Wednesday, December 28, 2011

My First 2012 New Year's Resolution

Stop trying to be so dang efficient by multi-tasking.  Said another way, focus on task at a time.

Today was the second time I've bungled an iPhone software update by trying to do it at work on my work PC.  Of course, we are about to go out of town, tomorrow, of course I needed the update, but why try to do so from work when I know I might have trouble completing the update because (1) I am on a PC and (2) I am on a work PC with certain security settings.  So here I am, now, without a phone trying to figure out how to restore it which means from home on my Mac or a trip to the AT&T store or both.  And I'm distracted by this problem, which I created myself, instead of getting my work done before I head out on my trip.

How did I end up in this situation?  Trying to get it done now, in the background, while working because that would save me time.  Thinking that the work PC related problems I had before would be different this time.  Why would they be different because I've figured out how to work around them in the past (of course never with an update has it worked).

I really am going to resolve to do one thing at a time in 2012.  Multi-tasking never seems to save me any time.

Tuesday, December 27, 2011

Other Goals from 2011 - Part Two

In addition to our 2011 savings goals and our other 2011 personal financial goals, I had a couple of other big projects on my list for 2011.

First, one of my big goals was to clean our my closet.  This goal is basically completed.  During the summer, I took everything out of my closet and spent a weekend trying everything on (except for clothes that were current - meaning I had worn them in the past few months).  It was an exhausting project, but I estimate that I got rid of 50% of my clothes/shoes/purses.  I got rid of clothes from high school and college, I got rid of clothes that no longer fit, that were not in style, that were poor quality, etc.  I even got rid of clothes that still had tags on them, meaning I never wore that particular piece.  

When I was done, I had two huge trash bags of clothes for Goodwill and another huge bag of purses and shoes that went to Goodwill.  I also had a huge trash bag of business attire which I still have as I'm trying to find a place to donate business clothes.  However, if I don't locate a proper charitable organization for my business clothes, I will drop this bag off at Goodwill as well.  In order to complete this goal I need to drop off this last bag.  

Mr. Sam also took all the racking out of my closet, painted and we put new, and better designed, racking back in.  I organized the remaining clothes into color, type, style (business or casual), and put it neatly back into my closet.  I still have too many shoes, but overall the closet project has held up well. 

Second, my other big goal was to get our office organized.  This goal is 75% completed.  I pulled a ton of paperwork out of three file drawers (I still have one left to do) and went through all of it.  I shredded hundreds of documents that were old and no longer needed.  I also implemented a new system for our filing.  Mr. Sam and I each have different color folders for our personal filing, we also have different color folders for each property and a different color folder for the dog too.  I also purchased a new two drawer file cabinet, as our filing was completely overstuffed in the original space, to keep all filing related to our real estate.  

I still have one file drawer to go through and I can't pretend I'm doing a good job at keeping up with day to day filing.  I'm trying to figure out a system that works for me, as I'm a fan of systems, to keep up with the filing.  I need to do 5 minutes a day or I need to do an hour a week or two hours a month or something.  At present, I have six months of filing waiting to be filed.

How do you keep your papers organized and how do you keep up with the inflow?

Sunday, December 25, 2011

More on the Mortgage

As previously posted, we are working on both our 2012 Annual Spending Plan and our 2012 Savings Plan.

One of our goals for 2011, which we completed, was to prepay $5,000 on our primary home mortgage.  I expect that we will repeat or increase this goal for 2012.  But, I'm somewhat conflicted because I know that our primary home mortgage is fixed rate, at 4.6%, for 25 years.  I also know that our mortgage interest is tax deductible so the effective interest rate of the mortgage is even lower.  Most likely, we could get a better return on our money if we invested it in the market.  However, in Florida, especially South Florida, we could save quite a bit of money in insurance if our home was mortgage free.  We could reduce our coverage, reduce or drop wind-storm insurance for our carriage house, we could self insure, etc.

Liz Pullam Weston opines that we should basically do anything else with with our money besides paying down a mortgage.  Although she doesn't suggest spending it on frivolities.  

First, Ms. Weston suggests investing in one's 401k to get a guaranteed 50% return rather than paying down the mortgage.  As an aside, I get so annoyed that every financial writer out there assumes that an employer provides a match or a match of up to 50% of one's contribution.  I've been contributing to a 401k for 10 years now and during that time (with three different employers) I've never received a match from my employer.  Even, Mr. Sam who gets a great match does not receive a 50% match, rather he receives a 30% match and it is all in company stock.  Putting all that aside, I agree that it doesn't make sense to forego contributing to a 401k or an IRA in order to prepay one's mortgage.  For us, this advice is not applicable because we are already maxing out our retirement accounts.

Second, she advises that paying down other debt before prepaying mortgage debt is probably the way to go because other debt likely has a higher interest rate.  Again, while I agree with this point, for us this advice is not applicable because we don't have other debt.

Ms. Weston's last two points, however, are interesting and I think more applicable for our situation.  Specifically, she suggests that we might be better off putting money we would use to prepay our mortgage into our emergency fund because we would have more flexibility.  I've got to agree with that, the $5000 we prepaid on our mortgage in 2011 is $5000 we cannot currently access.  We do, already, have an emergency fund, but we could continue to add to it rather than prepay the mortgage.  After a few years, if we found ourselves with an overly large emergency fund we could make a lump sum prepayment.  The only problem with this plan is that we are more likely to spend money that is available to us (even money that is in our emergency fund).  If we prepay our mortgage that is forced savings since we can't then turn around and spend that money.

The other point that Ms. Weston makes, and it is one I have already identified as something we need to look at in 2012, is that we should make sure we have adequate insurance coverage and if we do not we should be using our extra dollars for same.  Her point, if we don't have proper life or disability coverage, we could lose the house (and all the prepayment monies) if one of us became disabled or died.

So, are we going to prepay our mortgage principal in 2012?  I think we will still put a sum of money towards the mortgage principal, but we are still discussing the issue and this article has raised at least one point, the insurance issue, we have not really properly considered.

Friday, December 23, 2011

Other Goals from 2011

In addition to our 2011 savings goals, we had a couple of other 2011 Goals.

I'm happy to report that just this week I finally rolled over my old 401k.  This "to do" had been on my personal to do list for six months when I put it on our "2011 other goals" list.  That means I've been thinking about this personal project for 15 months.  But, listing this "to do" on our "2011 other goals" list got me to do it before the end of 2011.  And, crossing this "to do" off my list before year's end makes me happy.

We also had a goal to get our debt under $600,000 in 2011 and we were able to accomplish that goal as well. We actually added to our debt load, a bit, this year when we rolled refi costs for one of our investment properties back into the loan.  Right now our debt load is at $595,088.  In January 2011, our debt load was at $613,291.  Which means, in 2011, we have paid down $18,203 in debt.  As we think about our 2012 Savings Goals, we are thinking about whether to renew the goal to pay down mortgage principal.  I vote yes as I find paying down debt more fun than savings.  I wonder why this is, I need to research and spend some time thinking about this issue.  

Regarding our debt load, it doesn't really make sense for us to pay down the debt on our investment properties because our tenants are doing that for us.  Since we will be holding these properties for some time  there really is no advantage to prepay when our tenants cover the carrying costs for us.  Even though this debt is on our personal balance sheet and in our personal names it really is business debt.

But, when it comes to our primary home, I would really like to pay down that mortgage.  Being personally debt free would, of course, be awesome.  Without a mortgage payment we would have a lot of extra money to invest and save.  And if we paid off our mortgage we would have flexibility with our wind-storm insurance which is very expensive in South Florida.  However, I still question, as we should, the economic benefits to paying down our mortgage when we've got a low fixed rate and it is tax deductible.  On the other hand if I'm using dollars to pay down our mortgage that I'm not using for savings/investing, well that probably makes sense.  For example, if we reduce our eating out expenses and use some of those dollars to pay down the mortgage.  Could we get our debt down to $575,000 in 2012, I think we probably could.  That would mean paying down @$20,000 in 2012.  And in 2011 we paid down more than that, but we added some debt back in during our refi.

We still need to find a new accountant.  We have got to prioritize this goal for early in 2012, because I would like to get our taxes done on time and not file for an extension again.

Also adding to the other goals for 2012 is revisiting our insurance on each property and on our cars. We need to determine if we have the appropriate coverage and determine if we can save and/or take advantage of discounts.

Thursday, December 22, 2011

2012 Savings Planning

We are starting to think about our savings goals for 2012.

First on the list, max out our 401k accounts.  The amount we can save is going up from $16,500 to $17,000.  If you are over 50, the catch up contribution max is $5,500 in 2012.
So, goal #1 - Max out our 401ks - $34,000.

Second on the list, max out our IRAs.
So, goal #2 - Max out our IRAs - $10,000.

After the retirement accounts, we probably should be focusing on much of the same from 2011.  We should probably add more to our emergency fund.  And, I would like to keep chipping away at our mortgage principal.  Since we own a historic home, adding to our house project account (this is more of a short or mid term savings goal) would probably be a good idea.  Finally, we probably need to start a car replacement savings account for Mr. Sam.

Goal number one and two are set.  After that, everything else is up in the year and dependent on the 2012 Annual Spending Plan and deciding how much we can and how much we want to save this upcoming year.

