The leak in our bathroom ceiling

Ah, the joys of homeownership.

Remember the peeling paint in the bathroom ceiling that I mentioned last week? The peeling paint that I felt certain was due to humidity from the shower and lack of adequate ventilation? Well, I was wrong. The paint is peeling because we have a leak in the roof.

It seems to be a small leak, but it’s a leak nonetheless.

Monday morning, I noticed that there was a tea-colored water stain in the area where the paint had peeled. “I don’t like that,” I thought, and I snapped a photo.

The leak in our bathroom ceiling

I drove up to the family box factory, where my brother and I spent several hours waiting for Mom to be discharged from the hospital. While we waited, we sorted through her paperwork to be sure we had everything in order. We updated her personal-finance records. We chatted about the future.

In the end, Mom was not released from the hospital on Monday, so I drove home in the heavy rain. When I arrived, I checked the water spot in the bathroom ceiling. Had it grown? It had.

The growing leak in our bathroom ceiling

So, I ventured into our attic for the first time.

Crawling around in the dark, I managed to locate three roof leaks. None of them were extreme — there was no water pouring in anywhere — but all were most certainly leaks.

Yesterday morning, I climbed on the roof to see if I could locate the sources. I could not. Although I helped install a roof once long ago — back in 1993! — I’m no roof expert. I poked and prodded at the shingles, but I couldn’t find any obvious damage. (The source of a leak, of course, isn’t always where the leak manifests. The damage could be upslope and running under the shingles before it finds a spot to drip.)

Because our attic had no walkways (meaning that in order to move around up there, I had to move from joist to joist), I bought ten cheap boards at Home Depot. I hauled them up the ladder and into the attic, then nailed them down in order to make it somewhat easier to move through the cramped space. After that, I moved in to get a closer view of the leaks.

Ultimately, I decided there are two (possibly three) problems:

  • There is a very small leak — a seep? — coming from the chimney. This is likely due to problems with the flashing, which the home inspector had called out in August. This seep wets a rafter, but I can’t find any signs that it ever drips. The insulation and joist below weren’t wet, and I can’t find anything inside the house that would show previous problems.
  • The larger leak, the one that spurred all of this, is near a solar tube. The wettest area is near the downslope part of the solar tube, which makes sense, but the upslope part of the roof is wet too. To me, this indicates that the leak could be above the solar tube — or that the entire area around the cut-out is problematic.
  • The third problem spot is about twelve inches downslope from the solar tube. This might be a third leak, but it might also be residual run-off from the bigger leak upslope. I don’t know.

After three hours mucking around with the roof, I came inside to do research on the interwebs. Is this something I can fix myself?

I decided that while repairing leaks is theoretically non-difficult, it’s not something that I’m qualified to tackle in the middle of Oregon winter. If this were summer and I had time to mess around with the shingles, fine. I’d try it. But it’s not summer. It’s a very wet winter (as always), and I’m afraid that if I began to tinker, I’d make things worse.

I called the experts.

The man who answered the phone at the roofing company asked me some questions about the issue. “This doesn’t sound too bad,” he said. “We’ll send somebody out tomorrow or Thursday. If this is as simple as it sounds, he should be able to fix it in an hour or two.” I sure hope so! There’s a $250 charge just for coming out (which includes the first hour of work), then it’s $130 for each additional hour. Plus materials, of course.

While I know that things like this happen with houses — especially older homes like ours — I can’t help but be a little distraught. We just sold a home that needed constant repairs (although never on the roof, funny enough), so I have a bit of PTSD. These roof leaks are probably a minor one-time blip. I get that. But the cynical side of me worries that this is an ill omen.

When we bought this house, Kim and I talked about future changes we’d like to make. There’s not a ton to do, but there are a few larger upgrades we’d like to tackle.

We hate the carpeting in the bedrooms, for instance. It’s an off-white that stains easily and shows every bit of dirt and debris. Yikes. I wanted to replace the carpeting before we physically moved in. Kim convinced me not to. In retrospect, we should have done it.

The biggest project we’d like to tackle is remodeling one (or two) of the bathrooms. We have three bathrooms but no bathtubs. Because Kim and I both like to soak, this is a nuisance. Now that we’ll have to repaint the ceiling in the hall bathroom, I’ve begun toying with the idea of taking the opportunity to actually remodel that room this summer — and to do it myself. It would be a challenge, no doubt, but I think it might be fun.

We’ll see…

from Get Rich Slowly https://www.getrichslowly.org/leak-in-our-bathroom-ceiling/
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Drama in real life: Making planned gifts before death

My mother’s health has been declining over the past few months, and it’s produced a wee bit of year-end financial drama in our family. (The word “drama” is a bit of an exaggeration. Maybe it’s produced some year-end financial consternation?)

As long-time readers will recall, my mother has been in assisted living for more than a decade now. She lives a mellow life filled with television, her pet cat, and a regular routine. Because she has cognitive problems, it’s difficult for her to communicate. The doctors call her “non-verbal”, and they can’t explain the cause. She cannot form complete sentences (sometimes two words is tough!), and it seems as if she cannot formulate complex thoughts. It’s a mystery to everyone.

Today — at this very moment — my brother is driving my mom to the emergency room. It’s her third visit in six weeks, and it’s always the same issue: vomiting, dehydration, confusion. During the previous two episodes, a few days of hospital rest helped her, and she returned to the assisted living facility feeling better (and actually able to carry on a basic conversation, like you might have with a two-year-old).

So, Mom’s health is declining. That’s important point number one.

Important point number two is that her estate is larger than we once realized. For many, many years we believed that Mom had barely enough to get by. And it’s true that she’s never had a lot of cash in her bank account. However, we recently realized that when you look at her net worth, Mom actually has a sizable estate.

First, she owns an old house on two acres of land. Second, she owns 60% of the family box factory. Third, she owns the two acres on which the box factory sits and most of the structures on the land. Next, she has $66,000 in her bank accounts. Lastly, she has $437,000 in a SEP-IRA with Vanguard.

All told, she has a net worth of roughly $1.5 million, of which about $500,000 is liquid.

If Mom were to die today (or tomorrow or next month), that part of her estate in excess of $1,000,000 would be subject to a 10% estate tax. (This is the Oregon estate tax. The federal estate tax exemption is absurdly high. Good grief, is it high!) So, based on her current balances, that tax obligation would be about $50,000 — 10% of $500,000.

