Really Done

2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000 (this goal has been completed!)
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000 (this goal has been completed!)
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $17000 (Progress - 100%.)
(3) $13881 ($21,881*) (Progress - 139%)
(4) $5108 (Progress - 102%)
(5) $10000 (Progress - 100%)
Total: $50,000 (Progress - 100%)
* Our emergency fund already had $8000.

Now we're really done. We saved $50,000 this year for our various goals. We fell short on the 2007 IRAs but otherwise we completed all of our other goals and our overall goal to save $50,000.

Now what do we do? Well we're going to put $2250 towards the principal of our mortgage and we are probably going to buy some additional stock before the end of the year. Otherwise we are going to start working on our 2009 yearly budget and our 2009 savings goals and we are going to enjoy a stress free Christmas and holiday season.

Cheers!

Done

2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000 (this goal has been completed!)
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000 (this goal has been completed!)
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $17000 (Progress - 100%.)
(3) $13173 ($21,173*) (Progress - 132%)
(4) $5108 (Progress - 102%)
(5) $10000 (Progress - 100%)
Total: $49,281 (Progress - 99%)
* Our emergency fund already had $8000.

Technically, we are done with our 2008 goals. We have finished funding Mr. Sam's 2008 IRA and therefore at this point don't have any goals left to work on for 2008. Now technically we have not yet saved the full $50,000 so we need another $700 into savings before the end of the year. At present, I'm planning to use the $4000 that didn't make into Mr. Sam's 2007 IRA to pay about $2000+ extra on our primary home mortgage and the other $2000 to kick start our 2009 goals (2009 IRAs) or I may use that $2000 to buy more stock this year outside of tax advantaged plans. Thoughts are welcome.

Almost Done

2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000 (this goal has been completed!)
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000 (this goal has been completed!)
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $17000 (Progress - 100%.)
(3) $13173 ($21,173*) (Progress - 132%)
(4) $5108 (Progress - 102%)
(5) $9500 (Progress - 95%)
Total: $48,781 (Progress - 98%)
* Our emergency fund already had $8000.

Almost done, $500 left to go on goal #5 and $1219 left to go on Total Goal.

2008 Goals

2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000 (this goal has been completed!)
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000 (this goal has been completed!)
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $17000 (Progress - 100%.)
(3) $13173 ($21,173*) (Progress - 132%)
(4) $5108 (Progress - 102%)
(5) $8500 (Progress - 85%)
Total: $47,781 (Progress - 96%)
* Our emergency fund already had $8000.

We continue to be on track for wrapping up our 2008 savings goals ahead of schedule. Once we finish funding Mr. Sam's 2008 IRA, I think we will start putting aside money for our 2009 IRAs since we only funded my 2007 IRA (see goal #1). Otherwise, I have diverted the auto savings for the baby account (see goal #4) to our house account to fund a new sofa next year.

Changes

We have had some changes in our salary payment schedule. I am now receiving my salary every two weeks and Mr. Sam is now receiving his salary twice a month (15th and last day of the month).

I am very much in the habit of paying our bills on the 1st and the 16th of each month and the change in our salary payment schedule has thrown my system out of whack. I find myself either paying our bills early (today is the 9th and I just paid our bills that I normally pay on the 16th) or I hold my salary in my checking account for a week or so until the 16th or the 1st. But holding my salary in my checking account undermines our allowance system because for a week or more I have all kinds of extra money in my checking account.

Ahead of Schedule

2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000 (this goal has been completed!)
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000 (this goal has been completed!)
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $17000 (Progress - 100%.)
(3) $12865 ($20,865*) (Progress - 129%)
(4) $5108 (Progress - 102%)
(5) $8000 (Progress - 80%)
Total: $46,973 (Progress - 94%)
* Our emergency fund already had $8000.

First time all year, we are ahead of schedule on our 2008 money goals. We are about $3600 ahead on our 2008 savings goal. Reason, I have been quite aggressive in funding our 2008 IRAs the last few weeks because I am trying to take advantage of the down market.

On the other hand, we are low on cash so we will need to take care with our spending over the next few weeks.

Emergency Fund - CD

We keep our emergency fund (and our other savings) in high yield savings accounts with ING. But with interest rates dropping, we decided to move $5000 of our $20,000 to a 12 month CD (also with ING).

Goal #4 Completed

2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000 (this goal has been completed!)
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000 (this goal has been completed!)
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $17000 (Progress - 100%.)
(3) $12291 ($20,291*) (Progress - 123%)
(4) $5000 (Progress - 100%)
(5) $7000 (Progress - 70%)
Total: $45,291 (Progress - 90%)
* Our emergency fund already had $8000.

Goal number 4, baby fund, is now completed. We likely will need more than $5000 in our baby fund so we will pick up this goal again in 2009.

At present, I'm working on funding Mr. Sam's 2008 IRA. I've been buying stocks like crazy the last few weeks. My stock picking criteria - good established companies, stock priced at least 50% off, and diversified companies (i.e. conglomerates, retail, tech, energy, pharma, etc.)

We've been discussing what to do when his 2008 IRA is fully funded. If we close our 2008 goal early we could: (1) start saving money for our 2009 IRAs, (2) continue to buy stocks but not in a tax advantaged account, (3) establish our 2009 money goals and start putting money away for same, (4) save for a new couch. What would you do? At present, I'm inclined to either put money aside for our 2009 IRAs or continue to buy stocks.

Right on Track

2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000 (this goal has been completed!)
(3) E/R fund - $10000 (this goal has been completed!)
4) Baby fund - $5000
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $17000 (Progress - 100%.)
(3) $12291 ($20,291*) (Progress - 123%)
(4) $3992 (Progress - 80%)
(5) $5000 (Progress - 50%)
Total: $42,283 (Progress - 83%)
* Our emergency fund already had $8000.

For the first time all year, we are finally on track with our savings goal. Its week 43, we should have saved 83% of our $50,000 and we have saved 83% of our $50,000. Hooray!

Correction - Working on Goals # 4 and 5

2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000 (this goal has been completed!)
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $17000 (Progress - 100%.)
(3) $11985 ($19,985*) (Progress - 120%)
(4) $2892 (Progress - 58%)
(5) $1500 (Progress - 15%)
Total: $37,377 (Progress - 75%)
* Our emergency fund already had $8000.

As you can see, although we are still a bit behind on our 2008 savings goals, we have hit the 3/4 point. And, we have also decided to start working on goal #5 and put some money into our IRAs to take advantage, we hope, of the bear market.

2008 Goals - Working on Goal #4

2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000 (this goal has been completed!)
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $17000 (Progress - 100%.)
(3) $11985 ($19,985*) (Progress - 120%)
(4) $2892 (Progress - 58%)
(5) $0
Total: $35,877 (Progress - 72%)
* Our emergency fund already had $8000.

Nused Car - Dunzo!

Yup, all that waiting and savings has finally paid off.

