As the salesman was tallying up the bill he asked me if I would like to purchase the extended warranty for my brand new tires.

“And how much is that?” I sheepishly asked.

“It’s only $9.95,” came the salesman’s immediate reply.

“Is that per tire?”

“Well, yes.”

“So it’s not really $9.95, right? What you should have said is that it’s going to cost me an extra $40.”

I think I caught the salesman off-guard because he immediately tried to assure me that he wasn’t trying to pull a fast one. I nodded my head, but my raised eyebrows belied my true feelings.

That’s when the guy looked me straight in the eye and insisted that the extended warranty was “a really good deal that most people take advantage of.”

I passed on the warranty but, if what that salesman told me is true, it troubles me that there are a lot folks out there who insist on wasting their money for dubious services.

Prorated Tire Warranties

Almost all tires come with a pro-rated warranty from the manufacturer that typically cover only workmanship defects. Reimbursement is prorated, depending on how much tread is remaining when you make the claim. The rest comes out of your pocket.

Of course, new tires are rarely defective, but when they are, a defect usually becomes apparent soon after the tire has been purchased.

Extended Tire Warranties

Extended tire warranty plans are meant to cover what prorated manufacturer warranties usually don’t: replacement or repair of damaged tires and rims from road hazards like nails, pot holes, sharp debris, and other hazards. They don’t usually cover alignments, however, which are may be required if your car hits a curb, pothole or other hazard hard enough. Even so, that sounds like a pretty good idea, right?

Not really.

Here are a few reasons why you may be better off taking your chances by not paying for an extended tire warranty:

Some tires may come with free road hazard warranties. Although uncommon, some manufacturers and dealers actually offer free road hazard warranties. Ask your tire salesman to double-check and see if your tires already come with one. After all, why pay for something if it’s being offered for free?

The odds favor the dealer. If extended warranties weren’t to the dealer’s benefit, they wouldn’t be offering them. I’ve driven more than 500,000 miles in my lifetime. Over that time, I’ve driven over a nail or some other debris that has punctured my tire and caused a flat on just two occasions; that’s an incident rate of less than once every 250,000 miles. In my case, considering the new tires I bought are only expected to last 65,000 miles, it made little sense to insure them.

The cost-risk ratio is too high. Despite the low risk of tire damage due to road hazards, let’s say I did run over a nail that damaged my tire. The cost of replacing the tire is $74. Considering that I would have to pay $40 for the extended warranty, my ultimate savings would be $34. It makes little sense to spend $40 in the off-chance that I might save $34.

Remember, insurance and extended warranties are supposed to protect us from high risk events and losses that we can’t afford to replace. For most car owners, a flat tire is a low-risk low-cost affair that can be easily offset by scrounging up loose change hiding under the sofa cushions.

OK, OK. You’ll probably have to raid your change jar too. But you get the drift.

Photo Credit: shino

Related Articles:

• 100 Words On: Why Extended Warranties Sometimes Do Make Sense
• Why It Sometimes Takes a Real Daredevil to Get the Best Deals
• Extended Warranties: 4 Essential Questions to Ask Before You Commit
• Should I or Shouldn’t I? The Definitive Extended Warranty Litmus Test
• Notes from a Car Mechanic: 6 Simple Money-Saving Tips

It’s a ticking time bomb — and the fuse is getting visibly shorter with each passing day.

How long can the Fed continue printing money and manipulating the bond market in order to keep the illusion of prosperity going? Unfortunately, nobody knows. Our economic house of cards can come crashing down next week. Then again, the Fed may continue to successfully pull rabbits out of its bag of monetary tricks for another 20 years, although I sincerely doubt it.

What is certain is that, when the collapse finally does happen, events will unfold rapidly — and with a vengeance.

The good news is that financial collapse almost certainly won’t lead to the complete breakdown of society. Even so, there will be temporary pain for almost everyone — and the people who will end up suffering the most are those who are dependent on any form of government assistance and … the unprepared.

Don’t Take Anything for Granted

Clean, running tap water is something most of us take for granted. After all, there’s nothing easier than going to the nearest tap, turning the handle, and being instantly greeted with as much water as you want. It’s ridiculously cheap too. Even here, in arid Southern California, I’m paying a mere half-cent per gallon for the stuff.

It wasn’t always that way. Before the advent of modern plumbing, getting water required a bit of effort; most people had to grab a bucket or two and then walk outside to a spring, or a well serviced by a hand pump.

Of course, the luckiest folks had their water source nearby. Remember, water is heavy; a single pint of it weighs about one pound — that’s eight pounds per gallon! How far do you think you could lug a bulky five gallon container of water if you had to?

My daughter Nina recently got a small taste of just how dependent we are on our local municipality after a valve on my property failed that left our home without a source of running water for almost eleven hours.

It’s easy to underestimate how much water you use everyday until you no longer have it. In Nina’s case, it didn’t take long for her to feel the inconvenience of not having a ready and plentiful supply of clean water. She couldn’t take her morning shower, and the family had to ration our toilet flushes. We had to postpone washing our clothes and the dishes too. The lack of water also limited our cooking options, and even made brushing teeth a challenge.

When it comes to the most important survival items, water is at the top of the list. What would you do if your water service was disrupted for a week, or even a month?

Emergency Water Storage

Most people can survive in a dire emergency by drinking as little as one quart of water per day, but that’s leaves nothing available for anything else.

I currently have an emergency water supply totaling 168 gallons; that’s enough water to ensure each member of my family has one gallon per day for 42 days. I used a special water preservative containing 5.25% sodium hypochlorite to help ensure my stored water stays drinkable for at least five years.

My emergency water is stored in special 3.5-gallon stackable containers with handles called “water bricks” that constrain the entire supply within a compact area measuring just 54-inches long by 48-inches high by 18-inches deep.

