Category Archives: Philosophy



A Message to Graduates: Sometimes it’s Good to Ignore a Few Wrong Way Signs

Wrong Way Sign

On the road of life, you’ll see many signs telling you how fast to go, when to stop, when to take a detour, and when you’re going the wrong way.  Sometimes it’s a good idea to ignore those signs posted by society and go your own way.

1. Society will tell you to buy a brand new car before you have the money

It might sound tempting when you hear things like “No money down”, or “only $150 a month”, or “only $5 a day.”  Don’t do it!  Save up cash and buy a cheap, used A to B car with no payments.  Until you have the cash, walk, ride a bike, take the bus, or use Uber.  When you finally buy a car, set aside around $150 per month to cover maintenance and repairs.

2. Society will tell you to spend as much money as you can on a house

Don’t rush into buying a house.  It’s okay to rent until you know where you want to put down roots.  When you’re ready to buy, don’t take out a loan that’s more than 15 years long and don’t commit to a payment that’s more than 25% of your monthly income.  No matter what the bank says, too much house payment makes life harder than it has to be.

3. Society will tell you to use a credit card to get what you want now

A good credit rating is important for things like insurance rates, low interest rates on home loans and even getting a job.  But, use credit wisely.  Get a credit card or two, not because they have the best airline miles or cashback, but because you need them to maintain a credit score.  Always pay your bill off completely every month.  I can think of much better ways to spend 20% of your credit card bill than paying interest and late fees to the card company.

5. Society will tell you to go to the most prestigious (usually the most expensive) college you can

How about just going to a community college?  Unless you know you want to be something that requires the fancy education like a doctor, a lawyer, or a scientist, you generally don’t need a pricey four-year degree.  What you really need is experience.  If you do decide to get that degree, shop around for deals and look for scholarships.  Choosing a high-priced private medical school over a cheaper state school isn’t going to make you a better doctor.  Also, be careful how much money you borrow to do it.  Student loans are with you for life – they won’t go away, even if you declare bankruptcy.

6. Society will tell you to find a nice, secure, well-paying job from which no one gets fired

Don’t be afraid to try out many different kinds of jobs until you find the one you like.  If the one you like doesn’t pay well, find a way to make it pay well.  Work harder, start your own business based on that job, or take on a second job to support the job you love.  If you’re not sure what you want to do after high-school or college and aren’t afraid of some hard work, try a trade school.  As Mike Rowe points out, there are quite a few good paying blue-collar jobs out there.  Some of which can lead to six-figure incomes.

Often times society will tell you to join the crowd and take the easy route, or to go down the slide.  Don’t be afraid to go up the slide, even if the people across from you are yelling, “You’re going the wrong way!” (Thank you Planes, Trains and Automobiles)



Earliest Childhood Money Memory

monkey-gameboy

The other day, Mrs. Pennypacker brought up an interesting question: What was your earliest childhood money memory?  I’m not sure I can pinpoint the earliest, but there are several that certainly stand out to me.

My parents encouraged me to save

Saturday morning my mom would take me to Great Western Bank (which was later bought by WaMu, which was later bought by J.P. Morgan Chase).  We had to go to the counter, grab one of the pens (chained down to prevent theft), fill out a deposit slip, wait in line, then, when it was our turn, give the teller the slip and some money.  I know, so last century!

My parents encouraged me to earn my own money

I would get a weekly allowance, but only if I behaved and did my chores around the house.  If I really had my eye on a fancy new toy, there were other ways to earn extra money – usually mowing the lawn or washing the car.  I think I preferred washing the car over mowing the lawn, probably because we had one of those manual push mowers that seemed to require several passes over the same spot to get all the grass blades cut.  I think my dad purposely left the blade dull to teach me about hard work.

Door-to-door sales

There were times when I felt like mowing and car washing still weren’t enough.  No matter how hard I tried, my parents weren’t about to give me the large payouts that all my friends seemed to be getting. So, I looked at other options.  I tried the Olympic Sales Club.  It was a stationary company that recruited kids into their salesforce.  If you signed up with them, they would send you a catalog of things to sell and a catalog of prizes you could earn.  The idea was you were supposed to go door-to-door selling things like greeting cards and notepads to your neighbors.  Being a shy kid, it wasn’t something that came naturally to me.  But, if I really wanted more money or one of those prizes, I had to step out of my comfort zone.  In the end, I think my biggest customers ended up being my family, but it was a valuable experience.

A steady diet of video games and music

I spent a lot of money on video games and music.  I recall buying an original Nintendo system.  Then, when one of my neighborhood friends bought an SNES system, I decided I needed an upgrade.  I saved up my money and sold my old Nintendo so I could buy my own Super Nintendo system.  Of course these gaming systems usually only came with one game (Super Mario Brothers), so you had to pile up even more money to keep your library up to date.  Some of my favorites were Top Gear, Zelda, Pilot Wings, and Gradius III.

