Lazy Man and Money

Calculating Kids In Your Net Worth

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A lot of personal finance “gurus” talk about whether kids are expensive. Almost anyway you slice it up, they are. The rare cases I’ve seen when they aren’t expensive is when a family is already financially independent, so a member isn’t working anyway.

Calculating Kids Net Worth
This caricature of my kids probably doesn’t increase their value.

Personal experts agree that for almost everyone, if there isn’t a large direct cost, there’s a large indirect cost. For example, adults have to make sacrifices at work to be there when kids need care. Those sacrifices often come due during performance interviews that determine promotions and/or raises.

Relating it our own experience, kids are expensive. The oldest only eats “prime rib” (his name for any premium steak). I’m to blame for some of the expense because I have a not-so-modest STEM toy addiction. Our biggest expense though is the $250,000 that it will cost to get the two kids through 8th at their private school – and that represents a 50% discount.

If we’re spending all this money, we’re going to have to figure out a way to quantify this investment in our month net worth statements.

Luckily, I have an idea.

Calculating the Value of Your Kids

First, we clearly made a pair of terrible decisions. How can we turn this around? How do we get a return on this investment?

One of the most obvious ways to calculate the value of your kids is to use their value on the black market.

Of course, this wasn’t my idea. It was actually our doctor’s idea. I don’t know if he jokes with everyone this way, but when our first was born, he said that we can get $250,000 on the black market.

Like it or not, I’m going to take his word because I don’t want my Google searches to put me on some kind of list.

Does that mean we can get $250,000 for each of our kids today. No, we’re going to make some adjustments to that.

Almost all buyers are going to want babies more, that’s more time to bond and mold them. Our 6 and 7 year olds may be too attached to us now. They probably wouldn’t latch on to the new family too easily. (Note the use of “probably” – there’s some room for doubt.) However, at 6 and 7 they are potty trained and can get dressed and make their own breakfast. That should count for a lot.

You could also guess that, having invested in their education thus far, they may be able to command some kind of premium on the market. To maximize their value, we’d probably have to get some IQ and neuropsychological testing done. I’m comfortable that would boost their value. We can do some physical testing as well, but neither father nor their mother are considered athletes. I feel like these kinds of tests are either all good (Olympic Athlete), all bad (serious medical condition), or a non-factor (the vast majority).

Just trying balance the two factors is difficult. I think the value of having a fresh baby may be worth more. I have nothing concrete to base this off of. Maybe because puppies are at a premium and older dogs are less likely to get adopted.

One way of balancing those two factors is to split it in the middle – the value, not the kids. (This isn’t a King Solomon story.) If our doctor’s appraisal was on the level, I would guess we could probably still get $200,000 for each child.

Kids aren’t typically viewed as an asset. As my old physics teacher might say, have much more potential earnings than kinetic earnings. Hmmm, maybe he used a different “E” word there.

“E”-words aside, I’m going to have to go with the personal finance experts on this one. It pains me to have to agree with them, but it doesn’t make much sense to include some theoretical (and illegal) value of your kids in your net worth.

Important Disclosure

If you’ve gotten this far in the article, you’ve probably guessed that it was an April Fools’ joke. In fact, the first letter of each paragraph spells out “April Fools Day Joke.” However, the story about the doctor presenting the black market offer is 100% true. To this day, we don’t know if it was his (bad) joke, a test, or something else. Also, the part about spending $250,000 on tuition for two kids through the 8th grade is also true.

There are a lot of articles asking brands not to do April Fools this year due to COVID-19. First, I’ve never considered this blog much of a brand. It’s just one guy typing. I don’t sell a product. I don’t do anything that any traditional business would consider marketing.

Beyond that though, I feel that we need humor more than ever. Obviously COVID-19 is terrible and should be taken seriously. Social distancing is difficult – humor can make it easier. Let’s not COVID-19 ruin all the fun in the world.

Also, I had drafted this idea in late 2019. It was literally the only article I had planned for 2020. It wasn’t created in the time of the COVID-19 being what it is today… and it certainly isn’t related to COVID-19 in any way.

