Lessons About Money from the World of Warcraft

During late autumn and most of the winter, I live in another world. I join millions of others lost in Azeroth, the fictional universe for the computer game World of Warcraft. Believe it or not, one of the best lessons I've ever learned about money came from playing the game.

I was frustrated at never having enough gold to purchase the equipment I wanted, so on a whim I began to buy and sell goods at the in-game auction house. I was shocked at how much money I made. Normal gameplay might yield a few gold pieces per week, but I was able to make twenty or forty a week through arbitrage. And my character was fairly young! Over the course of a couple months, I was able to earn about 350 gold pieces, which is an amazing amount for a mid-level character.

And then I learned another lesson about researching investments when I spend all that money on a weapon of little value and a mad race to max out my Enchanting skills.

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More about...Psychology

Lattes, iPods, and Masterworks: New Ways to Look at Money

My brother is selling his house. To get it ready for market, his family has been packing stuff in boxes. When it came time to pack his wife's shoes, the kids were amazed. She had sixty pairs of shoes. "How much did these cost?" my brother wondered. "Only about $75 each," his wife told him.

Their kids are still a little young to understand money, so my brother tried to translate this for his oldest son. The kid had just spent a couple weeks working, for which his grandfather paid him $20 per day. He saved his money and at the end of the two weeks, he bought an iPod. (Though what a seven-year-old kids wants with an iPod, I'll never know...)

"One way to look at it," my brother told him, "is that for every two pairs of shoes, you could have an iPod."

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10 expert tips for saving on car insurance

My friend Lynn works for a major U.S. insurance company. I recently asked her for tips to help people save money on auto insurance. I expected maybe a few quick ideas, but she went above-and-beyond with the following detailed list. If you own a car, you should read these tips. For readability's sake, I haven't blockquoted this, but it's all Lynn.

Note that every insurance company is different — not all of these ideas work everywhere. The first thing you can do to save money on auto insurance is to self-insure as much as you can afford. Do this in the following ways:

  • High deductibles. Everyone preaches this, yes, but it's usually the easiest way to cut costs. Usually. (If your car is over ten years old, the savings may be minimal.)
  • Remove towing. Good maintenance and planning can save you money. Don't run out of gas. Don't lock your keys in your car. Make sure you have a spare and know how to change it. Sometimes your car will break down, but if your car is well-maintained, it won't happen often. You pay $10 - $30 a year over the life of your policy and one tow costs $100. Note that in the event of an accident, towing is almost always covered under collision.
  • Remove car rental. Small economy cars cost about $20 - $25 per day to rent. Car rental is $20 - $40 per year. Play the odds. If you rent a car on vacation, your insurance will cover you while driving that car. Don't pay for the extra coverage. The only things it offers are:
    1. Zero deductibles. You go all year long with your deductibles, why change now? Also, if you pay for the car with a credit card, they may pay for any out of pocket in the even of an accident.
    2. Downtime coverage. Downtime means that while the rental car you wrecked is in the shop being repaired, it can't be rented out to other customers and they can ding you for the daily fee. This may be an issue if they can show that all other cars were rented out and they lost money because of you — Hawaii is notorious for charging this. But, again, it's a risk you might decide to self insure rather than pay $21 a day for the insurance.

Aside from self-insuring, there are other steps you can take to save on car insurance.

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More about...Transportation, Insurance

Want to Save? Give up the Big Things!

My wife — the NPR addict — pointed me to a Marketplace commentary by
Amelia Tyagi. Tyagi says not to focus on small expenses, but to focus on big expenses. You can listen to the piece in RealAudio format from the NPR web site, or read this transcript:

Clip those coupons. Shift to that cheap, scratchy toilet paper. And whatever you do, don't buy any more lattes at Starbucks.

You've heard it before. Some famous financial advisor, shaking his finger and telling you how all you have to do is save $5 a week and all your financial problems will disappear. Before you know it, you will be debt free, investment rich, and lighting cigars with Donald Trump.

Yeah, right. The bottom line is, the little stuff really doesn't add up. Unless you live to be 500 years old, saving five bucks a week is not going to pay for a retirement home in Tahiti.

The real advice is that the big things add up. The fact is, one-third of Americans live in a house they can't really afford. Even more of us drive a car we can't afford. Fifty percent of us aren't saving a single dollar for retirement, let alone the 10% of our salaries that most experts recommend. So clipping a few coupons isn't going to build that nest egg.

If cutting the lattes isn't going to fund a comfy retirement, why do we hear that old advice so much? Because it is easy. It is easier to pack a brown bag lunch than to sell your car. It is easier to give your husband a haircut at home than to move to a smaller apartment. And it is easier to boil your own beans than to sell your house.

But of course, just because it's easy, doesn't mean it's right.

So the next time some expert shakes a finger at you for enjoying a lunch at an upscale restaurant, go ahead and roll your eyes.

Just try not to roll your eyes when it's time to make the real money decisions.

Tyagi's advice on big expenses is great. Some people spend so much time sweating the small stuff that they miss the big stuff. They're penny wise and pound foolish, negating their daily scrimping and saving through stupid financial choices that burden them for years. (My wife told me yesterday of a co-worker who wants to sell his Ford Expedition, which he bought new last summer. The problem? He owes $43,000 on it but can only get $23,000 in trade-in. Ouch.)

But I don't like Tyagi's advice on the little stuff.

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More about...Budgeting

How to Get Better Customer Service

I hate dealing with bureaucratic corporations. Their customer service is a joke. Even dealing with small companies can be a challenge. But I'm slowly learning how to coax good customer service out of the companies I call. Here's a list of my favorite tips.

According to consultant Dr. Gary S. Goodman:

Customers need to take some responsibility for the quality of the service they receive. And if they want better service, they should try becoming better customers!

