I Never Saw it Coming ...

Someone asked me the other day why I don't own a house. Considering my age and income, its a pretty good question.

There are lots of reasons I haven't bought a house yet. Some of it just goes to my lifestyle. I want it to be as flexible as possible because I really don't know where life is going to take me. Three years ago, you could have never made me believe that I would move to Seattle. Just a year ago, I was prepared to stay in Washington a few more years. Each time an opportunity came, I grabbed it because there was nothing like a house holding me back.

But that's not the real reason, or at least not the whole reason. It's much more a convenient story I tell to people so they just leave me alone. I'm a traditionalist when it comes to buying a house. I want it to put down 20%, a 30 year fixed mortgage, and I want to only spend about 33% of my gross income a month. When I finally got to the point I could put 20% down on a place, the places I could afford just didn't seem worth the money. I couldn't understand how someone like me, who earns well above the average, couldn't afford a decent place.

So I waited while the prices kept going up. I knew they would eventually come down because I just looked at my own situation. If someone like me, who saves like crazy, earns lots of money, and lives a understated lifestyle couldn't afford something, how could everyone else. So I waited while all my friends told me I was being stupid. It was hard, believe me. Logic seemed to be flying out the window because prices kept going up and up. But I knew things would eventually come back to a sane level. They had to.

That's why when I read articles about the problems in California housing prices, I just laugh. Just read the subtitle, "People in L.A. are coping in ways they never imagined with a crisis they never saw coming."  How did people not see this coming?  I saw it coming five years ago when I refused to buy a house here.  I saw it three years ago as I left the state.  I saw it two years ago as the peak was finally hit and prices topped out.

However "mean" it sounds, I just don't feel sorry for any of these people.  I really don't.   People bought something they could never afford.   Now that sanity is returning to the world, people are looking for others to pay for their mistakes.  The sad part is, it will happen.  The government will step in and help.  That's just how things seem to work around here these days.  Not sure what that does to moral hazard or how people like myself, people who don't get into these types of problems, will react.  What are your thoughts?  Did you see it coming?

Why I Left Microsoft

I wrote this post a while ago and never posted it.  However now is as good as ever, especially given my distance to the situation.

1. I didn't want to be in Seattle - This was a relatively minor reason but a reason nonetheless.  I am at the point in my career that I was seriously thinking about what to do the next five years.  Being in Seattle wasn't really on the list of things.


2. Broken promises - I came to Microsoft with certain expectations and certain things were told to me would happen.  They didn't happen.  I'll leave it at that.


3. I just didn't enjoy work - I know it is work, and that you shouldn't expect it to be a party all the time, but I'm the type of person who wants to really enjoy my work.  Give that I am the type of person who works long hours and spends most of my time at work, it is important that I enjoy what I do.


4. The wrong things are rewarded - I saw a few instances of people being recognized for things and behaviors which I just didn't think were appropriate.  It honestly seemed to me that it paid off to be a jerk.


5. It was too hard to get things done -This was a combination of things.  Part of it is just being at a big company with large interest to protect.  Part of it was people trying to do other people's job for the sake of increasing their scope.  Part of it was just being a very small fish in a huge Windows/Office Ocean.


6. Slow Career Growth - Probably the biggest reason I left.  I thought about where I wanted to be and how long it would take me to get there.  Today's Microsoft is not the Microsoft of old.  Microsoft is top heavy with people with long tenure.   Microsoft's employee base was doubling every few years.  You could advance simply because of the rising tide.   That's not the case anymore.  It would have taken me twenty years to get where I wanted to be.  No way I could see myself working there for the next twenty years.

I could probably go on, but this outlines the biggest reasons.   Don't get me wrong, there were plenty of reasons Microsoft can be a great place to work. The resources are fantastic, the benefits outstanding, and the quality of people who work there is generally pretty high.

It wasn't an easy decision to come to, even though I knew it was the right decision.  Looking back, I absolutely made the right choice. I can say that even though I have issues with my current job.  The problems I was encountering were deal breakers.  I could have stuck around and just "floated" along.  It would have been easy not do much work and just get by.  But it just wasn't me.  Besides, the opportunity cost was too high.  Every day I stayed at Microsoft was a day I wasn't doing something else.  I just couldn't have that.

