by mere passive entertainment.

This same type of satisfaction is naturally achieved by any number of productive endeavors: fixing up a car, renovating your house, creating a piece of art, writing a book, developing a program, planting a garden, practicing an instrument, learning a language, or cooking a good meal. Your body likes to reward you emotionally when you improve a skill or learn new things about the world around you. When you unlock a new concept in your mind or create something new out of other materials/ideas, you are fulfilling some of the most natural and deep desires we have as human beings.

Conversely, when we spend time passively consuming other people’s work, we tend to feel internally restless. We’re not creating or contributing anything to ourselves or others. Watching TV or movies, shopping aimlessly, surfing Facebook or YouTube, and playing video games are all fun activities, but when we give too much time to them, we don’t feel truly happy.

I encourage you to evaluate your daily habits to consider which ones are constructive and satisfying, and which ones are passive, leading to feelings of discontentment when done excessively. Please don’t misunderstand – I’m not advocating being a workaholic or feeling obligated to devote every waking second to productive activities. But I do think it’s healthy to evaluate whether our habits are in line with the version of ourselves that we’d like to be in the long run.

Why I’m Considering Using a Donor-Advised Fund

In a previous post, Double Your Donations for Free, I talked about how you should check if your employer has a gift-matching program for donations made to nonprofit organizations. While I’ve been taking advantage of this program for giving to certain organizations, I forgot to include the caveat that some employers’ gift-matching programs only match donations to certain qualifying types of nonprofit organizations.

In my case, my local church does not qualify under the criteria that are set for the matching program. I can still get matches to many parachurch humanitarian aid organizations like Compassion International,  but the 10% of our income that we give to our church each month can’t be matched. The criteria are put in place to keep matching funds in line with the employer’s legal requirements, which I certainly understand, but nevertheless it’s a bit disappointing to see a significant amount of money go unmatched.

Then, I started reading about donor-advised funds and realized I might have found a workaround for my problem.

You can open up a donor-advised fund (DAF) with most of the big investment companies that you might have your IRA or 401k with. This fund is essentially an account containing a mutual fund to which you contribute funds and from which you have the ability to write “grants” (i.e. donate money). Because the fund is technically housed inside a 501(c)(3) organization by the investment company you chose, contributions to your fund are tax-deductible in the year that you make them. You can then make donations from your fund to any other legitimate 501(c)(3) nonprofit organization, such as a church. Some DAFs have additional restrictions, so you’ll want to read the guidelines carefully, but most that are run by the big investment companies are extremely loose. As long as the organization is a legitimate nonprofit recognized by the IRS, you should be good to go.

There are some things you should be aware of:

  • The lowest minimum to open a DAF with any of the companies I’ve found is $5000
  • Sometimes there is a minimum percentage of funds you have to “grant” from your account each year, or a minimum balance above which you must stay each year to keep it open.
  • Contributions to the account are tax-deductible in the year that you make them, not in the year that you distribute money to an organization.

There are also some major benefits to this approach:

  • All of your donations to nonprofit organizations are made under this account, so when tax season comes you only need your form from the donor-advised fund. You don’t have to worry about getting documents from all the different organizations you donated to at the end of the year.
  • You can take the tax deduction in the year it’s most beneficial to you, while donating money to an organization when it is most helpful for them. For example, if you knew an organization was going to need money next summer, but you know you’re facing a higher tax bill this year, you can contribute to the DAF this year, but grant money to the organization next year. Win-win!
  • Donor-advised funds make it easy to donate stocks and other more complicated assets that most organizations like churches don’t have any way to handle. The company handling your DAF deals with liquidating the asset and you get cash in your fund to donate. You get to avoid capital gains tax on assets such as stocks that have appreciated and you avoid hassle.
  • You can choose what type of mutual fund to keep your contributed money in until you donate it. If you want to keep it in a mostly-cash mutual fund to minimize risk, you can do that. If you want to try to grow the money by allocating some of the money to stocks/bonds before donating it, you have that option as well.
  • You’re likely to be more intentional and thoughtful about giving than you otherwise would be.
  • You can give family members or friends, including children, the ability to write grants from the fund.
  • Your company might match donations to your donor-advised fund, while they might not match donations to certain other organizations.

That last point is the primary reason that I am planning to open a DAF. I can route my contributions through my DAF to my church and take advantage of the employer match in the process.

My wife and I will set aside our tithe (10% of income) into a separate savings account throughout this year. Once we get up to the minimum $5000 needed to open a DAF account, we’ll open it up and request a company match. After doing so, we’ll immediately have a fund containing $10,000 from which we’ll make our donations to our church and other organizations.

When I first heard about donor-advised funds, I had a lot of questions, since they’re not talked about very much in the personal finance blogosphere. Feel free to leave any questions you may have in the comments and I’ll be happy to answer them as best as I can.