On Saturday, I traded in my paid off 1999 car and bought a nused (2006) car. Whoo-hoo!! Even better, I paid cash (well, really check) for the nused car. Whoo-hoo!!

I had saved $17,000 for the nused car as one of our 2008 savings goals. I also assumed I would get a couple of thousand dollars for my old car. And my budget for the car was $20,000. We've been researching 3 cars for the past six months so we had a good sense of how much our target cars should cost.

On Saturday, we decided to test drive the three cars we were interested in. The car was below budget $19,500 and was a good price for the year and the mileage. So we decided to buy it! We also decided to trade in my old car at the dealership. While I could have gotten a bit more for my old car if we sold it ourselves we would have to sell it ourselves.

It was a great experience, no discussion of monthly payments, interest rate, etc. While the finance guy asked why I would pay cash for a depreciating asset, I asked why would I pay interest on a depreciating asset. I told the finance guy, if he gave me a 0% loan I would be happy to finance the car. You can guess his response. I wrote a check and drove the car home.

2008 Savings Goal #2 - Done!

2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000 (this goal has been completed!)
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $17000 (Progress - 100%.)
(3) $11813 ($19,813*) (Progress - 118%)
(4) $192 (Progress - 4%)
(5) $0
Total: $33,005 (Progress - 66%)
* Our emergency fund already had $8000.

Nused car account, goal #2 for 2008, is now fully funded. Whoo-hoo!!

Updates to Net Worth and Savings Goals

Net Worth
We have received our 2008 appraisal and real estate tax information for our Florida properties. Not surprisingly, our appraised values are down by about 5%. It is surprising that the appraised values are not down more than 5%. But, our official appraised values are quick to rise and slow to fall because the bulk of taxes in Florida are based on real estate (no income tax).

I have updated our Net Worth IQ chart if you want to see the dirty details.

2008 Savings Goals
2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000
(5) 2008 IRA - $10000
Total: $50,000

Current numbers: (1) $4000 (50%.)
(2) $15787 (Progress - 93%.)
(3) $11280 ($18,972*) (Progress - 113%)
(4) $5
(5) $0
Total: $31,072 (Progress - 62%)
* Our emergency fund already had $8000.

Sam's Dumbest Financial Move

Fascinating article in The New York Times (as part of the interesting Debt Trap series) on how banks used advertising to change the way Americans talked and thought about second mortgages (now rebranded as home equity loans or home equity lines of credit). And how Americans responded:

Since the early 1980s, the value of home equity loans outstanding has
ballooned to more than $1 trillion from $1 billion, and nearly a quarter of
Americans with first mortgages have them.

One complaint about the article was that it failed to mention the Tax Reform Act of 1986 and that pursuant to that law interest on consumer loans, such as credit cards and car loans, was no longer deductible. Although the article did mention that the banks' advertising campaign took advantage of the fact that these loan products were tax deductible.

Still, Elizabeth Warren, a professor at Harvard Law School who has studied
consumer debt and bankruptcy, said that financial companies used advertising to
foster the idea that it is good, even smart, to borrow money.

Back in 2000, I had some smart more experienced friends tell me I ought to take out a HELOC on my first house (bought in 1999) to consolidate some higher interest credit card debt that I ran up in professional school. And I fell for the idea that it was "smart" to trade higher interest credit card debt for lower, tax deductible, debt. So I got myself a HELOC of $21,000 and I made minimum payments on the loan until I sold the house in 2004 (luckily for double what I bought it for).

I made a lot of smart financial choices during this time period. I bought my first house in 1999, I created my first spending plan (budget) in 2001 and I paid off my car and student loans. But, taking out the HELOC was dumb, dumb, dumb. I traded unsecured credit card debt for secured debt (risking my home) and while I never ran up my credit cards again I continued to use the cards and my spending, while better than most of my peers, was still above what it should have been. Bottom line, I didn't change my spending habits when I consolidated my credit card debt and as a result I ended up with more debt.

Zen and the Art of Lower Dry Cleaning Bills

In the past 30 days we have spent $249 on dry cleaning. Yikes!! Over a year, we could end up spending $3000 on dry cleaning. Double yikes!! $3000 could be a fabulous vacation for us or a good chunk of our new furniture fund.*

So, I have been thinking about how to lower our dry cleaning bills. I have been investigating the home dry cleaning products like Dryel and plan to pick up a kit to use on our clothes to lengthen the amount of time between dry cleaning. But, what I have found best for lowering our dry cleaning bill is to simply change out of my work clothes as soon as I get home and to promptly hang up my clothes. I've found that I end up dry cleaning clothes simply because they have sat in a heap on a chair and have gotten horribly wrinkled and covered in Snarfle hair (Snarfle is the dog).

But, I get home after 10-12 hours at the office and I'm pooped. I just want to change, have a spot to eat and crash on the couch. Bottom line, I don't feel like hanging up my clothes (which probably takes at the most 5 minutes) because I'm worn out. I'm thinking about how to take care of present Sam and present Sam wants to crash out. But, and this is where the Zen comes in, if I take a second and think about future Sam (the Sam that has to pick up the clothes later or the Sam that has to take the clothes to the dry cleaner on Saturday or the Sam who has to pay the dry cleaning bill) I want to be kind to future Sam and I hang up my clothes. Basically, when I procrastinate to help out present Sam I've come to realize, and remind myself, that I'm only hurting my future self. This mind set helps in any situation, work, home, etc., when there is an opportunity to procrastinate.

*And don't get me started on the higher dry cleaning prices for women's clothes! Ugh!!

Tropical Storm Fay

Blustery, rainy day today in South Florida due to Tropical Storm Fay.

This is damage at one of the horse facilities that are inland in South Florida. This is a barn, luckily no horses (or people) were hurt.

Most people are at home today. Schools, government offices and most offices are closed today.

Life Insurance - Term vs. Whole??

One of the tasks on our 2008 to do list is to buy more life insurance. We both have small life insurance policies through work, but we have decided that we would like at least $750,000 coverage on each of us. We decided on $750,000 because we have @$657,000 in mortgage debt. If either of us died the other would be able to pay off the mortgages on all of our real estate and would not be forced to sell in a bad market.

For me a 20 year term life insurance policy of $750,000 would have an annual premium of $705 ($14,100 total cost). For Mr. Sam, he would have an annual premium of $557 ($11,140 total cost). The upside of term life insurance is that its pretty cheap and you can get a lot of up front protection. But the down side is that term life insurance only provides a death benefit and only during the term (in this case 20 years). You pay, in our example $25,000+, but if neither of us dies in the next 20 years we don't get any of that money back.

I think of life insurance as just insurance so I've been more in favor of simple term policy. Mr. Sam doesn't like the idea that we don't get any of that money back so he wanted to consider whole or some variable life insurance product.

Accordingly, we met with a very nice life insurance agent that came recommended from a friend. We looked at a blended life insurance product that provides an immediate $700,000 death benefit. This product is really an investment product with a cash value and a dividend, etc. plus the death benefit

The annual premium for this product is $5000 a year (for both of us $10,000 total).