Please note that although I’ve done my best to provide accurate numbers and information in this article, it’s quite possible that I’ve made a mistake. I’m not an accountant, nor am I a financial planner. Please feel free to offer corrections.

Now, it’s common in situations like this for an older person with wealth to reduce estate taxes by gifting assets before they die.

Under current U.S. tax law, each year you can make a tax-free gift of up to $15,000 to any individual. Because Mom has three sons, she could give us each $15,000 per year without any sort of tax consequence. This $45,000 in gifts would reduce her estate by $45,000, theoretically saving $4500 in future taxes.

My cousin Duane, who has no financial interest in any of this (but who, because of his own struggles with throat cancer, has been giving tax-free gifts to his family), believes strongly that it’d be foolish to not make these tax-free gifts from Mom’s estate in 2021. To Duane, we’re “flushing $4500 down the toilet” if we do not write three $15,000 checks today.

However, there are other considerations.

  • First (and least) is that I have power of attorney for my mother. I’m very careful to avoid anything that would look even remotely self-serving. I’ve heard plenty of horror stories from other families where one or more people has essentially raided the wealth of an aging parent. I don’t want to be that person. (But honestly, this isn’t one of those situations.)
  • Second, Mom’s expenses are increasing. Her monthly rent at the assisted living facility is going up, for example, and she’s clearly incurring additional medical expenses lately. (Although her health insurance will cover a bulk of those costs.) My brothers and I are worried that Mom won’t have enough money to cover all of her expenses in the future. This may be an unfounded worry, but it’s still a worry.
  • Third, estate tax is only part of the equation. I e-mailed my accountant. He pointed out that sometimes it’s better for beneficiaries to inherit assets rather than be gifted them. “If the assets are gifted,” he wrote, “the [cost basis] in those assets are the same basis as your Mom’s basis. If you inherit, your basis is the fair market value at the time of death.” Translation: For non-cash assets, sometimes it makes sense to not make gifts before death.

So, there’s a lot to think about here. (And I haven’t even shared all of the considerations — only the most important ones.)

Here’s what this looks like from a practical perspective.

Because Mom is over 70-1/2, she already took her RMD (required minimum distribution) of $14,169.69 from her SEP-IRA this year. If she were to withdraw an additional $45,000 from her Vanguard account today, that’d put her SEP-IRA withdrawals at $59,169.69 for 2021. The first $40,400 of that is subject to zero tax. The next $18,769.69 is subject to 15% long-term capital gains tax, for a total of $2815.45 in taxes. Gifting $45,000 now would reduce her future estate tax by $4500. So, making these gifts would save a net of $1684.55 in taxes.

If we were to wait until tomorrow (January 1st) to withdraw the money from her Vanguard account (while writing the checks today — the checks must be written today), that would not only serve as her RMD for 2022, but it would also bump the 0% tax bracket from $40,400 to $41,675, which means the tax liability for the transaction would be $498.75. The net savings vs. future estate tax would thus be $4001.25, which is indeed a chunk of change.

Ultimately, however, I don’t think we’re going to make gifts from Mom’s estate in 2021. My brothers and I are too nervous about her financial situation, for one. We don’t want to deplete her cash if it might be needed for future medical expenses. For another, the logistics are problematic at this point (one o’clock in the afternoon on the last day of the year with me ninety minutes from the box factory and my brother with my Mom at the hospital).

But going into 2022, it feels like we’ll be having some interesting (and complicated) discussions about Mom’s estate! Maybe it’s time to sell the family homestead?

from Get Rich Slowly https://www.getrichslowly.org/planned-gifts-before-death/
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Keeping a home improvement projects to-do list

My Christmas curse continues! You see, for a long time now — almost thirty years — Christmas has become synonymous with home problems for me.

This all started in the first home that Kris and I owned back when we were newly married. We woke one Christmas morning to find that the water heater had overflowed, flooding the laundry room and much of the converted garage. Unfazed, we cleaned up the mess and spent our holiday without hot water. It was fun!

Since then, I’ve experienced a long line of home problems on Christmas day: frozen pipes, broken gutters, fallen fences, and more. And this year? Well, this year’s issue was minor…but may lead to a major repair.

The house that Kim and I bought last August is in good shape. We made sure of that during the inspection period. Still, no home is perfect — and a house built fifty years ago has a few warts.

“Did you know something’s wrong with the ceiling in the hall bathroom?” Kim asked on Christmas morning after she finished her shower. “The paint on the ceiling seems to be peeling.”

“What?” I said. I went to take a look. Kim was right. The paint on the ceiling seemed to be peeling.

“I’ll bet that’s from moisture,” I said. I found a footstool and climbed up to take a closer look. I turned on the ventilation fan. “Wow,” I said. “The fan doesn’t seem to be pulling any air. That’s the root issue.”

I toyed with the peeling paint, which was a mistake. The brittle stuff crumbled and fell to the floor in large chunks. “That’s so strange,” I said. I picked up a few pieces of debris. “Is this only paint? It seems so thick.”

“It looks like it’s just paint,” Kim said. “But many layers of paint. Who knows? It could be something else underneath.”

Paint peeling from our bathroom ceiling

So, now we have the first urgent home project in our new place. It’s not a huge deal, obviously, but it’s something we want to repair sooner rather than later. It’s just a matter of finding time. (This seems like something we should be able to fix ourselves rather than hiring out.)

This issue has actually been a blessing in disguise. Everywhere I live, I keep a master list of repairs and projects. But I hadn’t yet drafted that list for our home here in Corvallis. This morning, I remedied that.

My Homeownership Projects List

When you buy a home, you also buy a parade of projects. No home is ever fully functional at any given time. There’s always something that needs to be repaired or upgraded or inspected.

As a fellow who struggles with ADHD, this never-ending stream of home projects can overwhelm me. There’s so much that needs to be done that my inclination is to do nothing. But, of course, doing nothing only leads to more projects in the future. I’ve learned that it’s important for me to make constant, incremental progress on tasks around the house.

To stay focused, it’s vital that I maintain homeownership to-do list.