True, at approximately $18 each, the water bricks aren’t cheap; on a per-gallon basis, they’re typically more than twice the cost of a 55-gallon potable-water storage drum. However, for me, the utility and smaller storage footprint of the water bricks were well worth the additional cost.

Here’s a picture of my set up:

A Few Additional Tips

• To handle extended emergencies, I bought a top-of-the-line pocket water microfilter from Katadyn that is capable of purifying 13,000 gallons of contaminated water. They cost roughly $250.
• If you live in a multistory home, you can use gravity to drain water that’s in the upstairs pipes. Just open an upstairs tap and then drain the water from a first floor (or basement) faucet.
• Remember, in desperate times, your hot water heater can be used as an emergency water source. Before you do, make sure you shut off the water intake valve and then turn off any power or gas going to the heater.
• Swimming pool water can be used for hygiene purposes. You shouldn’t drink it, however, unless you properly filter it first.

The Bottom Line

After our water service was finally restored, Nina looked at me and said, “Now I know why we have so much water stored up for an emergency, Dad.”

Yep. Even though we didn’t need to use it, my daughter no longer thinks her dear old dad is quite so crazy for keeping all that emergency water on hand.

Now, do I think the local authorities will have enough spare parts on hand to keep the city water supply functioning without any intermittent disruptions during an economic collapse? Beats me. But I’m not waiting to find out.

Photo Credit: bludgeoner86

Related Articles:

• Economic Collapse 101: Ten Ways to Prepare for the Unknown
• Comparing the Costs of Various Emergency Food Supply Options
• Stop Pouring Money Down the Drain: 9 Ways to Conserve Bathroom Water
• Economic Collapse 101: What It Will Look Like, and How It May Start
• Dear Diary: How I Fixed My Water Heater Without a Plumber and Saved $400

Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.

Happy Father’s Day to all you dads out there! I’m on a slightly compressed schedule this weekend because I’ll be playing a little golf and hanging out with my dear old dad. As such, this is a special espresso edition of Black Coffee.

Unfortunately, I didn’t have time to peruse many other personal finance blogs this week, so I can’t pimp any articles, but I promise I’ll double back and catch up with next week’s edition.

Anyway, I hope you all have a nice weekend! I know I will.

OK. Let’s get started; I’ve got a tee time to honor.

The Way-Back Machine: Past Posts Of Mine You May Have Missed

From August 2009:

Is Your Employer Stealing from You? – Do you ever wonder why some employers often look the other way even though they know their employees are running off with the occasional box of pens or paperclips? It’s because, after all’s said and done, they more than make up the difference by returning the favor and stealing from their employees. Surprised? You shouldn’t be.

Credits and Debits

Debit: Believe it or not, with summer officially less than a week away, the Dow Jones Industrial Average finally posted its first three-day losing streak of the year on Wednesday. That’s the Dow’s longest run of trading days to start the year without a three-day losing streak since the index was founded in 1896.

Credit: Hey, don’t be sad; it ain’t all bad news. Despite the losing streak, the Dow is still up 15% for the year. Amazing.

Debit: This week the IRS officially made permanent the Obamacare tanning tax, which the Indoor Tanning Association says has led to the loss of 3,000 tanning businesses since July 2010. By the way, if you think this tax disproportionately — if not unfairly — targets melanin-poor Americans, you’re not alone.

Debit: Speaking of health taxes, Minnesota’s decision to increase the tax on a pack of smokes by $1.60 on July 1 has resulted in a cigarette-buying frenzy. Yikes. I remember when a pack of smokes was less than a buck — now the tax hikes alone are more than that.

Debit: You can bet higher taxes will be the order of the day for everyone if the latest 30-year deficit projections by the GOP are to be believed. Their mid-range estimate, which includes all of the entitlements required to support the Baby Boomers in retirement, suggests that the federal government will rack up a budget deficit of $107 trillion by 2043. I know.

Credit: Did you see this? Two weeks ago, Venezuelan police raided a warehouse and seized 2500 rolls of toilet paper that continue to be in short supply there. The citizens can thank the shortages on price controls that were implemented by their recently-reelected socialist government.

Debit: Those price controls were misguidedly put in place to try and tame high inflation caused by excessive government spending. Prices are skyrocketing in Venezuela so quickly now that year-over-year inflation there has reached 35% and Goldman is warning that hyperinflation is a real possibility.

Credit: As one Chinese woman discovered, reckless governments aren’t the only entities capable of destroying our wealth — she recently lost a small fortune to termites after they got their mandibles on $65,000 in paper currency that she had stored in a wooden drawer. Thankfully, after examining the remnants of the termites’ meal, her bank was able to identify and recover all but $9786.

Debit: That ain’t the first time termites have eaten somebody’s life savings. Last year termites consumed $37,500 accumulated by a woman in Taiwan, and in 2011 termites devoured $222,000 in cash being stored at a bank in India.

Credit: Of course, you’ll never have to worry about losing your savings to termites with ravenous appetites — or even fiscally reckless governments hellbent on destroying their currencies — if you store your wealth in gold and silver.

The Question of the Week

Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.

Last Week’s Poll Results

What’s the most money you’ve ever won playing the lottery?

• Less than $10 (30.6%)
• $10 – $99 (28.7%)
• $100 – $999 (26.7%)
• $1000 or more (5.0%)

By the Numbers

You didn’t think I was going to let Father’s Day roll by without looking at some fun  — and disturbing — dad facts, did you?

70.1 million The estimated number of fathers in the United States, as of 2008.

189,000 Number of stay-at-home dads in 2012.

