A couple of decades ago, “wearable computers” were given as an example of a futuristic technology that would render the computing of the day obsolete. Imagine being able to detach yourself from your bulky desktop, ganglion of cables and giant monitor. Why, you could organize your recipes on the go! No one at Discover magazine envisioned that the humble little telephone would end up doing the trick, but of course it did. No cords, relatively durable, etc.
So given that smartphones exist, why would anyone own a smartwatch? Let’s see…they took the one negative of a smartphone, the small screen size, and made it even worse. Then they took some of the biggest positives of a smartphone – its concealability, its inconspicuity – and eliminated them. Another beautiful feature of mobile phones, even the most basic geriatric models, is that they eliminated the need to even carry a watch. Think about how odd it is to adorn yourself with a strap that displays a certain piece of data on it. But in a world where Samsung’s Galaxy Gear is more than an oddity, you can look simultaneously awkward and dorky. Win-win!
(One day until Apple’s big announcement. Zero seconds until the CoW. Let’s go:)
Jason at Hull Financial Planning counters the standard (bad) personal finance advice that all spending is evil. The idea of dropping a dollar for a worthwhile or beneficial purpose never occurs to the hyperfrugal kooks who dominate this industry. Jason reminds us that every dollar you spend, you’re getting something out of. Economists call it utility. The idea is to maximize your utility per dollar spent. If you and your spouse need separate transportation, it makes more sense to buy two $3000 Kawasaki Eliminator motorcycles, even if they are cheap pieces of junk, than a single $6000 Ninja SuperSport that you’ll have to share.
Harry Campbell at The 4-Hour Workday (he really needs to copyright that) quit his important and meaningful job. Then he went to Cabo San Lucas with his family, which seems equivalent to going to Disneyland for one’s honeymoon.
Hey Canadians! That magical fairy dust “free” health coverage stops at your borders. Jon Haver at Our Insurance Canada is here to remind you of that.
In our Hopelessly Naïve Headline category, there’s only one entrant this week. Joshua Rodriguez at CNA Finance, who writes “How To Make A Budget Spreadsheet That Makes Budgeting Fun!” It’s a 13-step process that will have you begging for a 14th step:
In the cell to the right, type “Saved So Far This Month”, to the right type “Need To Save This Month”, and to the right of that type “Total Savings/Invested”. Now, in the cell below “Monthly Savings Goal” type in the total you have after all expenses. As you put money into savings, update the “Saved So Far This Month” cell. In the cell below the “Need To Save This Month” title, type
And on it goes. Even better, he poses 3 “common budget spreadsheet questions” at the end, and only answers one of them. The answers he gives to the remaining two are “That really depends on what you are comfortable with” and “There really is no clear cut and dry answer to this question,” and congratulations to Joshua for managing to combine “clear-cut” and “cut-and-dried” into one all-encompassing über-idiom.
Earlier this year we told you that instead of cleaning out your closet, you’d be better off acquiring more possessions. But personal finance groupthink is a malicious beast, and such a contrary opinion as ours is never going to get much traction among the masses. Better to recycle the same old pap as FI Journey is doing. Our general rule here at Control Your Cash is to look askew at advice offered by a website that has a typo in its logo:
Anyhow, he discarded a bunch of stuff.
Babs Friedberg (we’re guessing no one has ever called her “Babs”) continues her brilliant “online MBA” class. The time value of money is something that a lot of people can’t seem to wrap their heads around. Observe any lottery winner who opts for the 20-year payout. Well, if you’re looking for rotten financial decisions you can observe anyone who even buys a lottery ticket. The difference between $10,000 now and $10,000 in the future should be obvious. $10,000 now and $12,000 in the future? That depends, and Babs explains on what.
Speaking of the 20-year payout, Mike St. Pierre at Annuity Rates HQ sends us the same post on annuities every week and we keep running it. Don’t buy an annuity, but don’t let us dissuade you.
Madison duPaix at My Dollar Plan wrote an article of her own this week instead of farming it out to one of her lesser contributors, which is always a good idea. If we could feature only practical suggestions such as the one Madison gives us this week, we’d rule the world. How to roll your 401(k) over into an IRA. Save time by starting at the 3rd subhead.
Michael at Financial Ramblings explains that dividends are not “free money.” A large corporation isn’t going to hand cash over to you just to be nice. Rather, it’ll give you the cash in order to make owning its stock more attractive than owning a similar stock with a lower (or non-existent) dividend. Dividends also discourage undue trading: why would you sell a stock if owning if means you’ll probably receive a check at the end of the quarter? (There’s only one answer. If you think it’s going to lose an amount greater than the dividend.) To accurately assess your investments, don’t separate the returns into appreciation and dividends.
PKamp3 at DQYDJ.net takes over the prestigious but purely ceremonial closer position. There’s a whole lot of dumb on the internet these days, and we’re not even talking about personal finance blogs. Some chick at Slate and another chick (named John) at Gawker have decided that because private schools are superior in almost every way to public schools, the latter should be discouraged if not outlawed. PKamp3 explains that if anything, we should be going in the other direction.
And we’re done. Another CoW every Monday, another blog post every Wednesday and Friday, another Anti-Tip of the Day everyday. Thanks for playing. Enjoy the games, everyone.