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Behind the Mind

I find writing to be a very soothing process for clearing a cluttered mind.  It is with this purpose in mind that I set forth to write this blog.  I sometimes become hyperfocused on a subject and think about it constantly.  I also tend to want to share these new ideas with those around me in an effort to relieve them from the cavernous depths of my mind.

My current obsession is meeting my goal of being a great husband and dad.  I want us to make as many memories as a family as we can manage.  I do not travel for my job and actually have not been on a flight since 2003.  My wife has never even been on a plane.  This does not mean that we do not go on trips.  We go to the beach every year, went to Disney World in 2011 and stay in a hotel more than 20 nights a year.  We have been confined to locations within driving distance.  However, thanks to recent credit card signing bonuses we have now amassed enough miles for multiple trips.

As a former accountant I have always had a tremendous interest in personal finances and learned a great deal about money.  Budgeting and money management aspects have always been fascinating, as well as the economic motivations of different people.  I am also enamored with the ability to crunch the numbers and find solutions to problems including process improvements which also interest me immensely.  Unfortunately, jobs like these are not abundant.  In fact, I actually told a former boss these interests in an annual review and he said condesendingly, “Well, maybe I should call the CEO and let him know I’ve replaced him with you.”  After that little chat I accepted another offer with a different company.

After a few years of corporate accounting I became burnt out on the mundane nature of the job.  In particular, I became frustrated with putting together budgets with the goal of cutting salaries and pay raises to the regular employees while insuring that the upper management received substantial pay raises.  The way I saw it was a 10% raise to someone making $5,000,000 is $500,000 which would be enough to give 50 employees a $10,000 raise.  I had trouble justifying the need to cut 10 employees making $50,000 a year just to pay one guy an extra half a million dollars.  I was not happy in my job and that bled over into my family life.  On top of that, eliminating “redundancies” meant that nobody had a backup for their job.  Taking a vacation took an act of congress and when I managed to get a week off I spent the next week doing 2 weeks worth of work.  When my daughter was born I left work on Friday at 5:30 and came back to work at 8:00am on Monday.  At that point I knew it was time for a life change.

I did some soul searching and decided that my family and mental well-being was more important than wealth and income potential.  I decided instead of getting an MBA I would get my Masters in Teaching and become a teacher.  At the same time I also vowed that we would take as many vacations as possible and spend money on other things that bring us all enjoyment.  As a teacher I may not be wealthy, but I do feel like I make a difference and I know that I feel more rewarded.

The second part of the equation is spending more time with the family and taking vacations when possible.  We live relatively simply and have been making strides toward this goal. Part of this strategy is using credit cards and other rewards to maximize value and never turn down free money.

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“Doesn’t getting a card lower my credit score?”

Last month my sister was planning a rare international flight.  I recommended she pick up a travel rewards credit card.  The Chase Sapphire Preferred rewards 2 points per dollar spent on travel and gives a 40,000 point signing bonus if you spend $2,500 in the first 3 months.  The cost of an international flight alone is about $1,500 so hitting a bit over $300 a month in 3 months is easily attainable.  Minimally all the points could be applied directly to the statement to pay for her trip. Her reply was “Doesn’t getting a card lower my credit score?”

Theoretically, it could since inquiries do negatively impact your credit score.  However, using a smaller portion of your available credit has the opposite impact on your score.

For the past few years I have only had a few credit cards in my wallet.  My primary card was my Discover Card, which earns 5% cashback on revolving categories throughout the year.  All other spending earns 1% cashback which is not really a bad deal.  For gas, grocery and drugstore purchases I had an old credit card that rewards 5% in those categories.  In February, I called Discover about my account and customer service did very little to resolve my issue.  At that point I decided I would focus my spending on other cards.  When researching online I found a plethora of very great credit cards and companies competing for my business with nice bonuses.  I pulled a few credit reports and all of them put me in the low 700s range.  I have never missed a payment and nearly all of my spending is put on a reward credit card.