Longer ago, I created my project list with pencil and paper. Nowadays, I keep the list digitally. At our last house, I maintained a text document with all of the things that needed to be done. For our new house, I’m experimenting with Apple’s built-in Reminders app. This allows me to share the list with Kim, add notes and images and deadlines to tasks, and more.

I suppose there are many ways you could choose to build your personal list of home projects. For me, it’s always been easiest to use the home inspection report as a starting point.

“I use your report as a to-do list,” I told our home inspector in August.

“If you do, you’re the only one,” he said, laughing. “Nobody seems to take this stuff seriously. It frustrates me to go back and inspect a home I saw a few years before, and not a single issue has been addressed. That happens all the time.”

To begin, I let the inspection report form the structure of my list. For this house, the report was divided by major systems, such as: Roof, Grounds, Exterior, Attic, Plumbing, Electrical, HVAC, and so on. And within each section of the report, the inspector graded items as OK, MM (for marginal or “needs maintenance”), or RR (for “repair or replace”).

Highlight from our home inspection

I divide my list into the same sections as the inspection report. Because this particular report didn’t break down individual “interior rooms”, I added a section for each space inside the house: Kitchen, Living Room, Kim’s Office, Hall and Stairs, etc.

As I page through the inspection report, I copy over each flagged item as an action step. The inspector’s comment about moss growth on the roof becomes “Remove Moss (RR)”. I add notes and comments, if I have them, and I might even pencil in a tentative date to tackle the project and/or contact info for a contractor I want to hire.

But the inspection report is only a starting point.

Next, I walk s-l-o-w-l-y through the house, going from room to room and thinking about our plans for the future. I take notes as I go. I write down anything that bugs us (“install thresholds into rooms downstairs”, “install carpet runner for stairs”) and I note any upgrades we want to make to the house (“buy heater for deck”, “completely remodel hall bathroom”). I try to write down every single thing I can think of, no matter how small. My aim is to get this stuff out of my head and onto (metaphorical) paper.

As a final step, I make sure to ask Kim if there’s anything else I should add to our list of projects. She’ll often have plans and dreams of her own that she hasn’t yet shared with me. It’s good to get those on the master list, too.

After this braindump, I’ll have a list filled with dozens of tasks that want doing around the house. These tasks will be divided by subsystem and/or room (which makes the jobs easier to “batch”), and they’ll also be ranked by priority.

A look at our home improvement list

Final Thoughts

My master homeownership to-do list has proved invaluable in the past. The list gives me motivation and direction. It helps me to prioritize the tasks that must be completed soon, as opposed to those that are easy or fun. Most importantly, it helps us to address problem areas in a timely fashion instead of allowing them to fester.

I should note that this isn’t the only list of home projects that we use. We also keep an ongoing list/calendar of maintenance tasks. This started as a simple list that I had pulled from some book about home maintenance, but over time it’s become a series of calendar reminders that Kim and I modify continually.

For example, I had to blow off the roof and clean the gutters twice this autumn because our house is surrounded by massive tall evergreens. The needles are a nuisance. Each time I cleaned the roof, I placed an alert in my calendar for the same time next year as a reminder. We do the same for any regular maintenance task that we don’t want to forget.

Home maintenance and home improvement can certainly be a headache at times, but I’ve found that the pain can be mitigated by (a) keeping an updated list of home projects and (b) regularly plugging away at the list — even if doing so in an unorganized fashion.

from Get Rich Slowly https://www.getrichslowly.org/home-improvement-list/
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Grading homes: The system I used when picking a new place to live

This morning — because the sky was clear and I hadn’t anything better to do — I let the dog lead me on a six-mile walk. For two hours, we wound our way through the streets of Corvallis. We sniffed drains, barked at squirrels, and in every way had a merry old time.

If I’d allow her, Tally would spend hours every day sniffing drains around the city.

Tally, sniffing a drainage ditch

As we walked, I reflected on how fortunate Kim and I were when we decided to move here. We were deliberate about our choice, sure, but it was still something of a gamble. Sometimes research and experience don’t align. In this case, they have.

Why We Love Corvallis

After four months Corvallis seems like a perfect fit for us. There’s so much we love about this place, such as:

  • The downtown remains vital and whole. Kim and I spent three months this summer exploring dozens of towns in western Oregon and Washington. We discarded many strong candidates because their downtowns were either decayed (often due to a freeway having been built a couple of miles away) or, worse, bisected by a busy highway. There is a highway through downtown Corvallis, but traffic is managed sensibly for pedestrian access. The freeway is fifteen minutes away. As a result, the central business core seems to be thriving.
  • The city is great for biking. Portland has a reputation for being a top U.S. cycling city, but Corvallis is actually ranked the best biking town in the state of Oregon. (Portland has a Bike Score of 82; Corvallis has a Bike Score of 84.) The cyclists here like to complain that things could be better (and that’s always true), but the reality is that bike lanes are ample and wide, cars seem to respect cyclists, and many residents opt to commute by bike.
  • Corvallis is even better for walking. In 2017, long-time readers chided me when I moved from a walkable riverfront condo to a rural home in a hilly suburb. I love to walk. I get cranky when walking isn’t easy. Well, here in Corvallis walking is very easy. The city is relatively flat. The sidewalks are well maintained. Downtown is great, as I mentioned, but the neighborhoods are designed to make walking for errands relatively painless. My favorite feature? The city has deliberately incorporated “active travel corridors” into neighborhoods: short paths that cut between properties in order to connect streets, parks, and so on.
  • The city is surrounded by endless hiking trails. There are so many trails, in fact, that I cannot find one website that lists them all. (Here are the trails I hike most often. Here’s another set of trails I’ve been exploring with Jeff, the Happy Philosopher.) Now that the weather has turned cold and soggy, I’m spending less time in the forest, but when the sun returns to this part of the world, the dog and I will walk in the woods nearly every day.
  • The city loves reading. This is no surprise, I suppose, considering Corvallis is a college town. Oregon State University is the city’s largest employer (contributing a whopping 27.6% of all jobs in the area). This has some interesting side effects, and one of those is books books books. Residents love the public library, yet they also support three local bookstores. Best of all, there are 144 little free libraries scattered throughout the city. (And after I finish writing this article, I will order my own little free library kit so that I can add #145.)
  • The restaurants are better than we expected. It’s no secret that Kim and I enjoy dining out. Portland has a great restaurant scene, and we’d become spoiled by easy access to great food. We were worried that Corvallis would disappoint us in this regard. And while there’s no doubt that our options are much more limited, we’ve still been able to find several places that we enjoy. (Top of our list is a joint called Cascade BBQ, which has great food and great beer.)

