Thursday, October 06, 2016

Moving to

It is getting complicated running this blog and Therefore, I'm moving over to the dotcom for future posts.

In case you're wondering what the complication is. Supposedly, one of the sites was for "business" and the other for "personal blogging". The trouble is that I do not have that schism, as far as I can tell. Same guy in both roles.

So, it was becoming difficult to choose where to post. I'd have these endless debates on where a post belonged, and then I would not write at all. I suppose it would be simpler to not write, now that I think of it. Except that I do write.

I think, eventually, I may point the domain over there and leave this as a blogspot site. That should simplify further.

Saturday, October 01, 2016

2016 Redesign of . . . and life?

New site.
One theme that has been coming up in my life a lot, recently, is letting go of the cruft of life. This includes several aspects, the stuff that clutters up my house, financial accounts that are relics, old ideas that are not yielding their promise, and even relationships (or lack thereof).

This has been the case with my website. It originally began as just a blog. But, it seemed inadequate at the time to serve as a website. Blogger had not offered Pages at the time. Google did, however, have Sites, which was based on a Wiki. I could use Sites for my concept. It was easy to use and had Adsense gadgets I could use to monetize.

I do like Google Sites for its ease of use and because it tracks cross-links. If I move a page, all the URLs get updated. However, Google Sites killed the Adsense gadgets, which means that my theme is somewhat stuck.

That's the problem with Google Sites. The service has not evolved with design standards. The last big update was responsive design that makes mobile use easier; but, it's a bit wonky. So, I hesitated to go out and sell advertising because I could not make the site look appealing, nor could I make the site good enough for mobile traffic.

You can view the old site at for now. Its days are numbered. I had set up the domain through Google Apps, which I later discovered can host multiple domains. So, I'm eventually going to shut that down and consolidate.

As a business, has generated a little income. Google has paid me here and there for the ads on the site, which I will lose. In retrospect, it was silly to hesitate to move the site elsewhere. It's not like the income has been life-changing.

Still, it was the most lucrative of my sites despite the ugliness and lack of updates.

I am in the process of moving the content over to a new hosting service that offers more visual appeal for my work. Once the site is fleshed out more, I intend to start looking for advertisers, which will make up for losing Adsense revenue.

Still, I'm not completely out of Google. I have decided to keep the Blog on Blogger because it serves a different purpose. The blog is geared towards interaction, whereas the site is not. Because of chronology, the blog has somewhat disposable information. Once the news is past, it is past.

Other Sites?

That brings me to consider, what about and The reason I have the two domains is also an issue of legacy. I have not quite decided to stop using Blogger and make a clean start. I do not have to delete my old blog if I do start over. So what is keeping me from doing it? It may turn out to be nothing.

Like many things in life, it may just be momentum that keeps me on the same track, not an intention to keep going in the current direction. All it takes is a decision to change course. We complicate something so simple as a choice with countless justifications for not choosing. If only we spent as much energy making decisions as we do making excuses, our lives might have totally different results.

Thursday, September 29, 2016

Behold! Jicama Threatens Thee

My latest misadventure involves jicama, a perishable food item that resembles a turnip. I can't make out whether it's a bean or a vine from the Wiki entry. It's definitely a root. But, other sources online categorize jicama as a sort of morning glory or nightshade.

I had a business idea, which required me to purchase five pounds of jicama. So, how much jicama does five pounds make? About three large jicamas will yield five pounds. Actually, I went over by half a pound. But, it's not like you can resize them to suit you.

So, now I have five pounds of jicama at home to eat. I cut one up and sprinkled Trechas and lime on it to eat. I had a few pieces and put the rest in the refrigerator to cool.

A while later, I started coughing with a familiar sensation that comes from a food allergy. After a little research, sure enough. Jicama is among the foods that triggers a latex allergy.

I had never experienced this reaction with jicama. However, I typically eat a few pieces along with other fruit. Having eaten it alone this time, I have no doubt that it's causing the cough and itching.

I am curious why the information that is available on this . . . vegetable is so sparse and inconsistent? The Internets have let me down.

Wednesday, September 28, 2016

Mr. President - Coco Jambo (1920 x 1080p HD) videoclip

My kids found this song. I had heard it years ago; but, the song wasn't one that I would have remembered. It's catchy and apparently global.

