Real Estate Update

Just did an update on our networth numbers.  Our three investment property mortgages are each, now, under $100,000 in debt.

The current mortgage balance numbers are as follows:
$98,207
$85,483
$74,520.

We also are about to get under $200,000 on our primary home mortgage, right now the balance is $201,583.  Next month's mortgage payment should get the balance below $200,000.  This makes me happy especially in light of my recent house envy.

I seem to respond more positively to reducing our debt than I do to increasing our savings.

Pulled the Trigger

I wanted to keep my old car, a 2006 sedan, for another year.  But, it didn't happen.  My old car was simply becoming too unreliable, especially since I'm often driving Baby Sam.  So, my options included investing about $4,000 in repairs or moving on.

I opted to move on.  While I could have kept my old car and invested in repairs, our lifestyle and needs have, with a baby, changed.  Babies bring along stuff, strollers, bikes, pack and play contraptions, etc.  So even if I spent the money to repair my car, I still felt like it no longer fit our needs for a family car.  Mr. Sam has a relatively new truck, but since its an open air bed truck, we don't normally use it for family trips or travel.

We ended up doing the research, test driving several models within the class we were interested in (small SUVs), shopping for the one we settled on, negotiating sale, finding financing, buying the car and selling my old car within a week.

Which means, instead of paying off our car debt this year (Mr. Sam's truck will be paid off by summer), we added a new debt to our family budget.  We paid for my nused car half in cash and then financed the other half at 2.8%.  I was bummed that I couldn't get 0% which is the interest rate on Mr. Sam's truck loan.  But, its a short loan, 24 months so the interest total overall is low.

I'm disappointed that we didn't save up and pay in cash for my nused car, in the same way I was disappointed that we didn't pay cash for Mr. Sam's truck (we basically did the same thing for Mr. Sam's truck, paid half in cash and then financed the other half except we got 0% since it was a new truck).  I believe in Dave Ramsey's plan to never have another car payment in your life, yet here we are with car payments.  On the other hand, I need reliable transportation both for family and work and I didn't want to empty out our savings account solely to avoid taking on the debt.  

Truck Update

Big news on the truck front, Mr. Sam is the proud owner of a new truck.  

As I shared recently, we were not finding very good prices on used trucks, they were running $12,000 or so for the type of truck we wanted but were 10 years old.  As such, after doing a lot of research, we opted for new (as Anon noted, the used car market is tough).

Anonymous said...

we had to replace our truck last year too. After looking for used ones in the 3 - 5 year range and finding not much of a price break off new ones, we went new. Its been awhile since we bought new but the cost justified it this time. I was going to pay cash, like you we hate car loans but the rate was so cheap and a $1000 rebate off the price for financing that we financed about 60% of the cost and paid it off over 6 months and came out way ahead with the rebate vs interest expense. I would have paid off the loan with the first payment but feared they would come back at us for the rebate amount. Our weekdays cars we bought in 2007, both luxury cars that are 2002 and 2004 models, bought as a package deal and plan to drive them for many more years.

We bought last year's truck (2013) and opted for a low end model.  We paid cash for about 40% of the purchase price and the rest was paid via a loan.   While I hate having debt of any kind, we will work hard to get it paid off quickly and, in the long run, I think it is a better decision.  We have a new truck that is under warranty, it has four doors which gives us greater flexibility (old truck only had two doors), and Mr. Sam is so happy to be out of his old, beat up truck.  

Car Repair Blues

One of the ways we keep our expenses down so that we can save more is keeping our transportation costs low.  I drive a 2006 four door car, which was purchased with cash in 2008.  Mr. Sam drives a truck, a necessity for our rental properties, which was purchased with cash in 2004.  The truck is of the late 1990s vintage.  So, I've had my car for six years and Mr. Sam has had his truck for 10 years now.

This year the average price of new car was $31,252.  Additionally, Americans are keeping those expensive cars for more years (due in part to longer car loans).

Last year, my car needed a fair amount of work.  The work was done, about $2000, and I was hopeful my car would be good for a few years.  No such luck, I've just put another $1200 into my car and I have an outstanding transmission problem that needs to be addressed by a specialist (which means expensive in my mind, but its an unknown at this point).

While we were talking transmission for my car, Mr. Sam's truck has reached its end.  He either needs a new engine or a new vehicle and the mechanic who looked at it said it really wasn't worth putting a new engine into the truck. The truck is also only two doors and we really need another four door vehicle for a variety of reasons.

So, we are on the hunt for a used four door truck (with a shorter bed).  Interestingly, the prices on used (2010-2013) trucks are close to the price for a new one.  I mentioned financing a purchase rather than depleting our savings account (which has already been battered by prior unplanned expenses this year), but Mr. Sam is strongly against having a car payment (I've trained him well).  Which means that we will need to look for something that is older or figure out some other plan.

