Green Minded Wallet

While I am a frugal person, I believe there are certain items where you get what you pay. I’m not advocating that you buy the highest end, but for certain products there is often a big difference between the low and middle end. Here are six things that I don’t buy low end, because I don’t think it’s worth it.

6. Beer. Life’s to short to drink bad beer. Unless I need to drink a cheap beer to be polite and hospitable, I just can’t be bothered to drink the stuff.

5. Bras. It’s estimated that 8 out of 10 women wear the wrong bra size. Now there are some reasons for that, for example your ideal bra size isn’t carried in most department stores, but for the most part it’s silly. Spending time and money on good bras and replacing them when they wear out makes your clothes fit (and look) better and can prevent you from having back problems (or other issues) in the future. This doesn’t necessarily mean that you have to go to an overpriced lingerie store, but taking the time to get fitted and buying what’s best for you even if you could get something else for 1/3 of the price can really pay off down the line.

4. Shoes. Like bras having good shoes are important for your health and comfort. Even if you don’t have a job where you have to stand or walk a lot, having good shoes can make a big difference. This goes not only for everyday shoes, but for athletic shoes as well. You’ll hopefully have your feet and your knees for the rest of your life, be kind to them.

3. Food. There’s a reason why you can buy Top Ramen for virtually pennies on the dollar. What we eat down has an impact on the rest of our lives: both quality and quantity. There’s a lot of conflicting evidence out there about what’s really good and what’s really bad. Personally I believe in balance and moderation. But what we eat from day-to-day helps determine our comfort, our productivity, and our attitude. Personally, I’m not willing to skimp on any of those.

2. Mattresses. Have you ever stayed with someone and slept on a sleeper sofa? How about a thin futon or an old saggy mattress? Now, I know that everyone has different tolerances when it comes to sleeping surfaces: personally I can camp for a week and not be bothered, but a night on a sleeper sofa leaves me feeling less than satisfied. Everyone is different, but it’s important to find out what your needs are, and meet them. About a year after I graduated from college, I bought a nice high quality mattress; it is one of the best investments that I have ever made. A good friend a mind bought a really nice mattress and we were so excited you might have thought one of us got engaged. Most of us spend one quarter to one third of our lives in bed, shouldn’t we invest in making that time as comfortable and supportive as possible. You probably spend more time in bed than you do in your car. I’m just saying.

1. Tires. Buying cheap tires, or not replacing your old worn out ones, is a gamble not only with your life, but that of your family, your friends, and complete strangers who may cross your driving path. I bought cheap tires a few years ago because I didn’t know better. Last winter I replaced them with much better tires and it’s has made a huge difference. Good tires won’t make up for bad driving, but it can do a lot to help prevent unnecessary incidents, like spinning out on a curve when you’re going 25 with chains on. In my opinion never having that happen again is worth a least an extra 50-100 bucks a year.

That’s my list. Is there any that you think should be on here?

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The personal finance consequences of the poor choices made during the recent housing boom/bubble/souffle/permanently high plateau are often discussed in the media. Things such as personal savings wiped out to ‘feed the gator’, years of blemished credit due to missed payments, as well as high mortgage costs making it difficult for people to save are now frequently discussed as repercussions of the housing euphoria. While the financial impacts of the housing boom which has gripped America and large portions of the world are frequently discussed, few people are discussing the environmental impacts of this phenomenon, so I thought that I would list some here. These are a few of the negative environmental consequences of the housing boom.

1. Supply has far outstripped demand so that we have a large number of hastily built houses constructed with unsustainable materials and a large amount of waste. Have you ever seen a dumpster near a construction site?
2. Older working fixtures and appliances have been replaced with newer ones during so-called upgrades and flips. These discarded pieces often end up in landfills. Furthermore, many of the new appliances aren’t chosen with increased energy efficiency or sustainability in mind. Granite and travertine upgrades come to mind.
3. To increase profitability (and profit margins) given the high increases in lot prices, bigger homes were built. This results in the use of more materials and more energy consumption.
4. Destruction of vegetation, landscape, and microclimate occurred to make space for more homes. These types of changes can cause increased runoff and sedimentation (issues for water quality) as well as displacement of local animal populations.