There’s so much more we love about Corvallis: the traffic (or lack of it), the people, the parks, the wildlife, the culture, and more. Plus, to balance things out, there’s another town of similar size (Albany) just twenty minutes away — and that town provides some of the things that Corvallis doesn’t (Costco, etc.). Suffice it to say that we feel like we made the right choice when we elected to move here.

My System for Grading Homes

During this morning’s dog walk, I also recalled the rating system I developed during last summer’s home search. I had intended to write a GRS blog post about this in July, but then got distracted by the actual process of, you know, buying a house.

Here’s how my system works.

When evaluating a potential home, I rate it in five categories: region/city, neighborhood, property, structure, and “other factors”. These categories are very much subjective. And, in fact, your personal preferences might change over time. (Mine sure have!) I score each category with a letter grade: A, B, C, D, or F.

  • First, there’s the region and/or city in which the home is located. Kim and I like to believe we could live anywhere — and we probably could — but there’s no doubt that we prefer some places to others. Portland once earned an A from me. Now I’d rate it a B- or C+. Cities like Orlando or Houston earn an F from me. I know many people love these places, but I hate them. Corvallis rates a solid A.
  • Second, there’s the neighborhood where the home is located. I’m always surprised at how my personal experience living somewhere is affected by neighborhood culture. This is something that can be tough to determine when shopping for a home. It’s dependent on a number of factors (and those factors differ from person to person). For me, top neighborhoods are safe, walkable, and quiet. The neighborhood we chose here in Corvallis rates a B+. It’d be better if it were closer to more businesses.
  • Next, there’s the property on which the home is located — the physical grounds. Not everyone cares what kind of property they own, but Kim and I do. We like to spend time outside with our beasts. Plus, we both like to do a bit of gardening. When househunting, we ruled out a couple of places because the yards were too small and/or unsuited to our needs. The yard we now have isn’t perfect — too many deer, too much shade in back — but it’s nice. I’d give it a solid B+.
  • Fourth, there’s the house itself. How well does the structure suit our wants and needs? The house we recently purchased seems has been great. Functionally, my only real complaints are that the kitchen layout is funky and that the living room is too large to be cozy. The house itself is huge (especially for two people!), and that may prove to be an issue in the future, but for now we like having separate spaces for everything. The house earns an A-.
  • Finally, there are “other factors” that affect the desirability of the home. These include things like the inspection report, the price, the presence (or absence) of an HOA, and so on. This house had a great inspection (and we’ve seen no problems so far), but it did seem expensive because the current housing market is inflated. Because of the price we paid, I’d give this category a B+.

Once I’ve rated a potential property in all five categories, I convert the letter grades to a standard GPA. In the case of our current home, the five grades (A, B+, B+, A-, B+) average to an A-/B+ (3.52 gpa). Not bad.

With this system, perfect 4.00 homes are tough to find. In fact, we didn’t see a single one during the five months we were watching the market. Part of this was due to price, of course. When home prices are high, it’s tough to get an A in the “other factors” category. Even so, it was very rare for us to see a house that had full marks in city, neighborhood, property, and house. This leads me to believe that a “perfect home” does not exist.

Just for kicks, I decided to grade each of the homes I’ve owned in the past. These grades are based on my experiences living in each place, not on pre-purchase impressions and expectations.

Grading the homes I've owned

Kris and I bought our first home soon after we were married. It was a solid little ranch house with a good location in my hometown. Our second home, where she still lives, was a hundred-year-old farmhouse in a scrappy neighborhood.

After our divorce, I bought a riverfront condo. That place was fantastic except for the expensive HOA and the lack of a yard for pets. The country cottage that Kim and I just sold had an amazing yard, which was almost enough to redeem the place. Almost.

It’s early days yet on our Corvallis home, but so far we love it. The next two years will be telling as we work to upgrade both the house and the yard.

Final Thoughts

As I used this rating system to guide our search this summer, Kim and I found it useful to take a “top-down” approach. That is, we began our search by looking at the Big Picture, then gradually refined things until we found homes that we liked.

So, for instance, we spent the first three months of the homebuying process driving to dozens of different cities. Our aim was to find places where we really, really wanted to live. By being ruthless about eliminating options, we were able to only consider those towns that earned a grade of A or A-.

Once we picked Corvallis, we spent two weekends down here during which we simply drove around to get a feel for different neighborhoods. We wanted to figure out which parts of town worked for us.

Picking the right neighborhood can be tough. To really know where you should live in a city, you need to spend time there. This fact created a big debate between me and Kim, actually. I was keen on a neighborhood just south of the high school and close to downtown, but she was afraid it would be filled with noisy college students. We never could get a clear answer on the neighborhood’s character, so we eventually eliminated it as an option. (And after four months here, I still don’t know what that neighborhood is like!)

Once we had some neighborhoods picked out, only then did we begin viewing available properties.

I know this might seem silly to some of you, but this nerdy approach to homebuying really helped me. Combined with my spreadsheets filled with facts and figures, grading properties helped me to keep things in perspective.

Ultimately, we’re pleased with the choice we made. Kim frets that we paid too much for this house (but I think she’s ignoring the fact that we sold our existing home in the same high market), while I wish we were ever-so-slightly closer to businesses. Other than that, however, I think we made a good choice.

One thing’s for certain: The city of Corvallis is almost ideal for us and our family of beasts. I expect us to be here for a long time — perhaps forever.

from Get Rich Slowly https://www.getrichslowly.org/grading-homes/
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The value of a college degree

I’m a long-time vocal proponent of higher education. For me, it’s personal. I was raised in a poor family with parents who had briefly attended college, but never with any real gusto. (I’m not sure my father had a plan. My mother studied home economics. Not kidding.)

My uncle got a math degree from a now-defunct community college, and his son (my cousin Duane) went to school back East. I’m not sure if he got a degree, though. (I’ll ask him tomorrow when we get together to bake Christmas cookies!)