Wednesday, December 21, 2011

2011 Savings Goals - December Update

(1) Max out 401k(s) - $31,329 (95%)(goal is $33,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000, this goal is completed)
(3) Add to e/r fund - $9,200 (92%)(goal is $10,000)
(4) Pay down mortgage - $5,000 (100%)(goal is $5,000, this goal is completed)
(5) House projects - $2,161 (40%) (goal is $5,000)

Total - $57,690 (92%)

Based on my calculations and projections, we will complete three out of five of our 2011 goals.  Two goals have already been completed, maxing out our IRAs and paying down an extra $5000 in mortgage principal..  We will come very close to maxing out our 401ks and I likely will count that as completed for 2011.  I will max out my 401k contributions and Mr. Sam will be just a couple of hundred dollars short of maxing his out.  And, since Mr. Sam has already received $5,000+ in matching 401k funds in 2011, in addition to his contributions, I think it is safe to say we completed goal number 1.  We will also complete goal number 3 and we will finish up adding $10,000 to our emergency fund this year.

I don't see how we will finish funding our house project account, at most I might be able to get it up to $3,000 by the end of the year.  I was trying to bump up the house project account by year's end, but we just paid out $2000 for Mr. Sam to take a Six Sigma green belt class so that is $2000 that we don't have to bump up the house account.

Overall, I'm generally pleased. We have saved $7000+ more in 2011 than we did in 2010 and we still have a couple of weeks to go. However, as I've discussed in other posts, we think we can do better and someone we respect is challenging us to look closer at our numbers and see if we can save more in 2012. This year we basically saved more because we saved our salary increases. So, we kept our expenses generally flat and we banked our increases.

I have to give us a pat on the back for fighting lifestyle creep. But, as previously discussed we could be doing better on controlling our expenses.  

Slow Posting

Sorry for the lack of posts recently.

One, I've been having trouble with Blogger.  As you can see, I'm updating the design.  Certain features are not displaying properly at this point, but I'll work on getting them back.  

Two, busy with holiday activities, family in town and the like.  

Thursday, December 8, 2011

Investment in Self

Mr. Sam has an MBA and works for a large corporation in logistics.   He works very hard and is trying to move the company forward from 1980s systems to modern, automated processes that are both more efficient and more accurate.  He is under utilized in his current position and also bored at times.  He is also a behind the scenes type of employee, so he thinks if it came time for cuts or layoffs he would be easily cut because no one really knows his worth. 

But, the job has lots of pros, he is working in his field in a professional job, he is paid reasonably well, he can work from home, if he works in the office his commute is 20 minutes, the benefits are great (we save quite a bit of money by both being insured under his medical insurance plan and this year he probably will get close to $6000 in 401k match), and he has a boss that is very hands off, etc. 

While he sits tight in this job with this company, he is thinking he ought to be obtaining more education.  As a result, he is thinking about taking a Six Sigma class.  First, he would like to be challenged since he is somewhat bored right now.  Second, he thinks the classes would be helpful for his career both at his current position (demonstrating his initiative to further his career and utilizing the techniques he will learn) and if he opts to look elsewhere.  The black belt certification and the green belt prerequisite will cost about $6000 and he will end up using two weeks of vacation.  There is a chance his company will reimburse part of the class costs (maybe like $2000). 

Anyone obtained a Six Sigma certification and if yes, was it worth it?

Wednesday, December 7, 2011

All Spending is Local

Talk about an expenditure cascade, I'm living across the bridge (we call it a moat) from the richest zipcode in the nation.

Expenditure Cascade

I came across the term "expenditure cascade" in this Slate article.

The author defines the expenditure cascade process as starting with the fact that those at the top are spending a lot more money.

The process begins with the completely unremarkable fact that top earners have been spending at a substantially higher rate than before. They’ve been building bigger mansions, staging more elaborate weddings and coming-of-age parties for their kids, buying more and better of everything.

Such spending then changes the norm in a particular circle, neighborhood, or community "since all spending is local" and those on the edge of that circle spend more and "shift the frame of reference" for the next group down and so on. So, you are not just keeping up with the Joneses, but keeping up with your peers, friends and other circles you may move in and out of.

I feel like I normally do a good job at ignoring the Joneses, but I recently altered my normal behavior based on  context.  I was at a charity, holiday luncheon on Palm Beach with a very large group of women who are affectionately known as "ladies who lunch."  These women range in age, but the majority are super rich or very rich, they do not work and rather their "job" is to attend social lunches, support wonderful causes and be seen in the society pages.   Before the luncheon there was shopping opportunities, think high end jewelry, fancy purses, etc.  Normally, I would never shop at this type of event because Palm Beach is not known for bargains.  But, being with this group, normal shifted for me and I bought two items (paying too much for both, but 20% went to charity).   Looking back, I was taking my cues from both the environment and the group that I was with. 

Monday, December 5, 2011

Eating Out

In reviewing our spending, in preparing our 2012 Annual Spending Plan, one of the categories we could cut back on is eating out. 

I eat out, on average, five times a week.  Eating out can consist of ordering lunch in at work, eating out on the weekend with my husband, eating out during the week with work colleagues or friends, etc.   I prefer eating out because (1) I hate to cook; (2) I work hard and after working 12 hours I'd rather not spend time cooking or preparing lunch for the next day; (3) I enjoy food prepared by professionals more than food prepared by me or my husband.  But eating out is expensive and adding it up we are spending more than $4000 a year eating out.

So, I'm going to cut back in this category.  I've decided that it would be reasonable to eat out twice during the week and once on the weekend.  My plan is probably to order lunch in on Monday, go out for lunch once during the week and bring my lunch the other three days.  I think that I can probably save $1000 by making this switch, plus I likely will reduce my calorie intake.  I can't cut the bill in half because the grocery bill is going to go up and groceries are expensive too.   I also won't cut back on eating out when we are traveling, when we have guests in town or during the holidays. 

How about you, is this a spending category that you struggle with?  If so, any tricks you have utilized to decrease your eating out spending.

Thursday, December 1, 2011

Progress - Depends on Your Point of View

I think, over the last five years, we have done a super, duper job with our finances. 

We, in year one of our marriage (2007), paid off all our unsecured debt ($55,000+), created an annual spending plan, began tracking our expenses and developed our allowance system. 

In the last couple of years, we have saved quite a bit of money.  Last year we saved $49,500 and this year we have saved $54,400 (thus far).  I'll have to look back and see what we saved in 2008 and 2009 as I don't have the data available right this minute. 

We feel like we are doing great, we are maxing out our retirement funds and also saving other monies, we are not incurring debt, we are paying down mortgage debt and we are saving monies in our emergency fund and elsewhere. 

According to the Employee Benefits Research Institute’s 2009 Retirement Confidence Survey, 53% of workers in the U.S. have less than $25,000 in total savings and investments. The typical American household had just over $18,000 in savings.  So, we are certainly doing better than many, but these statistics set a very low bar. 

So recently, someone (whose opinion I respect and whose personal finance acumen I admire) has challenged us both on our perspective and our progress.   He says we could save more and, that since we started late and based on our age, we should save more. 

Could we save more?  I think we could which is why I'm working hard on our Annual Spending Plan and trying to figure out where we could squeeze and reduce to free up more for savings or debt repayment (I count putting money towards our mortgage principal as savings). 

Should we save more?  Probably. 

How do we save more?  I'm working on this, but I, more than Mr. Sam (sorry honey), work really hard and as a result want to enjoy some of the fruits of my labor now.  If I'm just working really hard and putting every dime into needs and savings I'm going to get grumpy fast.  I want to eat out, enjoy my entertainment, travel, clothes, art, etc. now. 

Anyways, I'm glad that we were challenged in our thought process and I'm going to be working on reassessing our current habits, how we can improve, how we can save in some categories to free up money for spending in other, more important, categories and additional savings. 

Wednesday, November 30, 2011

It is that time of year again . . .

I have gotten an early jump on our 2012 Annual Spending Plan.  Last night I started working on our 2012 Plan and I've resolved to revisit each number on the Plan rather than just reusing the numbers from our 2011 Plan.  I've already determined that my 2011 numbers were outdated and the data was off for many of the categories.

What is an Annual Spending Plan you ask, it is our form of an annual budget/plan for our money. 

First, we start with how much money we bring in via our jobs, we use net numbers (deducting for taxes, health insurance, and we deduct our 401k monies). 

Second, we create sections for each item that has a bill associated with it.  Start with utilities, that would be phone, cell phones, data plan for cell phones (we add back any amount that is reimbursed by our jobs), Internet, water, sewer, electric.  Next on our list is our primary home, that would be mortgage, property taxes, hazard insurance, wind storm insurance, improvements, principal prepay (this was a 2011 savings goal, but since it deals with our primary home it goes under that heading).  Our next category is auto expenses, which would include car insurance, car service repair, and if we are going to start a nused car fund (which is a maybe for 2012) that goes under that heading.  Each line item has both a monthly amount and an annual amount. 

Third, we create a section for each investment property.  That includes the mortgage, property taxes, hazard insurance and wind storm insurance, and any services/utilities that we pay for (i.e. lawn service and water at one property).   We also list out things like rental license, business tax fees, a chunk for repair and improvements.  Finally, we add back in expected rental income.  Again, each line item has both a monthly amount and and an annual amount.