I believe that there are more impacts, some which might not be discovered for years to come. Can you think of any others, or perhaps ways to mitigate some of the negative environmental outcomes we may experience because of our hastiness?

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I don’t particularly care for the current reliance on FICO (or credit) scores. I don’t have a problem with detailed credit reports, but I do have a problem with tying someone’s creditworthiness to “one” number. Everyone seems to tout the importance of having a good score, but no one seems to be speaking up about the downsides of their current usage, so I thought I would. Here are my beefs:

1. Credit scores are over emphasized. Not since the SAT can I think of one number that people worry and obsess about so much. While I understand the importance of assigning a numerical value to credit history, I don’t think that FICO scores should play the role that they do in today’s lending industry. I know that lending standards, especially for housing are tightening, but if you have an excellent score you can still walk into lending institutions and get a 0-down, undocumented (income) home loan. Previous responsibility says nothing about someone’s ability to pay any cost. If you have a 60k/year salary, no significant assets and no rich old aunts who really like you, you are probably going to be hard pressed to pay a 500k mortgage, even at a fixed rate of 4%. You just can’t afford it. And the fact that you pay diligently pay on your Tahoe and your MasterCard doesn’t mean that you can afford a half-million dollar home.

2. Credit scores are easy to manipulate. How many articles or posts have you read about improving your credit score? There are even places where you pay to have your score boosted (these are technically legal but they are in a very grey area). Or you could forgo getting a stranger to help you and ask someone in your family to add you as an authorized user on their card, so you can piggyback off of their good credit. I’m sorry, but I don’t see how parents making on-time payments for years, should benefit their children. This to me is the equivalent of having your parents “finish” your science project the night before, because you didn’t put any effort into it. Your credit score should reflect your credit history; once we start using the efforts of others the true score loses a lot of its merit.

3. Credit scores penalize debt reduction and encourage financial baggage. This whole don’t close an old account business is poppycock as far as I am concern. If I don’t use a credit card, I shouldn’t have to keep it around because it helps make my debt to credit limit ratio look better. In the age of identify theft the fact that this sort of practice is considered beneficial is truly alarming. And really how does an unused credit card signal to a lender that I am a better risk for a car or a mortgage? Seriously. How?

4. Credit scores are used for other areas that have nothing to do with being a credit risk. I personally think that credit scores should have as much bearing on car insurance rates as driving records have on Visa applications. I know that people think that it’s so great that they have lower car insurance rates because they have good credit scores. But I ask you this, why should someone who carries no debt, and hence has a lower credit score, not have the same rate as someone who has debt, if all else is equal?

I believe our over-reliance on credit scores in the past few years is part of the reason that we are experiencing so many financial woes today. This couple is a wonderful example of what’s wrong with the high credit score mindset:

When they first bought their house, they were a single income family with two small children. As time went on they had to replace both their cars and had two more children.

“We would pull out as much as we possibly could (when we refinanced) to pay down credit card bills. We were using our credit cards to pay the bills. They give you those little checks in the mail and so I used those to pay the mortgage,” says Lisa. She also points out that she and her husband were always careful to pay bills on time so as to maintain high credit scores. “We were neurotic about paying our bills on time.”

They think they refinanced about six times. They had one late payment and the rates on all of their credit cards (> $60k) went up and broke the camel’s back.

“I had no more room on my credit cards. We basically could not make any more payments on the mortgage. We had to fight just to keep the electric on and gas on,” says Lisa. “Never in a million years would I have imagined myself getting into a foreclosure and filing for bankruptcy. You never would’ve thought this could happen, having had a 700-plus FICO score.”