Why I’m Okay with “Losing” $3000 in a Week

The sky is falling!

At least, that’s what you would think if you read financial news headlines after the S&P 500 dropped over 3% in just one day last Friday.

“Stocks are freefalling!” read one particular article I came across.

I’ve felt the hit a little, myself. I saw our investment accounts drop around $3000 in the last week or so. While not a huge amount compared to the decreases long-time investors have seen, it’s still not so much fun to watch the numbers fall.

So, you know what I’m doing differently with our investing since the stock market is going down?

Absolutely nothing.

The reality is that this is actually a relatively small drop compared to the market crash in 2008 or the tech bubble burst of 2000. Despite all the noise from financial media, the S&P 500 is only down about 7% for the year, compared to 43% in 2008.

And even if we were seeing a bigger crash like that of 2008, it wouldn’t affect my long-term investing outlook at all, except that maybe I’d invest even more heavily. In fact, when you’ve got a lot of years until you plan to touch your invested money, market drops are like the clearance aisle of the stock market.

Historically, I know that the market has gone up over every 15-year period in the last 100 years, and I don’t see any reason that trend shouldn’t continue. There are terrible months and even years in history where it has plummeted, but it always comes back up and surpasses its previous high point.

Long-term investing is pretty boring. You just keep putting money away with each paycheck, ignoring the financial news, and you go about your life. Frankly, I’m not interested in what the market’s doing today because it has no bearing on my financial behavior at all. There are plenty of far more important things to think about – like what I’m going to eat for breakfast tomorrow


The Holy Grail of Frugal Drinks – Homemade Iced Tea

After diligently searching Amazon and making trips to both Walmart and Target tonight, I finally found it – the perfect pitcher for iced tea. Our plastic pitcher was starting to show signs of cracking, while at the same time I’ve been reading about the negative effects of using hot water in plastics (chemical leaching). It’s a little sad how much time I invested into finding the right pitcher, but I wanted a glass pitcher with a thick, sturdy composition that could handle near-boiling water and would not need to be replaced for a long time. Oh, and it had to be under $15. I guess I could have gone for metal or ceramic, but there’s just something about a glass pitcher of iced tea on a summer day that looks and tastes exactly the way it should.

Target ended up coming through for me as it usually does, with a sturdy glass pitcher at $12. This baby looks like it can handle the heat of brewing for a long time to come. I had seen this one on Amazon and it had consistently positive reviews, but it was $20 there and I’d refused the pull the trigger on it.

My new pitcher

In case you couldn’t tell by now, I’m an avid iced tea drinker. My dad passed on the affinity for the cold beverage to my siblings and me from an early age, On just about any day, you could find Arizona tea, Snapples, or a pitcher of fresh brewed tea in the fridge.

Having just gone through a 100-ct box of Lipton tea bags, I started to wonder how much this tea-drinking habit is costing me compared to other alternatives. Being the nerd that I am, I pulled up a calculator and started running the numbers. Here’s what I came up with for the cost per glass of a home-brewed iced tea:

100-count Lipton tea bags = $3.50

4-lb bag of granulated sugar = $2.50

2-qt pitcher of tea = 4 tea bags + 3/4 cup of sugar (the recipe can vary. Most recipes call for 4-8 tea bags, but I find any more than 4 to be too strong, personally. I sometimes use a full cup of sugar, but that’s more for a Southern-style sweet tea and is a lot of sugar for regular consumption).

4 tea bags = $0.14 ($3.50 / 25)

3/4 cup sugar = $0.32 (4 lb = 8 cups. $2.50/8 = $0.3125 rounded up)

I’m going to assume the cost of water and and the electricity for heating are negligible. So, we’ve got a total of $0.46 for a 2-qt (64oz) pitcher of iced tea.

Considering there are 8 cups of iced tea in a 2-qt pitcher, we get somewhere between $0.05 and $0.06 per 8-oz serving of tea. That’s right, just a nickel per cup!

I like to fill up my 18-oz glass bottle for work most days, so this costs me only about $0.13 each day, compared to the $1.75 I would spend getting a drink at the vending machine or at one of the local coffee shops. At 5 days a week, this could work out to about $32 in savings each month. Even if you compare it to buying bottles of iced tea at the grocery store, the difference is pretty substantial. Also, it’s healthier and better-tasting to make your own real tea than to buy the artificial tea-flavored drinks that are most common. The only close alternative to home-brewed tea is Lipton Pure Leaf iced tea, which is made with real tea, sugar, and water – nothing else. But, at around $1 per bottle in a pack ($1.79 individually) they’re pretty expensive for what they are.

All if this works out to make homemade iced tea the cheapest drink besides plain water that I know of. What other drinks can you get for a nickel these days?