At the end of 10 years, after $50,000 in premium payments the policy has a cash surrender value of $45,736.
At the end of 20 years, after $100,000 in premium payments the policy has a cash surrender value of $152,343.
At the end of 20 years, after $150,000 in premium payments the policy has a cash surrender value of $356,789.

After 30 years of premium payments the death benefit also starts increasing. At 40 years of premium payments ($200,000), the death benefit is $1,046,800 and the cash surrender value is $741,500. After 50 years at age 86 (my grandparents are in their mid 80s), the death benefit is $1,678,700 and the cash surrender value is $1,405,400 based on premium payments of $250,000. This is just for one of the two policies, we would have about $3.3 million in combined death benefits.

One benefit of life insurance is that the death benefit passes tax free to the beneficiary and there are also ways to structure the policy so that it falls outside an estate.

There are a lot up upsides to the insurance product that we discussed with the agent, but the big down side is the annual cost ($10,000 a year for both of us). We could buy the term insurance for under $2000 a year and invest the remainder $8000 in an IRA and I wonder whether or not we would come close to the cash surrender value. According to a simple calculator if I invested $333 a month ($4,000 annual) for 50 years with a 6% interest rate I would end up with $1.2 million which isn't too much less than the cash surrender value for one policy. Clearly we would not have the $3.3 million in death benefits, but we should have other monies to leave to our heirs.

Thoughts, what would you do??

Snarfle

Snarfle just had his yearly check up - $232 vet bill. Very happy to report that a year after his cancer surgery for fibrosarcoma he appears to be cancer free. I say "appears" because the report is based only on manipulation of the surgery site (back right paw). But its good news regardless.

Snarfle is 11 and a half and I expect his care to start getting more expensive. The vet suggested that Snarfle start taking Phycox for his arthritis. Phycox is $35 a month, plus the cost of monthly dog food and treats, plus the cost of vet care (estimating $1000 a year) and I'm thinking that I ought to open an ING Snarfle escrow account.

Finally - Half Way Post

We have been behind all year on our 2008 savings goals. But, I'm happy to report that we finally have reached the 50% mark. While goal #3, increasing our emergency fund to $18,000, has been completed we continue to add a small amount each month to our emergency fund.

2008 goals:
(1) 2007 IRA - $8000 (this goal is now closed)
(2) Car fund - $17000
(3) E/R fund - $10000 (this goal has been completed!)
(4) Baby fund - $5000
(5) 2008 IRA - $10000
Total: $50,000

Current numbers:
(1) $4000 (50%.)
(2) $13787 (Progress - 81%.)
(3) $11280 ($18,972*) (Progress - 113%)
(4) $5
(5) $0
Total: $29,072 (Progress - 58%)

* Our emergency fund already had $8000.

Networth

During my computer troubles, I spent some time working on my paper files. And came across my notes documenting my net worth from 2001-2007. While I did not keep monthly net worth totals, I have added the annual numbers to my networthiq post.

Blue Screen of Death

I have been unable to post - sorry.

First, our Internet connection went down for about a week.

Second, once we got the Internet back up and running our computer pooped out.

I have computer #2 up and running and we are working on getting computer #1 fixed. Please cross your fingers.

Flashback Budgeting

What do you consider to be a household necessity? A 4 bedroom house, 2 cars, cable television, microwave, cell phone, high speed internet, DVR, Netflix, computer, Ipod?

Now, depending on how old you are, think back to the 1970s or 1980s and ask yourself whether the above items were a necessity or even available. That is the idea behind a flashback budget.

In the 1970s people generally lived in smaller homes, drove smaller cars (and generally only had one per household) and ate more meals at home. There was also likely no cable bill, no cell phone bill, no internet bill, etc.

If you have been working a budget or spending plan for more than a few years, take a few minutes to review your budget categories and numbers from the past. You may be surprised that even 5 years ago you lived a very good life without a few of today's "necessities."

iLearn

I noticed a Google advertisement on my blog for iVillage (a web site geared towards women) personal finance classes on iLearn so I decided to check it out and took the on-line course: "Get a Grip on Your Family's Finances."

iLearn courses are free, practical, led by expert instructors, and available around the clock to work with your schedule.

Each on-line class includes a lesson, quizzes to test understanding and homework projects. A brief description of the lessons of the on-line course I took are below.

• Lesson 1: Financial Planning Is a Family Affair
  No matter who the primary breadwinner or chief bill payer is, everyone in the family can play a role in mapping out your financial future. We'll take a look at family dynamics and show couples how to share roles and responsibilities in a way that works for them.


• Lesson 2: Setting Your Financial Goals
  Financial planning starts with a fun exercise: deciding what you want in life. In this lesson you examine some typical family goals and discuss ways to approach goal-setting that combine wishful thinking with financial reality.


• Lesson 3: Career Decisions That Affect Everyone
  Career decisions affect everyone in the family, regardless of who's earning the actual wages. This lesson discusses some of the key decisions many families face about working and retirement, and how to go about resolving them.


• Lesson 4: Embarking on a Savings Plan
  You can spend it now or spend it later. Or, to put it a better way, you can spend a little now, or you can save and invest it and have a lot more to spend later on the things you really want. This lesson talks about popular savings vehicles.


• Lesson 5: Managing Your Cash Flow
  This lesson shows you how to examine where your money goes in a way that enlightens but doesn't blame. It also features smart shopping tips and ideas for instilling spending discipline in children (and anyone else in the family who needs it).


• Lesson 6: Investing for the Future
  In some families, one person makes all the investment decisions; in others it's a joint project. To make sure all parties are up to speed on the basics of investing, this lesson covers the foundation and provides enough information to get you started.


• Lesson 7: Protecting What You Have
  Insurance is one of those things you hope you never need. But it's essential for any family that has assets to protect. This lesson discusses the major types of insurance, how to determine how much you need, and how to choose your policies wisely.


• Lesson 8: Thinking the Unthinkable
  One of the kindest things any family can do is to anticipate the deaths of family members and make arrangements ahead of time -- while everyone is rational and thinking this could never happen. This lesson covers estate-planning basics.

Although I found this iLearn course pretty basic, I would suggest it to friends or readers who are just starting to focus on personal finance.

What is Your Neighborhood's Walk Score?

Check out this cool tool.

Plug in your current address or, better yet, the address of a property you are looking to buy and Walk Score:

Helps homebuyers, renters, and real estate agents find houses and apartments in great neighborhoods. Walk Score shows you a map of what's nearby and calculates a Walk Score for any property. Buying a house in a walkable neighborhood is good for your health and good for the environment.

Walk Score gave my home a score of 83/100 which makes sense as we live in a very walkable small city. My only criticism, I wouldn't count 7-11 as a grocery store.