One of the first questions I ask myself when I see stories like this (and there are plenty more where this one came from) is, how were they even able to dig such a big hole? How did they keep refinancing? There is nothing in the article to suggest that he started earning more, or she get a job. There were clearly red flags here, but their high FICO score was key to green lighting them through this process. I have some thoughts on how to improve the use of credit scores but I won’t go into detail now (this post is plenty long as-is). However, I will say that I feel, and I think the market will clearly indicate, that a FICO score is but one tool in evaluating appropriate credit limits/products for individuals/couples. Hat-tip to The HBB for the story link.

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After hearing the news about NetBank and Coast Bank this week, I decided to look up their safety ratings at Bankrate.com. Sure enough both were rated with one star, the lowest possible rating available. While I always check out the rating of a bank or credit union before I open an account with one, recent events made me start to wonder about just how many poorly rated banks are out there. Now, I know that there are other tools that might have a different set of rankings, but Bankrate’s are easy to find and easy to read. You can access the search page from here.

Well this is what I found:

• In Iowa (where I live), there are 6 banks/thrifts and 5 credit unions that have only a 1 star rating.
• In California, there is 1 bank and 21 credit unions with a rating of 1 star.
• Of the 61 banks listed in Bankrate’s top yields for savings and MMAs, 2 had ratings of 1 star (NetBank is one of the two) and 6 had a rating of 2 stars. This means that slightly more than 10% of the highest yielding savings and money market accounts have below average safety ratings.

It may be worth your while to check out your bank’s rating. While ratings can change, and subversive parties can cook the books, it still doesn’t hurt to examine the financial footing of your banking institution given the data available. Given how many safe banks there are, even in the high yield arena, I can’t really see a reason to bank at an unsound institution. Can you?

Hat tip to the HousingBubbleBlog Bits Bucket for the leads.

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So I’ve had the same computer, a Sony Vaio Laptop, for just over four years. It’s been a fairly decent computer, but there are times (like now), when I think that it’s on its last legs. A few years ago my touchpad stopped working. It was still under the service plan, so I took it in, but the tech guys decided to replace something else (don’t ask!), and I really didn’t want to take it back again, since it seemed clear that they didn’t know what they were doing. Last fall my battery died, and it didn’t seem worth it to replace that, since I could still use the laptop. A few months ago I started having intermittent screen problems. It seems that at this point there are enough things wrong that it might not make sense to get it repaired. So the dilemma is, what do I do now?

Financial. A new computer will cost me money and time spent on research. It might also cost money to purchase new software if absolutely necessary, though I use a lot of freeware so that should be a minimal cost. If I do buy a new computer, do I buy desktop or laptop? I feel that I could get more usage out of a desktop as the parts are easy to replace and I could do some of the work myself saving maintenance costs or a service plan. I also don’t travel much, so I don’t feel that I would really need a laptop for that. But then there is the energy usage issue, which leads to the environmental cost.

Environmental. Laptops use less energy, but they also have a shorter life (in my experience). While desktops can last longer, they take up more space and energy. There is also the option of buying an older computer but I’m not sure how much time that is going to buy me, plus newer computer, especially newer desktop monitors are more energy efficient than the old ones. There is also the fact that something will have to be done with my old computer. Looking around it seems that there are ways to recycle computers so that is an option (I think it’s too old and broken to donate). I may have to pay a small fee, but it is much better than sending it to the landfill. I could also try to sell it on craigslist or chegg, but I’m not sure anyone would want it, especially if the screen goes south.

I’ve done some digging on what the best course of action might be. While I still haven’t come close to making a decision, I’ve learned a lot about the environmental cost of computing. From computershopper.com,

On average, most users buy a new PC every three years. … But also consider that more than 80 percent of the lifetime energy consumption of a PC occurs during its manufacture.

This information makes me lean towards buying an older desktop over a newer laptop, since even though it’s less energy efficient to operate, over the lifetime it’s a better choice. What’s worse is besides the energy consumption, computers also contain a number of toxic materials which are released if they are not disposed of properly.