As I mentioned above, I'm drilling down on each number by going back through how much we are actually paying for each line item.  For bills I pay via e-payments, it is quite easy to review the payments for the last year, add them up and divide by 12 to get an average monthly amount.  For those items I pay by check, I'm digging out the paper file and adding up the bills to get an annual and average monthly amount. 

Fourth, we create a line item for each spending category that is not associated with a bill.  I call this discretionary spending, but at least half is really not discretionary.  Discretionary includes things like gas, grocery, eating out/entertainment, holiday/gifts, travel/vacation, fun, clothing, personal expenses, charity donations, etc.  And we use our Quicken data and/or past budgets to try and figure out how much we want or plan to spend in these categories.  This is the section of our Plan that really is much more in our control, to the extent we want to save more we need to squeeze the items in this category.

Once our 2012 Plan is done, we will use it to help us (1) set up our monthly spending plan/budget; (2) identify and set up our 2012 Savings Plan; and (3) identify bills/items that deserve our attention (i.e., I already know I'll be calling DirecTV to ask for a reduction).

Wednesday, November 23, 2011

Holiday Planning

According to this article, just 31% of "consumers" plan to set a holiday budget this year. And nearly half of those surveyed were concerned about being able to afford holiday expenses.

I've done our budget for the holiday season, which is generally similar to the our budget from the last few years. That is the great thing about budgets, once you set them up they are quite easy to tweak.  And, I'm here to say that holiday budgets don't have to painful at all.  We also have an ING holiday savings fund and we save for the holidays each month, which makes the holiday spending that much easier.

Our budget is about $1000. We don't have children and we generally, there is still a hold out or two, do not exchange gifts with adults in our families. So, I recognize that our family set up is designed, purposefully, to limit holiday spending and gifting.

First, we send out 70 holiday cards, it is an investment in money, costs about $200, but we like to check in with far flung friends and family at least once a year.

Second, as I mentioned above, we don’t buy gifts for adults.  I do send holiday wreathes, another $200, and if I’ve found the perfect gift for a family member I may send it during the holiday season. The holiday wreathes, a fundraiser, also support one of my favorite charities.

Third, for the kids in the family, I give them cash for college and send them a little something, $250 ($50 in cash for 4 kids and $50 for 4 little gifts).

Fourth, I budget $50-$60 for work gifts.

Fifth, we budget $100 for misc. expenses, hostess gifts, our Christmas tree, cookie baking (which we give to our neighbors).

Finally, $50 bucks for stocking stuffers for my husband and our dog.  We don’t normally give each other gifts, instead we are taking a trip this year which was already budgeted in our travel savings account so it doesn't get funded from the holiday account.

And last but not least, I sponsor a needy child through a charity for which I sit on the board of directors. $100 for clothes and books.

We have come to the realization, after many years, that shopping during the holiday season, buying gifts for folks in our families (who really have everything they could ever want), wrapping and shipping gifts, is just not what we care to do during the holidays.  So we decided not to do it and almost everyone in our families is agreeable.  Our biggest holiday project is the holiday card, which I've already created and ordered, came to $75, plus postage will total @$105 (so I have extra money in that category), and our holiday list is in an Excel spreadsheet that I just update each year and Mr. Sam prints out the labels.  

What is your plan for the holidays, do you have a budget, a handy "Christmas account"?

Tuesday, November 22, 2011

Coming Down to the Wire

(1) Max out 401k(s) - $28,494 (86%)(goal is $33,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000, this goal is completed)
(3) Add to e/r fund - $9,200 (92%)(goal is $10,000)
(4) Pay down mortgage - $4,565 (91%)(goal is $5,000)
(5) House projects - $2,161 (4%) (goal is $5,000)

Total - $54,420 (86%)

With 5 weeks to go, we are running out of time to complete our 2011 savings goals.  We maxed out our IRAs earlier in the year, so we completed that goal.  As for our 401ks, I am on track to max out my 401k and Mr. Sam recently increased his contribution to try and max out his 401k (he also gets a match of $5000+ per year, so even if he falls a little short on his contributions he still has basically maxed it out).  As for our emergency fund, we are on track to meet this goal, this goal is set up as an automatic contribution of $400 every two weeks.  Regarding our prepayment of mortgage principal, we are on track to meet this goal.  We pay $415 extra towards principal each month, and with the next payment that will bring us to $4980, I'll just add an extra $20.  Finally, as for our house project fund, we are @$2,800 behind.  Right now we have $50 every two weeks going towards this goal, so if there are no changes we will be about $2,700 short on this goal and $2,700 short on our overall savings goals.  We can probably find an extra $1000 to put towards this goal before the end of the year, but I doubt we will be able to find more because of the holidays and holiday spending (even though we have a holiday savings account, our spending just goes up due to family in town, parties, etc.)

Thursday, November 17, 2011

Frictionless = Less Pain at the Cash Register?

An interesting article regarding the effect of credit card spending, this study indicates that using a credit card changes our perception regarding the value of the goods we are purchasing.

While I'm waiting for studies as to the debit card effect, I thought the discussion of other payment systems, i.e. Google Wallet and smart phone apps, intriguing.  I have one click purchasing set up through for my Kindle and it is, indeed, very easy and painless for me to buy e-books.  My book buying expenses went way, way up when I got my Kindle. 

Tuesday, November 8, 2011

2011 Goals - November Update

(1) Max out 401k(s) - $25,942 (79%)(goal is $33,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000, this goal is completed)
(3) Add to e/r fund - $9,600 (96%)(goal is $10,000)
(4) Pay down mortgage - $4,150 (83%)(goal is $5,000)
(5) House projects - $2,109 (42%) (goal is $5,000)

Total - $51,801 (82%)

We are behind by about $2700. 

Mortgage Numbers

We have completed the refinance of rental property #1, interest rate has gone from 6+% to 4+%, we were pleased we were able to refinance this property since, due to the value, we will be holding onto it for some time. 

We rolled the closing costs into the loan for rental property #1, so the mortgage balance went up.  As it presently stands, our total investment property mortgages total $328,391.  Our total debt is at $597,728 and that means that we have met our 2011 goal of getting our debt under $600,000 (even with the refi).

Wednesday, November 2, 2011


With the recent stock market bump, we are back up above the million dollar mark for our networth. 

I do like seeing that number, provides positive feedback for all hard work and sticking to our allowances, etc.  I also recognize it does not mean much since any profits are paper profits at this point.

Tuesday, November 1, 2011

Banks Back Down on Debit Card Fees

As an avid debit card user, I'm happy to see that most of the big banks, including our bank Wells Fargo,  have backed down on the plan to charge customers for using their debit cards. 


Thursday, October 27, 2011

Debit Card Shell Games

Previously, I posted about the ongoing issues with some banks now charging for debit card use allegedly due to the cap on swipe fees.  I've been continuing to follow the news since we are a debit card family. 

Back during the debate on swipe fees big retailers, like Wal-Mart and 7-11, promised that prices would be lowered if swipe fees were capped.  That promise has not been fulfilled because the new swipe fee caps don't apply to credit cards nor do they apply to debit cards from smaller banks. Credit cards, especially reward credit cards, have very high fees for retailers and those fees are not limited by the swipe fee cap.  So how would a retailer pass on the savings?  Well they could provide a discount for using cash, since the Dodd-Frank act passed it has been legal for retailers to charge a different price for those willing to pay cash, but so far I've not seen any cash pricing except on gas.  It is understandable that retailers wouldn't want the hassle and the cost (yes there is a cost) of having two prices.

So now come the banks, the big banks, who are starting to charge for debit card use and, according to this article, pushing people back to credit cards.  Eeeek!  Why would banks push consumers to credit?  Well, as explained above, there is no cap on the swipe fees, rather retailers are charged a percentage of the purchase price.  If you are using a great rewards card, the retailer is charged more.  Plus the banks earn interest and fees on credit cards.  While there are lots of responsible people who pay their credit card bills in full each month, 46%. according to a Consumer Reports article (sadly could not find link) carry a balance. 

What are you going to do if your bank starts charging for debit card use?

Friday, October 21, 2011

401k Changes

The maximum amount one can contribute to a 401k is increasing from $16,500 to $17,000 in 2012.  If you max out your 401k, you'll need to make a contribution adjustment in January to increase your contributions.

Friday, October 14, 2011

One Day Left

If you requested an extension from the IRS to file your 2010 taxes then you are running out of time, the deadline to file, with an extension, is Monday October 17, 2011.

I mailed out our taxes yesterday, so we are a whole two (2) days ahead of schedule.  Unfortunately, we owed money to Uncle Sam, but we did not owe as much as last year.  My goal is to owe Uncle Sam, but to owe him less than a $1000, because owing more than that throws off our monthly budget. 

We ended up using our same CPA because we ran out of time.  If you've read this blog long enough, you'll remember that we were audited in 2010 and said audit and IRS liability was the result of mistakes made by our CPA.  As a result, one of our goals for 2011 was to interview and hire a new CPA.  That is still a goal, we have two names of possible CPAs and we need to get going and interview folks and hire someone new.  But, we were too late in the game to get that done this year. 

Thursday, September 29, 2011

Boo BOA!