You Need a Real Emergency Fund

One of our 2008 financial goals was to increase our emergency fund from $8,000 to $18,000. I'm pleased to report that we have completed this goal and our emergency fund, which we keep at ING, is up to $18,000+. $18,000 is a lot of money, at least for us, to keep in a liquid form. And while we earn 3% on our emergency fund savings account at ING, we could earn more if we invested the money. Indeed, some experts suggest investing your cash and relying on a home equity line of credit or other line of credit for an emergency fund.

As The New York Times reports, banks are reducing or eliminating exisiting lines of credit due to dropping home values. A representative of WaMu explains:

“We will increase, decrease or suspend lines based on a number of factors, including a customer’s entire relationship with WaMu, their payment status and history, changes to their creditworthiness, and changes in the value of their property,” said Sara Gaugl, a Washington Mutual spokeswoman. “We believe this is part of being a responsible lender.” Home values are a particularly large component of the lender’s decision, Ms. Gaugl said, and since the real estate market remains moribund, more credit lines could be cut. “We will continue to evaluate individual home equity lines of credit in relationship to the amount of equity a customer has in their home,” she said, “and if appropriate, we’ll lower the line amount.”

If you don't already have an emergency fund, at least a mini-fund of $1000 - $3000, you need to start one.

1. Add funding your emergency savings account to your list of monthly bills and allocate $10, $25, $50 or $100 a month to your emergency fund.
2. Sell stuff at a garage sale on EBay or Craigslist. All proceeds go to your emergency fund.
3. Put your stimulus check or IRS refund towards your emergency fund.
4. If you did receive an IRS tax refund, talk to your HR department at work and adjust your withholdings so you take home more money in each paycheck. Put that extra money towards your emergency fund.
5. Cut back on the 'little' expenses that add up (i.e. lunch out, lattes, bar tabs, cigarettes, etc.) and you will be surprised at the money you can save. Put that money in your emergency fund.
   
   
   
   

Can You Be Bought With a Cookie?

Following up on my earlier Starbucks post, The New York Times discusses SB's new loyalty program.

I'm not a huge fan of loyalty programs, although I know many folks who use these programs to save big bucks. The only loyalty programs I use are frequent flyer programs with airlines.

If you are a SB regular, does it make sense to sign up for the loyalty program? What do you get?

You get: two hours of free wireless Internet service a day. The other freebies include syrup and soy milk additions to its drinks, refills of drip coffee and a tall beverage of any sort for people who buy a pound of whole bean coffee.

What does Starbucks get?

The point of a loyalty program is, first and foremost, to grab a bigger share of customers’ spending. Tracking customers through loyalty program account numbers offers companies an additional advantage.

While a couple of syrup pumps doesn't seem like much, according to the article it doesn't take much to get customers to take action in response to a freebie.

What he has found is that it doesn’t take a lot to get diners, for example, to do what restaurants want. One Chockstone gambit involves using the customer’s receipt to make an offer. Return within 10 days, perhaps, and you can get a free dessert, the slip says. “It’s amazing this stuff works so well,” Mr. Lipp said. “What we’ve found is that people can be bought for a cookie.”

What do you think? Can you be bought for a cookie?

Follow the Starbucks to Real Estate Riches

Interesting article from Newsweek that suggests that picking neighborhoods where real estate values are sure to rise is as easy as finding a new Starbucks or Home Depot. Why?

People who believe in this logic say that growth-oriented chains like Starbucks and Home Depot do tons of economic and demographic research before moving into a new town, and that their decision to locate a store indicates a big vote of confidence in the area's economy.

I'm not a regular customer of Starbucks, and I was a little bummed when SB came to our small city's downtown a year ago. But, now I guess I should consider SB's arrival a good sign.

A Different Kind of Mortgage Pain

There is so much media coverage on the sub-prime mortgage mess, foreclosures, etc. I was excited to see some good advice on how to get a mortgage now.

• FICO - Most applicants now need a score no lower than 660, and in some cases lenders are not willing to go below 720.
• Debt to income ratio - Debt (including housing costs, car loan, student loan, alimony, credit card debt) to income ratio is now at a maximum in the mid-40s. Available credit card limits count as debt even if rarely used - which might require some credit card cancellation.
• Documenting income - You now have to actually provide proof of income. No-doc loans, also known as liar loans, are generally not available any more.
• Cash-money - You need to have some liquid cash available, equal to 3 - 36 months of mortgage payments.

Even good customers, with high income and years of on-time mortgage payment history are finding it more difficult to move onto a bigger/more expensive home.

Val Kleyman, a self-employed lawyer from Staten Island, knows this firsthand. He bought a two-bedroom town house three years ago; his wife then had their first child and wanted to move on to a bigger place in the same borough. He had put down 20 percent on the town house and made payments on his adjustable-rate mortgage diligently on the first of each month. Mr. Kleyman would seem to be the perfect customer for another mortgage from his same lender. “I called the bank, saying I wanted a mortgage for a bigger house,” he said. “They said: ‘That’s very nice. You always pay on time, but we can’t give you a mortgage.’ ” Actually, the bank would give him a mortgage, but only with a 25 percent down payment. As he had with the town house, Mr. Kleyman wanted to give his lender a stated income — with no supporting documentation — rather than a verifiable income. He plans to hold onto his first house and rent it out, and that would count as debt against him. He is also self-employed.

Holding on to a prior property as investment rental is something we did when we bought our current house. Most mortgage companies/banks will consider rental income as part of your income after a year or so of established rental history. As a result, even if you plan to rent out a property to cover your monthly carrying costs, the bank won't count that rental income until its well established.

Vacation on a Budget - Update

I have returned from my vacation on a budget feeling a bit tired and sore (from all the hiking) but also refreshed.

Comparing my travel/vacation budget of $2000 to my actual spending is always interesting. See below for my original plans.

The next step for a vacation on a budget is to give some real thought (and research) to how much the total trip will cost me. Some costs, like the flight, hotel and rental car are fixed so those costs are easier to plan for. My share of the rental car is $82 plus half of estimated gas costs ($50). My share of the hotel costs is $452 (including estimated taxes). Additionally, we have planned time at a Spa and my reserved services are $285 (includes estimated tip). My total known vacation costs are $1199.

What about unknown costs? I estimated unknown costs based on the kind of trip (this time around - mostly hiking/outdoors) and then I give myself a reasonable daily budget. I have given myself $200 a day for Saturday - Monday of the trip and $100 for Friday and Tuesday of the trip(travel days) for a total of $800 in spending money. My daily spending budget should cover things like meals, entertainment and any shopping. My total vacation budget is $2000.

My estimated travel expenses (drum roll please) came in at $1566 about $434 under budget.

• The flight (a known cost) was $330.
• My share of the hotel (a known cost) was $456 (budget was $452).
• My share of the rental car (a known cost) was $82 plus my share of the gas $58 (budget was $50).
• The spa expense was $317 (budget was $285).
• The rest of the money, $323, was spent on dining, drinks, food/water supplies for our day hikes, and a few small gifts.