In the United States, only 10 percent of all computers disposed of are recycled, mainly because many people do not know how to recycle them and simply abandon unwanted PCs on the curb. The equipment is then often taken to landfills, where toxins such as lead, mercury, and cadmium leach into the groundwater and poison the air—if, that is, they don’t release deadly fumes into the environment by being burned in incinerators first.

Here’s a link for the full article on How To Buy a Green Computer.

Another option, which is the most frugal, is to simply not buy another computer after this one dies. That would mean just using the one in my office and going to the library on the weekends. I would save the cost of the new computer, and the monthly DSL costs, but I would probably lose all of my friends because I would just mope around all the time. We’ll see.

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Last week I wrote about some of the advantages of living in smaller quarters. However, I realize that it’s not necessarily as easy as it sounds. Some people have pets, like dogs. I am one of those people. So how do you determine the right size living space for you and your dog? Here are some of my experiences.

• It’s not about the name. I once had a good friend who insisted on telling me that having a dog in an “apartment” is cruel. Well, it can be, but it isn’t always. Dogs come in all different sizes and so do apartments. Furthermore townhouses, duplexes, and the like are often lumped with apartments and these can have nice-sized yards. Here’s an example: I live in a nice-size apartment (2bd+bonus room) that is the first floor of a turn-of-the-century (2oth) house. With a fenced-in area. There is also a dog run for the upstairs apartment. My neighbors across the street have a whole house, but no fenced-in area so they put their dog outside on a chain. I definitely think chaining a dog is a lot crueler than letting them run around in a fenced-in yard.
• Every dog is different. Just because you have a big house with a big yard doesn’t mean that your dog is going to be running around all day. Talking to people I am surprised how many put their dogs in crates and kennels while they’re gone. And I’m not just talking about puppies, I know five- and six year-old dogs who are crated. Why? Because they had separation anxiety issues. If you want to know what a dog with separation anxiety issues can do, I highly recommend Marley and Me by John Grogan. Even if you don’t care about doggie mental issues, I still recommend it for any dog lover.
• Every dog does not need a yard. There are a lot of wussy dogs out there. Seriously, I’ve known quite a few dogs that hate to be outside, they would much prefer to be curled up at someone’s feet or on someone’s lap than chasing squirrels outside. Also, some dogs are escape artists (I have one of those). These dogs can dig, chew, climb, or jump their way out of just about any fenced yard. For these dogs, leaving them unattended outside can be just too great a liability, so it’s better if they have limited time to run around freely, and instead great more of their exercise through supervised activities.
• Spend time learning your dog’s needs. Because every dog is different, the only way that you can really ascertain your dog’s needs is by being there for them. My dog loves people, and she loves being around other dogs. It doesn’t matter if she’s inside or outside, small space or big space she like to have company for a good part of the day. Also recognize that your dogs’ needs will change as they get older. My dog certainly moves around less now that she’s not a puppy, but she still has plenty of energy. She’s content to sleep inside and lounge around while I’m at school, but spends time outside in the mornings and evenings, sometimes playing with my neighbors’ dogs in their very large yard.
• Dogs love their owners. Most of them. I’ve found that having a big house, or big yard isn’t as important as spending time with your dog (same goes for kids). Paying attention to your pet can go a long way to bridge the gap of small space. Dogs often chew because they’re bored. Yes, they can get bored in 500 sqft, but they can also get bored in 2500 sqft if no one ever pays them any attention.

I don’t think that you can assign a rule of thumb to sizing, you just have to know your pet and be willing to make adjustments to your housing, budget, and lifestyle. But that doesn’t mean that you can’t make environmentally and financially sound housing choices will balancing your pet’s needs, it just means that you have to work a little harder.

Have you successfully had a pet in a smaller space? I would love to hear some advice and feedback (dissension is also welcome).

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