Tuesday, September 20, 2016

The New Amazon Echo Dot: One step closer to ubiquitous voice control

The Amazon Echo Tap
One thing I love about Star Trek, most of the different series, is the ability to issue voice commands to the ship's computer. The crew is able to use the computer's voice recognition anywhere they go.

Amazon has introduced a new and improved Amazon Echo Dot, which is a smaller, stripped down version of the Amazon Echo. The Echo Dot brings the vision of the Star Trek computer closer to reality.

The Echo devices are always listening for commands to play music, read books, control your IoT (Internet of Things) device, or even place orders on Amazon. However, the Echo sits quietly in one spot of your home waiting for commands within hearing distance. Once you move to another room, the fun is over.

Going back to the Star Trek computer, the characters in the show frequently speak commands to the computer, such as when they enter the turbolift and tell it to take them to the Bridge or Engineering. No buttons needed.

There are episodes on Star Trek: TNG where the Chief Engineer runs database queries with voice commands to figure out some obscure cause of problems on the ship.

The Echo has been very popular for its ease of use and ability to interact with other services and devices in an almost Star Trek fashion. At home, you can turn lights on or off, check if a window is open, lock a door, or even set your oven to preheat with a simple voice command. You can also use the Echo to order a pizza from Domino's or to hail an Uber car to your door.  This is getting very close to the Star Trek vision.

What makes the Echo Dot different from the Echo, or the Echo Tap, is that the Dot is built primarily for listening to commands. The Dot lacks the same speakers that make the Echo and Tap great for listening to music or audio books.

Furthermore, the Dot is only $49.99 when available starting in October. This price point is what makes it much more likely that households will have an Echo interface in every room. You COULD buy a regular Echo for every room; but, it would be a tad expensive. The Echo Dot, on the other hand, not so much.

As if anticipating that people might do exactly that, Amazon is selling the devices in sets where you buy five and get one free. Alternatively, you can buy a bundle set in what seems like you get the Echo Dot free with the purchase of a complementary device.

In our home, we have been playing with home lighting automation through Amazon Echo. We have yet to try other smart devices, such as sensors or receptacles. It is very easy to spend a lot of money on home automation. Granted, it is a one-time cost that would offer years of service. However, you could very easily go overboard in automating things that do not really require automation.

Amazon seems to be leading the way for making technology invisible to the end-user. I think this is the sort of thing, like wearables, that electronics consumers have been waiting for. We want to be able to use technology with a minimum of fuss and anywhere we please.

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Tuesday, September 06, 2016

Bringing Dead Blogs Back To Life

I have been considering the resurrection of RGV Life and recently. These blogs continue to generate a little bit of advertising revenue from Google Adsense every few months despite sitting around without updates. I don't feel any guilt or remorse about leaving the blogs fallow. However, I do wonder, ever so often, if I could have made them viable businesses.

I have been aware of Patreon in the last couple of years. I can't help thinking that it might be a better way to go than depending on advertising. It is easier for me, personally, to ask for patronage than to sell advertising. With advertising, I would have to pull stats, make reports, make sales media, and so much more that is required to process individual customer orders.

Asking for patronage, on the other hand, is simpler. Cleaner. One page. If you like what I do and want to support it, it won't break you. Obviously, bigger supporters would get something more for their patronage. I would have to figure that out.


So, why would I want to bring these blogs back from the dead? Or, is that the undead?

Partly, I would like to quiet that nagging "what if" voice.

Secondly, I want to transition to become a writer. Part of becoming a writer is writing every day. What better way to write every day than to become a writer? Right?

Once the writing habit is reestablished, then it would be easier to churn out novels, especially one that I've been piecing together. I have the characters, the setting, and several adventures. Yes, a series of books. The only thing stopping me is the lack of a writing habit. Instead, I sit around a watch Youtube videos, read books, or do other things instead of write. Certainly entertaining, if not productive.

So, would my work be limited to writing? No, unfortunately no. I also like the podcasting and the video creating. Sorry, they all fit together really well on a blog.

What Kind of Content?

I'm glad you asked this rhetorical question. The content would be local news and information. I don't think I need to break any exclusives. What I lack in timeliness could be spent on thoroughness. In depth interviews would work along with quick announcements of what's going on in the area.