Income Streams: The Forgotten FIRE Ingredient

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income streams

Are you looking for a safe retirement? In these uncertain times, the best plan is to have multiple income streams. For the first time in 11+ years the stock market has fallen fast. (It’s recovered over the last few days, but I feel it is temporary.) The last time the market had this kind of drop it was 2008. While there was a concept of FIRE in the personal finance community, the acronym of Financially Independent/Retire Early simply wasn’t used. It was a lot like Kim Kardashian in 2006. She existed, but not many people knew who she was.

This is the first time that there’s a “trial by fire” of FIRE. Everyone is an investing genius when there is a decade-long bull market. This is the time that all those plans get put to the test.

I hope all the FIRE folks are doing well. I think the vast majority of them are. I haven’t heard any stories of financial ruin, yet.

I have faith that the FIRE crowd is doing well. I asked this question:


Only two people responded that they were only dependent on investments. I hadn’t followed or heard of either of either one. They seem to be doing okay.

Mentally, I thought of all the people I know who are FIRE and they all had one thing in common: an income stream other than stocks/dividends. Most are bloggers and earn an income from their blog (*raises hand*, though we’re not really FIRE). Some have books. Some are money coaches on the side. Even if I didn’t have this blog, I’d still make money dog sitting. And many bloggers have a spouse that still works. Even if they don’t necessarily need this income it surely comes in handy with health insurance and providing a safety net when the unexpected happens. (Not that we’ve had anything unexpected happen in the last few months, right?)

Income Streams, Income Streams, Income Streams

I’ve read that if you say something three times, people get it. The most popular example is the real estate mantra, “Location, Location, Location.”

However, my favorite one is this:

My memory failed me. I thought he only said it three times. Still, it’s too funny not to share.

It’s hard to understate how important income streams are to FIRE. They are the ultimate safety net. Most of the people in the FIRE community are very good at reducing expenses when necessary. By definition, they’ve been focused on their money for a long time. An extra $10,000 a year can go a long, long way.

What we’re learning with COVID-19 is that sometimes income streams go away. It’s hard to say anyone has a solid business now – unless you happen to own a toilet paper or a hand sanitizer factory.

I’ll use my income streams as an example:

  • I have zero customers in my dog sitting business. Usually people get dog sitters when they travel. No travel, no need for a dog sitter. It’s about as viable as a cruise ship business now. That’s one income stream gone.
  • The stock market has been down as much as 35%. This would be the wrong time to have to take money out to live on. This is why you want to have a strong emergency fund. We’ll count it as a half an income stream.
  • The blog income isn’t doing well. I wasn’t sure why until someone told me that companies aren’t spending on ads since their business is on hold until the coronavirus clears up. I’ll count this as losing another half of an income.
  • We have 3 rental properties, but in total they lose a little money each month. We took aggressive mortgages on them and they’ll be paid off in 10 years. However, when they are vacant or a tenant can’t pay, it causes a lot of stress. This isn’t an income stream now, but it could become an income drain in the near future. If we get the mortgages paid off, this will become around a $3500/mo. income stream.
  • One of the companies that I did freelance work laid off most of their staff (pre-COVID-19), but the other is still steady. That’s another half income.

When everything was working, I’d have a very good income, especially since I need the flexibility to take care of the kids. Now, after losing two and a half of my income streams, it is not as good. However, we can get by on it. Fortunately, we don’t have to depend on what’s left of this income, I’m one of the FIRE bloggers whose wife still has a traditional job.

Having multiple income streams is like having multiple back-up plans. A lot of people have told me that COVID-19 was worse than they could ever have imagined. Having all these back-up plans in place puts us in a much better financial position than most.

If you are looking to FIRE, have you looked at adding new income streams? Let me know in the comments.

Let’s Be Cheap

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Be Cheap
Let’s Be Cheap!
When I started blogging in 2006, the personal finance blogosphere focused most of their attention on saving money. I remember reading one article where the blogger wrote that he makes sure not to open the refrigerator too many times a day, because he calculated it costs 4 cents to cool it back down.

