Thursday, May 29, 2008

Madd Money: My Take on the Dave Ramsey "Baby Steps"

Over at another blog that I follow (Frugal Dad, one of my favorite personal finance bloggers), one of the topics he covered this week was Dave Ramsey and his “Baby Steps”. For those who are not familiar with Dave Ramsey, he is a radio and television commentator out of Nashville, Tennessee. He talks about a very common sense approach to money and dealing with debt. In the Dave Ramsey world, debt is full-bore evil and should be avoided at all costs. If you have it, every ounce of energy you have should be applied towards getting rid of it.

What makes Dave interesting and engaging is his charismatic, borderline evangelical zeal for people becoming debt free, and the passion that he invokes in this crusade has garnered him a solid following. Virtually everything that’s relevant to his approach and game plan can be had for free at his web site, along with two weeks worth of his radio show that can be streamed to Windows Media Player or Real Player (his show is three hours each day). For those who enjoy reading the old fashioned way, i.e. pages with a spine and a cover, you can hit up your public library and check out any of his three main books:

Financial Peace, Revisited (this is the “what to do” book, recently updated, and this is the one that basically started Dave's philosophy).

The Total Money Makeover (this is the “how to do it” book, and if you just want to pick up one book to get the feel for the “Dave” experience, this is the one to get).

More than Enough (this is the “why do we care about money in the first place” book, and frankly, it’s his most underrated, and the one I personally most enjoyed. This one actually diverges from standard personal finance and covers a lot of ground that personal development and spiritual development books cover).

OK, right here is were everyone would normally check out and say “OK, dude, Dave Ramsey is great, blah blah blah, you’re a shill, blah blah blah.” Well, I’m hoping I can convince you otherwise, since I think anyone that blindly follows anyone’s plan without giving it serious thought is asking for trouble. What is the Dave Ramsey plan? Here it is in a nutshell, and modified a little bit from his own site:

* Work to get $1,000 to start a “Baby” Emergency Fund
* Pay off all debts (not counting the house, if you have one) using the “Debt Snowball”
* Save 3 to 6 months of living expenses in savings (a fully funded Emergency Fund)
* Invest 15% of household income into Roth IRAs and pre-tax retirement savings
* Save for College funding for children (if you have them)
* Focus on paying off your home mortgage early
* Build wealth and give! Invest in mutual funds and real estate.

If you listen to Dave’s show, he’s pretty dogmatic about these steps, and in general, I agree with what he is suggesting, with some personal caveats and tweaks. Now realize, I am not the best person to ask about how to get out of debt, since I managed to do it with a massive windfall of stock options in both cases; my personal debt was cleared out in 1995 by a massive sell of of stock, we were able to put 75% down on our house because of stock options I owned, and finally, the decision to fully pay off the house came at the expense of my remaining stock options. NOte: I no longer have any, so that puts me on the same playing field going forward as anyone else (truth in writing time, if it weren’t for the fact that I spent ten years working for Cisco Systems in the 1990’s, and had I not been obsessed with the idea of holding onto them, I would have had a very different financial picture).

Dave’s plan is austere, make no mistake, and his mantra is “Live like no one else, so that later, you can live like no one else”. Making Dave’s plan work requires a level of intensity (he refers to it as being “Gazelle Intense”) and *really* making a commitment to pounding through these steps and maximizing them.

1. Work to get $1,000 to start a “Baby” Emergency Fund

This is the first of the Baby Steps, and its purpose is to get you out of the habit of reaching for the plastic whenever an issue happens. Now, to be fair, in most cases, $1,000 will not take care of every emergency, and it will not be the be all and end all of an emergency fund. It’s not meant to be. It’s there as an incentive to say “hey, I just put away $1,000” so that, if I have to deal with something of a medium sized emergency, I have the means to take care of it. My personal approach would be to have a little more than this, but $1,000 as an immediate buffer is still a good number for most people to wrap their head around. This should be in an immediately accessible place, but not *too* accessible. Dave describes one woman who framed 10 $100 bills in a picture frame, with a note that read “in case of emergency, break glass”, and she hung it on the back wall of her closet behind her clothes.

The key to this step is that we need to change our behavior. If we use cash to pay for emergencies, we tend to prioritize in our minds what constitutes an emergency different than when we use plastic. Leg broken and need to visit an urgent care facility, that is an emergency. Big sale on flat screen TV’s, not an emergency.