I could have spent the rest of my budget as I really wanted to buy a lovely necklace that I saw in a couple of different high end jewelry stores (I saw the same style necklace a few times and the price ranged from $400 - $900 depending on the store). I also saw a beautiful sculpture that I still might buy (I will save the artist's information and if I still want the sculpture in 6 months and Mr. Sam agrees I'll buy it) that cost $800. Since I really coveted these two budget buster travel souvenirs, it didn't make sense to me to buy other lesser items.

All in all, it was a wonderful vacation and I'm very pleased that there will be no credit card bills showing up in the mail to ruin it.

Obsessed Update

Last week I posted about one of our mortgages being sold to CitiMortgage. I did, finally, receive the missing "welcome" letter from CitiMortgage which did not provide any real information but I am happy to have it for my files.

It appears, thus far, that CitiMortgage will draft my autopayment for the mortgage note on the 15th of each month. A 15th of the month posting date would be welcome since this is a mortgage for one of our investment properties - additional time to collect and deposit the rent before the payment is due.

Gen-X Retirement Blues

I found this recent article from USA Today regarding the retirement savings habits of Generation X very interesting.

Generation X is generally defined as those born between 1965 - 1980 and includes me and Mr. Sam.


The article warns that:

The Center for Retirement Research at Boston College has calculated that 48% of Gen Xers are at risk of being unable to maintain their standard of living in retirement, says Andrew Eschtruth, the center's communication's director. Compared with the boomers, Eschtruth adds, the Gen Xers "always have the highest at-risk scores. The changing retirement landscape is gradually becoming more challenging."

Why are we so at risk? The article notes the changing landscape of retirement savings (i.e. the shift from company sponsored pensions to 401k plans) and that Gen X is burdened "by high housing costs, stifling college debt, stagnating wages and outsize health insurance and gas prices."


Bryan Short is the 30 year old lawyer held up as a cautionary example.

At age 30, Bryan Short has, by any standard, achieved professional success since graduating from Boston College and law school at the College of William and Mary. Yet despite his job as a Washington mergers-and-acquisitions lawyer, he's nowhere near as financially secure as he expected to be by now.

He and his wife own one car and rent a 500-square-foot studio apartment. More than one-third of his take-home pay is gobbled up by repayment of college and law-school debt. Children are unaffordable right now. And retirement savings? They've barely begun.

I can relate to the Shorts. When I was 30 I still had $18,000 in student loan debt from professional school, $21,000 in a home equity loan (I had used the loan to pay off all my credit card debt run up while I was in school - ugh!), a $11,000 family loan debt, $3600 in credit card debt and I had a car payment of $366 a month. However, I had bought my first home by the
time I was 30 (with 20% down) and I was saving (according to my budget records - $184 a month went to savings) but not contributing to a 401k plan (I was not yet eligible to do so) although I had a small IRA that I occasionally contributing to.

Six years later I'm maxing out my 401k contributions (so is Mr. Sam) so I never see that money in my pay check. I also save $500 a month in regular savings (goes to our ING emergency account) in addition to our other savings goals. My student loan debt, family loan debt and car are all long paid off. My home equity loan was paid off when I sold my house and I no longer use a credit card (except for business travel or other business expenses once in a while) so I don't have credit card debt. Mr. Sam's MBA student loan debt was also paid off in January 2008 so we have no debt except for our mortgage.

But, even now the first expense we talk about cutting back on is our retirement savings.

USA Today provides a 7 item retirement savings to do list.

Vacation on a Budget

I'm starting to get ready for my annual Memorial Day weekend girl's trip. Along with packing and picking up supplies, I have reviewed my budget for this trip to make sure that I don't bring home any vacation debt.

One of our monthly sinking funds (which we keep at ING) is a vacation/travel fund. Each month we automatically transfer $50 into the vacation/travel fund. $50 a month in savings is generally enough to cover the cost of a flight or a deposit on a hotel - in other words it is enough to get a financial start on vacation planning.

So when it came time back in February to book my Memorial Day trip flight, I had just about enough in the vacation/travel fund to cover the cost of my flight on Southwest ($330).

The next step for a vacation on a budget is to give some real thought (and research) to how much the total trip will cost me. Some costs, like the flight, hotel and rental car are fixed so those costs are easier to plan for. My share of the rental car is $82 plus half of estimated gas costs ($50). My share of the hotel costs is $452 (including estimated taxes). Additionally, we have planned time at a Spa and my reserved services are $285 (includes estimated tip). My total known vacation costs are $1199.

What about unknown costs? I estimated unknown costs based on the kind of trip (this time around - mostly hiking/outdoors) and then I give myself a reasonable daily budget. I have given myself $200 a day for Saturday - Monday of the trip and $100 for Friday and Tuesday of the trip (travel days) for a total of $800 in spending money. My daily spending budget should cover things like meals, entertainment and any shopping. My total vacation budget is $2000.

For the last three months, I have set aside $300 a paycheck for my vacation. As a result, I have $1800 saved up for the vacation (remember I have already paid for my flight).

I expect you might be thinking that $800 in spending money for a long weekend trip is excessive. Vacation/travel is one of my favorite things to do. As a result, when I travel I don't skimp. Planning a vacation budget doesn't necessarily mean that I spend less money. Instead it means that I plan ahead and save up so that when I return from vacation I come home only with fabulous memories (and photos) and no debt.

While I do not use credit cards for day to day spending, I bring my one credit card with me when I travel just in case I run into a travel emergency. I will pay for my known vacation costs with my debit card. And, I like to carry my daily spending monies as cash.

This week's collected points of interest

• South Florida wins the inflation race. Miami/Ft. Lauderale metropolitan area topped all other cities, with a 4.9 percent annual inflation rate through April. The national rate was 3.9 percent.
  
• From USA Today, nearly one in six homes in the U.S.A. has only wireless phones - no land lines. We would like to join these folks and get rid of our own land line, but we have kept it due to our alarm system.
  
• Gas is expensive and you need to figure out how to save money on gas. But, don't waste your time with these gas-savings myths.

Frugal P.J.s

I made myself a fried egg sandwich last night (that's a frugal dinner choice for a late night dinner). As I was cooking my egg sandwich I noticed that my p.j. cuffs were seriously frayed.

Thinking about it, my p.j.'s date back to at least 1999 - 9 years ago. Am I in want of new p.j.s, yes - do I need them (who sees them besides me and Mr. Sam), no.

The curse of the recurring monthly bills

I travelled this week for business and had a rental car with XM radio. I so enjoyed the XM radio I began considering adding an XM radio to my future (hopefully this year) nused car. I was surprised that the monthly subscription fee (if you sign up for a 3 year plan) is a reasonable $10 a month. There are also set-up costs for the system.

But then..... I start thinking about whether I want another recurring monthly bill. Another recurring monthly bill is a sure way to increase our monthly and yearly budget.