21 Percentage of fathers in married-couple families who were raising three or more children younger than 18.

16 Percentage of single parents in 2012 who were men.

22 Children fathered by 33-year-old Orlando Shaw, who is currently being sued for child support.

14 Mothers of Orlando Shaw’s 22 children.

18 Age of Shaw’s oldest child.

15  Age that Shaw had his first child.

$7000 Amount the state of Tennessee currently pays every month to support Shaw’s children.

Sources: US Census Bureau; The Huffington Post

Other Useless News

Here are the top — and bottom — five Canadian provinces and territories in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:

1. Newfoundland (4.38 pages/visit)
2. Prince Edward Island (3.35)
3. Saskatchewan (2.62)
4. Manitoba (2.01)
5. Alberta (1.82)

9. Nova Scotia (1.44)
10. New Brunswick (1.31)
11. Northwest Territories  (1.25)
12. Yukon Territory  (1.13)
13. Nunavut (1.00)

Whether you happen to enjoy what you’re reading (like the crazy canucks in the Newfoundland, eh) — or not (you hosers living on the frozen Nunavut tundra) — please don’t forget to:

1. Click on that “Like” button in the sidebar to your right and become a fan of Len Penzo dot Com on Facebook!

2. Make sure you follow me on Twitter! And last, but not least…

3. Don’t forget to subscribe to my RSS feed too! Thank you.

Letters, I Get Letters

Every week I feature the most interesting question or comment – assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach me at: Len@LenPenzo.com

Not Making It left this comment:

Hi Len, I just had to write you. I read your article on 41 reasons why you aren’t lending me any money. I rolled on the floor laughing! Then I read (your post that said) I ought to be able to make it on $40,000 per year and I wasn’t so amused.

Good, because I wasn’t trying to be funny.

I’m Len Penzo and I approved this message.Related Articles:

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• Black Coffee: Why Texas Doesn’t Mess with Taxes
• Black Coffee: Who’s In the Mood for Some Sour Grapes?
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• Black Coffee: Celebrating Sixteen Years of Marriage (and All Its Accoutrements)

Kids, with Father’s Day right around the corner, I hope you don’t mind if your dear old dad takes a few minutes to give you a little bit of fatherly financial advice.

Despite what your mom says, I don’t profess to know everything — okay, I guess maybe I do — although in this case you’ll have to trust that what I am about to tell you is absolutely true. Remember, I learned a lot of this stuff through past mistakes and hard-earned experience.

1. He who dies with the most toys doesn’t win.

A lot of people mistakenly believe that if they could live like the small minority of wealthy people they see on television, all of their troubles would be gone. They’ll tell you that life is defined by the sum of your material possessions and how “large” you live — whether you can afford it or not. Don’t believe them. The ironic truth is that a rich life is defined by the things money can’t buy.

2. Taking on debt today sacrifices your ability to make choices in the future.

When you agree to take on debt it limits your future earnings because you’re essentially spending tomorrow’s wages today. To put it bluntly, excessive debt essentially makes you an indentured servant to your lenders. By limiting your debt obligations, you’ll not only maintain more control over your life as you get older, you’ll also avoid the chains that prevent you from ever attaining financial freedom. And that brings me to my next point…

3. You can achieve financial freedom regardless of how much money you make.

Don’t fall into the trap of thinking that one has to be “rich” to attain financial freedom. There are lots of people earning millions per year who aren’t financially free, just as it’s also true that there are folks earning less than $40,000 annually who are financially free. The truth is, financial freedom doesn’t depend on money so much as it relies on a commitment to fiscal discipline and personal responsibility. Speaking of personal responsibility, always remember this…

4. Those who believe in personal responsibility control their own destiny.

It takes real courage and integrity to look inward and take responsibility for all of the troubles that are a direct result of your own making. When you take ownership for all the decisions you make in life, you build confidence and self-respect. From that confidence comes an inner-strength from knowing that you and you alone control your own destiny. Of course, if you choose to take the easy route by failing to embrace personal responsibility, you will ultimately cede control of your life to those who don’t have your best interest at heart — and I promise you that will be the biggest mistake of your life.

5. Slow down — life is a marathon, not a sprint.

One day you’re going to leave the nest and you’re going to want everything at once. Unfortunately, your paycheck will probably be such that, by the time you’ve finished deducting money to fund your retirement and other savings accounts, you simply aren’t going to be able to afford much. That means hard choices will have to be made — and so it’s going to be very important that you understand the difference between wants (like concert tickets or a big screen television) and needs (like groceries or the rent). Patience is a virtue. Rest assured that, over time, your salary will rise — and with it, so will your purchasing power.

6. Violating the natural order of life can be costly.

A big part of our financial success is based upon the decisions we make in life. As I see it, there are four key milestones in life: 1) getting a good education, either through college or via on the job training; 2) establishing your career; 3) marriage; 4) kids. If you follow those milestones in order, you’ll greatly increase your odds of achieving financial freedom. However, if you take them out of order, you’ll quickly discover that life not only gets more complicated, but also gets significantly more difficult financially.

7. The harder you work, the luckier you’ll get.

It’s easy to belittle the good fortune of others by attributing their success to luck, and in some cases that may be true. However, the real wellspring of success is found through lots of hard work coupled with a serious passion for whatever you do — so make sure you find a job that you really love. If you’re fortunate enough to do that, the odds are good that you’ll end up making your own luck.

8. You won’t be young forever, so take advantage of youth while you can.

Did you know that thanks to a little thing called compound interest, even folks with modest incomes have a good chance of becoming millionaires? That’s because, given enough time, compound interest becomes a force of monumental proportions; Albert Einstein dared to call it the most powerful force in the universe. Think about it: let’s say you earned $2,500 working a summer job. If you invested that money in an account that managed to earn 8 percent every year it would grow to $117,254 after 50 years! But here’s the rub: after 40 years you’d have almost $63,000 less in that account. That’s why it’s important to start saving as early as you can.