But from a young age, I knew that I wanted to go to college. I knew I was a smart kid, and I viewed college as a Way Out. It was an escape from the trailer house I grew up in, an escape from menial labor.

Too bad then that I squandered my college education. I entered Willamette University intending to be a religion major, but eventually ended up with a psychology degree — chased with an equally useless English minor.

My college degree hasn’t really proved useful in my life. Well, I guess I apply both the psychology and English education in my career as a money writer, but I don’t make direct use of the things that I learned. And that’s the rub.

College degrees are valuable — but not if you choose the wrong one.

Although it’s popular in some corners to bad-mouth college degrees, according to the U.S. Census Bureau your education has a greater impact on lifetime earning potential than any other demographic factor. Education matters more than age. Education matters more than race. Education matters more than gender. When it comes to making money, education matters most.

The value of college vs. no college

So, I’m always interested when I see knew reports and/or research regarding the value of college. In October, the Foundation for Research on Equal Opportunity (FREOPP) released an excellent report entitled “Is College Worth It? A Comprehensive Return-on-Investment Analysis”.

I like this report because it goes beyond averages. Sure, FREOPP says, the median bachelor’s degree is worth $306,000 for students who graduate on time, but…

…the median conceals enormous variation. Some fields of study, including engineering, computer science, nursing, and economics, can produce returns of $1 million or more. Others, including art, music, religion, and psychology, often have a zero or even negative net financial value.

FREOPP argues that “the decision to attend college is less important than the choices that come next: which school to attend, and which subject to study.”

The analysis reveals that a student’s choice of program is perhaps the most important financial decision he or she will ever make. Most bachelor’s degree programs in engineering, computer science, economics, and nursing increase lifetime earnings by $500,000 or more, even after subtracting the costs of college. But most programs in fields such as art, music, philosophy, religion, and psychology leave students financially worse off than if they had never gone to college at all.

Differences in ROI between programs can amount to millions of dollars.

The FREOPP report — which is very long — includes plenty of interactive stats and charts and graphs. Readers acan compare the value of college majors, expected earnings, and more.

Value of college major

The FREOPP report echoes some of the findings of Georgetown University’s 2015 report on “The Economic Value of College Majors”. The Georgetown study found that engineering majors earned a median starting income of $50,000 per year. Folks with an art degree started with annual salaries of around $28,000. And high-school graduates who didn’t go to college? Well, they had average starting salaries of $22,000 per year.

The bottom line? FREOPP says there are three main messages to draw from their report.

  • First, major is the most important factor when predicting the return-on-investment for a college education. Degree subject accounts for half almost half of ROI variation alone.
  • Second, elite colleges can pay off, but not always. FREOPP found that there is a weak correlation between the cost of a school and how much a degree from that school is worth. But, as with majors, there’s plenty of variation. A film degree from Harvard is likely to be worth less than an engineering degree from a “no name” university.
  • Finally, there are a lot of bachelor’s degrees that don’t make sense from a financial perspective. You might want an art degree or a religion degree for other reasons, and you might be fulfilled with those degrees, but they’re poor choices when viewed through the lens of money.

Here’s what I always say when I write about this subject: The more you learn, the more you earn. And it’s true. No, a college degree isn’t a guarantee that you’ll earn more, but it never has been. But, generally speaking, the more formal education you have, the more money you’ll make during your lifetime. This report only reinforces that conclusion.

[“Is College Worth It? A Comprehensive Return-on-Investment Analysis” at Foundation for Research on Equal Opportunity]

from Get Rich Slowly https://www.getrichslowly.org/the-value-of-a-college-degree/
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A useful new tool to help you pick a place to live

Every now and then, The New York Times gives us an awesome new personal-finance tool. Back in 2007, they created an amazing rent vs. buy calculator, which they’ve diligently updated and maintained over the past fifteen years. A couple of weeks ago, they unveiled their where should you live? tool. [Warning: possible paywall, which is unfortunate.]

Here’s how it works:

We created a quiz using data for almost 17,000 places across more than 30 metrics. Realtor.com shared housing prices with us; Yelp contributed tallies of restaurants, music venues and gay bars; and AccuWeather helped us collect statistics on temperature, sunshine and snowfall, to name just a few of our sources.

We want the quiz to be useful to anyone who’s thinking about moving — not just affluent, highly educated people who are working remotely because of the Covid pandemic. We’ve included data on affordability, jobs and abortion rights, which could be relevant to young people deciding where to start their careers. And we’ve quantified health care quality, snowfall and crime rates — criteria that might be top of mind for retirees.

To use the tool, you select from 35 different factors that matter to most people, factors ranging from population density to climate to racial diversity to political affiliation. You can even emphasize the qualities that matter most to you. The tool tells you which American cities best match your preferences.

If you’d like, you can refine the results by specifying a region of the country (West, Midwest, South, or Northeast) and/or average cost of living.

Once you’re satisfied with the search results, you can click on indvidual cities to get a detailed description of their demographics. If you like a place, you can “heart” it to save it as a favorite. Then, once you’ve finished, you can click “Compare &heart;” to view a table that places all of your favorite cities side by side.

Here, for instance, are the results of my own personal living preferences.

My top places to live

I don’t know anything about my top match (Vestal, New York), but the rest of the results are pretty much spot-on. In order to get better matches for me, a tool like this would need to include some sort of stat to measure downtown vitality (it was important for me to find a city with a solid downtown instead of one where commerce clung to highways and freeways) and a stat to measure education level.

If this tool had existed when Kim and I were searching for new places to live last summer, we would have used it to help filter possible locations. As it is, we did a reasonable job picking a place to live. As you can see, Corvallis is a 75% match for my preferences.

Corvallis result

And three out of the top ten results on my list — Sequim and Port Angeles in Washington, Florence in Oregon — were towns we considered seriously during our search. Two additional towns in my top ten (Grass Valley and Eureka in California) were on my list to look at, but Kim ruled them out because she doesn’t want to live in California.

I realize that for most folks, this tool is just a fun diversion. Unless you’re actually looking to make a move, there’s nothing you can do with the results at the moment. Still, I think it’s worth bookmarking for the next time you are trying to decide where to live.

If you’d like to see the raw data behind this tool, check out the piece that explains the methodology: “How we calculated where to live”.