At present we have the following 6 monthly recurring bills for our home:
* mortgage with Wachovia
* utility bill from our city
* AT&T which includes a land line, two cell phones (one with a Blackberry data plan - but paid by employer) and DSL internet
* DirecTV
* ADT
* charity payment (we made a yearly giving pledge that we pay monthly)

Do I want another? On one hand, I think that its just $10 a month. $10 a month is not a big deal, its equal to just one lunch out. On the other hand, its $10 a month, every month. And my commute is 10 minutes, not really long enough to get my money's worth.

How many recurring monthly bills do you have? Do you have any you can cut out or reduce?

Obsessed

I spend a lot of time thinking about our finances. I update our net worth a few times a month, I review our checking account balances multiple times a week, I check our ING account balances a few times a month, I review our investment balances about once a week, etc.

You could say that I am obsessed with personal finance.

This month I noticed that a mortgage payment for one of our investment properties had not posted via auto-pay. I checked the mortgage account (with Coldwell Banker) on-line and the account summary noted that the next payment was due 5/1. I also reviewed the payment history and confirmed that for the last year payments normally posted between the 5th and the 7th of the month. Since it was the 12th of the month I was concerned. Yesterday, I called Coldwell Banker and went through the dreaded automated menu and again was told that my next payment was due 5/1.

When I finally got to speak to a human I explained the situation and my concern. Surprise, surprise, the mortgage has been sold to CitiBank. I was told I should have received a 'welcome' letter - I did not. I was told that CitiBank would draw the mortgage payment on the 15th and no CitiBank did not need to ask permission to draw from our checking account.

When I had asked all the questions I could think of, my last question of the customer service rep was the following. Why did the Coldwell Banker on-line and automated phone system both inform me that Coldwell Banker was still awaiting the payment due 5/1? If our mortgage had been sold why not provide that information via the on-line account system? The rep could not answer that one.

This week's collected points of interest

• An interesting article from Janice Revel of Money magazine on the possibility of higher tax rates in the future and why you should be investing in Roth IRA and Roth 401k options to hedge your bets.


• Hints that the sub-prime mess is seeping into prime loan territory from USA Today. 2.3% of prime loans were 60 days behind in February, up from 1.4% a year ago. If you prefer to look on the bright side, think about the status of the other 97.7% of prime loans.


• Also from USA Today, consumers increased credit card borrowing at an annual rate of 7.9% in March 2008.


• A different take on shrinkage, this time service shrinkage, from msnbc.com Red Tape Chronicles.

Latte Factor vs. Big Picture

I think most people have heard or read about the latte factor from David Bach's book the Automatic Millionare. Bach's plan is that by finding $5 a day (the cost of a latte) in your budget and directing that money into a retirement fund after 40 years you will find $1,000,000 in the bank.

Lots of experts also advise using the latte factor to pay down debt, instead of taking that $5-$10 a day and investing it you put it towards paying off your credit card debt or car loan. I'm generally in favor of this plan, I think its pretty easy to cut back on the day to day 'extras' and put that money towards your debt snowball. Once you start tracking your spending you will likely find lots of money leaks that you don't even realize are draining your wallet. (Here is a handy latte calculator.)

Walter Updegrave, Money Magazine's Senior Editor, advises that its better to stop "obsessing over every little treat" and focus on the bigger expenses in life. If you have a $500 a month car payment you would do better to cut out the car payment than you would if you cut out the latte.

I think Mr. Updegrave's advise is very smart but hard to implement mid-stream. If you already have a $500 a month car payment, it is difficult (and probably expensive) to get rid of the car payment. On the other hand, if you don't have a monthly car payment do your best to avoid taking one on.

What do you think?

Baby Budget Busters

Background, we barely use our home phone, in fact the battery in the handset has been dead for weeks (need to get that fixed), but we keep the land line because we need it for our alarm system. Today, I made a change in our residential phone service which will save us $10 a month and $120 a year. Five minutes of time saved us $120 a year. Is $120 a ton of money? No, but its money that we have now freed up to direct towards investing, saving or even other spending priorities (even fun ones like vacation).

Take a look at your billing statements and spend five minutes once a week calling your service providers to see how you can reduce your monthly bill.

Bag, Borrow or Steal - does it make cents?

I'm not one of those gals that is particularly interested in carrying the latest "it" bag, especially when they are so pricey. The other day, I saw a woman at my office building wearing brown on brown Coach logo shoes and carrying a colorful Louis Vuitton logo hand-bag. I found the look both confusing and pretentious (sorry).

But, anywho, if you must carry the newest bag, does renting one make cents? If you bought this Louis Vuitton bag it would set you back $685. If you rented it at bagborroworsteal.com it would cost you $43 a week or $125 a month (assuming you signed up for a membership - 1 year membership is $60). I guess if you are the type to buy a new bag every couple of months then it probably would be more practical to rent instead.

However, I would suggest that this rental service ought to be reserved for very special occasions (wedding, prom, 10 year high-school reunion).

Be different!

Living a debt free life, avoiding credit cards, saving up for purchases -- all behaviors that are likely to set you apart from friends, family and the general public.

Dave Ramsey preaches "live like no one else so you can live like no one else." Said another way "Don't let the world squeeze you into its mold."

How do we live differently? The most visible evidence of our debt free life is that we drive old ('99 and '97) paid for cars while our friends and co-workers drive shiny, luxury-brand leased cars. We could easily afford a new car payment or a lease payment, but instead we continue to drive our current cars and we are working on a new/nused car fund (one of our 2008 goals is to save $17,000 for a nused car for me).

Most people don't care what kind of car you drive and the people who do care are not worth associating with.

Penny Pinching Ideas

I caught a Good Morning America segment this past week on saving money during tough times. The top suggestions -

Smoking. No butts about it. At about $5 a pack, a smoker who smokes a pack a day is spending about $35 a week which adds up to about $1,820 a year.

Drink from the tap. A bottle of water runs about $2, so if you drink just one bottle a day every week it will set you back $56 a month or about $2,900 a year.

What are your penny pinching ideas, what regular purchases have you cut out?

Spending Fast

Recently, I posted step 2 of how we paid off $55,500 in debt which includes advice on creating a baby emergency fund.

Another idea for coming up with cash to use to fund a baby emergency account is to undertake a family spending fast.

A weekend spending fast.

Do you spend your weekends spending? It is super easy to spend Friday, Saturday and Sunday eating out, hitting the bars, going to the movies, shopping at the local mall, etc. It is even easy spending money doing chores - picking up the dry cleaning, picking up supplies at Home Depot, grocery shopping.

Instead of going to the movies, find the free events available in your community or head to the local park. Instead of eating out and even instead of going to the grocery store - go on a pantry diet (live off the food that is already in your pantry/fridge - eat soup, pb&j, eggs for dinner, etc.) Hold off on house projects so you can avoid the Home Depot (H.D. stands for hundred dollars in our house).

On Sunday night or Monday morning take the money you didn't spend and put those savings towards your emergency fund. Try committing to a weekend spending fast once or twice a month.

A work week spending fast.