Since then I have applied for 4 different credit cards and been accepted for all of them.  Over the same time span my credit score has increased substantially.  All credit scores I have checked now put my credit score at over 750 and the only thing I have done is get more credit cards (more available credit) and paid off the balances in full with each statement.  In my personal experience, applying for credit cards actually helps to improve your credit as long as you are a responsible borrower.  In no way is this meant to condone applying for credit cards wrecklessly, but if you are dilligent with your finances your credit should not suffer.

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Walt Disney World on a Budget – Dining – Part 4

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We have taken care of the major expenses involved in planning a trip to Walt Disney World in Orlando, Florida.  We have paid for transportation, theme park tickets and Lodging.  If we plan carefully, those will be our major expenses, but regardless we will still need to put food in our bellies.

In many ways the food portion of the budget does not need to even be accounted for in the same way.  Whether you are sitting at home or visiting the most magical place on Earth you will need to eat.  In fact, I would argue that a family could eat just as inexpensively in Orlando as they could in their hometown.  Every budget is different and everyone shares different values.  Some people think that since they are on vacation they should be spending hundreds of dollars per meal.  Other families think that since they outlayed all of the money for the trip that they do not have another dime to spare.  I feel like there is probably a happy medium to be found.  As a family you just need to set up how you value your time.

Dining Plan

If you are staying on site anyway, be on the lookout for free dining plan option.  This rolls the prices together and really allows a family to make every meal an event.  Unfortunately the dining plan is only included in the price a couple times per year.  Purchased separately I do not find the Dining Plan to be an exceptional value.  Probably because I would not normally eat every meal at a Disney Dining establishment.  Therefore the real savings to me would be much less.  I would rather eat inexpensive meals the majority of the trip and splurge on a couple occasions.

Food in the Parks

The most important thing that everyone should be aware of is that you are allowed to bring in your own food and drinks into the parks!  You could even pack some cans of soda and get a free cup of ice at any concession stand throughout the park.  It’s pretty easy to make a couple of peanut butter and jelly sandwiches, toss in some granola bars and be on your way.  We bought a big thermal bag at Sam’s Club prior to our trip.  In the morning we would wake up, put some frozen water bottles in the cooler with our snacks and be on our way.  It’s hard to beat the low cost of packing your own lunch.

Having said that, there are times when a splurge is quite nice.  We were able to go to Cinderella’s Royal Table when we visited and thought it was amazing!  Next time we go back we will probably do that again or visit Belle and eat there.

When we went to Hollywood Studios we stopped at Pizza Planet for an afternoon snack.  One great tip is to order a kid’s meal with pepperoni pizza instead of cheese.  This is not even on the menu, but when they substitute the pepperoni for cheese they also give an adult size pizza.  The kid’s meal includes a drink and a cookie yet costs less than the adult pepperoni pizza.  It’s definitely a win.

Bring Your Own Food

Walt Disney World allows you to bring in outside food and beverages.  We bought a fashionable cooler bag and froze bottles of water.  We then packed in extra snacks and Cokes.  You can get a cup of ice at any concession stand and then have an ice cold beverage.

Conclusion

I believe that absent a great deal for the dining plan the best method is to pick and choose meal options.  Eat breakfast in the hotel for free, pack a lunch, pick up some fast food and a few nights do something special.

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Dave Ramsey Modern Day Snake Oil Salesman / Financial Guru

In my formative years my attention was easily captured by loud, on-air television and radio personalities.  If they had such platforms they must be the smartest people in their profession right?  After I made countless billions of dollars following Jim Cramer’s shenanigans on “Mad Money”, I then sought out personal financial advice beyond investing.  I changed the radio dial and found Dave Ramsey with his strong voice and superior attitude, plus he was rich so he must know the best way to manage money.

