My time in Germany is starting to come to an end. Only a few more days and then I am back on a plane to America. This has been a great trip and I will be sad to leave everything behind again. But I am excited to see Jen, Otto and all my friends (7) in the US. Anyways, Christian came up from Bavaria and we spend the evening with my cousin Frank,  Henrike and Jens.  And tomorrow I will be going to one more Schalke game. It’s not quite the end yet.

It was marathon weekend in Plettenberg. Jen walked the half marathon (2:45), I ran it (1:41) and my parents both ran the full marathon (mum: 4:31, dad 4:45). It should be noted that my father ran the last ten miles with cramps and my mother was doped to the gills. Jen also got interviewed on stage after finishing her half marathon, and they even called me out as she was having troubles locating me after her run. I was having troubles showering at my grandma’s house (why would anyone not have a shower curtain?), which is why unfortunately how I missed Jen crossing the finish line. We then both left right after the race to see the most incredible derby ever (Dortmund vs. Schalke - 3:3) and came back just in time to see my mother up on stage at the townsquare to receive an award for her 4th place finish in the city championship. She was supposed to pick us up at the train station.  In between, Jen got to see what it’s like to be the only Schalke fans in a block of Dortmund fans, how I got three of those fans to leave the game early due to my beautiful chants and finally how a little discussion on a train ended with a Schalke fan dimming his cigarette on a Dortmund fan’s forehead. Not your average Saturday.

the new $50,000 bill?

Why the financial theme? Well, after ruling out topics such as romance, yoga and business etiquette due to a lack of qualification, saving money was just about all that was left. And being able to say that I have been able to build a solid financial foundation over the past five years, starting with zero dollars in my bank account and the absence of any sort of family trust fund, I am at least partially qualified. And after having worked with, managed, dated and talked to a number of individuals who were struggling to stay on top of their finances; I thought this might actually interest some people.

It should be said that I am no financial advisor, and also do not take responsibility for you following or extrapolating any of my tips (ie, robbing old ladies to fund your emergency savings account). Last but not least, the picture above is not a $50,000 dollar bill but rather 50 Euro. Sorry folks.

Alright, let’s get started.

Why $50,000? It’s enough to make a downpayment on a starter home or condo in just about any market. And despite all the current real estate jitters, I think buying your first own home will always be a smart goal for young investors.

Most of these examples are at least somewhat based on my personal experiences and beliefs. If you’re not interested in buying a home then this might be an interesting exercise on how to save $50,000 - which is 20% of a 250,000 real estate purchase. I am going to just start with some tips that I believe in and follow myself. Then based on popularity and demand, I am going to keep updating this blog entry based on your feedback and my experience.

Don’t budget how much you spend but rather how much you save
I hate spending budgets, just as much as I hate people telling me what I can or cannot do. But I love seeing my bank accounts grow. So rather than limit myself to how much how I can spend, I set a budget on how much I will save every month. And I like to save a lot. It turns a limiting notion into something positive and motivating.

Save more than you spend
Believe it or not, the minute I got my first salary job (and it wasn’t a big salary, especially not living in Los Angeles), I started saving 50% of my annual net income. And while I have gotten a number of raises over the years, I never stopped saving less than half of my income. That does include what I put into my 401K retirement. To clarify, I had no belongings or obligations at this point of my life, which was a direct result of my spartan lifestyle. So you probably won’t be able to save this much at the beginning, but you need to try. That’s the only way to get ahead.

Grow your income, then your lifestyle
You’re probably wondering how the heck I’d possible be able to save that much (50%). If you have ever dated me or lived with me, you know. I didn’t have a car for over a year when living in Los Angeles. I took the bus and rode my bike everywhere (oftentimes while wearing a suit), packed my own lunch and build my hobbies and passions around where I lived. I walked to Yoga classes, rode my bike to the soccer field, skateboarded to my improv comedy lessons and once carried a 60 pound TV for 12 blocks. That wasn’t cool. Fact of the matter is, you might have to lower your lifestyle a bit. Sell your car, get a roommate, go out during happy hour and walk your groceries. Can you do it? Once your income grows (so do your savings, btw), your lifestyle will grow with it. And you’ll appreciate every bit of luxury (or normality) in your life.

