Vacation on a Budget - Doesn't Mean What You Think

We are less than a week away from our big family vacation.  Hooray!  Most of our planning is done, although we still have a few items to take care of before we depart.

As we head towards our departure date, I need to do laundry and pack.  I also have one more Amazon Prime order to execute on.  But as for our travel plan, the airline tickets are paid for, the hotels are reserved and the rental car is booked.

We vacation on a budget, but we don't scrimp.  What does that mean you ask?  Well it means that we always have a short term savings account earmarked for travel/vacation.  We also have an automatic deposit set up, so $200 per pay period goes into our vacation/travel fund.  That normally means that we have more than enough in our travel/savings account to pay cash for airline tickets.  After our airline tickets are booked and our vacation is planned I often up extra savings into our travel/vacation fund to make sure we have more than enough cash on hand for our hotel, rental car and spending.  This time around we didn't need to since our savings account was well funded.

I don't scrimp when I go on vacation, so I normally budget at least $100 a day for food which seems like a lot, but if you are eating out or stopping at a local brewery for a couple of $10 beers it works out to the right amount for us.  I also think about and plan for other spending, we'll be stopping at two national parks, so I'm accounting for entry fees, gas, and misc. spending on a t-shirt here or there or a special souvenir.  Mr. Sam likes to pick up t-shirts on his travel and he wears them a lot.  I like a more upscale souvenir, a piece of art from a local or maybe a handcrafted piece of jewelry.  I am picky so that means I often come home with nothing and that is ok.  Baby Sam gets to pick out something fun for herself that is inexpensive and I will likely pick out something for her along the way.  I normally set aside another $100 in cash for misc. spending.

All of this preplanning means that when we get home from vacation we only bring memories, a rock or two for our collection and no debt.

Focusing on Debt

This was my December update on debt:

Debt killing goals:
(1) Pay off lingering credit card debt in the amount of $6500.
(2) Pay off Mr. Sam's new car, remaining debt $2500.

Of course, we've added to our debt by buying me a nused car.  But, I'm ignoring that for right now.

I've been chipping away at our credit card debt.  We killed the 0% credit card debt that we took out for tile in one of our rental homes.  Mr. Sam also cancelled that card/account.  As for our revolving credit card (Chase) that has been hanging around since Baby Sam arrived, it is now down to $3809.  I'm utilizing Dave Ramsey tricks by throwing a $100 at it here and there, and sending payments from various checking accounts on the same day.  I expect that Chase will be killed off by mid-March (hoping for end of February).

Mr. Sam's truck is down to $2000 and we have 4 payments left.  I don't plan to pay ahead as we have a 0% situation.  So, by May the truck will be paid in full.

Once the Chase is killed, we really need to ramp up 2015 IRAs savings since the deadline to fund is 4/15/16.  At present we have $2500 in our 2015 IRA savings.  That means we need to find $9000 before 4/15/16.  Our available savings is down because of my nused car purchase.  We do have $4200 in our vacation/travel fund, which means I could likely raid it for a couple of thousand.  And I could probably take $1,000 from savings.  That would mean we need to find $5,500 from other sources in about a month or month and a half.

NetWorth Update

I have updated out networth numbers over on NetworthIQ.com.  That site remains wonky and spotty, but I know how to use it and I can do a quick update when it works.

Angie (a reader here) had told me about NetworthShare.com, and I did create an account and had them port over data, but not all of my data came over.  So I need to spend some time, which I'm perpetually short on these days, bringing the rest of my data over and getting used to the site, etc.

Our expenses have gone way up with Baby Sam which is mostly due to child care costs.  We have also had some cash flow issues since we are converting a rental property.  As a result, we've been relying on our credit card to fill some holes in our monthly budget which I hate to do.

We do have plenty of cash in our savings so its not necessary to do this, but I don't want to take cash from savings.  Its been somewhat circular this summer.  I really, really need to kill the credit card debt once and for all and then cut the card to get us out of this habit.

The positive is that we should be under the $500,000 debt number by end of year (one of our goals).  If I killed the credit card debt we would be below the $500,000 number in a month.  Another positive is that we have stayed above the $2 Million mark (in assets) for a year now.

Otherwise, we continue to struggle with putting money into our IRA 2015 fund, and we will need to work hard on that goal this fall.

Target Moves

Early I posted about a recent Phishing email I received at work.  As I previously mentioned, I shopped at Target during the time of the data breach (which seems to be growing each day).  I already canceled and ordered a new debit card and I have checked my credit report using the free credit report site.

Today, I signed up for Target's free credit monitoring.

