Yesterday at 5PM I received notice from George Washington University that I was accepted into their PhD Program in Economics.  The PhD Department is a whole two blocks away from my current job.  This should make commuting a breeze.  Furthermore, I have a flexible schedule so I'll be able to go to seminars during the day.

With my MA from GMU, I should get about 20 hours credit towards my degree (a cost savings of 20,000 dollars).  Further, I there's a not very often used OPM program http://www.opm.gov/oca/PAY/StudentLoan/   that will fund up to 60K of student loan repayments provided I sign on for about 3 more years of service. 

Since I have no intentions of leaving the Federal Government in the next 10 years, this is a boneheadly easy decision.  When my Chief is back in the office on Monday I'll be talking to him about it.  This was part of the deal we struck when I had an offer to be an senior economist elsewhere.

While G-Dub isn't a top economics school, for what I need it for it'll do just fine =-)

Omaha is sometimes referred to as the Mecca of Capitalism.  When Warren Buffett and Berkshire Hathaway have their annual meeting, thousands flock in for what's as close as you can get to a Carnival atmosphere of economics, finance, and capitalism.

His annual reports and letters are an excellent read. 

It's my goal next year to attend the meeting.  I've got my B class shares, which means I can sit in, but I can't ask questions.  One has to be an A class shareholder for that.

http://www.berkshirehathaway.com/sharehold.html

When the sun is shining and the weather warm but cooled by a small breeze, working outside is close to heaven.  On Sunday morning, my wife worked all day (really, all day, sunrise to sunset) laying stone and stone dust to finish our patio.  It looks wonderful.  I spent the morning mowing the lawn with our RealMower (human powered mower), trimming, edging, and bringing stone over for our patio. 

Then I sat outside and worked on my laptop.  I had a few cold ones.  Beautiful day, you just can't put a value on it.

Sunday afternoon, sitting outside, was time I used to check over our budget.  It's probably a good thing to, every few months, see how we're doing on our finances.  I still have a problem with eating out far too many times in a week.  I'd like to get it down to 2 times a week, but right now I'm at 4-5.  That's too much.  We're really good about not eating out when we've been grocery shopping, but there's that period of a few days where your stocks are running low and nothing looks good...so you eat out.  We need a better stock of staples to keep eating in during the grocery store avoidance stretches.

That's not to say we're not doing good.  We knocked out over 15,000 extra off of our Home Equity Loan that built our addition in the past year.  We had positive cashflow each month for the last 12, which can only bode well since we had a home addition project, a wedding, and a honeymoon to pay for.  It even looks like our retirement accounts are back to where they were return wise pre-downturn.  That's a nice sign. 

Let me just say, unequivocally, on the record, that a "Gas Tax Holiday" has got to be one of the most idiotic, downright stupid, embarassing, shallow, pointless proposals to help our economy of this entire deplorable primary season.

Here's the deal.  Senators McCain and Clinton want to roll back the 18 cent a gallon gas tax for the summer.  Senator Obama and President Bush, along with nearly every single economist and newspaper editorial board of either political persuasion, oppose it.

First, the net benefit to the average household?  50 bucks.
The cost?

Under Sen McCain's plan?  5 billion dollars, to be paid for with future taxes.  Probably on our children.  Guess we can officially bury the "fiscal conservative" wing of the Republican party.  So long guys, you had a nice run in 94!

And in the meantime, we lose 5 billion dollars towards the interstate highway maintenance fund.  Yeah, our interstates sure look pristine and un-needing of maintenance, don't they.

Under Sen Clinton's plan?  She replaces the tax on gas with a tax on the oil companies' windfall profits.  Thusly, she (and her husband, a Rhodes Scholar in economics who should know better, but is making me think less of Rhodes scholars daily) moves the tax burden from the consumer, to the producer.

Except, that's not how taxes work.  The tax on profits would be passed on right back to the consumer.  Not entirely all of it, but a good bit of it.  Simple microeconomics theory tells us that.  That no less than Paul Krugman and Greg Mankiw agree on this point should be proof enough of its stupidity.

Yet, it appears that the promise of 50 dollars a month is enough to move votes.  Even if it means we continue to mortgage our so-called good times on the soon to be sweaty backs of our laboring children.

The sad reality is that Senators McCain and Clinton are gaining support for this platform.