2. Pay off all debts (not counting the house) using the “Debt Snowball”

This is probably the single piece of advice that Dave is most well known for (not his invention, BTW, but it’s most commonly associated with him anyway). The idea is this, arrange your debts from the smallest to the largest and ignore the interest rates for the time being (if you have two loans with similar balances, then put the one with the higher interest rate earlier in the order). Pay minimum payments on all but the smallest loan value, and with that minimum balance, take every spare penny you can scrape together and pay as large a payment as you can possibly manage every month until it is gone. If you have credit cards, cut them up and cancel the accounts while you do this process. If you can’t bring yourself to do that, at least tuck them away someplace so that you are not tempted to use them. After the smallest account is paid off, roll that same payment you were making before, plus everything else you can muster, on your next debt, and keep the momentum going. Still pay minimums on the other debts that are further down the line, but each debt will get a correspondingly larger amount of money to pay it off. Listening to Dave’s show, this is where you hear some amazing stories, people paying off $30,000 worth of debt or more in a year’s time. How did they do it? It all comes down to behavior and attitude.

You have to really want to do this step for it to work. If you are not pathologically committed to knocking out debt, this will be painful. Hand in hand with this step is the determination to put together a budget, spend every dollar on paper at the beginning of each month (in our family’s case, we do it twice a month) and commit to living by that budget. By doing this, you discover what areas and what frivolous expenses can be eliminated for the time being to attack the debt.
In most cases, I agree wholeheartedly with this approach, but I’d suggest one deviation. If you have a company that pays a dollar for dollar match for retirement savings, by all means take advantage of this, even while you work the debt snowball. Dollar for dollar matches translate to a 100% return on investment. Even the worst loan or debt that you have cannot match that return by paying it off, so take advantage of it if it’s offered to you, but only fund up to the match. From there, throw everything you can into the debt snowball.

Some accountants are certainly going to argue that not putting the highest interest loans first is bad math, but again, I agree with Dave here, this has less to do with math and more to do with behavior and motivation. Cleaning up small debts early in the process gives a psychological boost to the person, and helps fortify them and develop their debt reduction muscles so that they can take on the big ones (such as student loans or HELOC’s) when it is time. Also, if you want to get some motivation, listen to some of Dave's archived Friday shows, where you can hear people scream "I'm Debt Free!" at the top of their lungs. It's an awesome experience, and yes, it's very motivational :).

3. Save 3 to 6 months of living expenses in savings (a fully funded Emergency Fund)

With the debts all cleaned up (minus a mortgage if you have one), the next step is to build a fully funded Emergency fund. The full emergency fund is meant to be anywhere from three to six months of living expenses (note: this is not the same as setting aside three to six months of income, though if that’s an easier way to interpret and set your goal, there’s nothing wrong with that). The $1,000 Baby Fund is just to get you started. It doesn’t take much to wipe that whole thing out (blown transmission, busted water heater, etc). By having six months of expenses saved up, you are in effect “self insuring” yourself against many of the worst case scenarios, and giving yourself the ability to counter those worst cases and ride them out. In our case, we actually have more than six months living expenses set aside (not by a huge margin, but enough to help us weather a serious setback without having to go into debt to take care of it). How much you decide to save is entirely up to you, but remember, this is an emergency fund, and it should be in an account that will bear you a decent return, but not have penalties on withdrawing the money (in other words, Certificates of Deposit or bonds with a time requirement are not good places to put your emergency fund. A high yield savings or money market fund with an istitution like Vanguard or ING Direct, with check writing privileges or a Debit Card, is ideal.. and remember, a vacation to the Bahamas does not constitute an emergency (LOL!).

The biggest benefit to having this is that the need for a credit card becomes almost non-existent. Dave would recommend getting rid of all credit cards and using Debit Cards exclusively. I’m not that hard-core, but I would suggest keeping one high balance card for true dire emergencies (truck crashes into the side of your house or something). Otherwise, use a Debit Card for everyday purchases (or better yet, carry the appropriate cash).

4. Invest 15% of household income into Roth IRAs and pre-tax retirement savings

This is overall good advice, but as I said previously, I’d tweak it a bit. If your employer offers a match in a 401K or alternate type of retirement plan, take it. Dollar for dollar matches are 100% return on investment for those dollars, and you aren’t likely to beat that anywhere else in the same time period without substantial investment risk. Even when you are paying off your debts, make sure to take advantage of this. Once your debts are paid off, then expand beyond the matching limit and contribute and fully fund (if you can) a ROTH IRA. Once you max out the ROTH IRA, then add more money to your company’s 401K (or comparable plan) until you reach 15%. This is an oft quoted number, and I don’t know what makes 15% so magical. Money Magazine back in April of 2007 had an article saying where people should be by certain times in their lives:

Assuming you want to retire at age 60 and plan to have no pension and no job in retirement, you need to have…
1.6 times your salary in savings at age 35
3.5 times your salary in savings at age 40
5.8 times your salary in savings at age 45
8.5 times your salary in savings at age 50
11.9 times your salary in savings at age 55
16.0 times your salary in savings at age 60

I'm comforted to know that, at least currently, we are mostly on track with the figure for age 40 :).