Last week, I put in a limit order for Target stock. If the stock drops enough, I'll take advantage of the discount.

Lucky Numbers

Fascinating post on PIN code data, reveals 11% of 4 number PIN codes are 1234.  Looks like lots of other people are using expected PIN code combinations.  Take a look and see if your PIN code is on that top 20 list, if it is you may want to consider changing it up.

Satisfy Your Shopping Itch Without Buying

I've used a little trick for years to satisfy my urge to shop while also keeping my spending in check.  I go to my favorite online stores, J. Crew, Amazon, Pottery Barn, etc.  For clothes, I pick out something, I take a look at colors, I pick out my size, etc.  I may shop for an entire outfit.  Then I put it into my shopping bag or my shopping cart and then I simply don't check out.  My Amazon.com cart has items that I picked out more than 2 or 3 years ago.  Sometimes I use this method because I'm following our rules on waiting a day for every $100 an item costs, meaning if I picked out a pair a shoes that exceeded a $100, I am required to wait before I purchase them.  But, just as often, I simply enjoy this process, the browsing, the effort of coordinating a skirt with a shirt, finding the perfect dress for an upcoming event or trip and then feel little to no need to complete the sale.

This morning I read an article on The Atlantic that seems to confirm that materialistic folks (perhaps I am one) receive a greater happiness boost from thinking about acquisitions than from the actual acquisition.

What do you think?  Do you ever engage in imaginary shopping to satisfy your shopping impulses?

Quick Debt Update

I don't post much about our debt, because there isn't much to say these days.

We don't use credit cards in our day to day life.  But, we do, for our rental properties, occasionally run up the Home Depot credit card, we obtain 0% deals, and then pay it off over time with rental income.  I am happy to report that the $2500, 0% interest, credit card debt incurred in November 2012 has been paid off with proceeds from rent.

Additionally, I was pleased to note that the mortgage balance, for our primary home, is now below $250,000.  The outstanding balance is $248,962.  In two (2) years we have knocked off $25,000 from our principal.  And since our refinance back in September 2012 our progress has accelerated in that so much of what we pay each month goes to principal rather than interest.  The original loan balance was $315,000 and we took the loan out in July 2004.  We refinanced twice, reducing both the term of the loan and the interest rate each time.  

Ask, and you shall receive

I have been a DirecTv customer for years.  We also have an HBO package which includes access to HBO Go.  HBO Go is a great service, we can watch any and all HBO series, including past seasons and current seasons, on an iPad or iPhone anywhere (assuming access to WiFi) at anytime.

But, there is a down side of DirecTv and HBO and that is the price.  While, I feel like we get a lot of enjoyment out of the service, DirecTv has been inching up and inching up in price.  So I've developed a habit of calling once every 13 months or so and asking for a discount.  I used to call armed with information from their competitors, but now I just call up and tell them I want to keep our same services but I want to pay less and it seems to work.

Last night I called, and I received a $10 discount on our DirecTv package and then I spoke to someone in the premium channel department and received a $10 discount on our HBO package.  The general discount is good for a year and the HBO discount is good for six months.  So in 5 minutes I saved us $180.

This is a good lesson for all who are working on killing debt, sticking to a budget or increasing savings.  While you may have to cut certain things out in your quest for improved personal finances, there are also opportunities to keep the same services but pay less.

When we were killing our credit card debt in 2007 I regret that I never called, on the cards that were not 0%, and asked for reductions in interest rate or some other accommodations.  Last year, we combined and redid our car insurance (more than 5 years after we got married).  We dramatically increased our coverage and saved a ton of money (which we put towards our umbrella insurance policy).  We could have saved thousands of dollars over the 5 years of insurance status quo, but we didn't make the time to investigate our options.

Free Credit Report

Following up on my earlier post about free credit reports, I decided it was probably time for me to review my credit report.  My last review of my credit report was when we were refinancing our primary home last summer and at that time I purchased my report and score from MyFico.com.

This time around I obtained my report from the official site where consumers can obtain a copy of their credit report from the big three agencies.  Most of the information appeared to be accurate and up to date, with the exception of my home address, which is reported with a variety of errors.  But, I was pleased to see that our home mortgage was accurately reflected as paid in full with Wells Fargo and our new refinances loan with CitiMortgage.

The most interesting part of the report, to me, were the credit inquiries.

American Express is, basically, in love with me in that they inquire as to my status every other month.  In 2012 they checked on me six times and I haven't had an account with them for more than 10 years.  Clearly, they want me back.

I also was intrigued by the number of credit inquires that occurred in the month following our mortgage refinance.  Clearly those who would offer us credit received some kind of notification that we had just taken on a new loan.