Startled by the news that Bank of America will begin charging $5 a month to customers who use debit cards.  BOA is trying to recoup some of the $2 billion in swipe fees that Congress outlawed beginning next month. 

I expected, and previously posted, that banks, including my own Wells Fargo, were doing away with debit card reward programs, but I'm flabergasted that banks are actually going to start charging for debit card use.
And as a regular debit card user, I'm not sure what we'll do if Wells Fargo rolls out such a program that applies to our accounts.

I wonder if the merchants who promised to reduce prices if swipe fees were reduced will live up to their end of the bargain.  Somehow, I think prices will stay the same and the consumer will end up paying both the merchant and the bank.

Rental Refi

Happy to report that we were able to refinance the loan on one of our rental properties. 

We went from an interest rate of 6.25% to 4.625%, balance of loan increased by about $4000 since we rolled closing costs into the loan balance rather than pay upfront.  Monthly mortgage cost is reduced by @$150.  The refinance costs will be paid for in just over two years.  And as long as we keep the home rented during this time period, the tenants will be paying the costs.

Refinancing this property has been a goal of ours since 2009, when we refinanced our home, but its been difficult because lenders are more stringent on non-primary home loans.  Additionally, we were uncertain as to whether the home would appraise for what we needed. 

Glad to have this behind us and I'm glad that Mr. Sam took the lead on this one (since I normally handle the finances of the rentals and he handles the rest).

Wednesday, September 21, 2011


I'm heading out of town for a long weekend trip with one of my girlfriends.  I have to post to say how much fun it is to plan a quick trip and to have travel and fun money in our ING accounts just sitting there waiting for me to spend it.

Travel is so much more fun when the trip is already paid for and I have "fun" money available for shopping, spa and eating out.

Tuesday, September 20, 2011

Section 8

We are in the middle of renting one of our properties.  The property has been cleaned and turned and is ready for move in.  The property is listed and this past weekend we had three applicants.  One of the three applicants is an individual with a Section 8 housing subsidy voucher.

We have a friend who has several properties and he regularly rents to folks who use Section 8.  He spoke very positively about the program, in fact he prefers to rent to folks with Section 8 vouchers.  Our friend has explained that the Section 8 funds are paid directly by the government to the landlord and the tenant/landlord lease relationship is not altered by the Section 8 housing voucher.  If the tenant fails to pay his or her share of rent due, the eviction process would be the same regardless of whether the tenant has a housing voucher.  We understand that we would have to have the property inspected by the local HUD office, but otherwise there are really no additional hoops to jump through.

Our concern, and one that we apply to all applicants, is ability to pay.  We generally want to rent to a family or roommate group where the amount paid for housing costs (rent plus utilities) is 1/3 or less of take home pay (or other sources of income, Social Security, child support, etc.).  In this instance, even adding in the Section 8 voucher ($1000 a month), this candidate does not meet our 1/3 rule.  But looking at the Section 8 guidelines is seems unlikely that a Section 8 candidate would ever meet our 1/3 rule because then they would not qualify for Section 8.

We've never rented to someone with a Section 8 voucher so I'm wondering if anyone has any experience with this program? If so, I'd really appreciate hearing from you regarding your experiences, positive and negative.

Friday, September 16, 2011

Do You Use Coupons?

I am not much of a coupon user, although I will look for a coupon once I have selected a particular item for purchase.  So when I buy something on-line, which I do with some regularity, I look for a coupon for that site, or I'll hold my purchase until they have a coupon or a sale.  Same for in store purchases, I appreciate receiving coupons from retail establishments that I frequent, i.e. Ann Taylor, Pottery Barn and the like. 

But, when it comes to coupons for the grocery store, I don't normally bother.  First, most coupons are for products that I'm not interested in, like prepared foods, cold cereal, sports drinks, etc.  Second, I'm a very loyal consumer, there are certain products I like, not necessarily brand products (I am a huge fan of almost oall of the Publix store brand food items), and a coupon will not nudge me to try something else.  Third, I don't really have the time or inclination to clip coupons.

However, I have watched, somewhat in awe and somewhat in fear, the Extreme Couponing show on TLC in which regular folks often end up buying carts and carts of grocery products for $10 or less due to their coupon use.  I'm in awe that folks can be that organized, diligent and successful in obtaining hundreds of dollars in products for little to nothing.  I'm in fear, because many of these extreme couponers have garage, basements, rooms filled with products that, in my opinion, they will never use or need.  I saw one show in which a consumer cleared a grocery store shelf of mustard, it was clear to me that this household would never use all this mustard so I just didn't understand the point and some of these folks seem more like hoarders (I like that show on TLC as well, highly motivating to watch while cleaning the house).

Now I see that grocery stores and manufacturers are pushing back on the extreme couponing, limiting number of coupons per visit, limiting use of competitor coupons, and eliminating the doubling of coupons.

What say you, do you use coupons and if so what are your habits and patterns?

Debit vs. Credit

I'm a debit card kind of gal, so I read this article, Five Places Never to Use Your Debit Card and the comments, with interest.

First, we use debit for 99% of our day to day transactions because we find spending present dollars (vs. future dollars) to be a key part of our personal finance plan to avoid and reduce debt and to live within our means.  We also like debit rather than cash because we find that it is much easier to track our spending.  I recognize that there are lots of folks who use credit wisely, never pay any interest, and collect rewards left and right.  I, myself, used credit cards for years and paid them off without incurring interest, but when I switched from credit to debit I found that I reduced my discretionary spending by 50%.

  • Rental or security deposits. If you have to put money down to rent a car or heavy duty home improvement equipment, try not to use a debit card. Why? Because the business will actually take the money out of your account in the form of a security deposit. You’ll get the cash back when you return the car or equipment. But with a credit card, the money is just “frozen” but not actually charged and you won’t ever notice it’s gone.
I have run into the hold problem both with renting cars and at hotels.  And my husband has run into this problem renting tools and equipment.  So, I have to agree with this one.  We actually, now, use a credit card when traveling to avoid this problem. 

  • Restaurants and bars. There are way too many prying eyes around a dining establishment to trust using your debit card. Apart from the risk of having your card stolen, restaurants are one of those rare places where someone actually walks away with your card and you don’t see them for a few minutes. Much better to use cash when dining out.
Never had this problem and we eat out and drink out with great frequency.  I actually prefer to use debit in this situation, because I want to know how much I'm spending in this category.
  • Regular payments. Businesses love to get their sticky little fingers on your debit card number so they can extract dues straight from your bank account on a regular basis. Whether it’s a gym or your insurance company, you’re better off using a credit card. That’s because if there’s a dispute, the business won’t take the cash right out of your checking account if they don’t have your debit card number.

I agree with this one, it is much better to push payments rather than to allow businesses to pull payments from your checking account via debit or auto payment. 

  • Wi-Fi hot spots. Never use your debit card for an online purchase while at a coffee shop or other business that offers free Wi-Fi access. Many of those businesses have unsecured wireless connections, so it’s much easier for hackers and scammers to log on and steal your data.
This makes sense to me. 
  • Any retail outlet where you choose the “credit” option. Debit cards allow you to choose between a debit (having cash taken straight out of your account) and a credit transaction (where the money will be taken out but it could be a few days later). For one, credit purchases cost the retailer more cash in swipe fees, so you could be hurting a small business owner. But the real problem is the delay when choosing credit – you may forget the purchase and not account for the money. That can lead to an overdraft situation and the onerous fees that go with them.
This information is outdated, swipe fees have recently been capped by Congress so the cost to retailers has been much reduced.  I patronize quite a few small businesses but I always opt for credit when using my debit card for security purposes. 

As for the overdraft issue, I recognize that some people struggle with this issue, they use their debit card and they don't think twice about it.  I, myself, use a check registrar and log each debit transaction just like I would for each check and I do so about every other day.  With on-line and mobile access, I almost always know how much is in my checking account and I generally keep at least $500 extra as a cushion.  For me, using my debit card and then reviewing those transactions online, writing them down in my registrar, thinking about them, is a big part of my system for living within my means.  Yes I have to pay attention to my debit card use, but that is exactly why I use debit and not credit.

Thursday, September 15, 2011

2011 Goals - Mid Month Update

(1) Max out 401k(s) - $21,840 (66%)(goal is $33,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000, this goal is completed)
(3) Add to e/r fund - $7,600 (76%)(goal is $10,000)
(4) Pay down mortgage - $3,320 (66%)(goal is $5,000)
(5) House projects - $1,906 (38%) (goal is $5,000)

Total - $44,666 (69%)

We are about $200 behind where we should be.

Wednesday, September 14, 2011

Missoni Madness

So, I'll admit it, I got sucked into the Missoni for Target craze which crashed Target's servers yesterday. I wanted a certain Missoni throw (the brown with blue) which is already, of course on Ebay for much more than it cost at Target.

Anyways, I spent many minutes, at work, yesterday trying to get through to Target and when I did, I found that the item I wanted was sold out, but since I had gotten sucked into the hype I opted for a Duvet set, that I didn't even really like, thinking I needed to have some of this Target Missoni.

Luckily, reason set in and I reconsidered my purchase and recognized that I was just buying to buy and I opted to exit Target without purchasing anything.