9. Always strive to spend less than you earn.

If you take nothing else away from our little talk today, remember that the easiest path to a life of financial freedom is to always spend less than you earn. Do that, and many of the other lessons I just shared with you will naturally take care of themselves.

Well, that’s it for now, kids. Please, though, don’t tell your mom we had this little chat. Then again, on second thought, go ahead; she knows your dad is right. Well, at least he is this time.

Photo Credit:LadyDragonflyCC

Related Articles:

• 100 Words On: Why Excessive Debt Leads to Indentured Servitude
• 100 Words On: Why Financial Freedom Requires Very Little Money
• Why Birth Order Doesn’t Influence Financial Behavior
• My Kids’ Loan Interview with the Bank of Dad
• Use a Ledger to Teach Kids Money Management Skills

Aunt Doris (circa the good ol' days)

Every once in awhile, almost everyone says or does something so goofy or dumb that they wish the floor would just open and swallow them whole.

When that happens to you, don’t despair; it will eventually become an amusing incident. Lord knows I’ve had more than a few of them over the years — and I’m going to share some with you now.

Skirt Chasing

Many years ago, I got hired by a brand new department store that was opening up in town.

The day before the grand opening, me and the rest of the staff were checking the store merchandise. I happened to be working in close-quarters with several workmen who were putting some last-minute fixes on the store cabinets. One of the guys was crouching down behind me, with our backs to each other.

Then he got up.

Unbeknownst to either of us, the hammer in his back pocket had inadvertently become hooked under my skirt — and as he rose, my skirt came up with him.

Completely startled by what was happening, I hollered at the top of my lungs, “Hey!”

That poor guy was so embarrassed. The entire staff and work crew had a good laugh over that one. By the way, I ended up working there for 25 years!

Pill Poppin’

I used to be just a “One-a-Day” vitamin taker, along with a little echinacea and L-lysine — the latter being great for stopping those pesky lip cold sores. Not any more. Now I take a half-dozen prescriptions (doctors’ orders) that come with Greek-sounding names.

Recently, my daughter-in-law, Chris, and I were going over my prescriptions. I picked up one of the bottles, but it seemed unfamiliar to me. “What the heck am I taking this for?” I asked her.

“Memory,” she said.

A Malodorous Affair

Not too long ago, I thought I smelled a gas leak in my kitchen. I checked the stove and burners but couldn’t figure out where the leak was coming from, so I called the gas company and they immediately sent a guy out to find and fix it. He checked everything, but couldn’t find the leak either.

Then he noticed something next to the stove. “What’s in that jar with the holes in the lid?” he asked.

And there it was! The source of the dreaded gas “leak” was a moldy clove of garlic in the garlic jar.

I was so embarrassed, but the service guy tried to make me feel better by saying that they got lots of calls like mine.

Better safe than sorry!

An Indecent Proposal

A few years ago I was out shopping and two transients saw me and started a conversation. After a while, the older one suddenly said, “Hey! We should go to Vegas and get married!”

“I don’t think so!” I said. I then quickly ran into the shop next door to get away from them.

Later that evening, I called my son, Kevin, and said, “Hey! Today I almost got you a new dad!”

Kevin wasn’t amused — I got the usual lecture from him about not smiling at complete strangers.

“I do seem to attract odd people,” I said.

“Well, it takes one to know one,” said my son.

And, of course, we ended up laughing about that.

So don’t feel bad about those kind of goofs. That’s life!

Love you guys,

Aunt DorisRelated Articles:

• A Few Thoughts from Aunt Doris: The Gift of Laughter
• A Few Thoughts from Aunt Doris: Do I Know You?
• A Few Thoughts from Aunt Doris: A Cat’s a Cat and That’s That
• A Few Thoughts from Aunt Doris: How to Make Ends Meet
• A Few Thoughts from Aunt Doris: The Two-Fingered Salute

However, nobody was more excited than the kid with the fastest thumbs in the West, my son, Matthew, who no longer had to endure the supposed indignity of being stuck with an “uncool” Nokia Gravity phone because our new plan included three iPhones. True, they were older fourth-generation phones, but as far as my son was concerned, at least they weren’t made by Nokia.

Hey, don’t look at me; I’ve got nothing against Nokia. To me, a phone is a phone is a phone. Besides, I use a Blackberry that’s issued to me by my employer. But I digress.

Anyway, when signing up for the new contract, we were reminded by the sales associate that we had the option to insure the new iPhones. For $8 per phone per month, we’d get a replacement iPhone if ours were ever stolen, lost, run over by a car, or even accidentally submerged in a pool.

Sounds like a good deal, right?

Well, not necessarily. After looking into the dirty details, and then doing a little research and pulling out my trusty spreadsheet, I came to the conclusion that cell phone insurance can sometimes be a very iffy proposition.

To help illustrate, here is a breakdown of the cumulative monthly premiums I would have to pay for insuring one, two and three phones over the two-year contract period:

Looking at numbers, the point that immediately stood out was that it was going to cost me $576 in premiums to insure three phones for two years. And while our previous cell phone insurance plans had reasonable deductibles ranging from $0 to $25, the plan offered by our new carrier has a deductible of $140 per phone. That’s a lot of money, folks — especially considering that you can currently buy a brand new version of the exact same iPhones my family has on eBay for between $189 and $240, depending on whether you want the phone only, or all the accessories too.

Another interesting tidbit is that our new carrier charges $80 to repair a cracked phone screen regardless of whether or not you have insurance.

With all that in mind, let’s consider the case where I buy the cell phone insurance on the first day of my contract, and then lose the phone the very next day. (Hey, it happens.) Let’s also assume I continue insuring my replacement phone for the full two years because I’m justifiably afraid of misfortune striking again at some point during the contract period.