I want to say thanks to my friend Rick who provided me with a fantastic piece of software, Paint.NET.  It's what I used to crop the above picture.

A Quick Tax Lesson

I keep hearing ideas about a gas tax holiday. Every time I hear it, it makes me shake my head at the idiots we have to choose for our politicians. Simply put, this will never work.

First off, let's talk about the size of the break. For those that don't know. The federal gas tax is $0.18. With gas at $4.00 a gallon (and rising) this amount to about 4.5% break. Not shabby but not great. Most time lines call for a three month hiatus. Now I'm a pretty typical driver and I drive a typical car. I fill up on gas about once a week. Maybe 5 times a month. When I fill up, I put about 14 gallons of gas in my car. Doing the math

(14 Gallons*$0.18/gallon) * 5 * 3 months = $37.80

So this "big break" saves me a total of about $38. With gas at $4.00/gallon this saves me a little over a half a tank of gas over 3 months. Great!

But that isn't why this is stupid. Simply put, there is no way that the end user will ever see the full benefit of this holiday. Econ 101 tells you that the incidence of the tax IS NOT the same as who pays the tax. Simply put, just because you pay the tax doesn't mean you are the one who is really bearing the burden. Let's say the repeal the tax. Should you expect an immediate $0.18 drop in gas prices? A "yes" answer assumes that the consumer bears all the burden of the tax, but that is rarely if ever true. Most likely, the gas station owners also bear a burden of the tax. In which case, the price of gas will fall even less. It may very well be the case that gas station owners bear ALL of the burden of the tax, in which case, gas prices won't fall at all and only station owners will actually profit.

I literally learned this in my Econ 101 class so I'm not sure why our highest politicians don't quite get this.

Out Before It's Too Late

I have a co-worker who has decided to leave my company after only about two months on the job.  I can actually empathize a lot because there were times I wanted to leave in the past few months due to mounting frustrations with a few things at my company.

It raises an interesting question, should you leave a job early on if you feel unhappy in the first few weeks or months.  There are two sides of this argument.

On the one hand, you don't want to make a premature decision.  A new job can be difficult and deciding to leave a job too soon may be a rash decision.  Normally, there is an adjustment period, and you should allow yourself to figure out how to work in the new environment.

On the other hand, the first few weeks you should be the most excited about your job.  You are learning new things and you hopefully escaped the reasons that may have caused you to leave your last job.  If you are miserable the first few weeks on the job, is there really hope things will get better when normally they just get worse?

I obviously made the decision to stay, and for me I think it was the right decision.  I definitely hit some friction, but I gave it some time and now I am starting to hit my stride.  No doubt, many of the problems I faced are still there.  I ironically have the exact opposite of what I had at Microsoft and what caused me to leave there.  The grass isn't always greener on the other side though and I have found that extremes are bad no matter how you slice it.

However, I can't blame my co-worker for leaving.  After all, the "penalty" you pay for leaving a job you just started is probably pretty low. Chances are you haven't even adjusted your lifestyle to match your new job.  You probably haven't moved if your job was relatively close by or you haven't made a switch like your spouse getting a new job.  You don't even have to put this short stint on your resume so the "gap" in your resume will likely be non-existent.

Rebate Checks - Will they Matter?

I'm kind of torn about the idea of tax rebate checks, and not just because I probably won't be getting one.

Anything that gives less money to the government and more money to the people, I'm all for. I already think that the government is too big, and philosophically believe that people should keep more of their own money and give less to government.

That being said, I'm also no idiot. Without equal spending cuts somewhere, less tax dollars for the government simply means bigger deficits in the future. It is either pay now or pay later, and I would rather know what we are getting ourselves into sooner rather than later.

I think my biggest gripe with the tax rebate checks is that I honestly don't think they will matter. They definitely will not accomplish what Bush wants them to accomplish which is to stimulate spending and jump start the economy. Here is the thing. A lot of Americans are just struggling with the basics. Food and gas prices are getting to the point of ridiculous, and $600 isn't what it used to be. For most people, that is just a few weeks of food and gas, and I think most people are going to spend their money this way.

