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My HELOC Epiphany

I’m preparing to get the PMI removed on my home several months down the road, and to lower the costs, I’m working with my local bank to apply for a HELOC (home equity line of credit) and which would include a free home appraisal—and would potentially allow me to get around the appraisal costs when it was officially time to get the PMI removed. On the other hand, if I go ahead and get the HELOC now, it would allow me to finance some minor home improvements at a lower interest rate than unsecured, consumer-based credit.


Here’s the thing that caused my HELOC epiphany: My local banker tells me that “home appraisals aren’t really that much money.” Now because I’ve done some marketing work for real estate and home improvement companies in the past, I happen to know that the average cost of a home appraisal is $300-$500. I just couldn’t but think in real-time: what the hell, $500 is a decent chunk of change. Which leads me to think about when I was 16 and $500 felt like a veritable fortune. To the average person on the street—whatever in the hell that means—it’s surely a veritable fortune. So yeah, saving on the cost of the appraisal would feel like a pretty sizable win for me.


It also triggers another recurring thought I have about money: The first dollar you receive on the job in a day, week, month, or year has a tremendously different personal value than, say, the millionth dollar you receive on the job. People who make a million dollars a year have a fundamentally different relationship to the individual dollars than the person who earns only a single dollar or a thousand dollars or ten thousand or a hundred thousand, even though the value of the individual units are supposedly the same. $500 would buy so many meals and basic necessities for people who need them. I want another $500 to try to pay down student loan debt among other things.


It’s like another thought I have that attempts to process the impossibility and inevitability of having a relationship to money: “You take a thousand dollars here and a thousand dollars there and pretty soon it adds up to real money.” But of course, it would still take quite a while to reach $50 billion dollars and become too busy to pick up, say, $25,000 off the street:



Maybe the craziest thing is I think these things, but I also don’t consider myself a socialist. Just someone who believes more highly regulated financial markets based on identifying value instead of indiscriminate capital formation. Which I realize makes me a socialist to a lot of conventional, two-dimensional capitalists out there. Put me in a room with a bunch of self-identified socialists and it won’t take long for me to find something to disagree with. (I realize this characterization makes me seem judgy and self-righteous, but I can’t seem to escape it).


My spouse, ever the logician, tells me this is a thinking error. I, myself, always the fool, tell her all thoughts are flawed. My sister-in-law, forever the mental health professional, explains that thinking errors have a more specific meaning in a psychological context. Thinking errors are like thoughts that take you down the wrong path in a maze. It doesn’t really matter why you took that path or what’s at the end of it. It’s not going to help you get out of the maze. Oh yeah, I say, well, what if the major financial institutions of the world and the telecommunications company of the world have designed a system where it’s not a maze but a labyrinth in which the entry door closes behind you. What then? Do we sit down on the path, or do we keep scratching at the walls? I’m a grouchy old curmudgeon, and I worry for the day when I stop being a grouchy old curmudgeon.


Payroll Software Tips: Getting Paid vs. Paying Others

I’ve been on both sides of this phenomenon in terms of being able to count on getting and depositing a paycheck and the difficult position that comes when making payroll depends on receiving third-party payments. Going into debt, business or otherwise, is one thing, but if you literally don’t have funds in the account or, more often, there’s some type of clerical or printing error, things get really crappy really fast on all sides. You have people who have bills that need to be paid. You have long-term employee morale to consider, especially when your business operates in a high-stress industry like healthcare. Too often, there are no good answers.


DIY Payroll

It also points to one of the things that make decisions around payroll and accounting expenditures, both software and personnel, so difficult to make. It has to be cost-effective, but it also has to be reliable. One of my big pet peeves or maybe just general frustrations, both as an employee and an employer, was the idea of having to choose between not having a reliable payroll solution at all and overpaying for some fancy system that was little more than a glorified calculator and laser printer with special ink.


Partly because I was good at math and partly because I never had too many employees, I always kept my own books and I always did my own payroll—with a little help from free and, in some cases, cheap payroll software. With this in mind, if you don’t have these skills, if your company has 50+ employees, or if it’s all you can do just to keep up with meeting your business demand, then by all means hire an accountant. There are very real dangers to doing your own bookkeeping.


Free Accounting Software

Or maybe you’re the small business accountant looking for a cheap software solution for your client roster. In any case, what I generally found to be most effective is a combination of free accounting software paired with a low-cost payroll solution. Now, generally speaking, some of the biggest and most popular free software brands you’ve heard before. Based on in-app advertisements, Wave Accounting is also becoming something of a household name (among accountants anyway) for free accounting software. GnuCash is another great option for free software with basic accounting options. Quickbooks is the big industry name for free or low-cost software. A lot of businesses gain free access to basic Quickbooks accounting through associations or promotional deals.