Experience from my site shows me that hyperlocal information is in demand. People want to know what's going on in their community. It would be pretentious for me to equate what I propose to do as any form of journalism. The closest might be a reporter, which seems less . . . formal. I just need to ask what's going on and share it. Simple enough, right?

Sure. Unfortunately, it takes time to get into everybody's business, which is why news organizations pay people to go out and do it. Interviews don't happen by themselves. Blog posts don't write themselves. Somebody has to go out and do all of that.

Perhaps physical newspapers and magazines are suffering the loss of subscribers, but it doesn't mean that what they offer isn't valuable. It's just that consuming news is much easier in digital format than on paper. Plus, you don't have to worry about recycling the paper after it sat around unread a couple of days. That's one reason I stopped reading the paper, that it is relentless in delivery even though I may not have time to peruse its pages.

So, A Selfish Endeavor?

You may be thinking that this is all to selfish purpose. To a degree, yes, it is. However, I would not propose to do this if I did not have an instinct that there is a need for such information in the community. People want recognition for their achievements, for their troubles, for their causes, for their ideas, and especially their work. I believe that I can provide some of that.

The best way to find out is to give it a trial for 30 days. Let's see what I can do. If it works out, and I can increase my readership, then perhaps it may be worthwhile seeking patrons. If I go completely ignored, then I could try harder or hang up the keyboard. But, I won't know until I try, right?

Monday, September 05, 2016

Glacial Financial Growth of my Plan

My financial experiments have so far proven more or less workable, although rather slow. In fact, circumstances have led to diminished cash reserves, to the point where I am slightly nervous.

I've had some big draws on my reserves that in times past would have been impossible to pay. For example, my Prius had some cooling problems and required changing parts to the hybrid system and changing a leaky water pump. With dealer prices, the repairs cost almost $1000. Something like that is still alarmingly pricey on my budget. Still, I was able to take care of it. Prius models are known for their longevity, so I'm hoping that at 145,000 miles, I can count on the car to continue to perform as dependably as it has been.

Another large draw was for a deposit with a builder, which would become earnest money if we qualified for financing, my wife and I. That was another chunk that left the reserves. We expect that money to come back to us soon. The driving reason behind attempting to buy a house, a down payment assistance program for teachers, did not pan out. This means that we would have to come out of pocket that chunk of money. At this point, we are unwilling to do that.

So, the point of my writing today is that the whole purpose of setting up our experimental personal financial system was to help us weather big cash flow problems. Indeed, that is what the system has helped us do. The result is that we are experiencing glacial growth of our reserves as we pay down the draws from the system.

In case you are new to the experiment, here is roughly how it works.


  • Checking account - all income enters here and gets allocated to pay down loans
  • Credit Cards - most spending comes from here, paid by money market as a loan
  • Money market - all loan repayments enter here, except car payments, which existed before the system was set up.
  • Margin account with Bond mutual fund - slowly buying shares every month to increase margin. Principal is untouched, margin credit is the source of cash.
  • Whole Life policies with maxed out paid up additions - another emergency fund for borrowing.

The mechanics are that the checking account offers a feature called Goals. Goals let you create discrete savings targets. So, when I pay my credit card, say $500. I create a Goal for $550. That's the $500 I paid the credit card plus 10% interest. 

When I get a paycheck, I pay off as much as I can of the outstanding loans, which is most of my paycheck. This is using a personal version of paycheck parking. You can watch this video to explain some of my thinking:

Using the Debt Weapons described in the video, I am also using a little bit of Infinite Banking Concept. IBC uses whole life insurance policies as a source of financing. VIP Financial also suggests using IBC as a source of money. Unfortunately, it takes years to build up your policies to a level where your cash value is significant. This is where the margin account comes into play. I can buy shares of a bond fund that pays a very meager return, and use that to borrow back half when needed. It's like IBC, except that I can build the cash value faster by buying more shares. 

A lot of this seems convoluted. I apologize for not being able to explain the setup better. What I do want to convey is that there is a limit to the growth of this system. It's limited by my income. It can only grow as fast as I am able to save money. Thus far, I have not reached the point where my life insurance policies have earned their first dividends. My bond funds are small, and pay very little in interest. I have no other reliable investments that assist me in growing the reserves. This needs to change. 