In our case, we contribute 8% towards my company’s 401K plan (their matching is 50% of every dollar up to 3% of my total salary). From there, we push 7% of each check split evenly between our two ROTH IRA’s. Once the ROTH IRA’s get maxed out for the year, then the 7% per check will be adjusted to go back into the company’s 401K plan until the next contribution period begins. We manually handle these transactions right now, but in the future, we will likely automate this process so we can “set it and forget it “ :). Incidentally, for full disclosure, we use Vanguard for our ROTH IRA’s, and currently have an asset allocation of 70% in the Vanguard Total Stock Market Index Fund and a 30% allocation in the Vanguard Total International Stock Index Fund. Why we chose those particular funds would be a philosophical subject for a whole ‘nother post :).

5. Save for kid’s college.

I’m a firm believer in taking care of yourselves and your own financial future regarding retirement before saving for college. While that may sound heartless, let’s face it, an 18-25 year old has a lot more flexibility in working or making arrangements for getting their education compared to a 70 year old facing a retirement without enough savings. Plus, I’d hate to have to be a burden on our kids at a at time in their lives where they have to take care of their own families.

In our house, any money above and beyond the 15% retirement savings that we can save goes towards our kids 529 College Saving Plans (also managed by Vanguard, for those keeping score :) ). In addition to saving for the kids school, we are also actively encouraging them to look and be creative towards scholarship money and grant money where it is available. One thing we have drilled into the kids heads (and our own) is that student loans *will not* be considered unless it is an absolute necessity. Personally, we don’t believe it is, and we will do all we can to cash-flow our kids college educations to the fullest extent we can, and encourage them to work to help get the rest.

5a. Save for non-educational expenses for kids.

There are other expenses beyond college that we are earmarking for the kids as well, and each kid has their own separate savings account that they and we contribute to. These accounts are meant for such things as paying for missions, cars in their future (if relevant), big ticket items that may come along in their lives (prom dresses, summer camp or other special opportunity programs, orthodontics if needed, etc.)

6. Pay off the mortgage early.

For years, I fought this one, and I talked the same line about having a tax write off and investing my money to get a better rate of return elsewhere. Ultimately, I was convinced (and yes, Dave did the convincing (LOL!) ), that there were other ways to look at this. First, would anyone willingly take out a second mortgage on their house so that they could invest that money in the stock market? Some people might say yes, but I’d say “definitely not" because that puts my home at risk in the event I don’t make a wise choice. Well, that’s effectively what I am doing when I pay my mortgage while trying to invest elsewhere. Markets go up and down, but in the long term, they tend to trend up, on average anywhere from 8-12%. My mortgage was 6%. When taxes, gains, and risk are all weighed into the equation, the net benefit of investing tends to become a wash comparing to just owning your home free and clear. As to the idea of a tax write off, let’s just put it this way… would you willingly give someone $10,000, so that the government can give you back $4,000? No matter how you look at it, you still paid $6,000 you’ll never see again. What if you could remove that house payment from your life forever, and then use that original house payment to invest on top of what you are currently investing? That was the argument that ultimately convinced me, and we actually jumped ahead and did this step before we set up the kids college funds. Effectively, our former house payment now covers almost all of our retirement savings, and a good sized chunk of our kids college savings, plus it gives us the greatest feeling of walking through our house and saying “hey, this is *ours*!!!” Seriously, there is no feeling like it in the world.

7. Build wealth and give! Invest in mutual funds and real estate.

So what can you do when you reach this point? This is where people can invest for other things. You may want to set aside money to bankroll a dream globe-trotting vacation, or perhaps start a sideline business, or even get really into giving to causes that matter to you. The key is, at this stage, your income, your investments, and your lack of having to make any debt payments puts you in a totally different category compared to most people that are struggling to make payments. If you can get off the debt payment treadmill, you can use your money to actually do the things you want to do with your life. One of the key points that Dave makes, and I wholeheartedly agree, is that money is really only good for three things once you have met your basic living expenses. It is good for FUN. It is good for INVESTING, and it is good for GIVING. Outside of that, there’s not a whole lot that you can do with money that is long term beneficial or healthy.