In the music department I was fascinated with a variety of artists, from Janet Jackson to Nirvana to Jim Croce.  To play the cassettes or CDs, you had to have either a boombox or a portable Sony Walkman.  I generally settled for the cheaper off-brand music systems.

Lessons learned

As a kid, I always thought my parents weren’t doing enough to keep up with the Joneses.  My friends always seemed to get far more out of their parents than I did – bigger allowances, more presents, name-brand clothes.  Now that I’m an adult, I look back fondly at those years.  I learned that no one was going to just give me what I wanted.  I had to work hard, earn my own money, and patiently save up to buy the things that I wanted.

These childhood interactions with money had a huge impact on how I view money today.

What was your earliest childhood memory?  Bonus Question: How did that memory affect how you see money today?



My Top Five Favorite Movies About Money

Since it’s Oscar night, I thought I’d put together a list of my all-time favorite movies about money.  Some of my choices might surprise you…

5. It’s a Wonderful Life

“You sit around here and you spin your little webs and you think the whole world revolves around you and your money. Well, it doesn’t, Mr. Potter.”

George Baily and his new bride Mary use the money earmarked for their honeymoon to help the people of Bedford Falls during a run on the bank.  In return, the towns people all pool their money to help keep George out of jail and to keep his Building and Loan from collapsing.  The big lesson from this movie is, if you help people in their time of need, they’ll gladly return the favor.

4. Money Ball

“When your enemy’s making mistakes, don’t interrupt him.”

Sometimes a lack of money leads to innovative ideas.  Billy Beane doesn’t have the money that other baseball teams have, but that doesn’t mean he can’t put together a winning team.

3. Office Space

“Aahh, now, are you going to go ahead and have those TPS reports for us this afternoon?”

This movie gives hope to anyone who feels like they’re stuck in the rat race with no way out.  When Peter decides to rebel against the restrictive rules of the cube farm, he impresses Bob and Bob, the consultants, and ends up getting a promotion.

2. The Pursuit of Happyness

“If you want somethin’, go get it. Period.”

One of the great rags to riches stories that actually happened.  Chris Gardner goes from homeless man to CEO of his own multi-million dollar brokerage firm.

1. Forrest Gump

“Lieutenant Dan got me invested in some kind of fruit company. So then I got a call from him, saying we don’t have to worry about money no more. And I said, that’s good! One less thing.”

You might not think of this movie as a money movie, but I do.  It’s about getting the most out of the hand you’re dealt.  I mean here’s a guy who has below average intelligence and grows up wearing leg braces.  Instead of being limited by these things, he goes on to do more with his life than most normal people could ever dream of doing.  I mean the guy fights in Vietnam, runs across the United States, gets married, and starts a successful shrimp company,

That’s all for my list.  What films are on your all-time favorite money movie list?



It’s New Year’s, so Start Living Like a Millionaire

New Year’s is a great to time reflect on your life, both in this past year and in years prior.  Looking back, seven or eight years ago, I felt like I was doing steady-state runs on a treadmill.  The money was getting a workout – money was coming in and money was going out.  But, nothing was happening.  We weren’t getting anywhere.  Maybe this was how everyone lived?  You have a car payment, you have a student loan, you have no savings, you put very little money down on the biggest home the bank says you can afford.  Then later, you get a raise at work or a better job, and you go out and buy better furniture, a nicer car, and a bigger house.  Sure you have these trinkets that show others how much money you have.  But, what other people don’t realize, and what you don’t realize at the time, is you don’t really have any money at all.

For us, the focus was month-to-month.  There was no big picture plan, no long-term vision.  Affording something meant your paycheck could cover the payments.  You’d try to be smart with money by avoiding interest on some purchases like appliances or furniture with those “no payments for a year” deals or those “zero interest for a year” deals.  Of course, there was always interest you couldn’t avoid like for a car, or a student loan, or a house.  But that was normal, right?  Everyone makes payments on these things.  No one pays cash except for Bill Gates, right?  If you could just get a million dollars, then you could start really buying things.  You could pay cash for Bentleys, or mansions, or even islands.

Steve Martin explained once in one of his old SNL skits, that in order to become a millionaire, you first had to get a million dollars.  He purposely left out the hardest part – how do you get that first million dollars?  The answer is simple.  Do what real millionaires do – pay cash.

I think the answer really started sinking in for me, when I read Thomas J. Stanley’s The Millionaire Next Door.  Contrary to popular belief, real millionaires don’t live flashy, lavish lifestyles where everything they own is made of gold and servants cater to their every need.  Instead, they live low-key and debt-free, while ferociously saving their money.  They do these things not because they’re millionaires, but they become millionaires because they do these things.