Build a second stream of income
This one has a lot to do with me being able to accomplish my saving goals while still being able to travel and get out to enjoy life. An extra few hundred dollars a month will go straight to your savings bottom line and allow you to enjoy a few more of life’s luxuries. The key here is to try and build a steady (and almost passive) stream of income. Something that you build once and that then keeps making money for you. Rather than babysitting, write a guide on babysitting and sell it on the Internet. Depending on how much time and effort I put into this, I am usually able to cover all my fixed expenses through a secondary stream of income. Past money making activities have included: teaching online at a University, selling ties on ebay in Germany, selling dating site memberships on the Internet, building websites that sold flights and hotel rooms, publishing a book on writing complaint letters, etc. It’s really very easy. You just need to think about it, determine a plan, execute, optimize and then sit back and enjoy. The money you make with this will directly correlate to the time and effort you put into this.

Pay off your credit card debt
There is good debt and bad debt. Mortgages and student loans can sometimes considered be good debt, as they’re likely to carry lower interest rates and sometimes even are tax deductible. Ongoing credit card debt is always bad. It carries a high interest rate, and therefore should hinder you from participating in any other investment vehicles. For example, it’s stupid to save 4% with your savings account when your credit card company charges you 18% interest. That means every dollar you invest in your savings will net you a negative 14% return. So, do whatever it takes to pay off your credit card debt. Get a second job, consolidate your credit accounts into one that doesn’t carry any interest for a certain time period. Then put your credit card into a glass of water and put it in the freezer. Once you have paid off your credit card debt and understand the danger of such, you can start using a rewards card for every day purchases as long as you pay it off on a monthly basis.

401k, k?
Regardless of your credit card debt situation, I would invest the maximum amount necessary for a maximum employer contribution. Once you have stabilized your personal debt situation and build a 6-month emergency fund (see next paragraph), you can start putting more money into your 401K. You won’t pay taxes for it until you cash out when you’re bald and grey, but this the earlier you can start filling your 401K koffers, the better. Money grows over time.

Save Smart, Invest Smart And Do It All Automatically
I like investing money, more than I like spending it. But investing money can be a risky business, especially if you don’t have a lot of experience doing it. Or even if you have a lot of experience, but still don’t know what you’re doing. I have lost some money in the stock market, which I fortunately was able to balance with some lucky wins. So, if you don’t want to spend a lot of time managing your investments, here’s what I’d do. First start saving money and create an emergency fund that is worth about 6-month worth of living expenses. This money should be in your savings account or an insurable vehicle such a CD. I love ING Direct, and they automatically deduct a certain amount out of my checking account on a weekly basis, which is growing at anywhere between 4-5%. Once you have established your emergency fund, you can start thinking about investing in some stocks which is a great long-term vehicle. Rather than try your luck at choosing the right mix of stocks, I would recommend you just buy index funds. The Vanguard S&P 500 Index Fund consistently beats 90% of all other domestic stock funds. Again, invest automatically and re-invest your dividends.

Use potential negatives as an opportunity to save
Everybody is fretting high gas prices these days. One of my good friends used this market situation as an opportunity to sell his car and switch to riding a motorcycle and using public transportation. Rather than now paying an extra $50-$100 a month, he saves $400-$500 in car payments, car maintenance and gas. While not everybody can sell their car, we can all look at the current situation and potential hardship, as an opportunity to actually improve our financial situation.

Enjoy the financial freedom
Everybody enjoys life’s little luxuries differently. I like to travel, eat great food (at home!) and buy geeky toys from time to time. And through responsible money management, I am now fortunate enough to do so without having to feel guilty about it or doing so via credit card debt. The one piece of advice that I have about enjoying your new found financial freedom is to not lose it right away. Don’t buy toys such as a big car, a boat or a small airplane when that means you all the sudden have to make ongoing payments and then lose your financial freedom again. Buy things you can afford, enjoy them and then keep saving.

To be continued.

I just wanted to send a quick update from Deutschland. All is good. We have finally adjusted to the time change, and survived my cousin’s wedding. Barely that is. I had almost forgotten how much alcohol Germans are able to consume. I saw family  members and close friends consume 20-30 alcoholic beverages and still stay up longer than I did.  Jen and my mother are off looking at castles today. Tomorrow, we’re heading out to Amsterdam for a couple of days. On Thursday, we’re off to a professional hockey game before running a marathon this weekend directly followed by watching the biggest derby of the year. Then another party, another day of family and then Jen is off back to the States.