Even though I’m a fan of Dave Ramsey, I don’t follow his “gospel” to the absolute letter. I made modifications that made sense to me and my family, but overall his plan is a good one, and a blueprint that many people can use to help make good long term financial decisions. Do not, I repeat *DO NOT* take any financial advice from a blogger or radio personality or author at face value and decide to set up your finances on just that information. BAD IDEA!!! Do your homework, look at your financial situation, and really be critical with yourself. Make a game plan, one that fits your life, your goals and your dream, and then WORK THAT PLAN. Also, realize that any advice I’ve given here is just my opinion and it happens to fall mostly but not totally in line with a guy I like to read and listen to. Consider this a huge case of “Your Mileage May Vary”.

Wednesday, May 28, 2008

Scoutmaster Mike: ...and Keaton Makes Eleven!

One of the longest tenured ongoing activities in my adult life, second only to my being married, has been in my role as an Adult Leader in the Boy Scouts of America. I have a near fifteen year tenure as an Adult leader; I started as a Cubmaster for Pack 92 in San Francisco in August of 1993.

Recently, I was given a new calling in Scouts. I'm now the Scoutmaster for Troop 250 in San Bruno, California. By way of information, this is my second go-around as a Scoutmaster, and this now marks the third “double-dip” scouting position I have held (I was Cubmaster twice, first for Pack 92 in San Francisco from 1993 to 1994 and for Pack 290 from 2004 to 2007; Assistant Scoutmaster twice, for Troop 92 from 1994 to 1996 and for Troop 250 from 2007 to 2008, and now Scoutmaster twice, for Troop 92 from 1996 to 1998 and for Troop 250 from 2008 to who knows :) ). In addition, I'm also an Associate Advisor for Venturing Crew 461, our council's Order of the Arrow Lodge.

The Scout Troop had, up until yesterday, 10 active boys under the age of 14. Last night, we added our eleventh, boy. Keaton earned his Arrow of Light award last night and for the occasion, "Nick^2" (pronounced "Nick-squared" as it consists of my son Nick and his close friend, also named Nick), serve as characters for the Order of the Arrow Ceremony held for Arrow of Light recipients.

Nick^2 in O.A. regalia

I made the regalia that the boys are wearing specifically for them. All of the Lodge regalia that we have is made for six foot tall guys. They would have drowned in the clothes, so rather than have them swimming in huge pieces, I made brand new leggings and war shirts that were sized specifically for them. They are not elaborately decorated at the moment, but that will come in time. I told them I’d add new items to the pieces each time they performed a ceremony in them.

Nick D. and Keaton

This was Nick^2 first experience as Ceremony team members, and I was very proud of both of them last night. I think they helped give Keaton a memorable ceremony. There's still some work to do before the boys become totally proficient, but all in all, an excellent first outing.

Welcoming Keaton as the newest member of Troop 250

Friday, May 23, 2008

Fundamental Choices

As I was reading a book review for “The True Cost of Happiness” by Stacey Tisdale and Paula Boyer Kennedy, I noticed a phrase that was used in the early chapters. That phrase was “Fundamental Choice”. A Fundamental Choice is one where you make a stand about something and decide “I’m going this direction, and when I make this decision, it will have major implications in my life".

This gave me a chance to look at Fundamental Choices I’ve made in my life. Some of them have been really good ones, and some of them have been bad ones. The key to a Fundamental Choice is that they are the ones that all other things in your life move on. Another term I’ve heard for this is a “hinge-pin decision”. The idea is the same; we make a decision, and we know that that decision is going to be one that will forever change us and the way we view and deal with the world.

One of the first prominent Fundamental Choices I made was when I was 22 years old. Up until that time, I had lived with my family in the house I grew up in, I went to school, I worked a little, and starting at age 18, I developed a plan, a dream, and a hope that I could become an entrepreneur. However, my plan to be an entrepreneur was to be a professional musician in a band. Many people don’t consider being in a band the same as running a business, but it is, at least it is if you plan to ever make a living at doing it. That was my plan, but for many years, I just stumbled through it. It was easy to live at home, go to school part time, work part time and play part time. I made the Fundamental Choice to cut off all else and dive head first into being a musician.

I dropped out of school. I left home and moved in with some of my band mates for a few months until I found a house I could share with others in San Francisco. I also ultimately quit the part time job that I had. This was a Fundamental Choice that made a huge impact on my life. For the first time, I had no safety net, no fall-back plan, and I discovered how it felt to be one pay-check away from the street. It was not a fun experience, but it hardened my resolve to do something about it. I can safely say that the decision to do this at that time was the most critical decision I’d made, as it set in motion so many things that defined my life from that point on. Had I not moved to the City, I wouldn’t have had the focus to develop my lyrical writing and performing skills the way that I did. Had I not had that experience of borderline poverty, I would not have developed the intense work ethic that came from it. Had I not seen that the jobs I was working were a dead end, I would not have made that leap of faith to take a job at a little known company that was set to shoot to the stratosphere.