That’s far too extreme for me.

However, like most bloggers from back than, I have a central area where you can save money on almost anything. (Those articles may be outdated now. I bet a Google search for “save money [x]” will get you better results until I can update it.)

The reason why so many people wrote about those things was simply because there wasn’t a lot written about it before. Also, it’s much easier to write something concrete like “avoid the artisan grocery store” and “bring your own lunch to work” than “work harder and hope for a raise.” It was especially easy for me to focus on the frugal aspects because I had control over many of my expenses. When I put together the case that I was being paid less than 95% of all software engineers according to Salary.com, the answer I got was, “Sorry, there’s nothing in the budget to do anything.” They couldn’t even get creative with stock option compensation or vacation time.

I didn’t have any control when it came to the company’s business or how they were managing their finances. In this new coronavirus world, many people are feeling the same way. The days of asking for a raise are probably gone for awhile. If you are able to keep your income, you are doing well (financially, at least). There’s talk of potentially a 30% unemployment rate which is something I can’t remember in my lifetime.

This is the time to take control of the things you can control. It may not be much, but it might be the best you can do. It’s time to be a little cheap. Or, if you prefer, frugal.

(Side Note: If you have the means to be financially generous, please do so. Support local businesses like restaurants. They need that support. This article is geared towards those who aren’t fully financially secure.)

I was laid off in the dot-com bust of 2001. I was only out of college for a couple of years. Software engineering jobs were impossible to find. I remember on one interview the hiring manager essentially wanted me to rewrite TurboTax from scratch. He’d pay $2000 when it was completed.

During those tough times, being frugal saved me. Or to just call it like it was, I was cheap. From a very young age, my mother taught me to save money. I had always been a saver at heart anyway. I’d save all my Halloween candy until it went bad. I got more comfort knowing that the candy was there for me if I wanted it than actually enjoying the candy itself.

A month ago B.C. (Before COVID-19), there was a lot of talk on personal finance Twitter about earning more money. I understand why. Life is too short to not enjoy it. People love the idea of being able to have everything they’ve ever dreamt of. It’s easy to sell a “earn more money” message if it fits what people already want to hear. I have also seen some bloggers follow it up with, “Buy my book or buy my course.” To put it simply, by its very definition, it is hard to sell products or training to cheap people.

Making more money is certainly half of the financial success equation. I don’t want to dismiss that. However, it’s a difficult half to write actionable advice about. No writer knows what kind of job your are in or what your education is. Maybe making more money is extraordinarily difficult for your situation. I can suggest adding a side hustle, but that’s not what “Lazy Man” is about. I hope everyone can work smarter and get to the point where their money works for them.

I’ve always been an equal fan of both sides – make more money and save money wherever possible. I’ve known people who make crazy amounts of money, but don’t save or invest much. I’ve known people who don’t make a lot of money, which means they can’t save or invest much.

One of my favorite things to do is to thinking about how to be cheap. Not really cheap, but spend less money as a general habit. For example, I looked at my electric bill and thought, “I wonder if solar power makes sense in Rhode Island.” It does! We’re almost on our 5th year of solar power now. We paid a lot up front, but we’ve saved more than half of what we spent. After around 8 years, any electricity our panels generate will be “free” (compared to what we would have paid if we didn’t get the panels).

The other thing I like to do is save money on groceries. Soon after we moved to our house, we lost the local Best Buy. That was terrible for a technology geek like me. However, Aldi moved into the space. It is one of the best grocery stores for cheap, quality food. That’s a great financial trade-off for us. For example, they have so many chicken deals that I’ve been able to write some creative articles like, “McFly, Are You Chicken?” and Rich Chicken, Poor Chicken.

While I’ve had the best luck with Aldi, but occasionally, I can find some deals at our local Shaw’s. The local military base is a good source as well. I don’t go to different stores looking for great deals. I’ll only give it a look while I’m doing the rest of our shopping. It’s easier to “shop our chest freezer” from previous deals.