Here are the cumulative expenditures incurred after insuring a single phone over the entire two-year period, and the resulting realized savings (or losses) had I instead chose to bypass the insurance altogether and pay full price for a new phone on eBay:

As you can see, getting a replacement phone in the first month makes the insurance a fairly good deal; at that point I’m ahead either $92 or $41, depending on whether or not the replacement phone came with the accessories.

Even so, as time wears on, the cell phone insurance quickly becomes a losing proposition; I’d save a minimum of $92 by simply avoiding it altogether, assuming I required fewer than two replacement phones over the entire two-year period.

In fact, for me to come out ahead with the cell phone insurance, I would eventually have to either:

• Make two or more separate claims over the two-year contract period.
• Stop carrying the insurance as soon as six months — or no later than 12 months — after initiating the contract. (Depending on the price of the replacement phone.)

Admittedly, my kids haven’t had the best record when it comes to taking care of their cell phones; over the past few years they’ve had more than a couple of “oops” moments. But they’re older now and significantly more responsible too. At least they should be.

The bottom line is that sometimes the potential benefits derived from insurance policies aren’t worth the premiums when compared to the actual risk.

In the end, I decided to throw caution to the wind and decline the cell phone insurance. Frankly, it was a no-brainer because the premiums and deductibles couldn’t compete with the relatively low cost of replacing the phones with money from my own pocket.

After all, insurance is supposed to protect you from losses you can’t afford to replace.

Now, if the wife and kids each end up having to replace their phones more than once over the next two years, I’ll obviously lament my decision.

I’m not worried though because, as the old saying goes, sometimes being too cautious can be the biggest risk of all. This is one of those times.

Photo Credit: Yeray Hernandez

Related Articles:

• My Teenage Son, His Cell Phone, and the Bill for $1,055.20
• The Great Debate: Do Kids Really Need Their Own Cell Phone?
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• How I Know When to Drop Collision & Comprehensive Auto Insurance
• The Difference Between Whole and Term Life Insurance

Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.

Last month I passed a dubious blog milestone: I received my 1-millionth spam comment. I know.

Unfortunately for me, yesterday I was hit by a comment-spammer who attacked me with a relentless fervor that was, truly, something to behold. Talk about “shock and awe” … Over a 12-hour period, my blog was broadsided by almost 2000 spam messages that found their way around my normally-trusty spam filters.

During the attack, the best I could do was delete the offending messages manually, which was a very tedious process to say the least.

Thankfully, the attack is now mercifully over, and I have dispatched all of those worthless spam comments to an unreachable distant corner of Internet hell — but not without some casualties. During the cyber war, and much to my dismay, I inadvertently ended up losing all of the legitimate comments that were posted between noonish Thursday and Saturday morning.

Ah, the joys of running a blog!

The Way-Back Machine: Past Posts Of Mine You May Have Missed

From September 2009:

Killer Asteroid? Personal Finance Strategies for the End Times – Last week, Earth experienced a near-miss with an asteroid that was 1.7 miles wide. If it had struck our planet, the results would have been catastrophic. How would you handle your personal finances if you knew a killer-asteroid was coming that would destroy life as we know it?

And Here’s Some Other Posts You Might Enjoy …

Monevator – Why Your Relatives Will Be Glad You’re a DIY Investor

Fiscal Fizzle - 5 Reasons Why I Cancelled My TV Service

The Mighty Bargain Hunter – How to Get More Rides at Disney for Less?

Krantcents – Negotiations Start When You Ask a Question!

GenX Finance – How to Kick Your Bad Money Habits

Credits and Debits

Debit: Did you see this? Reverse mortgages are being pushed on seniors harder than ever, but they’re increasingly being used for all the wrong reasons. Instead of a reliable source of supplemental long-term income, they’re being used as a quick fix, and that’s backfiring on some homeowners.

Debit: The US unemployment rate ticked up one-tenth of a point to 7.6% in May. But as Zero Hedge points out, if the labor participation rate returned to realistic historical levels, the actual jobless rate would be 11.3%.

Debit: Don’t blame the falling US labor participation rate on retiring baby boomers; the majority of job gains since the Great Recession have actually gone to folks over 55.

Credit: On the bright side, there were 7000 new construction jobs created last month. In fact, there are now 5.8 million workers employed in the construction industry; that’s the most since August 2009.

Debit: Then again, it’s never good when the second fastest area of employment growth last month was in … temporary help agencies. They added 26,000 new jobs last month, surpassed only by food services which created 38,000 new positions. Unfortunately, neither offers truly good-paying jobs.

Debit: Maybe there would be even more construction jobs if nearly one out of every ten housing units in the US wasn’t currently sitting vacant. It’s another indicator that makes one question just how robust the housing market really is.

Debit: Think that’s preposterous? Well, the Federal Reserve Advisory Panel is now officially on record admitting that, after conjuring $2.5 trillion out of thin air since 2008, “The Fed may now be perceived as integral to the housing finance system.” Uh oh.

Debit: If that doesn’t sound like something you should be hearing in the middle of an economic recovery, you’re right. In fact, a recent report from UCLA finds that, since the end of the Great Recession, there hasn’t been any economic recovery at all.

Debit: Heck, with the economy in such sad shape, it’s probably no wonder a new survey finds that two-thirds of Americans who currently lack health insurance are still unsure whether they will buy the mandatory Obamacare coverage by the end-of-year deadline.

Debit: Of course, with the latest reports saying that the cheapest plan will cost a family of four $20,000 starting in 2016, I guess I wouldn’t be signing up for Obamacare either. And you thought private sector insurance plans were expensive.