Two years later, I faced another fundamental choice. Do I marry, or do I keep working the dream of being a professional musician? This came in stark contrast when I realized that there was no way I was going to have both in this scenario. If I moved to LA to follow my band’s dreams, I would lose Christina. If I stayed and married Christina, I would lose my band. This turned into another Fundamental Choice, the implications being huge. I chose to stay in the Bay Area and marry Christina, and let the career I’d worked towards for close to ten years die away. It may seem like such a trivial thing to some, to give up a rock band for the love of your life, but at that moment, it was anything but trivial. Still, I knew it was the right choice, and I knew that I would regret not choosing Christina, so I made the decision. I have moments of “what-if’s” regarding my former band, but honestly, I do not have any regrets for making the choice that I made.

The following year, I had the chance to bring Christina back to a family reunion in Salt Lake City and the surrounding area. While I was showing Christina the sights of Salt Lake, I had a very strong stirring of long dormant feelings. I was inactive in the church for several years, and those stirrings really made me question why, and if I was committed to doing something about it. That weekend, during my family reunion, I made the decision to return to full activity in the church. I realized that it would require a healthy dose of humility, a change in lifestyle, a change in my attitudes about many things, and it would also require a financial commitment to the tune of 10% of my income. I was willing and ready to make these changes, and once again I made a Fundamental Choice. It was one that I would make by myself for several years, but ultimately it became one that changed the culture and trajectory of my family completely. Today, my entire immediate family (myself, wife and kids) are active members of the Church of Jesus Christ of Latter-day Saints, and I am grateful for what that choice has provided for us, as well as the opportunities it has given to us over these past fifteen years.

Recently, we made another Fundamental Choice, one that was a long time in coming, and changed dramatically some of the ways that we spend money and allocate resources for things. Having worked at a technology company for a decade, I had accumulated a fairly large number of stock shares. When those stock shares were valued highly, we were very pleased and we took advantage of the opportunities having them (and selling them) gave to us. However, in the early part of the decade, those shares value took a long walk off a short pier, dropping to less than 30% of their peak value… and have since stayed there for many years. Since that drop, we had to pull from those stocks for a period of layoffs, my returning to school (another Fundamental Choice, but talking about that one probably deserves its own entry) and just keeping us afloat during some leaner years. We assessed where we were, what we had, what was coming in, and what the future outlook would be, and we made a Fundamental Choice… make ourselves 100% debt free, house and everything, by selling the stocks that had sustained us all these years.

That was a frightening concept, and one we had rejected many times (what if something goes wrong?). It took an analogy to change my thinking on this... Would I take out a second mortgage on my house to go and buy the shares of stock that I had held onto all these years? The answer is “no, of course not”. By putting it into this framework, I realized that I was doing exactly that, keeping a debt when I had an asset to pay it off, but hoping that the eventual return from keeping that asset would ultimately turn around. We made the Fundamental Choice to take what we had left of our shares and pay off our mortgage with it. What’s more, we made the determination to not spend the money that was formerly going out as our monthly house payment, instead opting to invest in retirement savings and college savings for our kids, as well as using additional opportunities to maximize our savings. This has been a big paradigm shift for us, one where we have deliberately turned away from passively spending to actively managing, and putting savings as the highest priority. We have yet to see dramatic changes from this, but we hope that we will be able to see those changes later on.

Bottom Line: Fundamental Choices face all of us at one point or another, and we will have opportunities to make them throughout our lives. It is vital that we look at these decisions as what they truly are, hinge-pin moments in our lives where our course, our direction, and our end destination can be radically changed. These opportunities should be handled with care and thought, with a lot of consideration, a lot of consulting with family, and most certainly with a lot of prayer. Often times, the most important aspect about Fundamental Choices is not so much which way we go, but that we make them in the first place. In many cases, making a right or wrong choice is less important compared to the missed opportunities that result from not making a choice at all.

So how about you? Have you found yourselves staring at a Fundamental Choice? What did you consider? How did making a decision one way or another affect you?

Thursday, May 22, 2008

Madd Money: Ten Years of Spending and Saving

A number of blogs in the Personal Finance blogosphere are asking a key question this week… How are your finances different today based on what they were ten years ago? I decided for this point in time I wanted to participate in this, and write down my feelings on these topics.

Ten years ago our finances were totally different than they are today. Here’s some of the significant differences:

1. Housing
Ten years ago…

Christina, Nicholas and I lived in a house in San Francisco that we were renting from my parents.