Free Report or Free Snoop

You may have heard that public officials, like Hillary Clinton and Vice President Biden, as well as celebs, like  Beyonce and Jay-Z, were the victims of hacking and that their personal finance information was disclosed.

Well now, it sounds like, according to this report, that some of that information came from AnnualCreditReport.com.  AnnualCreditReport.com is the site which the three credit reporting agencies set up so consumers can gain free access to their credit reports.  Scary stuff to hear that, possible, hackers were able to defeat the security features of the site (which I've had trouble answer for myself).  But, I guess, now that I think about it, if your bio details are out in the public domain someone with time and energy could probably answer the questions posed by this site.

The last time I checked my credit report was right before our refinance.  This news story reminds me that it is probably time to check again.

Chase-ing My Credit Card Payment Date

I'm not a fan of credit cards, but we have one general credit card (Chase Rewards) which we use for travel, both business and pleasure, and we've used it for a couple of recurring charges including a charity payment and an alarm payment related to one of our rental homes.

Since I don't use a credit card with frequency I seem to struggle to integrate payment of the bill into our spending plan.  Last month I paid the Chase bill on the last day of the month and had to have an interest payment reversed (there was a snag with their system).  This month, I missed paying the bill all together by two days.  I just paid it in full, the statement charges, charges to date this month, and the late payment, but I know they'll ding me for interest as well next month.  

Part of the problem is that the Chase bill due date is the 5th of the month.  Based on how I get paid, how we collect rent from our tenants and how I pay our bills I don't normally pay the beginning of the month bills until the end of the first week.  So this month, March, I've not paid our early month bills yet.  I plan to pay them on Thursday when I get paid.  As such, the timing of this bill has tripped me up a couple of times.  

The other part of the problem is that I was waiting on a $700+ reimbursement from my company due to travel in Feb.  I've asked my assistant to timely process my reimbursements, but it is still taking too long to get my money back (which is why I put it on the credit card in the first place) and I'm reluctant to pay the bill with my present cash.  But of course, the end result is that I only deposited my reimbursement check this morning and I still had to pay the Chase bill out of my own pocket.  

Brainstorming about this problem, I have already sent Chase a message to see if the due date for the bill can be changed to the second half of the month or changed to a date later into the month.  I'm also just going to have to come to terms with paying the Chase bill even if I'm awaiting funds from my company.  I should realize that I will have gotten a 15 or 20 day float and paying the bill myself will only mean the loss of those funds for a few days.  

Debit Card Diversion

We use our debit cards for 95% of our day to day transactions (the other 5% is cash).  As a result, I review our accounts online at least two or three times a week.

In the middle of last week I noticed a "funny" transaction that was in my pending transactions.  What was funny about it?  First, it was a debit card transaction and I do all of my transactions as check card (meaning I don't enter my PIN code).  Second, it was an online transaction for an entity that I did not recognize.  So that would mean that my PIN code would have been used for an on-line transaction, something that I never do.  I checked with Mr. Sam, as he sometimes uses my debit card, and he didn't recognize the company name either.  But, since the details on my pending transactions become clearer when they are no longer pending I figured I would give it a day or two.

So on Friday, at happy hour, I went to pay the check with my debit card and it was declined.  Yikes!  First, having my card declined embarrasses me no matter what.  So I called Wells Fargo and it was tough getting past the questions they use to verify that I'm me.  Besides giving them the charge/debit card number, my on-line id, the answers to my security questions, they also had to verify recent transactions not just on my personal account (the one tied to my debit/charge card) but on my other accounts.

Once I had verified that it was me, the representative from Wells Fargo indicated that my card had been flagged for fraud based on recent transactions.  She read through the transactions, totaling almost a $1000 and I confirmed that those transactions were not mine (the charges took place at stores that I don't shop at and further took place in another state that I have not visited recently).  So my card was canceled and my friend paid the happy hour bill.

When I got home I went through my online history and called Wells Fargo back, as instructed, and challenged the other transaction that I had eyed earlier in the week and another pending transaction that had occurred in Ohio (I live in Florida).  The transactions that the Wells Fargo representative had covered with me on the phone had all been trapped by the fraud algorithm so that money was never debited from my account.  The second Wells Fargo representative that I spoke to flagged the pending transaction and indicated that they would give me a conditional credit on the first transaction that had gone through and debited my account.

The next day, on Saturday, I visited my local Wells Fargo branch and they gave me a temporary debit/charge card while I await my new card.  The pending Ohio transaction never debited my account and has disappeared as of this week from my online statement.