[The New York Times: Where should you live?]

from Get Rich Slowly https://www.getrichslowly.org/pick-a-place-to-live/
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Learning from history: How this all happened

The older I get, the more interested I am in history.

When I was young, history and myth seemed to be interchangeable to me. To ten-year-old me, there was little difference between, say, Abraham Lincoln and the Greek gods sitting atop Mount Olympus. All of it was abstract stuff that happened to imaginary people long ago.

Somewhere along the way — in my late teens, I think — history began to seem relevant. During my junior year of college, I took a course on Pacific Northwest history and my eyes were opened. I could see in my own life how events decades ago (or hundreds of years ago or thousands of years ago) created the actual world in which I lived my day-to-day existence.

Now that I’m firmly entrenched in middle age, history has never seemed more relevant.

And one of my most common complaints — a complaint I’m not shy about vocalizing to my poor friends and family — is that we in the United States seem willfully ignorant of history. We, as a collective, seem to be blind even to recent history, to events that have occurred in my lifetime! So much of our modern strife could be mitigated if we, as a society, paid more attention to our past.

Okay, that’s a l-o-n-g preamble to a simple article summary. But it’s one of my favorite rants, so I can’t help myself.

You see, over at the Collaborative Fund blog, Morgan Housel recently published yet another gem. (Housel is consistently one of my favorite money writers.) In an article called “How This All Happened”, Housel explores the history of the U.S. economy since the end of World War II.

He writes:

If you fell asleep in 1945 and woke up in 2018 you would not recognize the world around you. The amount of growth that took place during that period is virtually unprecedented. If you learned that there have been no nuclear attacks since 1945, you’d be shocked. If you saw the level of wealth in New York and San Francisco, you’d be shocked. If you compared it to the poverty of Detroit, you’d be shocked. If you saw the price of homes, college tuition, and health care, you’d be shocked.

Our politics would blow your mind. And if you tried to think of a reasonable narrative of how it all happened, my guess is you’d be totally wrong. Because it isn’t intuitive, and it wasn’t foreseeable 73 years ago.

Here’s how this all happened.

This is one of my favorite essays from 2021. I like it because it’s Big Picture stuff, but it’s Big Picture stuff analyzed through the lens of how it applies to the Small Picture. It’s a look at how broader economic cycles and changes have influenced personal finance for people like you and me.

I also like that Housel tries to find a thread that ties all of this change together:

A central theme of this story is that expectations move slower than reality on the ground. That was true when people clung to 1950s expectations as the economy changed over the next 35 years. And even if a middle-class boom began today, expectations that the odds are stacked against everyone but those at the top may stick around.

Expectations move slower than reality. That’s a fascinating thesis, but the more I think about it, the more it seems true both at a personal level and a broader societal level.

Anyhow, this is a long essay (about 5000 words), but it’s well worth reading. And although I don’t know Housel, I’m very tempted to reach out to him to see if he’d allow me to record a video version of his article. It seems like the sort of piece that would lend itself well to video footage of the events he discusses. This is exactly the sort of stuff I want to create at the GRS YouTube channel in the months and years ahead.

from Get Rich Slowly https://www.getrichslowly.org/learning-from-history/
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Amazon Brand Detector

Two months ago, The Markup — a big-tech watchdog site — published a piece about how Amazon prioritizes its own “brands” first above better rated (and/or cheaper) products. This came as no surprise to me.

I’ve found Amazon increasingly useless over the past few years. Its search results are cluttered with ads. Sometimes my searches fail to show products I know the company stocks and sells. And Amazon Prime has lost its luster as shipping times have lengthened and Prime Video has become increasingly superfluous.

So, to learn that Amazon cheats search results by crowding out better and cheaper products in favor of it own stuff was no big shock. Yet another reason for me to take my business elsewhere, when possible. From the article:

We found that knowing only whether a product was an Amazon brand or exclusive could predict in seven out of every 10 cases whether Amazon would place it first in search results. These listings are not visibly marked as “sponsored” and they are part of a grid that Amazon identifies as “search results” in the site’s source code. (We only analyzed products in that grid, ignoring modules that are strictly for advertising.)

Despite its problems, Kim and I still find ourselves ordering from Amazon relatively often. It’d be nice to have some way to sort out some of the crap. Now there is.

Following its October article, The Markup set out to create a browser plugin that helps to identify Amazon brands (and Amazon exclusives) in the site’s search results, making it easier to detect when those search results have been manipulated. Here’s their description of Amazon brand detector:

Few respondents in a 1,000-person national survey we commissioned recognized the best-selling Amazon brands as owned by the company, apart from Amazon Basics.

So we decided to add some transparency for Amazon shoppers. The Markup created a browser extension that identifies these products and makes their affiliation to Amazon clear.

Brand Detector highlights product listings of Amazon brands and exclusive products by placing a box around them in Amazon’s signature orange. This happens live while shoppers browse the website.

If you too are wary of the world’s third-largest company, give this browser extension a whirl. You may find it useful.

(If Amazon Brand Detector interests you, you might also like Fakespot.)

from Get Rich Slowly https://www.getrichslowly.org/amazon-brand-detector/
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The long, complicated history of lines at Disney theme parks

As part of my new commitment to just being me, I hope to share a lot more random stuff around here — just like I used to. Instead of waiting for weeks (or months) in order for inspiration to strike for a longer essay, I want to share the best of the interesting money stories (and semi-money stories) that I find around the interwebs.

Think of it as Apex Money, I guess, but instead of sharing three to five discoveries each day, I may share one or two a week. And instead of editing and polishing these pieces, they’ll just be quick braindumps with minimal attention to detail.

Today, for instance, here’s a 103-minute YouTube video about the lines at Disney theme parks.

If you’re a nerd like me (and I know that many of you are!), this is fascinating stuff.

While this is only tangentially related to personal finance itself, the broader concepts the video explores have a lot to do with how our money is managed in this modern era.

You see, the history of lines at Disney theme parks during the past fifty years reflects broader societal and business trends.