Drum Roll - New Goal

CNN.com reports that the number of millionaires has hit a new high.  Which got me thinking, because this survey of millionaires excludes their primary homes in the asset count.

So, the new goal is to hit the million dollar net worth mark without counting our primary home.  And, looking at our networthiq.com numbers we are not too far from that mark.  At present, our net worth is at $1,380,755 and our primary home's value is listed at $399,000 (value from our last appraisal in 2012).  Which means that we are about $18,000 away from having a million dollar net worth without including our primary home.

Not too shabby.    

Royal Screw Up

So, I have a pretty good system set up for our personal finances.  I have a system for paying bills and for our savings that works off of our spending plant.  But, every once in a while things go surprisingly wrong.

At the end of last month, February, I was getting ready to do some work travel and I made the decision to pay our home mortgage March payment in February.  What was I thinking, well it seemed like I had lots of cash laying around our joint checking account, I knew I was traveling and I figured let me just take care of that big bill now instead of later.

Big mistake!  Several auto transfers and other obligations drafted after I made this payment and I, of course, came up short.  And further, of course, I had to try and fix this mistake while traveling.  Ugh, ugh, ugh.

Two weeks later, I am still undoing the damage that was incurred.

Cash Money

We have new tenants in Rental # 3 and they prefer to pay their rent in cash.

The upside of cash is that it is cash.  I know there is not going to be a bouncing check issue and when I deposit the cash it is instantly credited.

As an aside, have you seen the new $100 bill?  It has a 3-d security ribbon and a liberty bell hiding in the ink well.  There is also more color on the front and back.  I had several new $100 bills, which were new to me, a couple of the 1996 $100 bills and one 1990 $100 bill.  After I got over my amazement at the new $100 bill, the old school 1990 $100 bill really looked fake to me.

The downside of cash is that I have to go to the bank to deposit since, sadly, there is no remote way to deposit cash.  The other downside of cash is that it is hard to keep track of.  With checks, I have an image of the check for my records.  So, we have come up with a system.  First, we give the tenants a receipt so they have a record and we have a record in the receipt book.  Then when I deposit the cash, I am keeping an ATM receipt and putting that in my records in place of the check image.

NetWorth - Retirement Investment Progress

So, at almost the end of 2013 we have just over $800,000 in total retirement investment accounts which is mostly due to the performance of the market.  $200,000 more and our investments will be evenly divided between real estate and retirement accounts.

Holiday Cheer - 401K Match

For the first time in my corporate career, this year I received a 401K match.  My employer contributed "profit sharing" in the amount of $5,500.  

That was a surprise and certainly welcome holiday cheer at the end of somewhat tough financial year for us (with Mr. Sam's layoff).  

Stock Sale - Update

Back in October I posted about my hot stock dilemma and trying to figure out when and how to plan my stock sales (since I'm more of a buy and hold gal).  In particular I had a stock that was up 500% since I purchased it and I was trying to figure out if I should sell it or not.

I ended up selling the stock and making $4300 in profit (tax free since I hold my stock in my Roth IRA) but I did have regrets, what if the stock kept going up and up?  So I decided to calendar a two month follow up (which is today) to check and see the status of the stock I sold.  I sold the stock at $32, it has hit $34, but today it is at $28.

So, how do I feel.  I feel pleased, right now it looks like I made a good decision.  I sold close to the peak based on expert research telling me to sell and that research seems to have been correct.  We shall see, I will check again next year.

Stocks - Time to Sell?

Today, I sold some stock.  This was a momentous occasion because this was a first for me.  The last few years, in my IRA, I have been buying individual stocks (my 401k is mutual funds).  As of today, I had 21 stocks and my "change since purchase" (this would be my return if I sold everything) is in the 70s%.

Now, before you commend me on my stock picking skills, let me tell you that I am not an expert and you shouldn't be following my investment advice.  Secondly, I really started buying stocks in 2009, in particular March 2009, so much of my gains is as a result of a dramatic increase in the market between March 2009 and now.  Thirdly, I pick most of my stocks utilizing Fidelity's Preset Expert Strategies, so I am working off of expert research and not some particular skill on my part.

So, as I have been working on research for investing my 2013 Roth IRA monies, I noticed that I have several stocks that have done quite well.  One stock was up 500% in less than a year.  As a result, I was looking for some advice on whether to sell or not.  Thankfully there is a lot of good research available to read on the topic.