Why Being Cheap Matters

Here’s an example that many people can relate to. Let’s say you have a $60 cable bill. (Mine is over $100 and I don’t have any premium channels.) A cheap person might say, “Netflix has more television than I could ever watch at $10 a month.” I’m going to cut my cable bill and save $50 a month.

You might be thinking, “Big deal. That’s nothing.”

That $50 a month is $600 a year. This is where we need to apply the Rule of 25. The Rule of 25 states that in order to afford a $600 annual expense, you need to have 25 times more saved. It’s mathematically derived from a bunch of economic analysis that shows people can live on 4% of their saving mostly indefinitely by investing a large sum of money.

At the risk of putting an example in an example, if you have $1,000,000 you can roughly take out $40,000 to live on. And with the rule of 25, if you need $40,000 to live on, you should have $1,000,000 in savings.

When we convert that $600 annual cable bill into Rule of 25 terms, we realize we need to have $15,000 in our investments.

That’s just one bill. If you multiply it by many extravagances you’ll have a hundreds of thousands of dollars in your savings. Being cheap always makes a big difference when it comes to reaching financial freedom.

A bunch of small savings can add up. They have a snowball effect. It is very difficult to try to make an extra percent or two investing in the stock market. Even if you do, it’s likely to be mostly luck. However, by saving 75% on something like food it gives us more money to invest. Getting that money in the market early has been critical to our secure financial position now.

A lot of that started with being cheap.

Amazon Fire HD 10 Sale ($100 Prime)

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Just in time for distance learning or watching Netflix while you are crying in your bathtub (no judgment), the new Fire HD 10 is available at its lowest price – $100 (for Prime members.) I love the old version that I bought when I wrote this original review that I ended up buying two more. They’ve been lifesavers the last week with the kids home at school. This version of the Fire is mostly the same but with a faster processor.

Readers may (and should) be skeptical about my view in this article. Amazon has a commission program and content producers (i.e. me) make some extra cash by reviewing their products if people decide to buy them. That’s one reason why you see a hundred articles about all the Amazon device deals. Even if I try my best not to be biased, there’s an element of human nature that it isn’t easy to suppress.

With that disclaimer aside, I genuinely like Amazon’s products and services. However, I think the Amazon Fire HD 10 is in another class of value and I wanted to explain why.

Let’s rewind a few weeks.

I sheepishly said to my wife, “There’s a deal on the Amazon Fire, and I think we should get one.” I received the dagger eyes as expected. “How many tablets do you need? You don’t even use them. What are you going to do with the other three we have?”

The truth stings. It stings real bad.

We have a Nexus 7 from 2014. I also bought an Amazon Fire 7″ tablet back in 2014. I also bought a NuVision Windows tablet for $60 on a deal.

These were all great deals at the time, but every tablet was a compromise:

  • That Nexus 7 is still our best Android tablet… and we are in the Android ecosystem. I’d love to find a quality 10″ one for a similar price. You’d think in 4 years the technology would advance to that level, but it hasn’t.
  • The NuVision Windows tablet is like walking your pet sloth throw a pile of sludge in the wintertime. It’s terrible. I think the only redeeming value is that I was able to grab some free music off MicroSoft’s Music service before they shut down. I need to have a Windows 10 device and that’s the only thing that worked.
  • Our old Amazon Fire is good for watching videos, but non-expandable 8GB isn’t a lot of media and doesn’t have the best resolution. It’s old technology and it was a bargain at the time. I looked to see what I could sell it for now and could maybe get $25-30. That gives you an idea of the quality of this tablet.

Enter the Amazon Fire HD 10… Amazon’s best tablet. It came out last year, so there is that aspect of it being old technology, too. However, a 10-inch, full HD (1920 x 1080) tablet is very different from the tablets above. In any case, a flagship 2017 tablet is going to be better than a 2014 bargain tablet. Maybe Amazon’s top tablet can’t be considered a true flagship, but maybe it is just a notch below.

My secret reason for wanting the Amazon Fire HD 10 is the Scratch Jr. application for our kids. It doesn’t run on a PC and I think it is the best way to get started with it. I tried to introduce the kids to it on our old Fire tablet, but it didn’t go well. They slogged through it with a very cramped display. They got quickly bored of fighting with it. I’m hoping this will work better.