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The Entrepreneurial Spirit, a Tribute to My Father

My father was an entrepreneur. He was always starting businesses. He was always selling things.

When I was very young he operated Steve's Lawnmowing Service. He also sold World's Finest Chocolate. He carried boxes of chocolate bars with him to church, and sold them after Sunday School. I remember standing on the church lawn, waiting while Dad joked and told stories and sold candy.

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More about...Side Hustles

How I finally defeated dandruff

Here's a tip I cannot believe I'm sharing in public.

For years I've battled dandruff. I mean I've had it bad. Recently it's reached nightmarish proportions — my scalp was like North Dakota in January.

I tried all sorts of remedies. I tried Selsun Blue. I tried Head and Shoulders. I tried Denorex. Nothing worked. I even tried not washing my hair at all. That didn't help the dandruff and just created the added grossness of greasy hair. Continue reading...

More about...Health & Fitness

In Praise of Young Entrepreneurs

Last weekend my wife and I browsed a local farmers market. At one stall, Kris found a necklace that she loved. "Will you buy this for my birthday?" she asked. When I learned that the necklace in question had been hand-made by a 14-year-old girl, and that this was how she was raising money for college, the deal was sealed.

This young woman is making money from her hobby. She's also helping her parents to know whether they should provide financial support for college. (My guess: seeing how industrious this girl is, they'll be happy to help with what they can.)

I am a sucker for kids selling things. It's not just that I think it's cute — I also like to reinforce positive behavior. Developing the courage to sell cookies or lemonade or magazine subscriptions or jewelry is an excellent thing. It's one of the best ways to teach children the nature of money (and valuable social skills).

 

The latest issue of Kiplinger's Personal Finance suggests sending kids to money camp:

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More about...Side Hustles

Use Your Hobbies to Bring You Wealth

Yesterday I shared the most important money tip: to gain wealth, you must spend less than you earn. Get Rich Slowly has covered many ways to reduce the spending side of the equation. But how can a person increase the earning side?

Consider an entrepreneurial endeavor. Start a small business based around one of your hobbies. It's not difficult to earn a couple thousand dollars each year doing something you love in your free time. The key is to not let the hobby-as-business overwhelm you. Keep it fun. Don't let it become a chore.

With that in mind, here are some real-life examples of hobbies I've seen people turn into side-businesses. I know people who:

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How to Sell a Used Car

Most buyers are honest people, and are happy to be working with a private party instead of a dealership. To get the best price from your car, follow these steps:

  • Prep your vehicle. Check the vehicle to be certain that everything works. You may consider having a mechanic examine your car and issuing a report about its condition.
  • Research the market. Spend a few weeks scouring your local used-car classifieds to learn what people are asking for similar vehicles. Use the Kelly Blue Book or NADA Guides to get additional information.
  • Set a competitive price. Determine what you think your car is worth, and then add a little to the price for wiggle room. (You don't want to start negotiations from the price you think the car is worth.) Decide on a rock bottom price below which you will not entertain offers.
  • Gather records. Prepare a folder containing all maintenance records. If you had a mechanic inspect the car, include his report. Consider purchasing a vehicle report from CARFAX — it can help set potential buyers' minds at ease. Also have a bill-of-sale ready to go. (What you need for a bill-of-sale will vary by location; here's a list of state motor vehicle division web sites.)
  • Clean your vehicle. Wash the car thoroughly. Don't just run it through a car wash — scrub it down. Wax it. Clean the interior. Get all the junk out of it and vacuum it. Make it look its best.
  • Create an advertisement that sells. Mention top options and improvements. List any recent upgrades, such as new tires or battery. Has your car lived all its life in a garage? Say so! Do you have all the maintenance records? Mention that, too.
  • Spread the word. Get as much exposure for your ad as possible. The more demand you can generate, the more money you'll make. Online, try craigslist, Autotrader, and Cars.com. (Quality photos are important for online ads.) Run your ad in a newspaper over the weekend, when it will reach the largest audience.
  • Be prepared to answer questions. People will call or e-mail to ask for more specific information. Be ready to provide it. Keep a list of key facts by the phone.
  • Show your car to interested buyers. If you're nervous about your ability to deal with people, get somebody to help. You're selling yourself as well as the car, so make a good impression. Allow the buyer to take a test drive, but be sure to ask for a valid driver's license first! Permit buyers to take the car to their mechanic, even if you've already taken it to yours.
  • Negotiate a fair price. A good price is fair to both parties. Having done your research, you'll know what your car is worth. Be confident in this knowledge. When you're sure of a vehicle's value, it's easy to stand strong when somebody tries to lowball you. Have a firm bottom price in mind, but if a reasonable offer is only a couple hundred dollars from this figure, consider accepting it.
  • Make the sale. Complete a bill-of-sale transferring ownership. Again, what you need for a bill-of-sale will vary by location. (Here's a list of state motor vehicle division web sites.) Ask for cash or a cashier's check. (Here's a page about avoiding fraud, including fraudulent cashier's checks).
  • Take care of details. After the sale is complete, cancel your insurance on the vehicle. Offer your phone number to the buyer so that you can answer questions, but be clear that the sale is final.

If anything about the transaction makes you nervous, call it off. If the buyer seems shady, he probably is. If the buyer wants to pay more than you're asking and then be issues a refund, he's probably trying to pull a scam. Don't do it. Trust your gut.

If your car has trouble, if it's a lemon, don't sell it to a private party. Sell it to a dealer. You'll get less money, but you won't be screwing over somebody else. And the dealer will be better equipped to repair the trouble. Remember: your goal is to provide an excellent transaction for yourself and for the buyer. You're not there to rip anybody off.

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More about...Transportation