  • Initially, guests at Disney parks paid an admission fee at the front gate and paid nominal fees for each ride.
  • Before long, the “pay per ride” system was scrapped in favor of paper ticket books, where each ticket allowed guests access to rides based on priority.
  • Eventually, even the ticket books were abandoned. When I first visited Disneyland in the summer of 1987, you paid at the gate and then could ride whatever you wanted. The catch? The best rides had long lines. Very long lines.
  • As computer technology advanced, it became possible for Disney to implement its FastPass system, whereby guests could make “reservations” for top rides. This alleviated lines somewhat but began to create two “classes” of park visitors.
  • Over time, the queueing process became even more computerized. By the time Kim and I visited Disney World during our RV trip in 2016, the “classes” of park visitors were even more stratified. If you did your research like we did, and if you stayed in a Disney hotel on their property, you enjoyed privileged access to attractions. If you just showed up — whether because you were a local or because you didn’t know any better — your waits could be excruciating. (And there was a third class of visitor in between.)
  • Now, Disney is rolling out a controversial new system to manage the lines for rides. And in many ways, it’s going back to the beginning where guests have to pay for attractions.

But wait! There’s more!

Throughout these decades of change, Disney has experimented with social engineering. If the line for Space Mountain is 90 minutes, for instance, but less-popular attractions have no wait, they might lie to guests and tell them that Space Mountain has a 120-minute wait. Some folks will still wait in the Space Mountain line, but more people will actually peel off and choose to do something else, thus spreading crowds around the park. And since “do something else” frequently becomes “shopping”, that’s more money in the park’s pocket.

Because Disney isn’t wholly mercenary, its decisions aren’t guided 100% by company profit. They also consider guest experience. (But wait! Are they only considering guest experience because it increases company profit?!?)

Anyhow, I don’t expect to sit through all 103 minutes of this video. But I did. And I enjoyed it. Maybe you will too?

True story: Watching this video also gave me inspiration for the GRS YouTube channel, which I’ve begun working on again. Instead of doing my regular vlogs, I want to try my hand at some longer video essays. Maybe not 103 minutes long haha, but longer than three minutes.

from Get Rich Slowly https://www.getrichslowly.org/disney-lines/
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One thing to my people (A prayer of thanksgiving)

I recently flew to Cincinnati, Ohio to attend the second-annual EconoMe Conference. I had one of the best weekends of my life.

I can’t say that the conference itself was the reason for this peak experience. There’s no question that I enjoyed interacting with the speakers and attendees. As the video below demonstrates, the main-stage talks were both entertaining and educational. The conversations at the venue were great too. I reconnected with old friends and made some new ones.

But while I enjoyed EconoMe, the conference was mostly incidental to making my weekend great. EconoMe was merely the vehicle for bringing everyone together so that I could experience the laughter and conversations I enjoyed for five days.

Turns out that EconoMe was also the vehicle for one of those oh-so-rare moments when all of the disparate strands in my life — all of my hopes and fears and recent objects of rumination — weave together to produce something spectacular, a sort of personal Big Bang.

The net result is that today I find myself with a clear sense of purpose for the first time in years. More importantly, I feel deep gratitude for all that I have in my life.

Self-Actualized

As long-time GRS readers have noticed (and commented on), I am a bundle of contradictions. I always have been. Even when I was a boy, I was a dilettante. I read widely, tried new things, started projects and abandoned them, and tried to do too much at once. This isn’t a new phenomenon. (As an adult I now know that this pattern is a manifestation of my ADHD.)

A side effect of my scattered interests is that I can feel overwhelmed. I’m juggling so much in my head that I become, well, sort of confused and unclear about the direction I should take my life.

This happened to me in college. I entered Willamette University believing that I’d major in religious studies, then graduate and possibly attend seminary. (This is 100% true, although it’s something I don’t think I’ve shared at GRS before.) By the end of my freshman year, however, my faith was waning. And by the end of my sophomore year, it had disappeared entirely. I didn’t know what to do with my life. I felt overwhelmed. That spring term in 1989 was rough for me.

Then, a number of things came together. I’m old now, and I can’t remember all of the details, but I do know that I had begun dating Kris (whom I would eventually marry and be with for 23 years), I’d decided to major in psychology, and I had been accepted as a Resident Assistant for my junior year.

One warm evening in early May, as I was walking across the Willamette University campus, I experienced something new and unexpected. I was crossing the Mill Stream and the clock tower was tolling when all at once I felt utterly content and at peace with myself. Everything seemed right with the world.

It’s difficult to express just how powerful this experience was for me. It was magical! Even after the intensity of the moment subsided, an afterglow remained — not for days, but for months. This moment of self-actualization (which is how I thought of it then) propelled me forward into my junior year and beyond.

In time, of course, the feeling faded. But I never forgot it. To this day, I can remember clearly those twenty or thirty seconds during which it felt as if I’d reached the pinnacle of Maslow’s hierarchy of needs.

My Archimedes Moment

Sixteen years later — in February 2006 — Kris and I were married, living with our cats in a hundred-year-old farmhouse on the outskirts of Portland. I was deep in debt. I was working at a job I hated — selling boxes for the family business. I was fat. My life seemed out of control.

But I had begun to take steps to turn things around. I had drafted a plan to get out of debt, and I was actually following through on the goals I’d set for myself. I was reading book after book after book about smart money management. Plus, I had begun to look for ways to make more money on the side.

One night, I was soaking in the bathtub while reading The Millionaire Maker by Loral Langemeier. Something in the book (I no longer remember what) hit me like a bolt from the blue. All at once, I had the same brilliant moment of clarity I’d experienced that May evening while walking across my college campus.

Please note that I don’t necessarily recommend The Millionaire Maker. Yes, the book sparked something in me, but that doesn’t mean it’s a good book. It just happened to be in the right place at the right time in my life.

I had nothing to write with in the tub, so I climbed out, toweled off, then — no joke — sat down naked at the kitchen table, where a pen and notebook were waiting for me.

For the next half hour, I jotted down plans and ideas. I wrote down my path to the future. Kris wandered through a couple of times. “Why don’t you put some clothes on?” she asked, shaking her head. But I was too focused to move. I had to get all of this out of my brain and onto paper.

You see, my Eureka! moment had granted me an understanding of what I should be doing with my spare time. Instead of wasting my life on videogames, I ought to channel my experience and enthusiasm into something that might make me money: a blog about comic books! And, if that didn’t work, I thought that maybe I could start a site about money.

Obviously, the comic book blog failed. But my back-up plan? That website about money? Well, that website succeeded beyond my wildest dreams.