I have some prospects for additional income; but, they require large investments, which I currently do not possess.  These involve debt instruments that pay interest and use velocity of money over the long term. But, I'm no there yet. 

This plan is a long-term plan. I can see where it is going; although it can be exasperating in the first months. I have a lot of things that I need to resolve before I can make significant gains in my savings. For example, having a car payment to an external bank is less than ideal. I could recapture the interest charges if I were paying myself. However, I am not at a point where I can pay off the car entirely and turn it into a loan to myself. But, that's the goal. So, in time, my reserve balance will slowly grow. And my car loan balance will slowly shrink. They will cross paths at some point so that we can make that leap. 

All I need now is patience and diligence. 

Sunday, April 03, 2016

Why I Cancelled My Acorns Account

I very recently cancelled my +Acorns account. Despite the excellent app and overall product experience, it is not a fit for my needs. Two problems arise from my experience with Acorns. The first problem was the randomness, which could be fixed by not rounding up. The second problem is that they use modern portfolio theory (which money geeks call MPT). A third issue is not related to Acorns itself, but my own move towards simplification.


The idea of taking spare change and investing it has an allure of simplicity. Surely, you would not miss a few cents here and there, right? Sure, until it adds up to real money. I think my highest 30 day contributions reached around $70. That's real money out of my monthly budget, not just change. While the occasional draft of $5+ from my checking account does not interfere with my spending, I realized that the $70 could be going towards my other accounts or goals. I didn't realize that spare change is real money.

Downside Protection

With regards to modern portfolio theory, I at one point thought it to be the best way to invest. As my financial journey leads me to better understanding of money, I have come to realize some of the shortcomings of MPT involve downside protection, which is nonexistent. There is no amount of asset reallocation that is going to help you when the overall market gets its ass handed back to it. A loss is a loss.

I cancelled my +Betterment account last year because they also rely on MPT. I do like the idea of robo advisors; but, find that they rely too much on MPT alone. I did find and sign up with robo advisor +Hedgeable to manage my money. As the name implies, Hedgeable hedges against losses by actively managing risk.

What this means in real terms is that if there is increased market risk, Hedgeable is not shy about cashing out and waiting for things to improve. They would take a loss like everybody else, although it would be a small loss.

Acorns does not offer downside protection. At best, the algorithms will rebalance your portfolio. There are benefits to rebalancing; but, they do not include making up for large losses.


The third reason I mentioned was a personal move towards simplification, which has nothing to do with Acorns. I think they product is very well done and serves people who might not otherwise save money. However, for those who have some modicum of self-discipline and awareness about their finances, Acorns may not offer sufficient value. At the very least, Acorns is one more account to keep track of, one more app on your phone, one more demand of your time. For me, this is one too many at this point of my life.

Part of simplification also includes knowing precisely how much and when my deposits into my savings will occur. This way, there is no tiny nagging voice in my head telling me to be on the lookout for an automatic transaction.

I Am Still Favorable Towards Acorns

Despite my leaving Acorns, I still have positive regard for them. As mentioned earlier, Acorns provides an easy way for people to start putting money away for the future, which they may not have done on their own. Furthermore, if somebody with little financial sophistication is going to put money into the market, it is better to use modern portfolio theory than to buy individual equities.

In short, if somebody I know and care about asks about getting started in investing, Acorns might be one of my first suggestions so that they at least have a sense of getting started. Then, as their level of understanding increases, I might point them towards other products.

Friday, April 01, 2016 Tax Preparation Lovefest

I am crushing on my +Simple account now that I am gathering my expenses for tax purposes. While Simple is not so useful this year, due to limited use in 2015, it is going to be awesome next year. Simple currently only offers personal accounts, although their Help section mentions that they are considering business accounts in future, which would be even better.

The one feature that will make my tax preparation less demanding next year is the ability to tag my expenses. By adding a #business tag to the appropriate income and expenses, I instantly create a filter for my searches. Next year, for example, I would simply search "2016 #business" to get a report listing all my business expenses and income. Then, it is as simple as exporting the list. Done.