After further examination, I found many flaws in the Dame Ramsey logic and philosophy.  But he wrote a book, so he has to know the best way, right?  What do I know though, he has way more money than me.  I recommended my brother get a reward credit card with a lucrative signing bonus for spending rather than a debit card.  His question to me was, “Doesn’t Dave Ramsey say that people shouldn’t have a credit card and use cash or a debit card?”  I asked him to explain the difference between spending money on a credit card and paying it off every month and spending it on a debit card.   The only thing I know for certain is that the math that I use to make financial decisions must be different from the math used by the financial guru.

Advocating Luxury Spending

Budgeting can be as easy or as difficult as you want to make it.  You can break down every dollar spent for every category (Clothing Budget) including allocating expenses into subcategories (Cut-off Jean Shorts).  Most importantly to climb out of debt is to maximize the difference between income and expenses.  This means cutting out any luxury expenses.  Certainly Dave Ramsey demonizes many of the luxury expenses that I agree with cutting out.  However, he still advocates a 10% tithe to church and charitable donations (versus 5% for utilities).  Giving to charity is luxury afforded those who have met all other obligations.  If you are in debt and cannot adequately provide for your family then you should not be considering trying to support others.  I understand that giving money to charity is nice, but it is also a luxury.  This is one of those luxuries that does not seem luxurious, it just seems like the right thing to do.  However, if you are focusing on climbing out of debt your money could be put to better use.  Let’s assume that you make $48,000 a year and give $400 a month to church, that amounts to $4,800 a year.  Let’s assume you owe $10,000 on a credit card paying 12% interest, if you are currently trying to pay off the loan in 3 years you will pay $1,859 in interest over the 3 years.  Instead you could spend the extra $400 a month paying off the credit card and you would save $1,089 in interest ($1,857 vs. $768), and pay off the credit card 1.7 years sooner than under your current schedule (3 years vs. 1.2 years).  If you’re still set on giving the 10% away make an IOU and keep track of all the charity you did not give.  As you can afford it, you can increase the charitable donations.  This also has tax implications as well since it would be better for most tax filers to donate to charity in a lump sum.

No Credit Cards

Dave loves to talk about how bad credit cards are for consumers, but goes out of his way to point out good deals.  I absolutely agree that using a credit card to accrue tons of debt at 15% interest is a ridiculous notion.  However, banks also have enticing bonus offers.  Such as the Chase Slate card which offers a 0% introductory balance transfer for 15 months.  Using the same scenario as above you could apply for the card, transfer $10,000 to the Chase Slate card and pay $0 in interest plus if you paid $729 per month you would have your loan paid off sooner.  Although I have heard him say that he can allow a 0% balance transfer he needs to be telling everyone to reduce their interest rates immediately.

The first time I really questioned his advice was when I was buying a computer in college.  Best Buy was offering a 3 years interest free financing offer.  I needed a computer and was going to spend $1,500 on the computer I wanted with cash or credit.  I had the cash in the bank accruing interest (higher interest rates than now) so I decided to finance the purchase.  I paid it off $50 a month and paid it off ahead of time.  Never did I miss one payment, nor did the credit card companies lose my payments or force me to spend more.  I still had the cash available to earn interest and spend as needed.

Over the past few years I have used my Discover card and a gas, grocery and drugstore reward card to earn cashback on almost every purchase.  I earned 5% cashback in specific categories, but never did I overspend to earn money.  However, I did earn a few hundred dollars extra on money I was going to spend anyway.  Sure, it has not helped me retire early, but it did allow me to have a few hundred dollars extra to spend on my family.

More recently I have captured signing bonuses of $400,  50,000 airline points ($833 worth of airfares) and other offers from credit cards just for signing up and spending money as I normally would.  Studies may suggest that people spend more with credit cards, (as Mr. Ramsey loves to point out) but this really throws personal responsibility out the window.  If you are responsible and pay off your credit card every month you actually benefit quite greatly from a credit card.