I'm not worried.  If things get really bad in 20 years, we're packing up to St. Eustatius and becoming Dutch

Managing a good personal finance lifestyle is not unlike managing a good personal health lifestyle.  Temporary changes don't breed lasting results, but creating permanent changes does.  For instance, my wife and I have actualized a commitment to eat healthier.  In our diet we now have a decidedly larger proportion devoted to fruits and vegetables, and our portion sizes have declined, from last year.  When pared with another goal of ours, to exercise regularly, these two life changes will make permanent a difference in lifestyle.  Our bellies will be gone, and our health will be better.  We'll live longer, spend more time outdoors, and according to most research, be happier.

Your finances are similiar, and the lessons on a good diet and good exercise apply to your checkbook as much as to your fanny.
Being a frugal personal finance nut, I've compiled a list of small life changes that I've made within the last year. 

1) Eat out significantly less
My year-over-year change in monthly general food spending has declined by 150 dollars a month.
2) Brew my own latte
The latte-a-day savings plan strikes.  That's 3 dollars a day, or 60 dollars a month.
3) Substitute away from the gym
We changed lawnmowers from a gasoline powered to a manually powered one.  Now mowing our (albiet small) lawn is a workout.  Our bi-weekly walk to Trader Joe's nets us about 4 miles of walking exercise.  Keeping our car at home and using foot power to get to the local stores gives us an opportunity to exercise.  By taking a few more minutes per activity by walking, rather than driving, I'm able to maintain physical health without a gym membership.  40 dollars a month.

My small list total - about 200 dollars a month.

What's that worth in 20 years?

If I assume an inflation adjusted real gain of 7% on the money I save, that's worth a little over 100,000  in today's dollars. 

There a plenty of small, needless expenses that we incur without noticing every day. 

What fat can you cut out of your daily financial diet?

Hello to all my old livejournal friends who've followed me over to my new journal.  I needed a change, because my old journal suffered from a split personality, of who I was when I first started blogging versus who I am today.  Fast forward from 2002, and my life did, and did not, follow the path I thought it would.

Hello to all my old friends who have followed me from GetRichSlowly and CivFanatics (and other sites).  I hope the quality (and quantity) of my posts improve in this new venture.  I'm going to reference questions from various forums.

For the relaunching, I'm happy to revisit a old topic: time.  More specifically, I'm referring to how we value time, how it's value is internalized, and how we can make better personal, and financial, decisions based on understanding our values of time better.

In economics, we define value of time as an opportunity cost.  That is, we want to know what our next best alternative use of time is.  Our values of time are probably most evident in the lifestyle we choose to lead, and further obvious, where we choose to live.   But what exactly is one's value of time?  It's not our hourly pay, for sure, as that's the value our employer puts on our labor time, and is only an imperfect reflection on what we feel the value of our labor time actually is (Equilibrium or market-clearing wages are often paid on the aggregated industry scale, they are vastly imperfect on an individual basis, as we often over or under value our own labor price, or make that difference up in intangibles, or office pens).  We do use our pay as a base, but an hour of work may be worth more or less than an hour of commuting, or an hour of gardening,  depending on how much we enjoy our work or our commute or our garden. 

How much is your time worth?  Are you using up your time that would make you happier if you could spend it elsewhere?

Time, being a quantity that we have an unknown fixed supply of, is thereby our most precious possession.  We would want to maximize the happiness we derive from it.  For myself, knowing that the least enjoyable part of my day is my commute, I choose to live close into my work site, close to a metro stop, and free from my biggest annoyance of all, interstate traffic jams.  I can also substitute my time for more money.  By walking to and from the metro station as a regular habit (along with other habits), eliminates the need for a gym memberships (and the subsequent time commuting to the gym.  As an aside, the gym really does seem like an incredibly silly commercial business, and quite a sign of just how much more leisure time we have and how cheap food has been (that may be changing).  

So, while those of us who obsess about our personal finance (call us cheap, thrifty, frugal, whatnot) want to trim every penny, such a strict rule willfully ignores the truth that it's not just money that makes us wealthy, but that it's how we use money, and how we use our time, that does.

It's okay to pay more than market average for a rental, or for a home, if it fits your lifestyle.  If  you know yourself and plan accordingly, the increased cost there will be made up by savings (time, money, or less unhappiness) elsewhere.

So readers, what are some stories of your life where you've internalized your value of time that led to your lifestyle improving?

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I had to make a decision recently about whether to take a job as a senior economist or go back to school for my PhD.  While the job was exactly the job I had put as a goal of mine, I decided in the end that it would mean more to me (ie, make me happier, provide more utility) to go get my doctorate in Economics.  I'm about 2 years away from a dissertation.  I'm hoping my late application will be accepted so I can start this fall, otherwise I'll start somewhere next year.  Even for us PF geeks, sometimes cash doesn't rule everything around me.