Even back in 2006, I was very aware that my bathtub brainstorm was akin to the my moment of self-actualization in college. They might not have been identical experiences, but they were close cousins. And during the fifteen years since I conceived Get Rich Slowly while sitting naked at my kitchen table, the connection between these two peak experiences has only become more pronounced in my mind.

I’ve always wondered: Will I experience anything like this again in my life?

One Thing to My People

You all know how difficult the past few years have been for me. From 2009 to 2016, my life seemed idyllic. (That’s how it felt, anyhow.) I had my share of problems, sure, but mostly things were going great.

Then, in 2016, I began a slow slide into depression and despair. These dark days climaxed last winter, when my psyche became strangely entangled with my house — and with this blog.

I’m not going to belabor all of this because there’s no reason to do so. It’s enough to say that my 2021 has been the long, slow process of me figuring out how to dis-entangle myself from the habits and places that were bringing me down. I’m pleased to say I’ve made great progress, and I’m very excited for the future.

All the same, I’ve given serious consideration to giving up my online life entirely. I came away from Fincon in September believing that maybe it was time for me to do something different. Maybe I would take art classes. Maybe I would get a job at a hardware store. Maybe I would become a real-estate investor.

That was my mindset when I flew to Cincinnati two weeks ago. As has happened in the past, I felt like I had no clear direction. I was aimless. I had no purpose. Life was complicated and confusing and overwhelming.

During those five days at EconoMe, the Universe (or fate or God or whatever you want to call it) decided to hit me over the head again and again and again with the same message. And that message goes something like this: “Get Rich Slowly is your life’s work. Do it. As you work, follow your heart and your mind. Trust yourself. Most of all, ignore the haters.”

That last part is important. For whatever reason, I’ve become more and more concerned about what other people think as I’ve aged. It’s dumb. Most people experience the opposite as they grow older. They stop caring what other people think. Not me. I became obsessed with it.

Sunday in Cincinnati, I had brunch with my friend, Amy Finke. Amy attended the first F.I. chautauqua in Ecuador in 2013. We’ve been friends ever since. And while we don’t see each other often, we have great conversations when we do see each other in Oregon or northern Kentucky.

As we ate, I talked about my recent struggles. I told Amy about my depression and anxiety, and about my issues with internet feedback. I told her that I had thought about quitting. “It’s not just the negative stuff that gets me down,” I said. “I find that I’m also driven to pursue the positive stuff. It’s like I’m looking for the next hit of a drug or something.”

Amy’s response was kind. It actually made me a little misty. “You play an important role in the world of personal finance,” she said. “Your writing at Get Rich Slowly is human and nuanced and it’s not dogmatic. That’s what sets it apart. You aren’t perfect and you don’t pretend to be. You don’t have all the answers.”

And here, over coffee and omelettes, Amy said something that — for the third time in my life — triggered a transcendent moment for me.

“You know I work in market research,” Amy said. “I inevitably have the same conversation each time I work with a brand. Like you, they get lost in the weeds, they lose their way. And when that happens, I ask them the same thing I want you to ask yourself: Do you want to be all things to all people? Or do you want to be one thing to your people?”

Boom! All at once, everything was clear to me. With this one question, Amy had cleared away the cobwebs and the clutter and the chaos in my head. I could see the futility of trying to be all things to all people. It’s impossible to please everyone, impossible to have everybody like me. It’s a ridiculous goal. A foolish one.

But what I can do is continue to share my experience. I can continue to share what I learn about personal finance as I’m learning it. I can continue to be honest about my mistakes in an effort to help others avoid them. I can continue to amplify the voices of other folks in the personal-finance community who are doing honest, sincere work. I can continue to be goofy and creative and real.

I cannot articulate who “my people” are, and I’m not sure I want to. But perhaps you are one of them. Maybe you’re not — and that’s okay. What I do know now is the path forward for Get Rich Slowly — and for my life. As I did in 1989 and 2006, I’ve had a flash of insight, a moment of clarity, and I intend to use this revelation to direct my actions for the foreseeable future.

Before I conclude, I want to point out something that is probably obvious to some of you. These rare moments of insight and clarity — of which I’ve had three during my 52 years on Earth — don’t exist in a vacuum. They’re a culmination, a climax.

Amy’s question sparked something in my because of everything that had come before, both the good and the bad. And it’s really all of the conversations and meditations I’ve had throughout the course of this year — the hikes with Jeff Boyd, the phone calls with my cousin Duane, the glasses of wine shared with Kim — it’s all of these moments that made the flash of insight possible.

Years from now, I’ll remember the brunch with Amy as the instant I achieved insight. But I’ll forget about all of the other work that actually made that insight possible.

A Prayer of Thanksgiving

When I crawled into bed Sunday night in Cincinnati, I felt warm and alive. I felt grateful to everyone and everything. I then did something that I haven’t done in many, many years. Whispering to myself, I gave thanks for all of the good things in my life.

“I’m so thankful for this weekend,” I said quietly to myself. “I’m thankful to have such great friends. I’m thankful that my work has helped people. I’m thankful for my good financial fortune. I’m thankful for Kim and our beasts. I’m thankful to have work that I love.”

My litany of gratitude lasted only a minute or two, but it felt longer. And it felt profound. It was as if I were returning love to the universe. (I know that sounds woo-woo, but that’s how it felt.)

This is now from Little House in the Big WoodsAs I drifted to sleep, I realized something: I had just prayed for the first time in decades.

Growing up, prayer was an essential part of my life. As a devout Mormon (and then a devout Mennonite), I was taught that payer was a core part of being faithful. When my faith waned in college, so too did my habit of prayer.

Falling asleep in that hotel room, it occurred to me that prayer isn’t just for the pious. Prayer is for everyone. Prayer doesn’t have to be directed at a diety, and it doesn’t have to be some sort of mystical experience. Prayer can be exactly what I enjoyed that evening in Cincinnati: A heart-felt outpouring of gratitude directed toward the unknown. There’s plenty of value in that simple act.

I can’t say that I’ve made prayer a daily habit since returning home, but I have remembered to whisper my gratitude twice in the past two weeks. At night, as I’m falling asleep, I list the things I’m thankful for. And one of those things is you.

from Get Rich Slowly https://www.getrichslowly.org/one-thing-to-my-people/
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