Dave likes to say that he does not know any millionaires who got rich from credit card rewards, but that is hardly the point.  To me, these reward bonuses are extra unearned income.  I can take a trip using these airline points which will provide richer experiences for my family to share.  Otherwise we may have not been able to afford to fly for a vacation, even on Southwest.  Millionaires never worry about things like this because they can just buy their own plane tickets (or plane if they have enough millions).

Debt Snowball

For those people listening to Dave Ramsey to pull themselves out of debt he advocates the “Debt Snowball”  whereby the individual pays down the smallest debt most aggressively.  The theory is that as you pay off debt you can have a small moral victory.  From a psychological vantage point this makes a modicum of sense, but from a mathematical and fiscal sense this seems absolutely illogical.  Let’s imagine that someone has debts of $5,000 at 0% interest $8,000 at 3% interest and $10,000 at 12% interest.  Mr. Ramsey would suggest paying the minimum balance on the $8,000 and $10,000 debts then pay the rest toward the $5,000 debt.  Unless the 0% interest rate is about to expire and reverting to a higher rate there is no reason to be paying this amount at all.  If you pay down the higher interest rates you will save money over the long-term.  If you are paying off $500 a month over the 10 months it takes you to pay off the $5,000 debt your other debts will have accrued over $1,000 worth of interest.

I feel like Dave Ramsey has spent so much time being a part of the rich and elite that he does not value an extra $1,000.  Whether it’s from money saved on interest rates or rewards earned through the purchases you are already going to make Mr. Ramsey finds these methods undesirable.

Selling Services to Broke (Broken) People

I am not against the profit motive, but I do think that picking the targets of profit attainment is something else entirely.  Dave’s core audience seems to be people who do not need to spend a dime on incremental expenses.  These people usually need to even cut their fixed expenses.  Yet, Mr. Ramsey seems to be more than ready to constantly recommend to his adherents that they purchase his books or come to his conferences.  As an accountant I always loved making budgets, especially creating them for individuals is fun.  The problem with this is that a Catch-22 situation is created.  Most people who need a budget cannot afford to pay for a budget and most people who can pay you are pretty good with money and can set up their own financial policy.

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Walt Disney World on a Budget – Saving Money (Tickets) (Part 3)

Save Money at Walt Disney World

Save Money at Walt Disney World

 

Finding a place to stay and determining the best method of travel is only the beginning of the expense for a trip to Walt Disney World.  If you were just wanting to drive to Orlando, Florida and stay in a hotel the total outlay for such a trip would be quite low.  Unlike other Florida vacations, where your family relaxes carelessly (and cheaply) on the beach, you will find no beaches in Orlando.  This is where careful planning might pay off.

The last time I took a trip to Walt Disney World was in 2011.  We had actually thought about visiting Walt Disney World and Universal Studios.  I actually love Universal Studios and find it to be very fun.  However, due to the pricing structures of bothe Walt Disney World and Universal Studios the economics of visiting both parks is difficult to make work.  Both companies charge more for a single day ticket than they do for a multi-day ticket (on a per day basis). From a business perspective it’s a fantastic choice, but for a family wanting to enjoy both parks it can work be difficult to accomodate.  A 1 day ticket to WDW is $95 per adult and $88 per child 3-9.  A 7 day ticket, by comparison is $302 and $282, which breaks down to $43 and $40 per day.  Let’s imagine that on day 8 you wanted to go to Universal Studios for this extra day you would pay about $90 per adult and $85 per child.  Alternatively, you could spend your 8th day at a Disney Park again for an extra 10 bucks per person.  This really complicates the vacation math and in my case made us stay with Walt Disney World for the duration of our 6 day trip.

Ticket Inflation

When you are trying to vacation on a budget, the last thing you want to hear is for someone to recommend you buy in advance of your journey.  In 2011 2 adult tickets for 6 days were $242 each for my wife and me.  This same ticket in 2013 would cost me $296 through Disney.  This is a 18% increase in 2 years!  So one surefire way to save money on your tickets is to buy them early!  When’s the best time to plant a tree?  20 years ago.  When’s the best time to buy a ticket to Walt Disney World?  20 years ago.  If you cannot swing buying them years early definitely buy them before the yearly price increases.