In the many, many years that I have had a debit/charge card with Wells Fargo (f/k/a Wachovia and First Union) this is the first time I've had a fraud problem.  I was impressed that Wells Fargo's fraud alert system caught the vast majority of the fraudulent charges before they made it to my account and the money was debited.  I was also happy that Wells Fargo promptly provided a conditional credit of the one debit card transaction and that money was in my account the next day.  I am also happy that I have a temporary debit/charge card to use while I wait on my new card.

Capital One Hit With Fine

A little while ago I posted about my own dispute with Capital one involving a charge back for services I did not receive.  The charge back was not resolved in my favor due to misleading and incorrect information received by me from Capital One's call centers.  Thereafter, I closed the account since I had no interest in doing business with a company that would basically lie to me when I was trying to responsibly resolve a dispute with a merchant. So, I can't say I was too surprised to hear about Capital One getting hit with a major fine for deceptive practices.

Refinance Part 3

In applying for our mortgage refinance it is always eye opening to take a look at one's credit report and score.

My credit score was 799.  A score of above 760 is considered excellent and normally the best rates are provided to individuals with a score of 760 and above.  Of course I wondered why my credit score wasn't in the range of  800-850.  Talking with the mortgage broker he mentioned the fact that I don't have very much credit available to me since I only have one credit card with Chase which has a limit of $8000.  My score would actually improve if I had additional regular credit cards (of course it would go down if I applied for new credit right now).

Mr. Sam had a range of credit scores from 706-720s.  A score of 700 -759 is still considered great, but what was holding him back from joining the elite with me.  First, he has a medical bill collection for $160.  To me it is crazy that a tiny medical bill can ding the score like that, but that is the way it works, because it is counted as a collection regardless of the amount.  Second, Mr. Sam has no regular credit cards, he does have a Home Depot credit card, but store cards don't count the same way as a regular credit card.

Recession Map from Moody's Analyitcs

Here is a handy map from Moody's Analytics that you can use to figure out if your city is still in recession, at risk, in recovery or expanding.

For me, the map tells me that my closest city, the one in which I work is in recovery.

June is Wedding Month

Interesting to learn that money causes the most arguments between couples.  And since June is the most popular month for Weddings, it seems appropriate to revisit this issue.

• Only 43 percent of couples talked about money before marriage, according to a May 2010 survey conducted for American Express.

Have the money talk.  Mr. Sam and I had, what we call a financial summit, before we bought a house together (this was before we got married).  We sat down, with no distractions, and we each brought information regarding our current assets, current debts and a copy of our credit report, and a pay stub and talked through each of those categories.  No it wasn't romantic and there was some embarrassment on both sides of the table, but it was a very helpful step in our financial realtionship.  

• Be up front about your financial situation, have the "money talk" long before the big day, and tackle any challenges as a couple.

Yes, we had the money talk before our wedding.  But we continued to keep our finances separate until we married.  We did set up a joint house account, and we calculated, by income, what percentage each of us would put into the house account to cover the mortgage, insurance, utilities and joint expenses of living together.  I took over the task of paying joint expenses since Mr. Sam wasn't great about paying his bills on time.  

• It's helpful to have basic guidelines in place that will keep you on the same page. For instance, purchases under a certain dollar amount can be left to each spouse's discretion, while larger ones should to be cleared with your partner.

We work from an allowance system, each of us gets the same amount of money, X2 a month, for discretionary spending.  We also have a rules system.  Any purchase over $300, even if spend from allowance money, requires a discussion and agreement between the two of us.  We also use the $100 rule, any purchase over a $100 requires a day's cooling off period for each $100.  So, a $600 purchase, requires a discussion, agreement between the two of us and a six day waiting period.

• Some couples might be comfortable pooling all of their money, and others may not; neither is the "right" choice, but that should be decided explicitly.

We use a his, hers, ours system.  We each maintain our own account for our allowance money and then we have an ours account for our joint spending, saving and bill paying.  

If you are in a co-habitation or marital relationship, what systems do you use, what works and what doesn't work for you and your significant other?

2007 - 2010 Survey of Consumer Finances

Following up on my earlier Balance of Power post there was a timely article regarding states that had the biggest drops in net worth.  Guess which state made the list  . . . Florida.

The very interesting underlying report* from the Federal Reserve can be found here.  The data and charts are fascinating.

• The decline in median income was most pronounced among more highly educated families, families headed by persons aged less than 55, and families living in the South and West regions.

Well that would be us, highly educated, less than 55 and in the South.  And, no my income has not recovered to 2008 levels.