Storage Wars

I am a big fan of Storage Wars which airs on A&E. If you've never seen the show, a cast a characters bids on storage units that have been abandoned and then it is a bit of a treasure hunt crossed with Antique Roadshow, with some bidders coming out way ahead and some losing quite a bit of money.

Anyways, I read recently that storage units are big business and a real growth industry especially here in Florida where we have no basements.

So I read this article from with interest. The author, after moving to a home with a basement, is finally reunited with her storage unit stuff and finds out that most of it was junk.

Over the past few months I've been in a decluttering mode, I spent one whole weekend cleaning out my closet.  I found items in my closet from both high school and college (I am many years away from both) and items with the tags still affixed (meaning I bought it, but never wore it).  I ended up reducing the clothes, purses and shoes by 50% (and my closet is still pretty full).  Then I tackled our office, which I'm still working on, but I've shredded and recycled paperwork that included things like college and professional school acceptance letters, credit card statements going back more than 10 years, etc. 

I am overly sentimental and I hate to see anything with a family connection be given away or sold to non-family, which means, for example, that I've got boxes of china in my attic (thank goodness I've got an attic) that I don't really care for and may never use.  So, I'm getting better at parting with some things but not others (what I would call family treasures) although I've never rented a storage unit so I'm doing better than some.

How about you, do you struggle with clutter, do you pay to store your stuff, how do you keep family treasures close but not let them overwhelm your home?

Tuesday, September 13, 2011

Questions on Turning a Rental

I had a couple of questions on how we handle turning a rental property, how we manage security deposit charges, etc.
Frugal Coconut said...

Does Mr. Sam do the painting and cleanup himself or do you outsource those jobs?

I just had to do those as well as I'm also in the process of re-renting ... and it just seems as though it would eat into any potential profits, especially if the tenant hasn't been there that long.

I don't know what the fine line is for paint being a wear-and-tear item for which you can/cannot charge the tenant. My previous tenant put holes in the walls despite the rental agreement prohibiting it. Luckily I had to repaint anyway because it was time ... but what if it wasn't? And what is a typical lifeline of paint so that I would know whether the tenant got it dirty/blemished prematurely or if I just have to suck it up and fork over the cash to have it repainted at turnover?

How do you handle things like that? What is worth the hassle of deducting from the security deposit, and the risk that it will be disputed in court?

Anonymous said...

I have a property management firm take care of mine, I have no direct contact with the tenants. They seem to get higher rent than I think I could (so that offsets some of the cost). We agree on the rent and they have discretion for up to $100 for repairs then need my approval. Over 9 years they have done a great job screening tenants and my current tenant has been there 5 years. They also seem to get volume discounts for us (like painting) since they manage a few hundred homes. 10% of the top of the rent for all the above.

First, when it comes to turning our rental properties, Mr. Sam does almost all the work himself (although he often has a guy who works with him or who works at the property when Mr. Sam is at work).  At this point in the game, Mr. Sam has all the supplies, equipment, know-how, etc. to do just about all the rental maintenance that is necessary.  We also, minimize costs by using the same paint colors for the exterior of our rental homes (and our primary home), same paint color for the interior of our rental homes, and we utilize the same carpeting from rental home to rental home.  

Second, when it comes to paint, we don't count that as a charge against the security deposit, because we almost always paint each time a rental turns (most of our rentals are more than a year), we count it more as cleaning.  Security deposit goes to actual damage.  We also try to take a non-refundable pet deposit as part of our security deposit.   And since its non refundable there is no discussion as to what we are charging for. 

Third, we've never used a property management service so I can't really speak to same.  For us the costs, which seem much higher than what Anonymous reports, are just not worth it.  All of our properties are within 10 miles of our home, we have lawn service for one, but otherwise we (meaning Mr. Sam) can manage them with one Saturday of work per month when they are rented.

Sunday, September 11, 2011

Wells Fargo Rewards - No more

As I wrote about back in March, my bank Wachovia (now Wells Fargo) has done away with its debit card reward program.  This past week, I received the official notification that the Wells Fargo Rewards program is no more.

Since I already cashed in all my accumulated rewards back in March, my current rewards balance is pretty low but I'll cash out the points anyways.

Friday, September 9, 2011

2011 Goals - September Update

(1) Max out 401k(s) - $21,240 (64%)(goal is $33,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000, this goal is completed)
(3) Add to e/r fund - $7,200 (72%)(goal is $10,000)
(4) Pay down mortgage - $2,905 (58%)(goal is $5,000)
(5) House projects - $1,856 (37%) (goal is $5,000)

Total - $43,201 (69%)
We are about $400 behind on our 2011 savings goals, so starting to slip up a bit.  Mr. Sam is in the midst of turning one of our rentals so no rent coming in and money going out for new carpet, paint and general clean up.

Thursday, August 25, 2011

Plastic Purchases

We have purchased a new, large, rug for our living room.  My favorite store, for home furnishings, is Pottery Barn and that is where the rug is coming from. 

Rather than pay cash for the rug, we are electing to use our Pottery Barn credit card.  The PB credit card provides a point for each dollar spent and the points add up to rewards.  500 points provides a $50 certificate.  We are purchasing a $1000 rug and as such opted to use plastic to obtain the rewards.  $100 in rewards will be used to purchase some new glass wear already picked out as well. 

Before we went down this path we shopped around to make sure that the rug I had picked out was the best option for us.  Meaning that I love Pottery Barn, but there are lots of other home furnishing stores so we needed to make sure that my selection was not out of bounds. 

Secondly, we waited the requisite number of days before purchasing the rug (pursuant to our $100 rule).  A 10 day wait was required since the purchase was $1000.  We actually waited many more days since we were also shopping around.

Third, we have the cash in the bank for this purchase.  So even though we are using plastic we will promptly pay off the purchase with cash before we incur any interest or other costs associated with a plastic purchase.

And even after all that I get a little jolt of anxiety running up a $1000+ plus credit card bill.

Friday, August 12, 2011

The Economics of Coffee

For Christmas last year, I bought Mr. Sam a Keurig single cup coffee machine .   He makes a single cup of coffee each morning to take with him and on the weekends we'll each have a cup.  I get my coffee, during the week, at work (which has an industrial Keurig coffee machine).

The Keurig system works great, but the coffee pods can be expensive, ranging in price from @ .70 to more than a dollar a pod.  So we don't use pods at home, instead we buy good coffee and use the my K cup which allows one to simply use their own coffee in a mini filter cup.

Recently, I was in a Dunkin Donuts store (my favorite coffee) and noticed they were now selling coffee pods of DD coffee. I thought that was interesting, wouldn't they be undermining their customer base by offering such an easy option for home brewing?  But then I noticed the price, $13.99 for a box of 14 pods, basically $1 a pod.  The price for hot coffee in the retail store starts at about $1.20 for a small.  So the pods are about the same price, of course a pod will work for a large or an extra large serving and you save on gas and time.

My favorite pod flavor at work is "Donut Shop" which I think mimics the flavor of Dunkin coffee. has a 50 pack of the Donut Shop pods for $30 or .60 a pod, that is the best price I've seen in the pods.

We will probably stick with our current system of simply using our favorite coffee in the my K cup, that is the cheapest option and the coffee is good. 

Thursday, August 11, 2011

ING Takeover by Capital One

I'm a bit slow to post on the sale of ING to Capital One and the outpouring of emotions on the interwebs about the end of happy savers at ING.

I'm a big fan of ING, have been a happy saver at ING since April 2003.  I give them high marks for ease of use, the ability to set up multiple sub accounts for different savings goals, ease of setting up recurring transfers in order to build savings, etc.

And in the past I've used ING for our CD ladders although I don't have any presently because the interest rate for CDs are so dismal (I can get the same return in the regular ING savings account).  And what was a high yield savings account is now down to 1% although still much higher than I can obtain at my local bank, Wells Fargo, or my local credit unions. 

So, high marks for function, form, ease of use, customer service, low marks for interest rate but still better than I'd get anywhere else.

Now, as for Capital One, I've got a credit card with them and can't say I've ever had any trouble with them although they do, generally, get low marks for customer service.  I don't use the credit card with any regularity so can't really offer an opinion.

Tuesday, August 9, 2011

2011 Goals - August Update

(1) Max out 401k(s) - $19,440 (59%)(goal is $33,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000, this goal is completed)
(3) Add to e/r fund - $6,100 (61%)(goal is $10,000)
(4) Pay down mortgage - $2,905 (58%)(goal is $5,000)
(5) House projects - $1,800 (36%) (goal is $5,000)

Total - $40,245 (64%)

Monday, August 8, 2011

Market Impact on our NetWorth

With the recent market volatility we have been pushed back below the millionaire mark.  We also had a major expense for which we had planned for, but had to take $10,000+ out of our short term savings. 

Bummer . . .

Sunday, August 7, 2011

Other Goals

In addition to our 2011 savings goals, we had a couple of other financial goals that I documented in this January 2011 post.  

I'm pleased to report that we have completed goal number three, which was to get our debt below $600,000.  In fact, today when I was updating our NetWorthIQ profile, I calculated that our debt is now at $598,247. 

Although our mortgage debt may edge up a bit in the near future because we are working to refinance one of our rental properties and rather than paying the closing costs up front we are rolling those costs into the new loan.  But it makes sense to refinance since we will be moving from a 6% plus loan to a 4% plus loan, we are keeping the payoff term the same and our monthly costs, even with the closing costs rolled in will be reduced. 