Another excellent tax feature is the ability to upload invoices to the individual transactions. This is great in that I would have access to the actual invoice should I ever need to verify that the expense is business-related.

Finally, the ability to add memos to my transactions is extremely useful, not only for tax purposes. Sticking to taxes for now, a memo would allow me to document why an otherwise personal transaction is business-related. For example, I frequent Walmart to purchase groceries and other items. On occasion, I need to purchase a wireless router or a tool to finish a tech job. In a sea of Walmart transactions, it would be difficult to distinguish a business expense from an everyday expense. That is, it would be difficult unless I tag, attach the receipt to, and annotate the transaction.

The reason all of this is easier with Simple is because this can be done as you go. As soon as you purchase and have the receipt in your hand, you can tag, photograph the receipt, and add a memo. The entry is automatically made for you when you swipe your card. You no longer have to go home, sync your accounting software, hunt for receipts, and then match them to transactions. Part of what makes keeping records is the drudgery of batch work. However, if bookkeeping is as simple as posting a tweet or other social update, it simplifies tax season.

If Simple ever does come around to creating business accounts, you bet I'll sign up in a heartbeat. Imagine that your accounting software was also your bank. One login. No syncing. No manual entries. Instant updates with every transaction.

I'm actually excited about doing taxes next year because of Simple.

Friday, March 11, 2016

The Grid Beta Access: First impression has granted me Beta access to my account. You can see the account over at if you like. If you have never heard of The Grid, they are working to build a self-designing website that uses artificial intelligence. The idea is brilliant. I like the concept.

I think that when they iron out the bugs, The Grid should be excellent. I am not ready to make The Grid the home to any websites that are important to me quite yet. Here is why.

They are still in Beta

Obviously, being in Beta means that the service is not at full production capacity. There are things I expected would be available, which aren't. Watch the video to see more or less what I expected.
So, the first thing I expected was to be able to choose the website's purpose, which is not currently an option. Instead, there is a very rough posting process that allows me to share content from the web and to type up blog posts from the browser. At least, there is some control of the AI's design parameters.

Missing Content

When I publish some posts, for some reason the AI only publishes the photo and decides to not publish the text. To make things worse, making changes and reposting seems to have no effect. The best I could do is delete the post and try again, but even that is sketchy. I could not reliably edit posts and be sure that they will display properly, most especially when they have their own separate page.

One Page?

Posts default to a single page. You would have to infinitely scroll down to old posts if you ever built up a large repository of posts. There is no search feature. I would post to both the homepage and a separate page if the separate page weren't keen on deleting my content.

Inability to Change

I mentioned this before, but it needs emphasis. Making changes to a post, such as removing it from Navigation or making a Page from the post, seems to have no effect. Publishing the changes has no effect. Once an error is in place, it's permanent unless you delete the post and start over.


At the very least, I thought I could use my Grid account as an aggregation site; but, I have not found an RSS feed anywhere.

I Won't Harp

I'm not going to harp too much on The Grid. They do warn users that it is in Beta. They are not running the meter on billing yet, so it's not like I'm paying for something I don't like. I look forward to improvements that they make to the back end to make publishing more intuitive and, quite frankly, effective. 

In the meantime, I will likely use my Grid site to point other content until I can reliably post to separate pages within The Grid. My experience demonstrates to me that they are putting all their effort into he AI and limited effort into user experience. I think this will improve over time. For now, I am content to use my account for experimental purposes. 

Friday, February 12, 2016

Lesson From Automatic Budgeting with Simple Goals

In the last couple of posts, I have written about how I am using to manage my self-banking experiment. It turns out that one flaw in the process is me. It has become habitual to check balances, transfer money, schedule payments, and figure out strategies to ensure what needs to be paid gets paid. I maintained the habit knowing that Simple can mostly manage things.

Since switching my payroll direct deposit over to Simple, finally, much of my fussing over money is automated. It has been difficult for me to let go of the reins. At first, I was putting lump sums into Simple Goals in order to pay off self loans, as I have done since beginning the self banking experiment.

The problem with manually doing this is that Simple automatically allocates a daily amount into your goals. Therefore, your Safe-to-Spend quantity goes down every day as Simple allocates your daily rate.