Cheap Payroll Software

Almost all of these options have pay-for products when it comes to payroll and/or more advanced accounting software needs. Quickbooks has its equally well-known Intuit software line. Indeed, that’s “how they get you.” Well, that and monthly subscription rates that make it seem like just another monthly bill that’s part of running the shop.


Look, I get the draw and comfort of sticking with the same brand and platform, but here’s where Finance Gets Personal: I remember, an old college friend who also ended up in accounting was in town, and we were talking payroll software and how that was really the point in which you need to invest in pay-for software. We were at this chic French restaurant and were also talking about the rise of software subscription services including those for payroll. He was like, “I don’t understand the appeal of this cloud-based software and monthly fees. For one low price, I can get a whole year of payroll software and support services.”


He was the first one who told me about Advanced Micro Solutions and its payroll platform. An unknown but little dynamo in Oklahoma City. They even still send CD-ROMs to their “older” customers, but their software is the least expensive on the market and it does all you need. So, that’s my tip: If you don’t mind having a different system for your payroll than your free and general accounting software, small business owners in particular can save a few dollars on their payroll software and accounting costs.

Spending Money on Experiences vs. Things

Research shows that people generally tend to be happier when they spend more money on experiences and less money on things. It can sound a little hippie and new-agey to those who are trained to look at the appreciation rates of commodities and other hard assets, but in my opinion, there’s an even more fundamental truism at work here: Time, not money, is life’s most precious commodity.


Taking a Second Look

If this advice sounds over-simplified, that’s because it is. The primary study for this claim comes from San Francisco State University and looks like sound science to us, but it suggests that people generally undervalue how much experiences have to offer their happiness compared to things. In other words, this doesn’t mean that all experiences are worth the price or that a purchase of a material thing can’t be a smart buy. It’s also worth pointing out that many purchases, including some major life purchases, seem to straddle the line between an experience and a material thing. Part of the value in buying a car or a house is the time and experiences you’ll have living and driving, but then where do you draw the line? Both gold and memories can last a lifetime, but do weekly trips to the shopping mall really make your life better if you end up swamped in consumer debt.


Moving the Needle

Even still, the research is provocative and reinforced by plenty of anecdotal evidence. And since we all face complex financial decisions, it doesn’t hurt to see what the hard evidence has to say on the subject. Again, finding a balanced approach is best—or at least an approach that’s balanced with your own personal priorities and living your best life possible. To this point, we like to think making wiser financial decisions involves moving the needle slightly more toward experience and slightly away from things.


Being smart financially doesn’t have to be a complex order. Watch famed financial scholar Harold Pollack discuss how all the financial information you will ever need can fix on an index card:

My First Memory of Brand Names

I’m sure there were plenty of encounters with other brands and merchandise along the way, but the first real memory I have with brand names is being in late grade school and throwing a huge tantrum in the shoe store because I wanted the Nikes and my mom was pushing the Converse. Nikes were cool at the time, and I remember she told me that Converse was the shoes to have when she was a kid. The Nikes were more. What’s odd is that I can’t remember which pair of shoes we ended up getting. I think it was the Converse but I’m not for sure. I remember that money was tight, but I can’t remember whether my dad was laid-off or not during this time.


I don’t think it was a coincidence that it was shoes, either. I don’t know what it is about shoes, but they seem particularly and perpetually swept up in social status, even more so than other items of clothing and even in the face of what one might assume was a primarily functional piece of apparel. My grandmother told me that during the Great Depression, a lot of other families were worse off than hers, so while she had shoes to wear, many of her school peers did not. So she would get picked on and her shoes would get stolen. Her parents would buy her more shoes, but these too would get stolen. Eventually, she would stop wearing them. Before school started each morning, she would go to a hiding spot and hide the shoes so that they wouldn’t get stolen anymore.


Anyway, this childhood memory continues to inform my attitude about brand names today. Which is to say, I now couldn’t care about brand-name shopping if I tried. It’s not even that I’m a crusader against brand names, or those who have their favorites. It’s just that, for me, anchored by this memory, feeling pride in a brand name seems like betrayal on a personal level that’s hard to change at this point. In fact, while I wouldn’t consider myself a crusader against brand names, it’s not so much that I don’t care about any brand names. It’s just that they’re all negative. Starbucks putting my favorite local coffee shop out of business. The customer service I’ve received from Comcast and CenturyLink. Stuff like that.