Credit: By the way, if a majority of uninsured Americans really aren’t buying-in to this newly-created bureaucratic Frankenstein, why in the world was Obamacare even created in the first place? One thing is certain: If enough healthy people balk at signing up for coverage, Obamacare is doomed to fail.

Credit: After all,with preexisting condition limitations now a thing of the past, it makes much more sense for everyone to game the system and bypass the so-called “Affordable” Care Act coverage until they really need it. Especially since the penalties are unenforceable.

Credit: Too bad the auto and home insurance industries refuse to follow that destructive business model. Then we could all wait to buy our insurance policies until after our home caught fire or our car got into a collision.

Credit: One person who no longer has to worry about paying for ridiculous government healthcare premiums is the 84-year-old Florida woman who won that record-breaking $590 million Powerball jackpot awhile back.

Credit: If you’re wondering what her tax bill is going to be, according to Jay Leno, “The IRS said it’s too soon to tell because they don’t know whether she’s a a Republican or a Democrat.” Heh.

Debit: Officially, after taxes are paid, she’ll have “just” $270 million left. That’s less than half of her original lottery winnings. Still, I wouldn’t be complaining after receiving a check that large. Would you?

Credit: I know what you’re thinking. It turns out that lucky lady will need to spend an average of at least $50,000 per day if she wants to enjoy all of her after-tax winnings before her 100th birthday.

By the Numbers

Not everybody can win $590 million in the lottery. Here are a few facts you might want to consider before playing the Powerball:

$2  Price of a single Powerball ticket.

6  The number of Powerball grand prize winners from Florida; it’s produced more winners than any other state.

120 million  Approximate number of Powerball tickets that have to be sold to produce even odds of a winning ticket being drawn.

32:1  The approximate odds of winning any Powerball prize. (The lowest is $4 for hitting a single number.)

175,223,510:1 The odds of winning the Grand Prize by correctly picking all six numbers.

25,000,000:1  Approximate odds of winning several million dollars from a wide-area progressive slot machine (in the state of Nevada).

95 Number of tickets you would have to buy to ensure you’ll have a 95% probability of winning at least one prize.

145 Number of tickets you would have to buy to be 99% sure you’ll have at least one winning entry.

Sources: Business Insider; Yahoo; Las Vegas Sun; Huffington Post

The Question of the Week

Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.

Last Week’s Poll Result

Have you ever been to France?

• No, and I probably never will. (43%)
• Yes. (39%)
• No, but I plan to visit it someday. (18%)

Other Useless News

Here are the top — and bottom — five states in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:

1. New Mexico (2.33 pages/visit)
2. Alaska (2.09)
3. Kansas (2.07)
4. Arkansas  (2.04)
5. Idaho (2.01)

46. Oklahoma (1.54)
47. New Jersey (1.52)
48. Hawaii (1.50)
49. New Hampshire (1.48)
50. Wyoming (1.31)

Whether you happen to enjoy what you’re reading (like my friends in New Mexico) — or not (ahem, Wyoming) — please don’t forget to:

1. Click on that “Like” button in the sidebar to your right and become a fan of Len Penzo dot Com on Facebook!

2. Make sure you follow me on Twitter!

And last, but not least…

3. Don’t forget to subscribe to my RSS feed too! Thank you.

Letters, I Get Letters

Every week I feature the most interesting question or comment – assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach out to me at: Len@LenPenzo.com

Rob wrote in to opine on my decision to buy tickets to see Maroon 5 in concert:

Maroon 5. Really?

Well … I originally wanted to buy Led Zeppelin tickets, but it turns out they’re not touring this year.

I’m Len Penzo and I approved this message.Related Articles:

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I know. That may not sound like a ringing endorsement, but it’s true.

Anyway, one of my favorite things about summer is our annual family vacation; my favorites are when we go on extended cross-country road trips. I’ve made seven coast-to-coast trips during my lifetime, so suffice it to say that I have at least a little bit of experience in this arena.

When it comes to road trips, half the fun is in the planning. Unfortunately, if you aren’t careful, it only takes one or two bad decisions to turn a family vacation for the ages into a family vacation of the rages.

In fact, if you want to guarantee your next family road trip is a real loser, then simply follow these tips:

1. Put the brakes on planning. Remember, a road trip is all about experiencing the adventure, so why bother doing any research ahead of time? Don’t even think of tapping fantastic travel guides like Fodor’s that have already done much of the leg work for you.

2. Bypass Auto Associations. Be sure to save a few bucks by failing to become a member of the American Automobile Association (AAA). Never mind that their free road maps, TourBook guides to sights and hotel and restaurants, and on-line interactive TripTik Travel Planner are well worth the price of membership.

3. Forget maintenance. Cars today never break down, so don’t bother getting your oil changed, or checking the tire pressure and belts before you leave. After all, if an idiot light does come on, you can always add water, oil or other fluids while you’re on the road. (Er, unless you’re in the middle of nowhere.)

4. Be a traffic scofflaw. Nobody ever gets pulled over by cops while they’re on a road trip. Nope. So don’t bother checking to see if you have your updated license, registration and insurance papers with you. The odds are you aren’t going to be tempted to speed on those long lonely stretches of highway anyway. That being said, if you do get a ticket in another state, you can always avoid paying the fine. Well, assuming you never plan on coming back.

5.  Over-pack. Don’t forget to stuff your luggage to the gills because nothing says “relaxing vacation” like lugging a bunch of heavy bags to and fro each time you stop for the evening. Packing intelligently is so overrated.

6. Drive a compact car. Why bother maximizing your family’s comfort — or ruin your street cred — by traveling in a spacious minivan or large touring sedan?