Besides, it will just exacerbate what is going on in the economy. To pay for the tax rebate, the money has to come from somewhere. There is no such thing as a free lunch, the money comes from somewhere, and it comes from abroad, namely China and the Middle East. So what happens? The government is just going to borrow money for the rebate from these countries, and see the American consumer give it right back. The typical American consumer is going to spend it on something either made in China or the gas that comes from the Middle East. It's a great deal, if you are one of these other countries.

Living Debt Free

Is it possible to live debt free?  It was a questions I saw on the front page of MSN Money today.  Since I am probably in the 1% of Americans who is 100% debt free, I felt qualified to answer this question.

Yes, it is possible to live debt free, and it really isn't all that hard.  I have found it easy becasue

1. I grew up without much money


2. I was determined not to grow old without money

So throughout my whole life, I have planned.  I made sure that I would end up with the right job and that I would live the right lifestyle.  So when you combine a high salary with a simple lifestyle, it becomes very easy to be debt free.

Right now, I have no debt of any kind unless you count my credit card which I pay in full every month.  I have no mortgage, no car loans, no student loans, nothing.  It's fantastic.  You just live within your means.  You do it long enough and lots of possibilities open up.  For example.  This weekend, my girlfriend and I decided to buy some furniture.  We saw a TV stand we really liked.  Like all good furniture it is expensive.  In total it cost me $1400.  This wil shortly be paired with a TV that cost $2500.  That will be followed up with a living room set that will probably cost around $2000 and that will be followed by a bedroom set that some more as well.

Now I don't ever spend money like this.  This is highly unusual for me.  But the point is, I can do it, and I can do it all without incurring any debt.  This is coming straight out of savings.  Now to be clear, debt isn't a bad thing if used correctly.  However, I believe it should only be used for productive reasons.   That is, the debt you incur should only be used if the money will be used to earn more money later or to finance a purchase that would otherwise be impossible.  This generally only means

• Student Loans


• Buying a house


• Buying your first car

Student Loans is obvious, this directly leads to you being able to earn income later.  A house falls under the impossible to do without category (although this wasn't always the case).   The latter I allow for simply because it is a big ticket item that a lot of people just starting out can't afford to buy without a loan.  And since most people have to drive to work, I think it is acceptable to take out the loan.  Every car after that though I think you should have the ability to pay for it in cash.  I qualify with "ability" because even though I could now buy pretty much any car I wanted to in full, I doubt I would buy a BMW M5 in cash.  The money could be used better investing rather than laying it all out for a car.

What do you think?  How close are you to being debt free?  Do you find it hard to live with or without debt?

Monthly Bills - To Spend or Not To Spend

Today, I decided to upgrade my gym membership. I have access to all 24 Hour Fitness Sports. These are generally the highest level club for the chain. However they have a few limited Super Sports which are a little bit bigger and nicer. In particular the regular sports around me don't have full basketball courts but the Super Sport does, so I joined.

Now, it wasn't an easy choice for me. One thing I'm pretty adamant against is having too many financial obligations that you have month to month. It is almost a sure way to spend more money without knowing about it. It's important that most of your costs are variable, not fixed. That way, when you have to scale back, such as when you quit your job, it is much easier to do.

In the end, I decided to do it because I would use the gym a lot less if I didn't. I haven't been going to the gym as much as I would normally and it is important to me to be in good physical health. Since I love basketball as much as I do, it is really important that I have this option available. It will cost me an additional $32 a month to go, since I'm paying for me and my girlfriend's membership. That comes out to almost $400 more a year. I also had to pay $160 in total initiation fees, that kind of sucked. But it is a month to month membership, so if I decide to cancel, sometime in the future it shouldn't be a big deal.

That's the key. If you are going to take on another financial obligation, make sure you can get out of it easily. That's one reason I'm hesitant to sign up for DirecTV service even though thy probably have the best HD service around. They force you into a two year commitment.