Christina, Nicholas, Karina, Amber and I now live in our San Bruno home. We have owned it now for almost nine years and we *love* it. We were blessed to buy a house in Christina’s original home neighborhood (her parents live a ½ mile down the street, in the house Christina grew up in). We also made, what I hope, were some wise choices along the way, such as putting a very large down payment on the house and having taken out a very small (relatively speaking) mortgage. While it was an inconvenience to me commute-wise when we first bought it, today it’s perfectly situated, and we totally love our neighborhood and neighbors. we have already made most of the major renovations (remodeled kitchen, new windows, upgraded central air and A/C, and an updated guest bathroom). We also made a commitment to own the house free and clear as soon as possible. We made our final house payment on December 14th, 2007, and I am not at all ashamed to say it is a wonderful feeling to have that monthly payment out of our lives forever!

2. Spending

Ten years ago…

We were fortunate in that we went through the pain of our significant debt pay-down (not counting a mortgage) early in our marriage. By 1998, we were debt free. Still, we had some big appetites and were willing to go and do and buy a lot of things that, today, look a bit silly or we don’t even have anymore. Still, it did feel really good to go and buy a brand new car for Christina for Valentines Day and pay cash for it (even if the cash was spawned from selling stock options I had at the time).


We have made great strides towards changing the way that we use and spend money because the days of rapidly appreciating stock options are a thing of the past. In fact, the shares that I used to own were liquidated and the cash was converted into ROTH IRA’s and our kids 529 plans. Without the friendly cushion of stocks we could raid whenever we felt like it, we’ve had to be more disciplined in our approach to spending. We use one credit card that gets paid off every month for convenience and shopping online, but most of our purchases are handled through an old fashioned cash and envelope system. We set aside a certain amount of money in key categories, and we use that money until it’s gone. Once that money is gone, that’s it for that category until the next pay period.

3. Retirement Planning

Ten years ago…

I had been contributing the maximum allowed by my company to our 401K plan (15%) for years, so I was doing what I thought at the time was the best I could do (and frankly, it was really all I wanted to put away at that time).


I’m not going to write down specifics or numbers, but compared to average 40 year olds, we’re doing pretty good (there were three years where my being out of active work because of my choice to go back to school caused a pause in my contributions, but I’m back in the saddle again). The one difference is that, instead of putting all of my retirement money into my company’s 401K, I now put in enough to get the matching that my company provides, with the rest of the money being saved for retirement going into two self directed ROTH IRA’s that my wife and I have set up. We’ve agreed to keep to the 15% of gross pay marker for the time being, since we have some other savings goals that we want to meet as well, but we feel that 15% over continued years will have us in good shape by the time I’m 70.

4. Tithing

I found it interesting that this category was included, and through additional reading, I was pleasantly surprised to find out that Latter-day Saints are not the only active and conscientious tithe payers out there. Many church denominations pay tithing and are just as devoted to the principle as Mormons are.

Ten years ago…

We used to pay tithing with the stock options that I was granted. To some, that may have been seen as cheating, but it’s a perfectly valid way to pay tithing, and I would annually make up a form letter for my brokerage and the Church’s financial organization in Salt Lake City to make this transaction. Still, while I felt I was living up to the letter of the law, I often felt that the spirit of the law was not quite being followed, in that it didn’t seem like I was making much of a sacrifice. It also had a net effect that we didn’t live by any kind of a budget at the time.


No more stock transactions; our tithing is a check that we pay at the beginning of each pay period, and we have made a commitment to make it the very first item that we pay (i.e. the “first fruits” of our labors). We make sure that it is 10% of gross pay each time (I work hourly, so we calculate it each pay period and then write a paper check for it each time). The effect of this change has been dramatic, not so much with the way that we pay it, but in the testimony building opportunities it has provided to us; since we take the first 10% each pay period to pay tithing, it makes us much more aware as to how we use and budget the remaining 90%. More to the point, it helps us keep money into perspective better as it relates to our lives. Paying that 10% reminds us that God owns all, and that we are meant to be good stewards with the resources we are given. Making that 10% gift first helps us keep that in perspective.

5. Attitudes Towards Money

Ten years ago…

We were both lucky and foolish in these years. We had a lot of money relative to our peers and we were more than happy to spend it. While we didn’t have credit card debt or any loans at this time, looking back I realize so many things that we did just on whims that, if we were to gather all the money we spent and count it, the amount would be staggering. We had fun, to be sure, but we could have been in a much more solid place today had we been less free-spirited with what we had and managed it better.