Stop Renting Your Cable Modem from Comcast

It recently came to my attention that Comcast just bumped up the price of renting a cable modem from $8 to $10 per month. This is insane! $8 was already a rip-off and a massive scam to begin with.

Did you know that you can buy a perfectly good cable modem from somewhere between $40 and $70? For $69.99, you can buy the latest Motorola SurfBoard from Amazon, which is the same modem that Comcast would probably rent out to you. That means the device pays for itself after just 7 months, and then continues to save you $10 a month every month after that. Use that $10 instead to cover a Netflix subscription, buy yourself a nice lunch,  go to a movie, or best of all, save for the future. I don’t know about you, but I can think of a million things I’d rather do than give an extra $10 every month to a company that I don’t particularly like to begin with.

After 7 months, you’re then saving yourself $120 every year. Since I’d estimate you could probably use the same modem for at least 3 years after that initial 7 months, you could save yourself $360 over that period of time.

The only downside I can even imagine to buying your own modem is that you’re responsible for replacing it if it breaks. However, Motorola offers a one-year warranty on the modem I linked to above, so if it breaks within that timeframe, you can just get it replaced for free. And if it breaks after a year, the device has already paid for itself and put $50 in your pocket compared to renting from Comcast. The chance of this happening is really low enough, though, that it’s not worth worrying about.

I bought my current modem refurbished about 2 years ago when I moved into my apartment for about $40. It was already an older modem at the time, but it’s still kicking just fine. I haven’t had a single problem with it and the speeds are good. Considering I would have been paying $8 per month to rent, I’ve already saved $152 over the last two years. Even though Comcast has been calling me just about every week to tell me I need to upgrade my modem to take advantage of the latest and greatest speeds, I’m not bothering. The reality is that even if you have an old modem, it’s still probably fast enough that you wouldn’t notice the difference in speed if you upgraded. I can already download at over 20 Mbps, which is fast enough to download movies in minutes and stream Netflix in HD smoothly.

My Bandwidth Speed Test Results with a 2+ year old modem.


Other factors actually make a much bigger impact on your internet speed, anyway, like how fast your wireless router is, whether you are plugged in to your router with a cable or connecting wirelessly, and whether you are within close enough range of your router when connecting wirelessly. Any cable modem made within the last few years will serve you perfectly well, as long as it’s compatible with Comcast.

If you want to shop around a bit and compare prices on other modems, you can check out http://mydeviceinfo.comcast.net for a full list of compatible modems along with their rating from Comcast.

Take a minute to check out your internet bill. If you never bought your own modem and you have internet from Comcast, then you’re already paying $10 a month to them without even noticing. Do yourself a favor and buy yourself a modem today.

Our Trip to Italy and Greece – Part 3


At long last we boarded our plane. We climbed into our seats, which held a pair of headphones and a blanket to ease our overnight flight. Each seat had its own small TV and a surprisingly impressive selection of new movies to choose from, free of charge. After the plane lifted off the ground and the turbulence turned to a slow hum, we chose our unmemorable movies and settled in for the long flight.

Emirates’ drink varieties were as impressive as their movie selection, with a wide variety of alcoholic beverages available alongside the typical soft drinks and juices. Again, even the alcoholic drinks were free of charge (or more accurately, rolled into the price of our tickets). Unlike the budget airlines I was accustomed to, there were no hidden charges or unexpected costs thrown at us. Quite the opposite, in fact. I did not expect quite the level of luxury that awaited us. Even the food was more than tolerable, verging on tasty.

The only uncomfortable experience I had with the flight was being unable to recline my seat. The man next to me showed me how he reclined his, but mine refused to cooperate. As a result, I probably only slept for about an hour for the entire flight, but excitement and adrenaline for the adventure ahead sustained me well enough.

Because of the time difference (6 hours), we arrived at Malpensa Airport in Milan, Italy around noon. Oddly enough, there were no customs checks other than simply showing our passport to an agent in a booth. Not a single baggage check. While this was convenient, we kept doubting ourselves whether we missed a turn, questioning whether it was supposed to be so simple for foreigners like us to leave the airport.

Our plan was to ride the Malpensa Express train from the airport to Milano Centrale, the main train station in Milan about 50 minutes away. However, we found the airport confusing and could not find our way to the Malpensa Express. After wandering around for over a half an hour, we changed our plans and paid for the first bus we found featuring a sign for Milano Centrale. Fortunately, tickets were 10 euros each, so the price was comparable to the train and probably more comfortable. We were just happy to be heading in the right direction.

When we arrived at Milano Centrale, we found a ticket booth (biglietteria) and explained that we were looking for the next available, cheapest tickets to Venezia. Thankfully, almost all the ticket salesmen in Italy spoke English, so the language barrier was no big problem yet. We paid our 81 euros for two tickets and walked into the train station. While we had read about and seen video of Milano Centrale, we weren’t quite prepared for the chaos that is finding and boarding your train. Compounding the stress of the fast-approaching departure time were the labyrinthine levels and stairs required to climb before finding the boarding area.