First, I realized that I am not setting any goals when I buy stocks.  And, sometimes you don't need to set a goal if this is a stock, i.e. blue chip, that one plans to hold for many years.  But, on some of my more riskier investments I should be figuring out what I want to get out of the purchase and then "pull the trigger" when that event hits.  For an example, if I buy stock XYZ at $10 a share and my goal is to triple my money, I need to set that as a goal and then set up a limit order to sell when it reaches that number.

Second, tax implications (and note I am not a tax expert either, and we were audited by the IRS so you really should not rely on any tax discussions that you read here).  Since, I am buying and selling within a Roth IRA there are no tax implications.  But, if I were selling this stock that I bought less than a year ago in a trading account I would be paying short term capital gains.  Roth IRAs are awesome because that $4,300 I earned today is tax free.

So, yes, I ended up selling my super hot stock, profiting and pocketed $4,300, tax free, and . . . .  I had immediate regrets.

Even though I set a well researched limit order to sell at a price that I thought was reasonable, the stock went even higher today.  Bummed, is how I feel, I could have made more money and I worry whether I could have made even more money by holding on to it.  I expect that I will continue to stalk this stock in the future to see how much more I "lost" out on.

The lesson I learned, among others, is that if I set certain goals for my stock purchases and I hit those goals I will feel better about my plan rather than being caught up in the exuberance of one hot stock.

How do you buy (and sell) stocks?  Do you have a goal or plan for each at time of purchase?

Tossing and Turning

I found myself unable to sleep last night and as a result ended up reading several great articles on Longform.org which is one of my favorite cites for in-depth, well written articles.

Since the Powerball jack pot is up to $425 million I found this article from Nautilus on why we keep playing the lottery extremely insightful.  I use the term "we" loosely as I'm not a fan of the lottery and I have often pondered why so many people play and why so many people who play are poor.

I have a personal objection to lotteries in they act as a regressive tax on the poor.  As such it was interesting, and depressing, to think about the analysis of the lottery is more popular among the poor.

For many poor people, he adds, there is “no scenario they can come up with in which they are suddenly going to get very rich.” To them, the lottery may be a low probability event—but so is getting a job that pays six figures.

The last time I played the lottery was the last really big Powerball jackpot.  Now, I really had no interest in playing, but everyone in my office was chipping in for a pool and I didn't want to be left out (I also didn't want to be viewed as a "stick in the mud").  The article notes, that indeed, some people are motivated to opt in not because they think they will win, but they don't want to miss an opportunity.

In a 2003 study, researchers in the Departments of Economic and Social Psychology, and Marketing at Tilbrug University in the Netherlands, noted fear of regret played a significantly larger role in the Postcode Lottery than in a regular lottery. It was not the chance of winning that drove the players to buy tickets, the researchers found, it was the idea that they might be forced to sit on the sidelines contemplating missed opportunity. 

So how about you, are you buying a Powerball ticket today?

Unemployment Compensation

Mr. Sam has been working on applying for unemployment benefits.  Sadly, Florida makes it super difficult to apply and obtain benefits.  Florida puts up so many road blocks regarding the collection of benefits that they are being investigated by the Department of Labor.  Mr. Sam's application process took about three hours, which includes a very long application and a skills test.  Luckily Mr. Sam has access to internet, the only way one can apply, he speaks English and he is educated.  Even so, he remarked at how difficult the process was, which is probably why only 17% of Floridians who are eligible actually received these benefits. 

Florida also provides a maximum weekly benefit of $275, which is the fifth-lowest amount in the country.  Mr. Sam should qualify for the maximum benefit which means $1,100 per month for three months (benefits cut off after 12 weeks).  

When is a Sale Not a Sale?

Earlier, I wrote about the psychological impact of shopping without actually buying the product you are shopping for.

Now comes news on something I've suspected for many years, at some stores sale prices are not really sale prices.  Rather, as Today News reports certain stores, including J.C. Penny, Kohl's and Macy's have been caught advertising and pricing items on sale when they are actually selling the product for the manufacturer's suggested price.

There are almost an unlimited number of techniques companies use to get us, the public, to part with our money either by increasing purchases and/or by increasing the purchase price.  A "sale" when its not really a sale is just another technique but one that the savvy customer should be aware of by comparison shopping and doing their own research.

Diamonds and Dollars - Update

Back in August of 2012, I wrote about a claim we had submitted in the DeBeers diamond price fixing case. Well, yesterday Mr. Sam received a $270 settlement check.

I have no idea if this is a fair or reasonable settlement for the damages suffered by the consumer class (I understand, from my research that the wholesaler class is getting much larger checks) since I never studied the claims or undertook any analysis as to Mr. Sam's damages.  I understand from the diamonds class action web site that "payments were calculated based on several factors, including how much you paid, the quantity and quality of the diamonds you purchased, the amount of money that is available for your Class or Sub-class, and how many Class Members filed claims."