On Sunday, hit the grocery store (make sure you plan out some menus and bring a list) and fill up your gas-tank.

For the next 5 days, Monday - Friday, spend no money!! No lunches out, no take-out for dinner, no coffees at Starbucks, no stopping by 7-11 to pick up a soda/water/candy-bar, no lunch money for the kids. By cutting out those work week purchases, you likely will find that you save $10-$20 a day or $50-$100 a week. In 10 work weeks you will have saved enough for your $1000 baby emergency fund.

A 30 day spending fast.

I don't think it is realistic to go 30 days without spending any money. But, you CAN, for the next 30 days, avoid the mall, Target, Wal-Mart, Barnes & Noble, Home Depot, internet or catalog shopping, etc. Whatever triggers your spending, for me its all those glossy catalogs, avoid it for 30 days (I recycle those catalogs without looking at them).

What else can you put off for 30 days? If you get your hair cut every 4 weeks wait a couple of weeks and get your hair cut at 6 weeks. For the ladies, cut out the weekly, biweekly or monthly pedicure/manicure.

By putting off a purchase for 30 days you likely will find that you no longer want that particular item. A spending fast will also help you sort out the difference between a want and a need. If you can do without an item for 30 days it most likely is a want not a need.


Note, even if you 'fail' at your spending fast you will find you are much more aware, or engaged, in how you spend your money. A spending fast is a great way to become more aware, and more mindful, of where and how you spend.

How we paid off $55,500 in debt - 2 of 6

Step two of paying off our debt was to change our day to day habits such that we stopped adding to our debt. What does that mean??

First, we cut up all our credit cards. Dave Ramsey suggests switching from credit to using cash for all day to day purchases. We tried using cash for every day spending, but we found that cash was too difficult for us to track and instead switched to using our debit cards for all of our day to day purchases.

Second, we established our baby emergency fund of a $1000. The baby emergency fund is designed for those expenses, like a car repair, a medical bill, a home repair that used to land on our credit cards. Dave Ramsey recommends establishing a baby emergency fund before moving on to the debt snowball. And if you end up raiding the baby emergency fund, as we did a couple of times, you rebuild it before continuing with the debt snowball (more about the debt snowball in step 3).

I'm sure you are asking yourself, how do I save up $1000 for a baby emergency fund when I'm deep in debt and I'm living pay check to pay check . . .

• Pay yourself first. Include savings for your emergency fund as you would any other bill and put it at the top of your bill paying list.


• Found money. Use your tax refund, your stimulation check, bonus, birthday money, any 'windfall' money for your baby emergency fund.


• Clean house. Sell stuff - hold a yard sale, list items on eBay.com or craigslist.com. Down size - sell your car and buy a less expensive vehicle, sell the boat, camper, RV, etc.


• Up your income. Take on a part-time job and put your nights and weekends to work. Pick up extra income by baby-sitting or pet-sitting.


• Work your budget. Track your spending, every penny, for a couple of weeks and figure out where your money leaks are. Ask for receipts or carry a small notebook to track purchases. Are you spending $5-$10 a day on coffee or lunch? Plug up those money leaks and put that $50 a week into your emergency fund. Take a hard look at each and every regular bill (think cable, cell phone, internet, gym membership, cleaning service, lawn service, pet service, club dues, kids' activity fees, etc.) Anything that you can do yourself -- cleaning the house, cutting the lawn, walking the dog -- should be cut out all together. Consider also getting rid of the cell phones, cable T.V., etc. -- can't live without the cable, then reduce the number of channels and reduce the monthly bill.

What should you do with your emergency fund monies? Well, that is up to you - you need to figure out what works best for you. We kept part of our emergency fund in a regular savings account linked to our checking account with Wachovia. We kept the rest of our emergency fund in an ING high yield savings account. We earn more interest on the money in our ING account and its harder to access as it generally takes a day or two to transfer from ING back to Wachovia.

Are you interested in living a debt free life? Make it happen, move forward by establishing a baby emergency fund of $1000.

If you want to pay off your debt, stop incurring new debts. Cut up your credit cards or put them on ice (literally - freeze your cards in a block of ice).

Check back for steps 3 - 6 of how we paid off $55,500 in debt in 12 and a half months.
See step 1 of 6.

Zillow Zestimates - Zact or Ziction?

If you invest or even follow real estate you likely have heard of the web site Zillow.

Zillow calculates a Zestimate® home valuation as a starting point for anyone to see — for free — for most homes in the U.S. So, using the Zestimate as the foundation, we built a Web page for each home and then filled it with data and maps and layered it with publicly available information such as comparables and tax information. We were breaking new ground — to package all of this information in one place for everyone to see, for free.

As the above information notes, Zillow pulls its data from publicly available information - here in Florida I regularly consult with my local property appraiser's web site. But Zillow has real advantages because so much information is compiled, mapped, graphed, etc.

As such, I generally review the Zillow Zestimates for each of our properties about once a month. I have noticed that our primary home Zestimate has worked its way back up to peak Zestimates from early 2006. See below.

Do you rely on or even consult your home's Zesitmate?


Note - When calculating our net worth, I utilize the official values received from the property assessor's office.

Risks of Cotton

I bought new place-mats at Pottery Barn this past weekend (in advance of a small dinner party on Saturday night and a visit from Mr. Sam's parents on Sunday). A wash and dry later this is what my brand new place-mats look like now.

And this is what they look like when I tried to reform them....

I have put the place-mats back in the wash and my new plan is not to dry them.

The cute Florida themed cocktail napkins that I bought at the same time, also at Pottery Barn, still look great after a wash.

How we paid off $55,500 in debt - 1 of 6

In December 2006, shortly after I married Mr. Sam, I started shopping for a new/nused car. I wanted a new car (I was and continue to drive a paid for 1999 car) but I did not want to a new car payment. I did some internet research and came across Dave Ramsey and his drive free plan and I was intrigued by Mr. Ramsey's debt free philosophy.

Accordingly, I picked up Ramsey's book Total Money Makeover at the library and read it while Mr. Sam and I were vacationing in Key West over the New Year's holiday. When I had completed Ramsey's TMM I was highly motivated to tackle our debt and to start living "like no one else so we could live like no one else."

The first step was to determine how much debt we were carrying. Easier said than done. It took us a while to collect statements and information for our debts (6 credit cards, 1 other debt and 1 student loan) and when we added up the damage we owed $55,537.

Ouch!! Were we surprised at by the total debt amount? Yes, indeed, we were. But, step one of tackling any problem is to first face the problem.

Check back for steps 2 - 6 of how we paid off $55,500 in debt in 12 and a half months.

Are you interested in living a debt free life? Why not take the first step and gather your credit card, car and student loan statements and documents and add up your unsecured debt.

Net Worth

I have posted a link to our net worth entry for April 2008. If you click on the link you can review our net worth entries dating back to January 2007. See chart to the right.