Lots of space

As I am typing this blog entry, I am arguably sitting on the best flight ever – flying from Portland direct to Frankfurt on Lufthansa. Since Lufthansa is a German company, there might be a slight bias in play here but that’s ok.  I am constantly flying for work, and other than flying on a private jet, this has been the best flight experience in a long time. It’s refreshing to see an airline do some things right, especially from the perspective of a guy who publishes a book on how to write complaint letters.
Here’s what Lufthansa did right today:

• When checking in at the gate, there counter was well staffed and we got checked in to our flight within a matter of 5 minutes. This is unusually fast for an international flight.
• At the counter, I asked if there was any chance that Jen and I could get a window/aisle seat rather than the “bathroom watch” row we were assigned in the back of the plane. The guy told me that he wasn’t able to make any changes right now, but to find him once we got to the counter.
• I, of course, forgot to find him at the counter. Instead, he found me. While walking on to the airplane, he pulled us aside (I was assuming they had opened my luggage and were wondering why I was bringing 37 brand new soccer jerseys) and asked whether we’d still like to change seats.  2 minutes later, we had graduated from the bathroom watch row and were sitting in a window/isle in an exit row. As you can see in the picture above, the leg room was incredible.
• Before walking onto the plane, we grabbed a half dozen magazines (GQ, Mens Health, Cosmopolitan, Nudists News) from their free magazine counter and boarded the plane.
• Once on the plane, we enjoyed excellent food, great service and lots of sleep induced by French wine and a couple of blue pills – the sleeping kind.

Lufthansa really didn’t do anything crazy here, but unlike most airlines, they upheld the promise of the kind of service that one should be able to expect. Nothing crazy, just basic stuff.
Now, some might say that international flights are always more pleasant than domestic ones. But I disagree. I paid $900 a piece for this tickets, which isn’t that much more than a number of domestic routes are going for these days.
Anyways, we are about to land in Frankfurt. Who knows what will go wrong there, but this is was an awesome flight. Thank you Lufthansa.

Ps. It should be noted that the on-board entertainment was broken for the duration of the flight, as the system’s hard drive somehow got corrupted. While this was certainly a bummer, I won’t remember it as a negative. Rather than keeping us in the airport for hours and hours, the captain made the right choice in departing Portland rather than trying to fix a problem that wouldn’t have been fixed anyways.

I obviously have done a very bad job of keeping my blog updated over this past week. Lots has happened, all which is good. The Hasselhoff talk was a success, and hopefully I won’t be giving that talk at any more professional outings. I had a great time in Seattle meeting up with Jerry and Gail, as well as some of my old friends at Wongdoody. My marathon training is absolutely awful, and I am not looking forward to those 26 miles up and (and hopefully) down the hills of my hometown. I’ve got a few posts in the pipeline that I need to wrap up and get posted.

I just arrived at Gnomedex, and it all looks very impressive. Everything is well thought out and the people all seem very friendly. Everyone brought their laptop, so seems like my kind of place. Let’s hope I don’t get booed of stage with my Hoff talk. Rumor has it yesterday’s speakers were amazing.

I am still somewhat in shock about this, but I have been asked to present at this year’s Gnomedex conference in Seattle. I will be enlightening the crowd with my educational Why Deutschland Loves David Hasselhoff talk.

Burrito Por Favor

With inflation being in full swing, I am really starting to see the impact on my wallet. My every day lunch staple, a bean and cheese burrito from my favorite lunch truck, Loco Locos Burritos, has just seen a price increase from $3 to $3.50. This is simply unacceptable, especially since I well remember the days of a $2.50 bean and cheese burrito at Loco Locos.

So, I have been forced to make some tough decisions. The other day I walked straight by the Loco Loco truck and Maria’s golden smile to purchase a bean and cheese burrito at the cart next door for only $2.50. Unfortunately, they didn’t quite understand my order (half pinto, half black beans - easy on the cheese), and I ended up with a burrito cut in half with extra cheese.

I either need to improve my Spanish or I need to stop thinking that I can order in Spanish. I sure hope this recession ends soon.