Tuesday, July 26, 2011

Bill Pay

I bank at Wachovia which is now Wells Fargo. And according to this article, Wells Fargo's bill pay options works differently than Wachovia.

Wachovia debited bills paid through bill pay the day they were paid.  Wells Fargo debits bills paid through bill pay the day they are "sent".  And according to the article this results in, up to, a five day float in favor of Wells Fargo. 

Both systems have their pros and cons depending on what kind of customer you are.  Wells Fargo's system makes sure you've got money in your account when you send those payments out by bill pay.  If you live life close to the edge this might be a good system in that you and your bank are sure you've got the funds available to make these payments.  If you normally have a cushion in your account, then the risk based system, the old Wachovia system, would be better in that your money would not be tied up for days on end. 

For me, the switch from Wachovia to Wells Fargo required me to reschedule our one recurring auto payment from a few days before the end of the month to the first of the next month.  I had to change the send date to what was previously the paid date.

The rest of my recurring payments, the ones that are set on auto pilot, i.e. our mortgage payments, money transferred to savings is all set up as pulled payments (i.e. ING pulls the savings money from our Wells Fargo account).  Therefore, the change from Wachovia to Wells Fargo did not impact these payments or transfers.

The rest of my electronic payments are sent through bill pay, but not as auto payments since the amounts change from month to month and since I review those bills each month.  When I sent those payments under Wachovia I always had the money in hand so nothing changes under Wells Fargo.

So far, the payments I've sent by bill pay under Wells Fargo have been processed the same, in my mind, as with Wachovia.  I understand that WF is pulling the money from my account when I send the payment, but all payments are processed within a day or so, same as Wachovia, so I'm not really noticing that my money is tied up any more or less than under the Wachovia system.  I'm probably not noticing a change because when I paid bills under the bill pay system with Wachovia, I counted that money as debited that day.

What do you think of this change, how does your bank work, how to you manage this?

Monday, July 25, 2011

2011 Goals - July Update

(1) Max out 401k(s) - $17,143 (52%)(goal is $33,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000, this goal is completed)
(3) Add to e/r fund - $5,700 (52%)(goal is $10,000)
(4) Pay down mortgage - $2490 (50%)(goal is $5,000)
(5) House projects - $1725 (35%) (goal is $5,000)

Total - $37,058 (59%)
Progress has slowed a bit, although because we were ahead on our goals we are still on target.

Thursday, June 30, 2011

Always a Bridesmaid

We are off to a wedding this weekend, one of Mr. Sam's good friends.  In honor of wedding season, see this interesting article from CNN on the high cost of being a bridesmaid.  According to CNN it costs, on average, $1695 to be a bridesmaid.  Ouch!  I'm going to call up my bridesmaids and thank them.  Luckily, I was in two of their weddings, so I think that cancels it out.  But I have two single bridesmaids and I feel like I owe them some money.

We're spending $400 for flight, $200 for hotel, $150 for Mr. Sam's rental tux (and he owns a tux, but this is for the wedding) and related costs,  $1500 for his attendance at bachelor party in Las Vegas, $200 gift and $400 in daily spending money on the trip (we are going for 4 days).  Total - $2850.

Tuesday, June 28, 2011

Tenant Problem

If you follow this little blog, you know that we have a few real estate rentals.  With rentals come tenants and in a down market sometimes one can end up with problem tenants.  We may or may not be in this boat and we are trying to figure our way out.

We rented one of our properties to some younger guys.  These are guys with college degrees, decent jobs (first professional job), who have a clean background (i.e. no criminal issues).  But we did rent to three guys (it is a three bedroom home) and these guys have girlfriends and friends and some how the home is often the site for gatherings.

Well one of the neighbors has complained to us via an anonymous letter.  The complaint primarily appears to be related to the number of cars parked at the home at any given time.  On Friday night, Mr. Sam swung by to check, there were three cars in the driveway (the letter mentioned 5 or 6 cars).  The home has a two car garage but the guys are opting not to park in the garage because they've got a boat in the garage that they are working on.  Assuming three cars for the guys, a girlfriend or two at the home it does add up to 5 cars or more. 

The home is in good repair and the lawn is cut and tended (we pay a service, and our home's lawn looks remarkably good considering the long term drought we are in, much better than many other lawns on the block).  We have checked, there are no code issues with the home or police reports (i.e. related to loud parties). 

The guys pay the rent on time and they don't call us (which is what Mr. Sam likes).  At least one of the guys is looking to buy a home so at present they are on a month to month lease, meaning either of us could give 30 days notice.

The problem is we have one neighbor who is annoyed, we are going to own this property for some time so being on good terms with the neighbors is important.  On the other hand, the neighbor opted not to sign the letter so there is no way for us to go back and communicate on this issue.  There are no police or code complaints so that leads me to believe this is not really a problem, but of course a complaint to us could be followed by a complaint to code.

What would you do? 

Monday, June 27, 2011

2011 Goals - July Update

(1) Max out 401k(s) - $15,943 (48%)(goal is $33,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000, this goal is completed)
(3) Add to e/r fund - $4,885 (49%)(goal is $10,000)
(4) Pay down mortgage - $2490 (50%)(goal is $5,000)
(5) House projects - $1600 (32%) (goal is $5,000)
Total - $34,918 (55%)
Half way through the year, we are generally on target to complete our goals.  We have finished goal number two, we are generally on pace to complete goals one, three and four.  We are behind on goal number five, in fact we just started funding this goal the last month or so. 
How about you, have you done a mid-year review?  Made any adjustments upward or downward regarding your savings, debt payments or other financial goals?


Yes, I've been missing in action around here.  Busy with travel, family and work. 

Wednesday, May 18, 2011

2011 Goals - Mid-May Update

(1) Max out 401k(s) - $12,491 (38%)(goal is $33,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000, this goal is completed)
(3) Add to e/r fund - $3,600 (36%)(goal is $10,000)
(4) Pay down mortgage - $1660 (33%)(goal is $5,000)
(5) House projects - $0 (goal is $5,000)

Total - $27,751 (44%)

Invest Now or Invest Later?

A Reader in New York had a question regarding whether it is better to fully fund an investment, i.e. our IRAs, early in the year or spread out the investments over the course of the year to take advantage of dollar-cost averaging. Great question.

First, although we have fully funded our IRAs for 2011 we have not actually invested all that money. We use our IRAs for individual stock investments. We pick out stocks that we like based on our investment goals and then we try to buy same on down days via a limit order. We plan to hold these investments for at least 3-5 years or until they double in value. 

Second, for our 401k contributions we contribute over the course of the full year. We do so for budgeting purposes.

Third, regarding dollar cost averaging. Our savings goals are really a savings snow-ball.  I stay motivated with savings by working towards the goals and crossing them off as soon as possible.  If I could fully fund our 401ks earlier in the year, I would do so. 

I'm not an investment expert, but my goal is to get my/our money invested as quick as possible. Get that money working sooner rather than later.  Here is an expert's opinion and explanation that sums up my feelings about this issue.

What say you?  Are you pro dollar-cost averaging and if so, why?

Tuesday, May 17, 2011

2011 Savings Goal No. 2 is Completed

We have now completed funding of our 2011 IRAs. 

Monday, May 16, 2011

Managing Major Purchases in a Marriage

I'm married to a wonderful guy who while he pays very little attention to his spending is not a big spender.  But, recently, this month, Mr. Sam has come to me (pursuant to our $300 rule*) with a desire to spend about $5,000 on a purchase that makes no sense to me.

Without disclosing the purchase, it is for something that will really only benefit him, has a danger factor, and I think is unnecessary, but will make him happy (or he thinks will make him happy).  Think something along the lines of flying lessons when I hate flying.

First of all, we discussed the money factor.  I suggested that we save up for the purchase, make it a savings goal, and he would be able to execute the transaction in 2012.  Alternatively, we could switch our $5000 house project fund, which is a 2011 savings goal, to a savings fund for him and he would be able to execute the transaction at the end of 2011.  But, he wants to move forward with the transaction now.  We do have the money, we have money in our emergency fund and we have money in our other short term/mid term savings that we could tap.

Second, happiness.  I fully support Mr. Sam in just about anything that he thinks will bring him happiness.  This transaction is important to him, something he has wanted to do for many years, etc.

Third, we discussed the fairness factor.  I direct the spending of the bulk of our household monies.  In the past few years, I've purchased new furniture, a nused car for me, etc.  In fact you could go back to our wedding and look at all the funds (granted this was before it was our money) I spent on our special day when he would have rather saved that money.  While one could argue that these purchases and expenditures  benefited both of us, and they do and did, they benefited me more because I cared much more about them.

Fourth, the danger factor.  There is an element of danger to this purchase that I'm not comfortable with.  In fact, in discussing the purchase I suggested spending more money to increase safety.  I also encouraged him to do more research, etc. 

Finally, decision time.  Ultimately we decided as a married couple to move forward with the purchase.  We are taking $4000 out of our emergency fund to front the cost.  However, this week, I'm receiving a bonus at work which will allow us to refund the emergency fund.  Said another way, we are using my bonus money to pay for this expense. 