For example, let's say that to meet my Goals, Simple needs to set aside $45.67 per day among the various Goals. This means that I would need to have enough money in Safe-to-Spend to set aside until next pay day. So, if I were paid every week, I would need $319.69 available to put towards my daily budgeting.

What I was doing instead was allocate money manually and make payments to my self loans without leaving that 7 day buffer. Therefore, my Safe-to-Spend balance would zero out and cause my Goals to pause their daily budgeting. Then, by the next paycheck, my Goals would grab a big chunk of my paycheck to catch up, in addition to the daily allocations from my already diminished paycheck.

The result is that I kept "running out of money", which is preposterous because I earn sufficiently to cover all my expenses.

Whereas I manually budgeted in lump sums per paycheck on my own, Simple budgets smaller daily quantities automatically.

I have to learn to let go and allow Simple to do its magic so that I can go about enjoying some extra free time.

To remedy my problem, I've had to borrow from myself to ensure that there is enough cash in the account to smooth out the roller coaster budgeting that my interference has caused.

My take-home lesson is that once I automate a process, I should step back and let it run. My interference caused something meant to uncomplicate my life do the total opposite.

Wednesday, February 10, 2016

Self banking is easier with Simple

In my last blog post, I wrote about my self banking experiment and a transition to +Simple as my main bank account. Previously, I had my paycheck deposited into a local bank. The money would then pay bills and pay down my loans to myself. This method required a lot of time in tracking accounts, bills, and loan balances. Transitioning to Simple has freed up so much time.

Self Banking Recap

Let me recap the self-banking idea. I have a savings account where I accumulate a percentage of my income. Whenever I need to purchase something other than a living expense, a WiFi router for example, I use money from savings. That instantly becomes a loan with tacked on interest that is paid back over one year or less. In this way, the savings account has a means to grow other than the meager interest rate the bank offers. In this way I avoid using outside credit and recapture the interest I would have paid out.

Self-banking is a fun mental game to play with my finances. Whenever I purchase something in this way, the loan has a name, it has a payment schedule, and it has an interest rate. There is a greater mental urgency to budget my paycheck to pay off these loans than there is to only save a fixed percent of my income.

Imagine borrowing $120 from savings and then still making payments on it after six months. It is a bit ridiculous to take twelve months to pay down $132 (loan + interest). Yes, I could make $11 payments every month, or I could pay off the entire loan in a lump sum. The point is that having a "Router Loan" hanging over my head ensures that I will pay down the loan in addition to my regular savings contribution. Thus, by financing purchases in this way, I am effectively increasing my savings rate every paycheck. The game ensures that I budget loan payments like I would a utility bill. This could get exciting if I ever got to the level of loaning myself money for a car.

Simple Makes Administration . . . uh, simple

One drawback to this mental finance game is that there is some administration necessary to make it work. The old way required creating a note, creating an amortization schedule, keeping track of payments, calculating balances, and budgeting my paycheck to figure out how much of the loan to pay back. By switching to Simple and using their Goals feature, all of that goes away.

I originally started the administration with note cards for each loan. Then I moved to tracking via Evernote. I would also do the budgeting on paper every paycheck.

Now when I borrow from Savings, I tack on the interest and make it a Goal in Simple. Simple automatically siphons money into the Goal every day. If I want to pay down the loan faster, I can move lump sums into a Goal until it is paid off.

By using Simple, my Self Banking game is easy to do from my phone. The only "work" is that I need to add 10% to the loan, which might require a calculator. Beyond that, Simple handles tracking payments, tracking balances, and a large part of the budgeting.

Why It Works

I have given some thought to why Simple is so effective for making my Self Banking game work. It comes down to Accounting. Prior to considering Simple to track my self loans, I was seriously trying to design an accounting system to help me manage the loan accounts. I was about to shell out money for ledger paper so that I could create a general journal, a ledger, and loan accounts. It would basically do what my note cards were doing, except more formalized. I was even considering Quicken or Quickbooks.

Simple works because it breaks your main account into sub accounts when you create Goals. Simple also works because it does not separate your bank account from your accounting. It's all in one. No reconciling required.

A Goal in your Simple account can be used as a sinking fund, for tracking loans, for budgeting monthly bills, to create as many "savings accounts" as needed, and probably some other uses I have not imagined. In short, rather than have a checking account and a separate accounting system, Simple combines both into one product, which is a time-saver.