A little bit of background information on our net worth. First, our net worth entry is joint (includes Sam and Mr. Sam's assets and liabilities). Second, we include our primary dwelling in our net worth calculations. Third, all real estate values are based on the assessment as determined by the property appraiser's office. Fourth, stocks include our pre-2007 IRA monies and bonds consist of our 2007 IRA monies. Finally, other includes our various ING savings account (except not our emergency fund which is included in cash).

Enjoy and let me know if you have any questions.

Habits

If you do something every day for 30 days it becomes routine.

Happy Friday!

Cooling Off Period

I really like this idea from No Credit Needed:

For every $100 that I want to spend on the purchase of a new product, I must wait one day before I make the purchase. This creates a self-imposed ‘cooling-off’ period.

If a new gadget costs $100, I have to wait one day until I can purchase the gadget.

If a new gizmo costs $400, I have to wait four days until I can purchase the gizmo.

If a new thingamajig costs $1400, I have to wait two weeks until I can purchase the thingamajig.

My husband and I have a rule that any purchase over $300 has to be discussed and agreed before one of us can spend that kind of money. I also, often, shop online by putting purchases into my virtual shopping bag and then I wait a few days or weeks before I purchase same. My amazon.com basket has books and CDs that have been waiting to be purchased for months (its also fun to watch the prices rise and fall).

What do you do to keep your spending and shopping in check?


Check out No Credit Needed for more.

Hooray - Full House

Mr. Sam has rented the crack shack before the first of the month. We are back up to full house with tenants in all our rental units. Hooray!!

Mr. Sam is in charge of screening and approving tenants (although I could veto if I felt strongly enough) and it was his call to rent the crack shack to a felon. We have, however, rented this unit to others with a criminal background. We'll see how it goes with this guy and his girlfriend. We hope his criminal indiscretions were limited to his youth and now that he has a couple of kids he has put that type of behavior behind him.

It has been an expensive couple of months. Besides the monthly carrying costs (mortgage, monthly insurance and real estate tax costs) Mr. Sam has done a lot of work on the property including new laminate flooring in the 3 bedrooms and entry way, new tile in the kitchen and a complete gut and redo of the bathroom. We also refreshed the landscaping at the house. I don't have the total we spent because I have not done my Quicken numbers from March or April (need to get that done this weekend) but I would estimate at least $2000 plus @ $2000 in carry costs.

Rent-O-Meter

Check out this handy tool.

You can plug in your rental unit address, current monthly rent, number of bedrooms and units in building (i.e. apartment building, single family home, duplex) and this web site lets the average slum lord (kidding) know whether they are charging an average, low or high amount in rent. Even better, the web site maps other rental properties with a + or - sign so you can see where your rental unit falls on the neighborhood rent scale. So while many rental units in our small city are asking a higher rent than we are, rental units in the immediate neighborhood are asking a bit less ($995 and $1200).

This is the feedback Rent-O-Meter gave us on our crack shack. Its a good deal because of the neighborhood ameneties such as prostitutes and drug dealers (sigh).

Your rent of $1,250/month for a 3 bed unit at [address] FL is lower than the median rent in your area. Your unit seems to be a good deal!

Gold Plated Lab

Snarfle went to the vet this past weekend to be checked out by Dr. G. for his thirsty behavior. The short answer, Snarfle does have a urinary tract infection (hmmm..... wonder which lady dogs he has been sniffing) which would explain his need to pee every 2 minutes. The question about kidney function is still open and we are waiting for the blood work results to come back from the lab.

Total damage $325.

Real crack at the crack shack

We own a couple of real estate investments here in South Florida. Mr. Sam is in charge of our real estate business - he does 90% of the repairs, upgrades, landscaping, etc. Mr. Sam also takes care of advertising, screening renters, wrangling the renters (which can be like herding cats), etc.

One of rental properties, which we lovingly call the crack shack, is in an "up and coming" neighborhood. Presently, however, the neighborhood has taken a plunge for the worst - lots of prostitution, drug dealing and homeless. So Mr. Sam recently met with the police to try and get more police presence in the neighborhood. We'll see what comes of it.

Tonight, Mr. Sam brought home his very first crack pipe (found across the street from the crack shack).

Thirsty Dog

Snarfle, our 11 year old yellow lab, has been drinking water and peeing up a storm the last couple of weeks. I called one of my good friends, SM, who has adopted and fostered many old dogs and asked her what she thought about Snarfle's thirst. She confirmed what I suspected - kidney issues.

So, Snarfle is off to the vet tomorrow for a check up. SM said that there are special foods for kidney disease. Hope to hear good news from the vet tomorrow.

Tax Day

So, one of the goals of this blog is to post about our finances.

Did you get your taxes done? Did you owe money to the IRS or did you already get your refund back??

We got a ton of money back this year -- about $8200. Last year we got about $4000 back. I adjusted my withholdings at work but Mr. Sam did not. In 2007 we both maxed out our 401ks and due to our investment properties and charitable giving we had a ton of deductions. So there you go, we ended up with a biiiiggg refund. Mr. Sam and I will be looking at the IRS withholding calculator http://www.irs.gov/individuals/article/0,,id=96196,00.html to see if we can do a better job at bringing home more cash money in our pay checks and give less to the IRS.

Anywho, (I love that fakey word) our fun plans for the cash money (mostly my plans as Mr. Sam has not staked a claim to the cash money) is to add $1000 to our ING travel/vacation savings account which now has a balance of $1106. I made a couple of fun purchases at Red Envelope (http://www.redenvelope.com/).

Practical plans for the money include paying off a 0% Home Depot credit card $555 charge for one of our investment properties (done), plumping up a couple of our checking accounts to compensate for one empty investment property and the bulk will go to our emergency account which before IRS monies is at $10,200.

What is the Point?

My goal for this blog is to help me stay on track. I will be mostly focusing on issues related to personal finance and real estate investing. I don't pretend to be an expert on these issues so take all posts with that in mind.

This post from wisebread.com http://www.wisebread.com/there-is-no-tomorrow really sums it up.

Life Happens while we’re busy making plans. If you wait until tomorrow, you’ll have a whole new set of life circumstances to deal with that will throw you off-course yet again. Don’t be that person who wakes up one day wondering where life went and finds their self in a pickle, or worse – with regrets.
The tomorrow you’re waiting for never comes. So let’s try to find a way to make it work…today.

Friday Night loser

Ok, so its Friday and Snarfle and I are hanging at home. Mr. Sam is working on the crack shack (one of our investment properties).

So far, Snarfle and I have watched an hour of Cops and now we are watching I Know My Kid's a Star! Have you seen this show about crazy stage mom's and their kids... its a train wreck but somehow entertaining.

My first post!

Ugh, I feel so lame starting off a blog "this is my first post" .... but heck what are you supposed to write?

Anywho, I have decided to start a blog because I want to document the life of my yellow lab "Snarfle" (isn't that a noble subject matter), my pursuit of happiness, our personal fiancial goals, various house projects, life in So.Fla., etc.