The process would be slow, deliberate, and require plenty of patience, both on my part and on the part of Mrs. Pennypacker.  But it was doable.  We really could pay cash and live a debt-free lifestyle.  And in a few years we really could be well on our way to being wealthy.  So several years ago, we decided to get off the treadmill and start following the millionaires and now that decision is really starting to pay dividends.  When the new year starts next month, we’ll be about two years away from paying off our entire mortgage and we’ll have enough cash to write a check for new floors in our home (assuming I get the same bonus at work that I received last year).  Both of these accomplished while maintaining a healthy emergency fund, paying cash for both of our cars, saving for retirement, and paying off our credit card balances each month.  We’re not millionaires, but because we live like millionaires, we may soon get there.  If you’re still on that treadmill, I hope you’ll use this new year as an opportunity to take the leap and start living like a millionaire.



Festivus – The Airing of Grievances

Happy Festivus!  According to The Strike episode of Seinfeld, December 23rd is Festivus.  I keep thinking one of these years I’m going to pull out the Festivus pole, eat meatloaf (or spaghetti), air my grievances, and compete with my family members in the Feats of Strength.  But, I keep getting distracted by real holidays like Christmas.

Speaking of the Airing of Grievances, I do have some general money-related gripes I’d like to get off my chest.  Here are my top five, not directed at anyone in particular.

1. Buying a brand new car

Edmonds.com has this great chart that illustrates how much a new car can depreciate.  The average is an 11% drop the minute you drive the car off the lot.  The best way to combat new car depreciation is to buy the same car used.  In fact, a five year old car costs, on average, 63% less than the brand new equivalent.  Surely, there are other things you could buy with that huge chunk of change you save.

2. Paying Credit Card interest and/or late fees

According to bankrate.com, the average interest rate for a fixed rate card is 13%.  For a variable rate card, it climbs to 15%.  I don’t know about you, but for every $100 I spend, I’d rather not donate an additional $15 to the credit companies.  Now I’m not saying you shouldn’t use credit cards at all, just pay off the entire balance on time every month so you don’t owe any interest or late fees.

3. Letting retailers manipulate you into making impulse buys

Branding expert Martin Lindstrom outlines some of the tactics stores use to get you to deviate from your list and grab something off the shelf that you never planned to buy.  Don’t let the marketers win.  Plan out your purchases ahead of time and stick to your list, no matter what.

4. Living without an emergency fund

Things happen in life – good and bad.  The trick to dealing with the bad, is being prepared – mentally and financially.  A natural disaster could strike, you could wind up in the hospital, or your furnace could go out in the middle of winter.  Dealing with any of these situations can be very challenging, but it’s a lot easier when you have the money to pay for these unforeseen expenses sitting in a bank account ready to go.

5. Keeping up with the Joneses

If your neighbor pulls up in a brand new BMW or gets a new living room set delivered from the local high-end furniture store, do you feel the urge to run out and do the same?  If so, consider moving to a more modest neighborhood.  At the very least consider that these people probably aren’t rich, and if you want to be rich, you shouldn’t follow their lead.  As Thomas J. Stanley points out in his book, Stop Acting Rich: …And Start Acting Like a Real Millionaire, more millionaires drive Toyotas than BMWs and three times as many live in homes valued at under $300,000 than over $1 million.



Don’t be Clark W. Griswold

I’m very fortunate that my day job is at a company that gives out profit-sharing bonuses.  Plus, ever since I started working for this company, they’ve been profitable.  So, every year around Christmas time, they give a share of the profits to all of their employees.  Last week, we found out that the company is having a rough third quarter.  This doesn’t necessarily mean we won’t get a bonus this year, but you never know.

I’m reminded of a famous scene from that 80s movie classic, National Lampoon’s Christmas Vacation, featuring a lovable character named Clark W. Griswold.  In case you haven’t seen it, Clark is expecting a Christmas bonus that he’s received every year since he’s worked at the chemical manufacturer.  In fact, he’s so confident, he’s already put money down on a pool for his backyard.  Of course, hilarity ensues when he doesn’t get a bonus, but instead receives a membership in the Jelly of the Month Club.  Clark flips out.  And, using some choice PG-13 language, sarcastically suggests that if anyone is looking for any last minute gift ideas, they should deliver his boss, Frank Shirley, right to his living room so he can tell him what a lousy person he is for not giving bonuses this year.  Here’s the entertaining clip of Clark’s flip out…

His cousin, Eddie, who’s not the sharpest tool in the shed, takes Clark’s request literally and drives off in his RV to kidnap Mr. Shirley.  A short time later, Eddie delivers Mr. Shirley to Clark’s doorstep, complete with shackles and a red ribbon on his head.

Shockingly, Mr. Shirley is not thrilled about the kidnapping.  But, once Clark explains the whole thing, Mr. Shirley agrees to reinstate the bonuses and add an additional twenty percent to what Clark received last year.  Miraculously, everything works out and potential bankruptcy is avoided.

It’s that classic saying, Don’t count your chickens before they hatch.  Don’t be like Clark.  Don’t put money down on a pool (or new flooring in my case) because you think you’ll get a bonus.  Wait until you actually have the money in your account.  Unless you’re planning to turn your life story into a 97 minute comedy.