What about building trust and loyalty with a brand that has a track record of success? I’ve been too disappointed too many times by the big-name brands. Everything feels like a random hodge-podge of quality from one product and service to the next. Which isn’t to say that I don’t research the things I buy. It’s just that I spend much of that time scouring the online ratings and review from consumers about the individual item in question, rather than relying on a brand name.


The Fine, Fine Print of Buying a Home

Whether it’s their first home or their fifth, a lot of home buyers are excited about searching for their new home. It’s a momentous occasion. It’s also one that tends to be split into all the various financial considerations and the personal passion for a place you can truly call your own. You need to work to optimize your credit rating, minimize your interest rate, find mortgage terms that make sense for our household, and, of course, do all your due diligence on the property itself. It’s like buying a car, starting a retirement fund, trying to do your own taxes, and getting an X-ray of your spending and saving habits all in one.


You’ll probably also be subjected to any number of blogging experts, friends and family, and banking reps telling you to do your research and carefully plan. You need to remember, you’ll be told, that your home is going to be your biggest financial asset—often by a large margin.


And the lion’s share of this advice is true, more or less. But here’s the thing: For most home buyers, it’s not that we don’t understand the weight of the decision or the importance of gathering as much information as we can before making a home-buying decision. Rather, the central problem is that it’s logistically implausible to do all the necessary background research. Not only is the home buying contract several pages of dense legalese in which, for example, realtors in training routinely sit through four hours of instruction on the first page, but if you’re working with a home lender, you’re likely to have a crush of reporting requirements for financial information and form-based documentation. Simply keeping up with the bare minimum of this paperwork as well as the bare minimum of, you know, life—well, it doesn’t leave a lot of time for reading up on the fine, fine print. Deep research about contract ambiguities and the role of third-party vendors, especially property mortgage insurance, is not in the cards for the vast majority of home-buyers.


Realtors and Home Loan Officers

It’s easy to think that these problems are solved by working with a knowledgeable real estate agent and a home loan officer you can trust. But it’s actually much more difficult to find these types of professionals than you might think. Word-of-mouth and online reviews can be manipulated and obfuscated, but even the standard services offered frequently leave much to be desired. If the realtor is put to sleep by the hours of lecturing on the first page of the home sale contract, how much are they going to know about the rest of the document? Whether it’s clearly communicating the risks of adjusted rate mortgages or updated rules about mortgage insurance, home loan officers don’t always seem to have your best interests at heart or else are ill-informed by those who actually write and enforce the rules.


Real Estate Market Realities

I’m not saying that home lending institutions are infallible—lolz, tears, lolz. Even apart from their role in the Great Recession, it’s not difficult to find stories in which real estate investors and other actors find ways to exploit the legal code to their own benefit and at the expense of the lending institution. But it goes without saying that this isn’t the experience of the typical home buyer.


Or, at least, I wish it went without saying. I’ve had more than a few friends and family members go through the home buying experience and, almost without exception, their responses were cynical in attitude and/or bitter in mood:


  • “We made $40k on our home and thought we got out at the top of the market at the time. Little did we know. Still, we feel really fortunate with the place we have now. It’s a rental at a great price, and now we’re not letting our housing dollars go to a big bank.”


  • “We got a favorable appraisal and the market continued to surge. Our realtor, our home loan officer, and every online source at the time talked about getting the property mortgage insurance removed when the loan-to-value ratio hit 78 percent. So when our market analysis hit that point we made the request. We got a letter in the mail saying that the PMI was ineligible for removal during the first two years and required a 75 percent loan-to-value ratio during the first five years. Which okay. Whatever. But at least tell me so I know what’s what. We went through everything else with the purchase of our home, why wouldn’t we also talk about the terms of the property mortgage insurance?”


  • “I made an appointment and cleared my schedule to meet with the home loan guy from the bank. I went to the appointment with a tape recorder so I would be able to go back and reference everything that we talked about. We went over a bunch of stuff, so much so that it was impossible to keep track of it all. It seems like, at some point, you just have to take it on faith.”


And therein lies both the problem and the answer for the typical home buyer. One of the most important financial decisions of your life hinges upon doing the best you can to make a well-informed decision, but even then, it’s all too easy to overlook something that threatens to harm years of planning and sacrifice. It’s also another lesson in why homeownership is best when the focus is on the experience and long-term financial potential, rather than any short-term accounting gain.