Now that we have three kids that are growing up very quickly and the possible costs that we will be facing in the future for things like college and missions, we have made a commitment as a family to be a family of “savers” rather than a family of “spenders”. We look to have fun when we can, and try not to be super austere in our measures, but we have turned a corner in our lives where we care much less about things like what people think about the cars we drive or the furniture we have or if we own the latest gadget. More to the point, today, we sit down together, take our paycheck, spend every dollar on paper up front, and work hard to not deviate from that plan. The net result is that we are able to save much more than we used to, and when we want to have some fun, or we want to buy something for ourselves or the family, we plan it and save for it, and we make sure that we can allocate for it and afford it *before* we go out to do or get it.

Bottom line:

My wife and I have changed a lot over the past ten years, and we have made a lot of progress over the years in key areas, but we still have a long way to go before we reach our “Pinnacle Point”. Ultimately, our goal is to save and invest enough so that we reach a point where the interest and dividends of our investments could replace my income. That goal is a*long* way into the future, but so far, we are situated in a way that we will be able to take advantage of good opportunities, and weather most down periods without too much stress or worry.

What about you? How are you different financially-speaking than you were ten years ago?

Wednesday, May 21, 2008

When the Music Stopped (Thank You, Laura)

The following was sent to me by a friend of mine who's son is currently serving in Iraq. I love the sentiment and the power of this, and though it did not happen at her son's point of deployment, she has received enough comments back from other servicemen to attest that this story is true, so I want to share it here:

For those who are unaware, at a military theater, the National Anthem is played before every movie.I recently attended a showing of 'Superman 3,' here at LSA Anaconda. We have a large auditorium we use for movies, as well as memorial services and other large gatherings. As is the custom back in the States, we stood and snapped to attention when the National Anthem began before the main feature. All was going as planned until about three-quarters of the way through The National Anthem the music stopped.

Now, what would happen if this occurred with 1,000 18-22 year-olds back in the States? I imagine there would be hoots, catcalls, laughter, a few rude comments; and everyone would sit down and call for a movie. Of course, that is, if they had stood for the National Anthem in the first place. Here, the 1,000 Soldiers continued to stand at attention, eyes fixed forward. The music started again. The Soldiers continued to quietly stand at attention. And again, at the same point, the music stopped.

What would you expect to happen?Even here I would imagine laughter, as everyone finally sat down and expected the movie to start. But here, you could have heard a pin drop. Every Soldier continued to stand at attention. Suddenly there was a lone voice, then a dozen, and quickly the room was filled with the voices of a thousand soldiers, finishing where the recording left off:

"And the rockets red glare, The bombs bursting in air,
Gave proof through the night That our flag was still there.
Oh, say does that star-spangled banner yet wave,
O'er the land of the free, And the home of the brave."

It was the most inspiring moment I have had here in Iraq . I wanted you to know what kind of Soldiers are serving you here. Remember them as they fight for you! Pass this along as a reminder to others to be ever in prayer for all our soldiers serving us here at home and abroad. For many have already paid the ultimate price.

Written by Chaplain Jim Higgins
LSA Anaconda is at the Ballad Airport in Iraq , north of Baghdad

Who, and what, is MKL?

As time goes on, I get farther and farther from the origin of this acronym, and I realised that a lot of people don't realize what it means or why I use it.

My name is Michael Spencer Larsen, and for 18 years of my life, I was perfectly content with it. However, in 1986, I started a band called Monikker (not a typo, that's how we spelled it; silly conventions of 80's rock were in full force here :) ). Of the five members, three of them were named Michael. We thought that would look silly in print, so two of us decided to change our names, and I decided to be one of them. I chose "Kelly" as my stage name. After some time, a lot of people in the music scene only knew me as "Kelly", but I wsn't interested in changing my name officially. Things got really interesting when istarted working for companies where people would call and ask for "Kelly Larsen" and the receptionist would say "I'm sorry, there's no one here by that name".

For a little while, I actually signed things as Michael/Kelly Larsen, but I figured that looked a bit schitophrenic, so I lost the slash and signed everything as "Michael Kelly Larsen"; thus people would realize that Michael Larsen and Kelly Larsen are the same guy. that convention lasted for close to ten years and through a number of different jobs. Today, even though I haven't used "Kelly" as any type of official name for more than 16 years, MKL is how most people know me, so I still use it.

Now aren't you thrilled to know all that :)?

Gone Country?!

I'm writing this one for my wife and kids, because they seem to think that Dad has recently lost his mind. I want to assure them that their Dad's mind was gone long before this (LOL!), but also try to explain to them (and others) a little bit about how my brain and music mesh with one another.