* The $300 rule = we have to discuss and agree regarding any purchase over $300.

Friday, May 6, 2011

2011 Goals - May Update

(1) Max out 401k(s) - $11,054 (33%)(goal is $33,000)
(2) Max out IRA(s) - $9,000 (90%)(goal is $10,000, my IRA is now maxed out for 2011)
(3) Add to e/r fund - $3,600 (36%)(goal is $10,000)
(4) Pay down mortgage - $1660 (33%)(goal is $5,000)
(5) House projects - $0 (goal is $5,000)
Total - $25,314 (40%)

We are a little bit ahead on our savings for 2011.

Thursday, May 5, 2011

Better Chance You'll Get Struck by Lightning

Do you play the lottery?  I do not, and generally describe the lottery as voluntary taxes for people with poor math skills.  What I mean by that statement is you are giving money to the state and your chances of winning are very poor.  Indeed, often times you have a better chance, especially in Florida, of getting struck by lightning than winning the lottery.*

So imagine my surprise, when Mr. Sam told me he bought a Florida Firecracker Millionare Raffle ticket this past week.  He said he kept hearing about the raffle on the radio and decided to buy a ticket.  The odds for this game are better than the regular Lotto, because they are selling a limited (750,000) tickets.  Anyways we were talking about what to do with the money if he wins the big prize and I was surprised that he said pay off the house.

What would you do if you won the lottery?  Or are you like me, you don't play and you'd invest that $10 instead of buying a ticket?

* Over the course of a lifetime, 80 years, the odds that you will be struck by lightening is 1 in 5000.  Your odds in Florida are even higher in that Florida is the lightening capital of the country. 

Wednesday, May 4, 2011

Forcasting Tool

Mr. Sam came across a tool at which provides information from a number of  analysts (varies from stock to stock) as to the forecasted stock price information over a 12 month period.  Seems like a handy tool, but whether it is helpful will require some analysis of our own. 

For example, I own 275 shares of Citigroup (symbol:  C), this forcasting tool tells me that over the next 12 months the high forecast on price is $6.50, the median $5.63, and the low $4.00.  So, I'm going to watch Citigroup over the next few months and compare to this tool. 

Monday, May 2, 2011

The Expensive Side of Delay

Confession time, I recently got a speeding ticket.  At the same time I received the speeding ticket, I received a ticket for not having proof of insurance or registration with me. 

I challenged the speeding ticket.  I might save money by challenging the ticket since an attorney friend is handling it for me at no charge.  But, in challenging the speeding ticket I completely ignored (forgot) the insurance ticket.

I could have resolved the insurance ticket by presenting proof of insruance with 30 days at the DMV and paying $10.  Instead, I forgot I needed to do anything about the ticket and ended up missing the 30 day window which meant I had to pay the full amount of the ticket $116.  But, it gets worse.  I paid the $116 but ended up having a late fee of $23 which I didn't know about or pay so my license was administratively suspended.  So I paid the $23 late fee, but I still had to pay $60 to get my license reinstated.  And, I wasted an hour of my life at the court house and then another hour at the DMV.

$199 to the State of Florida vs. the $10 I should have paid.  Ugh!

Friday, April 29, 2011

Vacation Planning

We just returned from a short vacation, 5 days out of state, and we have three trips coming up.  For the past few years we have followed the same sort of financial plan for our vacations.

First, we always have a travel savings account at ING and we always have an auto transfer funding that account.  Most times the auto transfer is $50 every two weeks (if no travel is planned) and if we have travel planned we up the amount.  As a result, we generally have enough in our travel account to pay for the flight. 

Second, once we know where we are going, we book the hotel.  Even though we don't normally use credit cards for day to day spending, we do use credit cards for booking travel. We use credit cards both because we don't like travel holds on our debit cards and because we get travel insurance with our credit card.  Normally we can book the hotel without paying for it upfront and then we up our auto transfer to the travel fund to account for the hotel/accomodations costs.  I love to stay in nice hotels, but I still search for the best rate on those nice hotels. 

Third, once I've got the hotel booked and rental car (if applicable), I plan out our "budget" for the trip.  And budget does not mean I limit our spending, but rather I just plan out how much we are going to spend.  I normally budget $100 a day for each of us when we travel.  Yes, that is a lot of money.  But, when I factor in eating out, entertainment, museums, shopping, tipping, cabs or rental car, admissions, etc., this is normally what we spend when we travel.  Then I up our auto transfer to our ING travel savings account and by the time we depart on our trip I have the full "budget" saved up. 

Fourth, at the time of travel, I transfer the travel funds from our ING travel savings account to my checking account.  I actually like to use cash when we travel if there is a safe in the room.  I prefer just taking $100 cash for each of us at the start of the day, spending what we spend and then accounting for it at the end of the day.  But if it doesn't seem safe, we use my debit card since I transfer the travel savings to my checking account.

Fifth, after travel, normally I might have the hotel bill or rental car bill on my credit card.  But, we've already got the money set aside to pay the credit card bill and we promptly pay it off.  Often times, when we return there is no bill awaiting us. 

Wednesday, April 20, 2011

2011 Goals - Mid-April Update

(1) Max out 401k(s) - $10,404 (32%)(goal is $33,000) (2) Max out IRA(s) - $9,000 (90%)(goal is $10,000, my IRA is now maxed out for 2011)
(3) Add to e/r fund - $2,800 (28%)(goal is $10,000)
(4) Pay down mortgage - $1660 (33%)(goal is $5,000)
(5) House projects - $0 (goal is $5,000)

Total - $23,864 (38%)

Plan is to start contributing to house project fund, once 2011 IRAs are maxed out. 

Tuesday, April 19, 2011

Economics and the Movies

Well, it turns out that we were the last folks in Florida renting movies from our local brick and mortar Blockbuster store.  And as such, Blockbuster has gone bust and both stores near us are now closed. 

We don't rent a whole lot of movies, normally we rent a bunch of movies for a couple of months and then we go six months or more without renting any.  I have lots of friends who are big fans of Netflix, but I am really not a fan of the recurring expenses.  I don't want to sign up for another monthly payment.  I do rent movies from my local library from time to time which is free (hooray!) but the selection is limited.  So for now we are going with Redbox which is $1 a night (plus tax), way less than Blockbuster and we won't be tied into a recurring expense.

So far the Redbox system has worked well, the only catch is getting the movies back on time to avoid an additional $1 charge. 

Monday, April 18, 2011

It is Tax Day

We filed for an extension. 

As I mentioned earlier in the year, one of our non-saving financial goals is to find a new accountant (due to the fact that we were audited last year and such audit was painful and expensive and fully the fault of our accountant).  So I have the names of two potential replacements but since we've not gotten around to meeting with either candidate it was easier just to put the whole thing off for now. 

Friday, April 15, 2011

Economic Security

I found this recent story on Economic Security from NPR fascinating. 

According to the Basic Economic Security Tables in order to achieve economic security the average minimum income needed for a family with two workers and two young children is $67,920 — that is with both parents working, and earning just over $16 an hour.  And a single worker with no children needs to make about $30,000 a year (twice the minimum wage). 

These number seem very high to me, but when you look at the individual categories they seem to be realistic (although I though transportation costs were too high, but again my commute is quite short).  One of the biggest categories of expense is child care.  Because of my charitable activities I have first hand knowledge of the average cost of preschool child care (not in home) and I found the numbers from this study to actually be on the low side. 

And of course, the amount necessary for economic security far exceeds the federal poverty numbers.

Wednesday, April 13, 2011

One Milliooooonnnnn Dollars

Our Net Worth has jumped over the $1 million mark.

We've been on this side of the net worth line before, twice, and nothing changes for us except we can say we are millionaires now again to each other. Mostly we throw the millionaire term abound when one of us wants to make a certain purchase and the other says no we can't afford it. Then the other will say, but wait, arn't we millionaires. And then the other says, we are only millionaires because we watch each penny, etc. Often time we switch sides on this discussion depending on the particular expenditure.

Thursday, March 31, 2011

2011 Goals - April Update

(1) Max out 401k(s) - $9,804 (30%)(goal is $33,000)
(2) Max out IRA(s) - $7,000 (70%)(goal is $10,000, my IRA is now maxed out for 2011)
(3) Add to e/r fund - $2,800 (28%)(goal is $10,000)
(4) Pay down mortgage - $1245 (25%)(goal is $5,000)
(5) House projects - $0 (goal is $5,000)
Total - $20,849 (33%)

We are about $4000 ahead on our goals, mostly due to Mr. Sam's bonus which bumped us up on the 401k and the IRA goals.

Saturday, March 26, 2011


My bank, in addition to others, has recently cancelled its debit card rewards program. There is some speculation that the debit programs are being done away with in response to the recent legislation that would limit swipe fees.

Now, I don't use my debit card to rack up points, but rather it is how we manage and track our day to day spending (since we don't use credit cards and cash is too hard to track). But, since we've been "earning" points for years and since the program is expiring or changing, I decided to cash out the as many points as I could.

In redeeming points, cash awards (credits to our checking account) have the lowest point to reward ratio, but I went with cash vs. the other choices. I looked at the travel rewards, since we have a few upcoming trips, and I reviewed the gift cards and prepaid cards since the point to reward ratio is better. In the end, since our travel is already, generally, booked and paid for and since the gift cards can expire or be lost, I went with cash.

