Updating my Holographic Will

Being so frugal or maybe even something worse, I didn’t want to fork over the money on an attorney to create a will. And, of course it takes time, appointments and trust in an attorney. Instead, several years ago, I did a little research using a book on Texas probate which was sent to me as a gift by a local funeral home!

The book gave some examples of wills, some common errors, what not to do and helped me hand write my first will. This is perfectly acceptable in the state of Texas and is referred to as a holographic will. It must be written only in the hand of the testator and signed by the testator; no date, no witnesses and no notary public are required. Perfect.

I made a copy of the document, stored the original in a fire resistant safe at the house and kept the copy locked in a safe at my place of employment.

I have not thought much about it since then, but of course, things in life change over the course of several years and the will needs updating. By chance, I also caught the Suze Orman show last Saturday where she provided a gift code to get a free copy of her online Will & Trust kit.

I had not watched her show in quite awhile and had forgotten how amusing it is to see her reaction to some of the unbelievable financial moves that people make. A lot of her advice seems like common sense, but every now and then she hits on something new to me.

In addition to the will, her software allows you to setup a revocable trust, Financial Power of Attorney, and an Advanced Directive / Durable Power of Attorney for Healthcare.

What a deal! Of course, using her software will require two witnesses and a notary public. I figure it’s probably worth going through the questions to get info on these other documents and maybe add that wording to my soon to be updated holographic will. I signed up for the offer and created an account. It appears that I can go back at any time to work through the questionnaires and generate these documents.

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Best and Worst U.S. cities for building Personal Net Worth

Salary.com has released its 2008 salary value index ranking of 69 U.S. cities with at least 250,000 residents. The index measured local salaries, the cost of living and unemployment rates to come up with the communities with the most favorable combinations. The top five and bottom five cities are shown below in the table. The top five offer the largest difference between pay and costs providing the best opportunity to build wealth.

It’s no surprise that New York city or Honolulu are expensive places to reside, but I didn’t expect to see Washington DC so high up on this list at #2.

As for the top five, I can attest that as a whole, Texas has an inexpensive cost of living. Eight other Texas cities made the best cities list as well. Of course, just being a cheap place to live is not enough to rate highly in this index, it’s also important to have good paying jobs. And that combination does not seem to lend itself to some of the prime real estate locations in this country.

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The story of my roof replacement continues....

It took over a week, but I now have my insurance adjuster’s estimate for replacing my roof that has suffered hail damage. I looked it over line by line and found several errors. The estimate is difficult to read. It’s inconsistent, sometimes material and labor are included for an item and other times it is not. I found that he had missed a couple of items (power wash and re-stain a chimney) and one of the subtotals was incorrect (short) by over $600! But, the most surprising thing was that his estimate to replace my roof was $2500 less than the two contractor bids that I have.

The adjuster had left me with a long distance phone number to call him with any questions. I don’t see why I should need to pay phone charges to talk about an insurance claim, especially when I have a local agent. I called the agent and they said they would contact him and have him call me. Two days later, I still had not heard from him. I called the corporate insurance claims center. They gave me another 1-888 number to reach the adjuster. I left three phone messages over three days before he returned my call. He said he didn’t check that voice mail very often!

His response to the huge difference between his estimate and the two contractors bids, was that I needed to get three bids. That’s interesting as these two contractors must have 20 signs up in my neighborhood. Could they be that overpriced and yet have so much work?

The adjuster assures me that the insurance company wants to make my roof "whole" again. If that is the case then why did he underestimate the cost of the work? Here’s an example: he estimated the cost to power wash the chimney and re-stain it as $48.80. I don’t know anyone who would want to climb my very steep roof with a power washer in tow for less than 50 bucks. I wonder if I could even rent a power washer for that?

When I pointed this out, he offered to add on another $50. Then he throws out that they have decided to send the depreciation check immediately. I should have it in less than a week. I mentioned this to a roofing contractor and he looked at me in disbelief. He had never heard of such a thing and said that the depreciation value is usually sent after the work has been completed. I get the impression that this insurance company wants me to put this cash in my pocket and just go away.