With Simple, I can track expenses, allocate money, transfer from one account to another, and many of the things that we can do with a formal accounting system. The only thing missing is that transactions between your cash and Goals, or between Goals, are not recorded. You lose those details. However, since this is my personal financial game, not a business, there is no need to leave breadcrumbs for auditing.

Now the question is, what can I do with all the time I have freed?

Monday, January 25, 2016

Experiment in Self-Banking

In the past few months, I have been experimenting with self-banking. The idea is to have some money saved away, which I can borrow. After borrowing the money, I run it through a 1 year amortization, or longer. Then, I pay back the loan to my savings with interest. The idea is to progressively have a larger and larger savings after I pay off each loan to self.

I have been searching online for information from others who have created a similar system to save money and recapture the interest that would otherwise be paid out to banks. However, the search results usually come up with links to Infinite Banking Concept, which is similar to what I am doing, except that it involves whole life insurance as the source of capital. I think IBC has its merits; but, it takes years to build up and adds a "load" to the program from the life insurance. I would still do IBC because of the whole two birds, one stone business, in which one needs to be insured anyway, might as well turn it into a collateralized source of capital.

The other search result from self-banking is for ATM and online banking where you don't have to go into a bank branch. This has nothing to do with what I want to do.

The experiment was a struggle at first. The first challenge is having too little capital. If you start off with $500, then it doesn't take much borrowing to max out your "credit limit". But, with the magic of velocity of money, that $500 can build up to something more workable.

The experiment has a few defaults, as mentioned earlier. I charge myself 10% interest amortized over one year. The interest is static, so I don't bother with calculating average daily balances or early payments. Once amortized, I pay in increments spelled out in the amortization table. Some paydays I'll make one payment per loan, or several payments. The result is that my loans have been paid off withing 1 to 3 months.

The trouble I have found is that it is time consuming to track each loan and sit down to calculate how much to pay every week on pay day. I have discovered a way to save time, which involves using Goals in my account. Each loan becomes a Goal, which includes the principal and interest. Simple does the bookkeeping. I take whatever money I have accumulated in each Goal and send it to my "treasury" via ACH.

It seems like all this is a lot of bother. It was until I figured out last week that Simple could be used to track each loan. So, why bother?

Interest Expense Recapture

Instead of paying interest, I can keep the money and save it up. By paying a credit card, I would have lost the money, so it should not count towards my living expenses.

No Credit Check

If I need to borrow money, no credit check.

Flexible Repayment

The biggest problem with bank loans, credit cards, and other finance is that you are set on a strict payment schedule. If you have a tough month or somehow don't have enough for a complete payment, you get pounded with penalties and credit report dings. By borrowing from my own little "treasury", I can pay more, pay less, skip a month, or even "forgive" the loan if I choose. As long as the loan eventually gets paid back, I'm rather flexible with my payments to self.

Increasing Credit Limit

Every time I borrow and pay back, the treasury grows, which means I have more money to borrow.

Some drawbacks

Of course, not everything is roses. One of the drawbacks, which I have not yet hit, is that eventually the pile of money could become "too big" to keep in a deposit account. I'm going to have to do something with the excess so that it can be collateralized. The thought is to put the excess into a margin account so that I can borrow against equities. But, one step at a time.

Another drawback is that my paycheck is already spent every week. The same urgency one feels when having to repay a credit card is the same urgency when you are the lender. I have one single credit card with a $300 limit that I use for spending. I pay off that credit card every week, which involves a loan with interest, which I pay back from my paycheck.

I could cashflow my spending; but, once I started looking at time value of money, it seems that any expense should account for opportunity cost. Thus, I am perpetually in debt to myself. I guess if I'm going to be a slave to the bank, I should own the bank.

The biggest drawback is that I know that this fictional bank is, well fictional. I'm willing to put up with the shenanigans mainly because I would have been doing it if I were using outside financing. So, I'm all in with the fantasy, as it gives the whole savings process a narrative. I could simply pay my bills and save money in an account like everybody else, without wasting time with loans, interest, and perpetual debt to myself.

I'll report on my progress in the coming months.