Having once upon a time been a professional musician (you can go to if you're brave enough :) ), I can safely say that my casual enjoyment of music has been virtually destroyed. I cannot listen to standard popular music without dissecting it and processing it through my brain as though it were independant tracks. I literally will listen to a song and isolate the drum track, analyze it, isolate the guitar parts, mentally figure out the chords, isolate the bass guitar, figure out its counterpoint to the other instruments (if there is any) and then analyse the vocals for pitch and emotional depth, and that's not even getting into what I do for the lyrics. I don't know when this strange tick of mine developed (I'm guessing when I first started practicing and forming bands in earnest around 1986), but it's left me almost incapable of just sitting down and enjoying music as it is... with perhaps three exceptions. I can listen to Classical music without going through this process. I can listen to Native American music... and I can listen to Country.

There's more to it, though, and I realized something about my fascination with Country music lately and the impact it has on me:

1. There is no better music in the world when one wants to settle in and do some hard, back-breaking work, or even if there's a long job ahead that needs to be done. Country music is perhaps the greatest productivity tool in my arsenal.

2. It's actually cool to be patriotic in Country music.

3. Some of the most clever lyrics ever written are ensconsed in Country, and there is no better storytelling tradition in music to be found today than in Country (Merle Haggard and Dwight Yoakam are two of my favorites, and Brad Paisley is rapidly rising in my esteemed as one of the cleverest newer wordsmiths).

4. There is genuine emotion to the songs, and some of them are the closest I've come to crying listening to music in decades. At the same time, some songs provide the best laugh I've had regaring songs and lyrics in years.

5. It seems that Country is the last place where singing about a love of God is mainstream. In just about every other genre, if you sing about God, you either have to declare yourself a Christian performer, or you have to somehow do it in a mocking, ironic tone.

6. Country does not take itself too seriously. This is something I think the current trend of rock/metal/emo/etc. needs to remember. Music can be many things, but please, leave some room for it to genuinely be fun at times!

So who am I listening to currently? Little Big Town is one of my favorites; imagine Fleetwood Mac with a Southern twang and you'll have a good feel for these four. Great harmonies and four great and distinct voices. Montgomery Gentry is also frequently played by me; these guys do the traditional country thing with a blend of the Byrds and Skynyrd as well. Brad Paisley's "5th Gear" is a great album both of catchy sonds and really good guitar playing; Paisley has a very legitimate claim to being this generations Albert Lee. Yes, he's that good. Gretchen Wilson cracks me up every time I hear her, yet at the same time, you can tell she has a voice that will rip the roof off the place (and she does a bang up job channelling Ann Wilson; go to YouTube and check out her rendition of Heart's "Barracuda" (woo!!!). Plus, you really can't go wrong with George Straight, Merle Haggard, Dwight Yoakam or Charlie Daniels, especially his old stuff, and I've always had a thing for Steve Earle, ever since I first hear Copperhead Road oh so many years ago.

Now, if y'all will excuse me, I have some Sugarland queued up to listen to :).

Tuesday, May 20, 2008

Welcome to MKL's Muse

Greetings and welcome to anyone who happens to find this page. I decided that there are some things I want to say that just seem to work better in a blog format, and plus, I realize that it takes an incredible amount of chutzpah to write about one's personal life and put it out there as potential entertainment for others. However, that's *exactly* what this is for, and *maybe* I'll actually write something profound and Earth-shaking in the process. I wouldn't get your hopes up, though (LOL!).

By way of introduction, my name is Michael Larsen. I'm a 40 year old guy as of this writing. I'm an active member of the Church of Jesus Christ of Latter-day Saints. I'm married to, IMHO, *the* coolest woman on the planet! She has to be, she puts up with me :). I'm Daddy-O to three pretty awesome kids, and I work as a Quality Assurance Engineer for a small company in San Francisco.

Some random things about me, much of which may or may not inform this blog in the future:

I love my church, the people and the opportunities that come out of my being involved in it.
I adore my wife, who is, again, the coolest woman in the world by virtue of her putting up with me.
I love being a Dad, and I dote pretty hard on my youngin's.
I'm a Scouting freak.
I'm a Personal Finance junkie.
Life Hacking is a favorite hobby.
I love Native American culture, especially the modern pan-Indian movement that surrounds and epitomizes the current Pow-Wow world.
I'm a fan of tremendously varied music.
I'm a retired snowboard competitor well past his prime, but still love riding with every fiber of my being.
I'm a casual gamer (of the Video persuasion).
I've been terrible at keeping a personal journal much of my life, so I want to have this basically be it.

Let the games begin :).