Cheapest Tickets

When purchasing tickets outright the best company that I found was Undercover Tourist.  In 2011 their price was better after tax than Walt Disney World tickets were priced at before tax.  Remember that Undercover Tourist shows total price you pay while the Walt Disney World website just throws the tax in at the end.

Ticket Discounts

Although I purchased my tickets from Undercover Tourist in 2011 I do not know if they are truly the best choice today if you are willing to take a little extra time.  I used the ticket comparison calculator for 2 adults and 2 children on a 6 day ticket the total from Undercover Tourist would be $1,103 while the price through Disneyworld.com is $1,145.  Certainly Undercover Tourist is $42 cheaper which makes them 3.67% cheaper.  If you just want to buy tickets quickly, this is a good bet.

However, if you time your purchase right you can save more than this by paying with a gift card.  Sign up for an American Express Blue Cash Preferred (special offer through card match tool)which gives a $250 sign-up bonus 6% cashback at grocery stores and 0% interest for 15 months ($75 annual fee).  Let’s assume you only get this card for your Disney trip and that’s it.  At my local Kroger they offer an incentive of 2x fuel reward points on any gift card purchase.  During certain times of year they offer 4x fuel reward points on any gift card purchase.  What does that mean?  Every 100 points earned is good for 10 cents off per gallon.  I went to Kroger when they offered 4x fuel reward points and used my American Express card to buy gift cards to pay for Walt Disney World.  The price is $1,145 which will earn me $68.70 cashback and 4,580 fuel reward points.  The rule for gas points is you can redeem up to 1,000 points for $1.00 off 35 gallons of gas.  Purchasing tickets with this method would earn $68.70 (6% cashback) +$250 (sign up bonus) – $75 (annual fee) + $157.50 (gas savings) = $401.20 in total savings on a family of four.  That works out to 35% off which is better than the 3% off offered by Undercover Tourist.  Plus, the 0% interest means you can pay your card off slowly like a nice savings account.  If you really want to amp up the savings take all of your gas with you on the trip and you will be filling up on $1 off gas!  I would not condone, recommend or try this trick myself, you would be saving cash on gas.

Ticket Choices

I have read other advice in the past and have heard many people suggest that people buy Park Hopper,  No-Expiration and other more expensive tickets.  I found the incremental cost to purchase these tickets were not cost effective.  This just goes to show that there are no right answers if two people will recommend opposite things.  As adamant as I am to not get the Park Hopper option, other people suggest it’s “a must”.  I believe Disney is expensive enough and there is enough to do without worrying about such an option.  For instance, if you go to Magic Kingdom, you can leave in the middle of the day and go back to Magic Kingdom.  With a little extra planning you can easily get by without the Park Hopper.

Park Options

Just as opinions vary on what upgrade options should be added to your ticket there are many strong opinions on which parks to see.  I find Epcot to be quite boring when compared to the excitement of Magic Kingdom.  I believe that Animal Kingdom has promise, but currently there’s not enough to do in the park.  That being said, I have had people come up to me and say “Animal Kingdom is so great!” or “I could spend the whole week at Epcot”.  I think that spending a week in Orlando and wasting every day at Epcot would be a punishment.

When my family went we had 6 days.  We went to Magic Kingdom and Hollywood Studios twice and Epcot and Animal Kingdom once each.  I used touringplans.com and undercovertourist.com to plan my trip.  I actually made a spreadsheet and evaluated each day based on expected crowd levels.  I also looked at the calendar to be certain that we were in attendance during “must see” events.  We went to Hollywood Studios on at least one day when Fantasmic was showing.  Without good preparation we could have easily just gone to the park and not known what we missed.

 

 

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