7. Adhere to a strict schedule. While you’re on the road, stick to your schedule at all costs. Do not — I repeat, DO NOT — deviate from it. Remember, it’s all about the destination and getting there on time — so stick to those sterile interstate highways and stay away from those two-lane back-country roads. Make unplanned sites and other points of interest strictly verboten. Yes, those half-buried Cadillacs sticking out of the ground off the side of the road do look interesting, but it’s more important to make sure you get to the next hotel on time. Hey, maybe you’ll get a prize from the front desk staff for getting there before 5 p.m.

8. Stay in sardine cans. Speaking of hotels… Forget putting your family up each night in a multi-room extended-stay suite — because, at the end of a long hard day on the road, there’s nothing better than being cooped up in a tiny 300 square foot room with a couple of cranky rugrats and a single television set.

9. Fast food or bust. Whenever it’s time to eat, make sure you always dine at the same old tired chain restaurants you have back home. Even though the best meals you’ll ever have will never be found at those national establishments, trying the local cuisine while dining at a local mom and pop restaurant is just way too risky — even when you see a parking lot full of patrons.

So there you have it, folks. Hopefully I didn’t miss anything.

Good luck with your next road trip!

Oh, and don’t forget to send me a postcard.

Photo Credit: garbyal

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• Are You an Unwitting Financial Time Traveler?

Unfortunately, the only squeegee I could find was at another pump island that was occupied by a big ol’ cowboy who was filling up his pick-up truck. (Yes, there are a few cowboys in my neck of the woods.) So I walked over to him.

“Do you mind if I use the squeegee?” I said. (I almost ended the question with “partner,” but I figured that would be overdoing it.)

The rancher squinted and then, for a couple of uncomfortable seconds he just stared at me with his steely eyes. Uh oh, I thought. It suddenly crossed my mind that if this guy was in a bad mood and looking for a fight, it wouldn’t be long before that dang bug wasn’t the only thing plastered on my car windshield.

Thankfully, and much to my relief, the wrangler broke into a wry smile. “It’s a free country,” he said.

Well … He’s right about that. It is a free country.

Of course, that freedom extends to how we manage our personal finances too — which is why it almost always surprises me whenever I hear people making excuses for why they can’t make ends meet.

I don’t care how much money you’re earning; unless you’ve been struck by a catastrophic medical condition, are stuck in an extended period of unemployment, or blindsided by another unforeseeable event such as a gold-digging spouse who skips town with your life savings, there’s no reason why you shouldn’t be able to balance the bills every month.

Let’s face it, folks. The reason most people get into financial trouble is because they make lousy choices, and one of the biggest choices we all make that affects our standard of living is where we choose to live.

A few years ago, I explained why people who can’t survive on an income of $40,000 per year have nobody to blame but themselves — and one of the biggest reasons is because, well, it’s a free country.

Think about it; most of us have the freedom to live wherever we want — especially in the early stages of our adult life. And yet, there are countless numbers of people who insist on living in high-cost-of-living areas even though they lack the means to afford it. Why?

The most recent data from the United States Census Bureau Cost of Living Index reveals just how much disparity exists in the standard of living for the 325 largest metropolitan areas in America. The index measures relative price levels for consumer goods and services such as groceries, housing, utilities, transportation, and healthcare.

Here are the American metropolitan areas with the ten lowest and highest costs of living:

The nationwide average equals 100 and each score represents a percentage of the national average, so areas with lower scores are more affordable than those with higher scores.

As you can see, all things being equal, it’s approximately 2.6 times more expensive to live in Manhattan, New York, than Harlingen, Texas. That’s a significant differential — and it’s especially important to keep in mind if you’re, say, a twentysomething or somebody who is still trying to figure out where to put down your roots.

Yes, for many people, living in San Francisco (affordability index: 164.0), Lake Tahoe (146.4), Honolulu (165.7) or the Big Apple is a romantic notion — but it’s not the smartest idea if your household income can’t cover the bills. It’s just not.

When it comes to keeping your financial head above water, remember: where you live matters. It really does, folks.

The good news is, it’s a free country. So choose wisely.

Photo Credit: Phillip Taylor PT

Related Articles:

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• 6 Basic Steps to Help You Achieve Financial Freedom

Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.

I heard this the other day and it made me laugh …

A man walks into a bar and orders a grasshopper. On his way home, the man meets a real grasshopper and says, “Hey! Did you know there’s a drink named after you?”

“Really?” said the grasshopper. “There’s a drink named Irvin?”

The Way-Back Machine: Past Posts Of Mine You May Have Missed

From October 2009:

The 7 Deadly Sins of Personal Finance – In this post, Reverend Len from the First United Church of Our Lady of Blessed Household Finances holds a confessional for the congregation. Hallelujah!

And Here’s Some Other Posts You Might Enjoy …

Money Plan SOS – The Do’s and Don’ts of Helping Aging Parents Who Don’t Want Help

Afford Anything – Traveling to 30 Countries by Age 30

Making Sense of Cents -  Common Concerns for Life Insurance Newbies

L Bee and the Money Tree – Buying a Home Is Exhausting

Daily Money Shot  -  10 Simple Ways to Suck at Life

Credits and Debits

Debit: An analysis by the Fed shows that the average American household has rebuilt just 45 percent of the wealth it lost during the Great Recession. Families that are having the most trouble regaining their wealth are those with low savings rates and high debt. No surprise there.

Credit: On the other hand, households that have been able to save and invest have supposedly recovered almost all of their lost wealth since 2009, thanks mainly to gains in the stock market. It’s impossible for anyone to build wealth with the Fed’s severely-flawed zero interest rate policy.

Credit: Speaking of the stock market, despite all three major indices sinking more than 1% at the closing bell on Friday, the Dow Jones Industrials and the S&P 500 both ended May almost 2% higher, while the Nasdaq finished the month up 4%.