The biggest problem is that the Amazon Fire tablet is locked into Amazon’s world. There are pluses and minuses with that. For example, this “unlocked” all the old books I’ve had over saved or bought really cheaply over the years. I always had access to them, but I was never going to seriously read them on my phone or my PC. I realize that I’m explaining why a bazillion people read eBooks, but this is a new-ish discovery for me.

The other big thing is free new books and media. I was able to set up my library’s Hoopla and Overdrive applications to borrow easily. There’s next-level cool about borrowing a book for free without leaving your couch.

It’s also the perfect device for watching Netflix, Hulu, Disney+ or Amazon Prime. Those work extremely easily, but I was thinking about adding more complex stuff like Plex to access my DVR media. It’s almost like having an extra television around.

The downside is that it is also stuck in Amazon world. Not all of the Android applications are immediately available (though there are hacks to get them). I haven’t even set up a way to check my email on it. I want to learn to make it more of a family device with different accounts. I want to figure out how to get rid of the lock screen as well. I want the kids to be able to use it and not have me needing to unlock it for them. I could teach them the unlock code, which might be easier in the long run.

Last November, I had declared the Amazon Fire HD 10 an exceptional value at $100. Now, I can say from my own personal experience I’ve gotten over $100 worth of value.

The second reason I jumped on the pricing is that I figured, in the worst case, it is a decent digital photo frame. I’m still looking for the perfect app for that, but it is something that I appreciated out of my old HP Touchpad. I’ve been obsessed with Kallax “cubbie” shelving from Ikea lately, and I think a digital photo frame in there would be great when the tablet isn’t actively being used.

I think it’s not bad for being part book reader, library, television, digital photo frame, and a kids’ supplemental education device. I’m sure that people paying much more than $300 for an iPad can say the same thing and a lot more. I personally like spending less money whenever possible and this works for me.

For latest pricing click here.

Our Family’s Coronavirus Update

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Every business under the sun is giving a coronavirus update. I don’t want to this to be one of those. Staying home and reading personal finance blogs may be one of the safest things you can do now.

At the same time, everyone is sacraficing for the greater good now. Things are changing so rapidly almost every hour. I said to my wife, “It seems like each city and state is trying to one-up each other with more strict measures… and this is a healthy development!”

There are a few different perspectives in how this immediately impacts our family. Part of the reason I’m writing this here is that it impacts the Lazy Man blog. Another part is that it often just helps to talk to someone (even if it is writing online). If you need that space, feel free to use the comments below.

The Kids

The kids were already on school vacation for the next two weeks. I doubt the school will open then as planned. One grandmother was going to take them for a couple days. I was going to bring them to a children’s museum for a day. I was also going to bring them to my mother’s house who doesn’t get to see them much. That’s all canceled. With the local library closed, the only thing I think we’ll do outside is a hiking area with the dog while the kids play Pokemon Go. They’ll probably ride their bikes a bit too.

Being 6 and 7 years old, they often get in each other’s faces if they don’t have some separated time. That won’t be much of an option. That will be difficult to deal with.

Their private school costs $2200 a month – even if it’s closed. They’ll do some distance learning activities set up by the teachers, but I’ll be doing 90% of the teaching and 100% of the child care with 100% of the fight prevention. I feel like that we’d be losing 90% of the value that we pay for. I’d like to opt-out of the distance learning and grab my own homeschooling curriculum to save the money.

At the same time, I understand that teachers have mortgages and need to make an income too. It’s a difficult situation and I’m not sure there is an easy answer.

My Wife

As a phramacist with the United States Public Health Service (USPHS), she’s on the front lines of this. It was only a couple of weeks ago that she was dinner with the Surgeon General (along with a dozen other USPHS representatives). Things have moved fast, but they haven’t deployed her yet. She may be deployed to help with airport screenings on Tuesday. For now, she can work from home (the office is shut down), which is very helpful.