Anyways, assuming we never would have thought to bring a claim related to the diamond in my engagement ring, we are happy to recover $270 and we are putting it into our vacation fund.

This is the second time I've recovered more than $200 in one of these class settlement scenarios, so I'll continue to fill out the paperwork.

Drinking and Shopping Don't Mix

I enjoyed this fun Atlantic Wire post on shopping under the influence.

 I have been to enough Palm Beach charity events over the years to understand the silent auction (and live auction) bidding dollars go way up the more people drink.

As such, I would add a section to the article that one should generally get a pass for shopping/bidding at charity auctions, since its for charity.

Otherwise, I thought the suggestions in this guide were great.  Definitely leave the credit cards at home if you are shopping after drinking and have a friend there to talk you out of bad ideas.

I often find myself in trouble when it comes to art, because (1) I love original art, (2) I'll spend good money for art, and (3) I'm often admiring art while holding a glass of wine.  So I stick to my rules and anything over a $100 requires a cooling off period.  I'll take a photo of the art with my iPhone, I'll take a business card, but I generally don't buy art on a first viewing.

2013 Goals - Post Bonus Update

(1) Max out 401k(s) -        $7644 (22%)   (goal is $35,000)
(2) Max out IRA(s) -         $4508 (41%)    (goal is $11,000)
(3) Add to e/r fund -          $2400 (24%)   (goal is $10,000)
(4) Pay down mortgage -   $830 (17%)     (goal is $5,000)
(5) Trading account fund - $50  (1%)        (goal is $5,000)
(6) House projects -          $600 (20%)      (goal is $3,000)

Total:  $16,032 (23%)

With Mr. Sam's added bonus monies, we are currently $109 ahead of where we should be for the year.  Whoo-Hoo!!  I doubt it will last, but I enjoy being ahead.

Bonus Plan

Mr. Sam recently received a small bonus at work.  Nothing huge, but every little bit counts.

First, the bonus was subject to his 401k withholdings, so a chunk has gone to the 401k, which left a couple thousand.

Second, since its Mr. Sam's bonus he wanted to take a chunk, a third to be specific, and put it in his everyday checking account.  His point is that he struggles with our allowance system (true) and he'd like to have a cushion.  I wasn't in favor of this plan because I believe that Mr. Sam will spend as much money as is available to him (hence the allowance system) and that this "cushion" won't last 90 days.  But, he convinced me to let him try* and I guess we'll see what happens.  We probably should have made a friendly wager.

Third, the rest of the money will be put towards our savings goals.

*In our house any expenditure over $300 has to be discussed and agreed and we counted this experiment as such.  I  don't want the impression to be that Mr. Sam's is "hen-pecked" as this rule works both ways.

Executing on the Holiday Plan

Earlier, I posted about our holiday plan and budget and since its Cyber Monday it is time for me to start executing on our plan.

As I previously posted, for the past few years we've been sending out holiday wreathes to our adult family members (we don't exchange holiday gifts with the adults in our family).  The past few years the holiday wreath giving has also supported one of my favorite charities, but they have opted not to participate this year.    So, I was thinking of sending wine from a winery we visited this year.  But, that option ended up being too expensive and too complicated although I am going to order a 6 pack of wine to give as gifts locally (work and hostess gifts).

For the wreathes, I decided to go with L.L. Bean. First, L.L. Bean makes the wreathes right in Maine, so the company supports American workers.  Second, the wreathes ended up costing about the same amount, with free shipping today and 10% off today, as the charity wreathes.  Also, I will receive $40 in gift cards, $10 per $50 spent, which I can use for other holiday shopping.

Happy Days

Good news, I  received a 5% raise yesterday at work.  And further good news is that the raise is retroactive for a few months.  Whoo-hoo!

So, since today is pay day for me, I received my newly increased paycheck via direct deposit and a check for the retroactive pay.  Eyeing that retroactive pay, we could use it towards funding our 2012 IRAs or towards paying down our mortgage.  We are behind on both of these 2012 savings goals (behind $2371 in funding our IRA, and behind $1461).  Or we could put it towards expenses related to turning Rental #3  (which Mr. Sam is working on as we speak).

But, what I really want to do is put it towards the art work that I've been saving for since Memorial Day.

What would you do, put it towards 2012 saving goals, put it towards current rental related expenses or spend it on something fun?  As an aside, I already have $110 in my art account so I only have $515 to go before I have sufficient funds to purchase.  This piece of art would be my Christmas present to myself from myself and Mr. Sam.