Debit: More proof that the latest US housing recovery is based on a lot of smoke and mirrors: Since early May, Wells Fargo, JP Morgan and Citi have stopped nearly all sales of foreclosed homes. Unfortunately, that artificially constricts supply. The end result is unwarranted higher prices and decreased affordability.

Debit: Curiously, as Zero Hedge points out, the majority of foreclosed homes taken off the market are in California, Nevada and Arizona — which is where the biggest home price increases are currently occurring.

Debit: Then again, lender foreclosures have been drastically scaled back ever since October 2010, thanks to a misguided settlement reached in October 2010 between government and lenders that was the result of the “robo-signing” scandal.

Debit: The robo-signing agreement, which provided for $25 billion in cash and principal reductions to state coffers and homeowners, continues to hinder the clearing of the housing market and raise prices for qualified buyers, while allowing squatters to live mortgage-free for longer periods. Genius.

Credit: Did you see this? Over the past decade, no other state created more jobs than Texas. Perhaps not coincidentally, of the 10 states with the best economic performance since 2001, all but two of them are so-called “red” states, based upon the last four presidential elections.

Debit: As for the other end of the spectrum, no state created fewer jobs over the past ten years than Michigan. You’re right; that ain’t the first time their economy has been in the dumps. As for the bottom 10 states, all but two are “blue.” Make of that what you will.

Debit: Can you name the eighth most-populous state in the US? No, despite the conventional wisdom, it’s not Georgia. It’s actually the state of disability. You heard me. Believe it or not, an astounding 10,978,040 people now reside there.

Debit: In 1968 there were 51 people working for every person who collected a weekly government disability check; today it’s just 13. Zut alors! It won’t be long before the number of people in the cart surpass the number who are pulling it — then what?

Debit: I’m sure if anybody gets hurt pulling an overloaded cart, Obamacare has a medical diagnostic code for that. The law has created 122,000 new codes that doctors will have to wade through when describing patient injuries — including “walking into a lamppost” and “injuries sustained from a turtle.” Unbelievable.

Credit: I’m sure the additional medical codes, along with the law’s 10,000 pages of new regulations, were designed to drive costs down. Don’t laugh; there are many people who will go to their grave believing the government is more efficient than the private sector. I know.

Debit: Despite proponents who shamelessly continue to mislead millions of math-challenged Americans, the latest data released by Obamacare’s California exchange clearly shows that the new law will increase individual-market premiums in the state by as much as 146%.

Debit: As Forbes points out, the bureaucrats and politicians who are responsible for foisting Obamacare on America are the same people who chastised Anthem Blue Cross in 2010 when they dared to raise premiums 39%. You can’t make this up, folks.

Debit: I guess things could be worse; just be glad you aren’t one of 8000 wealthy households in France with a tax bill that topped 100% of their income last year. Meanwhile, the unemployment rate in France is at all-time highs. I wonder why.

Credit: For his part, French president Francois Hollande thanked France’s rich for their fiscal, um, “donation” to society. His thank you hasn’t helped his image though. Hollande’s popularity is on the rocks — just like the foundering French economy. Go figure.

Credit: On the bright side, I think it’s safe to say that we finally know the socialists’ definition of “paying your fair share.” Even so, I suspect they think a 101% tax rate is still too low.

By the Numbers

Here’s a little more info regarding France and its language:

3 France’s rank among European countries in terms of land area. Only Russia and Ukraine are larger.

300 Number of cheeses made in France.

1964 Year that French women were first allowed to open a bank account or get a passport without their husband’s permission.

44 Percentage of French citizens who are atheists.

1066 Year that French temporarily became the official language of England. It remained the official language there until the early 15th century.

30 Countries that still claim French as their official language.

4 Rank among the world’s countries in terms of most gold medals won at the summer Olympics. (Only the US, USSR, and the UK have won more.)

81 million Tourists who visited France in 2012. France is the most-visited country in the world. Along with Spain, Austria and Greece, it’s one of four European countries where the number of annual tourists exceeds the population.

Source: Eupedia

The Question of the Week

Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.

Other Useless News

Programming note: Unlike most blogs, I’m always open for the weekend here at Len Penzo dot Com. There’s a fresh new article waiting for you every Saturday afternoon. At least there should be. If not, somebody call 9-1-1.

Hey! If you happen to enjoy what you’re reading — or not — please don’t forget to:

1. Click on that “Like” button in the sidebar to your right and become a fan of Len Penzo dot Com on Facebook!

2. Make sure you follow me on Twitter!

And last, but not least…

3. Don’t forget to subscribe to my RSS feed too! Thank you.

Top 25 Referrers for May

It’s the first weekend of the month, which means it’s time once again to thank the top 25 referring websites to Len Penzo dot Com.

1. MSN: Smart Spending
2. Business Insider
3. Kiplinger
4. The Simple Dollar
5. Money Talks News
6. Clark Howard
7. Budgets Are Sexy
8. LifeHacker
9. Mr. Money Mustache
10. Wisebread
11. Save Outside the Box
12. Budgeting in the Fun Stuff
13. Monevator
14. Wealth Pilgrim
15. The Finance Buff
16. The Free Financial Advisor
17. Afford Anything
18. Control Your Cash
19. So Over This
20. Money Crashers
21. The Consumerist
22. DQYDJ
23. Smart Asset
24. The Oblivious Investor
25. Money Funk

Thank you to everyone who refers their readers to this little ol’ blog! It’s much appreciated.

Letters, I Get Letters

Every week I feature the most interesting question or comment – assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach out to me at: Len@LenPenzo.com

From Rudy:

It’s rare to find someone who really knows their stuff. Good job!

Thanks, Rudy. If you think I know my stuff, you should meet the Honeybee — she’s never wrong.

I’m Len Penzo and I approved this message.Related Articles:

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