Thursday, March 24, 2011

Business Travel

Lately, I've done quite a bit of travel for work, which includes expenses for things like flights, hotel rooms, gas, business dinners, conference rooms, etc.

My company uses a travel service and to the extent I can give them enough advance notice they will book, and pre-pay, flights and hotel rooms. But, all other expenses fall to the individual employee and I'm not provided with a company credit card. Additionally, to the extent I'm booking something last minute I have to put it on my own credit card.

I'm not happy about this situation, I don't normally use my credit card except when we book personal travel and then I pay it off immediately. As a result, I don't normally have a credit card bill to pay so it is not part of my normal bill paying routine and I ended up being late on the payment, by one day, this past month and incurred a $20 charge. Moreover, the whole reimbursement, deposit of reimbursement check (since it is delivered as a hard copy check), payment of the credit card bill is time consuming and more so depending on number of reimbursements within a month. I've decided it basically takes a half hour of my time for each reimbursement and being short on time I'm not happy about adding this to my weekend errands.

I don't know what the solutions is for this problem or if there is a solution.

Friday, March 18, 2011

Dave Ramsey's investment assumptions

I am a fan of Dave Ramsey for the following reasons. He helped motivated us to pay off our unsecured debt (we used his snowball method to pay off $55,500 in unsecured debt in 12 and 1/2 months). I generally agree with him that personal finances is 80% emotion. I think his plan is easy to understand and fully support the idea and the practice of living a debt free life. Freedom from debt is freedom.

I catch Dave's show now and again on my way home from work. Recently he was talking about investing, why he preaches investing in the stock market and he touched on his assumption, which he relies on again and again in his books and on his show, that the stock market returns 12%. I've never believed the 12% number, and it has always been one of those things about Dave that I've thought undermined his overall message.

I thought, while listening to the show, that Dave was going to cling to the 12% number, but he recognized that people have challenged him on that number and as a result he ran his scenario using 8% and 10% returns as well.

This week when reading Dave's monthly newsletter, he again addressed the 12% return assumption. His newsletter sets forth where he gets his numbers from and based on my own independent research he is right. The S&P 500 from 1926 to December 31, 2010 returned, on average, 11.95% (not adjusted for inflation). And he is right that the S&P 500 during 1991-2010 returned, on average, 11.04% (again not adjusted for inflation).

But, most individual investors only obtain about 50% of the average returns. Which I think is why many other gurus and experts often suggest only assuming a 6% return when running the numbers in a retirement calculator. Why the discrepancy between average and individual return? Individual investors are very bad at timing the market. We, in general, pull our money out of the market when it goes down and put it back in when the market is going up. Said another way, we buy high and sell low.

So how do we combat this problem?

While I agree with Dave that 80% of personal finances is emotion, when it comes to investing emotion may be the problem. When faced with a volatile market you can do nothing. Doing nothing can be your plan. I speak from experience, in 2008 and 2009, we did not sell our 401k or IRA investments. And it was hard to watch our numbers go down, down, down, but it is important to remember that loss (and profit) is not locked in until you sell. We had enough time to wait it out, so we did nothing and almost all of our pre-2008 investments have fully recovered and gained.

Have a plan when you buy. This is something we are working on. When you buy a particular product, have a plan for when you will sell. Do you revisit the product every 5 years, every 10 years, depending on your age. Or do you revisit the product after the investment has doubled or tripled in value? Or do you do both? When we bought stock in 2009 the market was low, so since then, some of our investments have doubled and tripled in value. As such, we are looking at these investments and evaluating whether it makes sense to sell or to hold.

Have a global plan. If you are diversified, if you re-allocate your assets each year, you shouldn't have to sell in a down market.

Think before you trade. In general, the more an individual investor trades the worse their returns (over time). This truism means that Mr. Sam's trading experiment is eventually going to lose money.

Thursday, March 17, 2011

Disaster Investing

Mr. Sam has been watching Toyota, thinking about investing in it because the stock is down due to the disaster in Japan. While it makes sense to invest when the market is down, which I did last week, it feels wrong (to me) to be making investment decisions based on other people's pain and death.

I just don't know how I feel about it, yet I know that the big boys, including the investment advisers of some of the mutual funds that I am already invested in, are making these very same moves. If it is okay for Wall Street, pension fund managers, mutual fund managers and the boys with the high speed computers to make these moves, is it okay for the individual investor?

Wednesday, March 16, 2011

2011 Goals - Mid - March Update

(1) Max out 401k(s) - $6,901 (21%)(goal is $33,000)
(2) Max out IRA(s) - $6,000 (60%)(goal is $10,000, my IRA is now maxed out for 2011)
(3) Add to e/r fund - $2,400 (24%)(goal is $10,000)
(4) Pay down mortgage - $830 (17%)(goal is $5,000)
(5) House projects - $0 (goal is $5,000)

Total - $16,131 (26%)

With bump forward, due to Mr. Sam's bonus monies, we are about $2800 ahead of schedule.

Tuesday, March 15, 2011

One Down

Mr. Sam received a bonus, always good news. As a result, my 2011 IRA is now maxed out, so one goal down, many to go. We've also put $1500 of the bonus monies towards Mr. Sam's 2011 IRA. A portion of the bonus, since its pay-roll money also went to his 401k.

Friday, March 11, 2011

Market Moves

Because the market is down, I made some limit orders today for my 2011 IRA monies. I'm not trying to "time" the market, but rather since my IRA money was sitting in cash I decided that today was a better day to enter some orders.

We use our IRA money to invest in individual stocks and I use the Fidelity research tools to start my research. If you've got a Fidelity account, click on research, then click on stocks, then click on preset expert strategies. From that list, you can pick the strategy that matches your goals and personality. I'm a bargain hunter, so my favorite strategy is "bottom fishing." From the bottom fishing list of picks, I then use the research tools from Fidelity or I'm also fan of Morningstar and Google Finance.

After I've made my selection, I normally buy my stocks via a limit order that is good until I cancel it. A limit order can only be filled when the stock reaches a certain price. So, today I put a limit order in for a stock that was $14.56 at close yesterday. I'm already looking at a bargain stock so my limit order is normally just below the trending price for that particular stock. So, my limit order was at $13.75. Good until cancel means that limit order will sit until its filled, meaning the stock drops to $13.75 ,or it just sits as an open order and I can come back and cancel it later.

Disclaimer - I'm not a financial advisor or expert, this post is simply a description of my pattern and practice and it may not work for you.

Tuesday, March 8, 2011

2001 Goals - March Update

(1) Max out 401k(s) - $6,269 (9%)(goal is $33,000)
(2) Max out IRA(s) - $4,500 (45%)(goal is $10,000)
(3) Add to e/r fund - $2,000 (20%)(goal is $10,000)
(4) Pay down mortgage - $830 (17%)(goal is $5,000)
(5) House projects - $0 (goal is $5,000)

Total - $13,599 (22%)

Slightly ahead on our goals (by about $1400).

Monday, February 28, 2011

The Kindle is Testing My Resolve

So, I received a Kindle from Mr. Sam for my last birthday.

Some background, I am an avid reader, I often read one or two books a week. Before our personal finance awakening (2007), I often bought 4 books a month. After we started working on paying down our debt, I resolved to reduce my book spending, and decided I would limit my book purchases to my book-club book and airport book purchases. I filled the book purchase gap by using my local library, which is within walking distance to my home. For about three and a half years, I maintained my resolve, but slowly, I realized I was starting to re-read library books (which I do with my own personal library). Basically, while I had not read every book in my library, I had exhausted what I was interested in reading. I had read every book from every author that I like or had heard about. I had read every available book from the various year end lists (NYT best books of the year, best books, The Slate best books, the Booker Prize short list, the Pulitzer Prize short list, etc.) The real problem being that my library, which is small, just doesn't have many of these books.

So last birthday, Mr. Sam bought me a Kindle, which had come down in price to about $150. And, if you are not familiar with the Kindle it is super easy to buy books. Too easy. If I have my Kindle with me, i.e. at book club or traveling, and I'm in a wi-fi hot spot I can simply purchase the book in about 10 seconds with one click ordering. If I'm not in a wi-fi hot spot I can purchase a Kindle book via my iPhone Kindle app. I can instantly gratify my book itch.

Since, I received my Kindle, I'm averaging 3.4 book purchases a month, which average in price at $9.99, so about $34 a month. $34 a month isn't much in the grand scheme of things but it does translate to about $400 a year and that is probably $300 more per year on books than I was spending before I received the Kindle.

So, what to do? I could decide that the $400 I'm spending on Kindle books is money well spent. Money well spent in that it is small amount of money for something I very much enjoy and therefore I should allocate the sum either in our spending plan or it comes from my allowance money.

Alternatively, I could impose a holding pattern on my Kindle purchases. I use "holding patterns" for many of my on-line purchases, including Amazon, but the Kindle is set up for this one click purchasing so I would need to figure out how to select my Kindle books without actually purchasing them.

I'm also considering hitting the library again, I'm sure in the last few months they have some new selections. I could probably obtain at least one book a month from my library which would reduce my Kindle spending by $10 a month or a $100 a year.