Upon arriving at the main gate, there was a crowd of people looking up at an electronic board listing all the upcoming departures. Everybody was waiting and watching so eagerly because the platform number for your particular train does not get listed until shortly before boarding starts. We saw that our train was 5 or 10 minutes delayed, but when we saw our platform number come up and everybody made a dash to that platform, we followed the crowd and boarded. We were a little early, but we figured the train would just wait until the departure time to take off. The train left a little before the time printed on our ticket, but we didn’t think much of it. Sleep deprived and physically fatigued, we were happy just to be able to sit and relax, fading in and out of sleep. Only three more hours were left until we’d arrive in Venice.

An hour later, the train stopped and everybody got off, far ahead of schedule. We didn’t see any signs saying Venice and it certainly didn’t appear to be a busy enough train station to be Venice. Panicking, we talked to the first people we could find just outside of the train, an older Italian couple who didn’t speak a word of English. After asking as clearly as we could whether we were in Venice, it was clear we were not and that we should get off the train. A few minutes had already passed and it was becoming obvious it was not going any further. This was the last stop.

We had arrived in a train station in what looked to be a working-class, lower-income area called Bergamo. We talked to everybody we could find at the train station, including a woman at the ticket booth, and nobody spoke English. As time was passing quickly, we kept fearing this was a connecting stop, and that we were missing the next train to Venice. It was an incredibly unsettling feeling being in a completely unfamiliar city where your cellular data is so slow as to be almost unusable and you are unable to communicate with anyone, no matter how hard you try.

Thankfully, we finally found a friendly and helpful young Pakistani guy, perhaps 20 years old, who spoke a little English. He said he had time before his train was going to arrive and he graciously walked with us to the ticket office. With the help of his interpretation, we explained our situation to the man at the ticket booth, and he informed us that we had boarded the wrong train and that our current tickets were no longer valid. No matter how much we tried to plead with him, it was to no avail. We had to buy brand new tickets and eat the cost of the previous tickets as a painful learning experience. 75 additional euros and another hour or more later, we were back on our way to Venice again. This time, though, we were aboard the slow train.

There are two types of train tickets in Italy. The first is a general use ticket. These don’t have a particular date or time printed on them, but are good for one ride to a particular location, redeemable within 30 days of purchase. If you get this type of ticket, you’ll have to validate it before you get on your train. Otherwise, you could face a hefty fine. To validate your ticket, you stick it in one of the green machines that can be found on just about any train platform. The machine will print a date and time onto your ticket. The other type of ticket is only good for the specific date and time printed on the ticket. If you get this kind of ticket and you miss your train’s departure, you’re out of luck. But, you don’t need to worry about validating this type because it is only good once, anyway.

Because of all our delays, we did not arrive in Venice until almost 7:00 p.m., much later than our anticipated 3:00. While the city was absolutely beautiful, we were too worn out and hungry by this time to fully appreciate the scenery. We had barely slept at all in the past 30 hours, and due to the train fiasco we hadn’t eaten since our breakfast on the plane. Using our free T-Mobile international data, we pulled up Google Maps directions from our itinerary and followed the phone down a series of dark, yet peaceful alley-ways to our hotel.


We were immensely relieved to find that the concierge was at the front desk and that he spoke English. 24-hour English-speaking reception was a luxury we would soon find should never be assumed in a low-cost Italian hotel.

As soon as we arrived in our tiny room, we dropped our 20-25 pound backpacks from our shoulders and enjoyed a moment of relief. We didn’t stop for more than a few minutes, though, before we showered up, brushed our teeth, and went back out to the streets to find the nearest restaurant. Because of our extreme hunger, we didn’t spend time to look up restaurant reviews and costs ahead of time as we should. Instead, we opted for a nearby pizzeria. While we were excited to fill our famished stomachs with authentic Italian pizza, our excitement dissipated when the mediocre pizza, beer, and water arrived, followed by a 40-euro check. Ouch. Another expensive lesson learned on our first day in Italy.

With our stomachs fuller and our wallets emptier, we could finally appreciate the charm and beauty of Venice. Vaporettos (water taxis) and gondolas glided down the Grand Canal, the main waterway that weaved through the city instead of streets. Lining the canal were rustic houses, cafes, shops, and restaurants, filled with honeymooners and romantics enjoying each other’s company as much as my wife and I were.

For the next hour or so we wandered the city without any particular destination in mind, enjoying the cool breeze off the canal and the relaxed atmosphere before returning to the hotel for some long-overdue sleep.


The next day, the real fun was to begin. Our first full day in Italy…