It is frustrating that this adjuster was not as thorough as he needed to be. He mentioned that he had completed over 7 house estimates for that one day. It seems quite possible that because he is paid by the claim, he rushes from one house to the next to cash in and then takes weeks to get the paperwork out.

I am certain that this will all work out in the end after I do a lot more work collecting bids. I plan to get that third magical bid, as well as three bids for the power washing and staining of my chimney and wood decks. But most importantly, I already have an attractive quote for a home insurance policy with another company.

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Upgrading my workstation - the hard way

My Dell Precision 650 dual processor workstation has fully depreciated after 4 plus years and now it’s time to order a new machine. I attempted to go through my employer’s IT department, but the cost of an extra 8 GB of RAM sent the total over their allowed budget for a workstation. I reasoned that it could be ordered with 8 GB and then once it was delivered, I could order an additional 8 GB on a separate purchase order to get it to the desired 16 GB.

The IT guy would have no part of that deal. He said that I should order the machine to meet the requirements – which means I have to write a capital equipment request. That translates into a lot more paperwork, requires 9-10 signature approvals and instead of being on a 2-3 year refresh cycle, the workstation will need to fully depreciate before its next replacement – that’s 4 plus years. All of that for 8 GB of RAM. Such is corporate life…

Last week, I got the price quote and the justification paperwork together and sent it on its journey through the corporate procurement cycle. It’s going to be a great workstation. It’s a Dell T5400 with dual quad Xeon processors, 64 bit OS and a 512 MB video card. I’m looking forward to the expanded capability – it will allow me to build much larger and more complex computer models for electromagnetic simulation purposes.

The only downside is that now my PC at home is going to seem like even more of a slow dog! It’s a little old Dell Dimension 2400. I actually won it in a lottery at work. If that sounds odd, let me explain how it worked. For each piece of old computer equipment brought in for salvage, you got a lotto ticket. The first 5 names to be drawn won various types of new computers. I hauled in a bunch of old computer equipment from the labs that I manage and amazingly my name was drawn 2nd and I won a desktop PC. Too bad they don’t have those lotteries anymore!

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Behavioral Finance - Bias from Deprival, super-reaction syndrome

This is the eleventh in a series of posts about common human misjudgments. The series is based on a Charlie Munger speech at the Harvard Law School in 1995.

Why study human behavior in relation to finances?
Recognizing and understanding why people do the things they do, what drives them, and what are innately human tendencies is the first step in overcoming your own self and making sound decisions! We want to make rational, logical decisions, but emotions and irrational tendencies get in the way.

These behaviors are not all bad, many are good in some way - that is why they survived. In fact, these behaviors served some purpose that helped extend life at some time in the evolutionary process.

11. Bias from Deprival, super-reaction syndrome
Have you ever noticed that when there is a perception of scarcity, people totally over react to the situation? It seems that when people believe some item or thing might run out they tend to hoard that something. This behavior would probably be a pretty good survival instinct. For instance, if grain was running in short supply, early humans might try to stash away as much as they could to prepare for more lean times. That is probably a good trait in that type of situation.

Problem is, that behavior also permeates into other areas – like gambling and stock market speculation. Charlie provides the example of slot machines. Casino owners know that a slot machine that provides a lot more near misses than another machine that has the same probability of winning will translate into more collections for the casino. Its the near misses that keep enticing players to put more money in. If you weren't coming close to winning, you would probably give up a lot sooner.

As for stock speculation, a lot of the motivation is to get in on a stock that is moving up so as not to miss the boat. There is nothing worse for a stock trader than to miss out on a big move. These folks are motivated not so much by what they have to gain but what they stand to lose if they don’t do something.

I see this type of bias on a regular basis and have recently experienced it myself. The most recent case involved my dealings with my home insurance company. The insurance adjuster was late making an assessment of my damaged roof and then late getting the estimate to me. I didn’t really get upset until a couple of my co-workers with similar claims for hail damage with the same insurance company told me they got their estimate the same day as the assessment. One even had a check within a week of filing. It had been over two weeks since I filed my claim - Why wasn’t I getting the same level of service? It prompted me to start calling the adjuster, then the agent, then the corporate claim office to get my estimate. I got motivated once I realized I was missing out on something.

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