She’s very excited about the Presidential conference with all her USPHS co-workers at the podium. In 22 years of her being with the service, the work they do has been behind the scenes. It never gets mentioned in the big hurricanes, earthquakes, or ebola outbreaks. Now she’s pumped and ready to kick some coronavirus butt! I want to remind her that this is the administration that has spent three years trying to shut down USPHS. They systematically added new regulations that forced many to take second jobs and maintain fitness levels in off-time (military do it as part of their work day). My wife recently spent three years getting a master’s degree in addition to her Pharm. D. due to new regulations.

They put more effort in the Space Force. That doesn’t look too good now.

She had to cancel her trip to the annual pharmacy conference. That means that she might have to earn continuing education credits some other way. No one is really thinking about that now, but I bet some will be surprised surprised to lose their license later on this year. She’s been trying to get through airlines and hotels for 4-5 days now to cancel and it’s just a busy signal.

Me

I’m very good with the kids. As you can tell from the above, the USPHS has really piled the work on my wife over the last 3-4 years, so I do almost everything with the kids. However, it gets to be too much for me if it’s too long of a time without a break. They never nap and for a long time constantly needed help with stuff.

I often find impossible to get much blogging done with them around. I have no quiet place to focus on writing. The interuptions break up my flow whenever I feel like I’m putting two decent sentences together. However, I’m using this time to teach them how to be more independent. They can get snacks and drinks themselves. They are pros at working the TV and tablets now. Things are a lot better now than they’ve been in the past – as long as I can limit the fighting.

Besides the loss in blogging time (and likely revenue), there’s likely going to be a loss in dog sitting business. Dog sitting income is best when people travel – school vacations, long weekends, and summer. If people don’t travel, they won’t need to book their dogs to stay here.

I also do customer support for a company based out Silicon Valley. They are largely virtual with many international customers. This should continue to be a strong income for the near future.

Losing the majority of two incomes, and having to still pay the school $2200 a month is a big financial blow.

Local Economy

Most businesses are going to suffer for a long time. That’s a given. Everyone’s local economony is going to feel it.

However, our area, Newport, Rhode Island is a tourist town. They do 75-80% of the year’s business in the summer restaurant and hotel industry. If there’s a rainy Memorial Day weekend, restuarants close forever. That’s not an exaggeration.

Maybe it could be worse. Maybe our city could be where they build cruise ships. It’s very close to the worst situation many could imagine for businesses.

Final Thoughts

This is a not an easy time for anyone. There are certainly people who have it a lot worse than us. People who have tested positive. People have family members who tested positive. Families who rely on day care to bring in a single income and are looking at losing both. It’s impossible to enumerate them all, so it’s hardly worth trying.

We’ll lose some significant income sitting dogs. We’ll do more supporting of great teachers and the local economony than we may get back in return. We’ll lose a significant amount of money in the stock market. However, the key to all that is that it’s all just money. Because I’ve been writing about money and managing it for so long, these aren’t completely and forever life-changing. In the the grand scheme of things, as long as we can healthy we’ll be fine.

As for the blog, I’ll continue to do my best to keep it updated with the most relevant information. Today’s update about our family was necessary, because this blog is about our money journey and this is certainly part of that. However, I’m committed to helping you with your money journey.

I know a lot of parents are being put in difficult situations. Losing day care and staying home to educate kids isn’t easy. I need mental health breaks. You need mental breaks. The kids need to relax and have a little fun too.

Fortunately, I have a couple of articles that can help do all that for you, while keeping the kids learning:

  1. There’s the best educational streaming shows for preschoolers. This isn’t meant to replace an educational curriculum, but these shows can give everyone a break.
  2. If you have Hulu, you can stream multiple Teen Titans Go! episodes about money: 401ks, compound interest, landlording, currencies, and pyramid schemes. I suggest some parental guidance with this show as it’s for older children. However, it’s rare for a kids’ show to introduce the topic of a 401k or compound interest and give you something to build a discussion on… all while making it hilarious.

    3. If you know someone who is staying at home with their kids’ school closed, maybe send them one of those articles. It could be the lifeline they need to get a little sanity back.

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