• The decreases in family income over the 2007−10 period were substantially smaller than the declines in both median and mean net worth; overall, median net worth fell 38.8 percent, and the mean fell 14.7 percent.

So, that is the good news I guess.  Incomes didn't fall as hard as net worth.  Average net worth is now down to the level found in the early 1990s.  So almost two decades of progress was wiped out for average families.  

• Although declines in the values of financial assets or business were important factors for some families, the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices.  The decline in median net worth was especially large for families in groups where housing was a larger share of assets, such as families headed by someone 35 to 44 years old (median net worth fell 54.4 percent) and families in the West region (median net worth fell 55.3 percent).

Well, that would be us, for sure, we have lost almost $200,000 in our real estate investments (that doesn't include our primary home, which also lost value).  As mentioned in prior post, we were heavily weighted in real estate before the bubble popped so we have taken a major hit in our net worth due to the real estate collapse.

*I find the title of this survey to be ironic.  We are only consumers in the eye of the Federal Reserve.  

"This is Peggy . . ."

You know that Discover credit card commerical, where "Peggy" is the male customer service representative with the thick accent and he gives the confusing run around to the consumer's credit card problem.  Well, I had a similar problem with Capital One and as a result I have closed my Capital One account.

As you probably know if you read this blog regularly, we don't use credit cards for day to day expenses.  But we do have a credit card and we do use it for travel expenses.  Back in May 2011, I went on a girls' trip to Las Vegas and ended up charging an outing on my credit card.  We didn't get what we contracted for and I learned a few lessons that I wanted to share. 

First, and I'm not sure if this is actually a tip that will work, but I learned not to sign a credit card slip for an outing before the outing is underway.  The company used the fact that I signed the credit card slip against me in the credit card dispute.  I had been drinking, we were in Vegas after all, and the slip was presented to me to sign before we got on our way.  When you sign the slip you are, evidently, aknowledging receipt of the services and since the service had not yet started I should have said I won't sign until the end of the night.  However, I'm not certain that we would have been able to go on the outing until I signed the credit card slip, so perhaps the suggestion should be to make some notation on the slip that I was being asked to sign before we got underway.  

Second, we did a charge back and when I received the letter from Captial One setting forth the company's response I should have responded in written form with my evidence.  Instead, I opted to call Capital One, which was an option presented in the correspondence that I received, but then spoke to a "Peggy" person, who did not speak English as a first language and told me that that I did not need to do anything that the dispue had been resolved.  I had plenty of evidence that we did not get the service we paid for, but I never presented such evidence in writing because I was told I did not need to.  Unfortunately, the person who was telling me what to do or not to do, was wrong or did not understand my questions (because of the language difficulties) and the end result was that Capital One counted my failure to respond, in writing, as agreement to the company's position (which again consisted of presenting a copy of the contract and a copy of the credit card slip signed by me).  Going forward, I will always respond in writing.

The Hazards of Debit Cards

We use our debit cards for 90% of our day to day transactions. We like debit cards because we can keep track of our spending, we avoid debt by avoiding credit cards and by spending present dollars, we stick to our budget and our allowance system since we are limited in what we can spend.  90% of the time our debit card system works well, but everyone once in a while something goes wrong and since our debit cards are tied to our checking accounts, when things go wrong they can go way wrong.

Mr. Sam recently ordered car parts (for our antique car, his hobby) that totaled about $300.   Since the purchase exceeded $300, we discussed and agreed that he could go forward with the purchase (one of our rules requires us to discuss and agree on any purchase over $300).  He waited until the second half of the month to make the purchase so that he would have more than enough money to go forward with the purchase.

Unfortunately, the car part company put the $300 transaction through three times on his debit card which triggered an overdraft to our main account.  Ugh!  I was furious and disappointed and I really want to call the company and chew them out.  Luckily, Mr. Sam noticed the problem the day it happened so he got on the phone with Wells Fargo and the car company to work a solution.  The car company had reversed the two extra charges and Wells Fargo agreed to forego the overdraft fee, but it took a number of calls and about and hour of time.

Vacation Season

I have posted before about our vacation budgeting/planning system. I have used this system now since 2007 and it continues to work well for us. We just returned from a long weekend trip and the known costs, the rental cottage and the fishing trip, were prepaid prior to the trip.  The remainder of the trip expenses were budgeted, as previously explained, I normally budget $100 day for each of us and we save that up in our ING travel/vacation account.  However, this trip was more of a nature/relaxing trip and we didn't come close to spending that much each day.  My annual girls trip, over Memorial Day weekend, is coming up so I'll put the money we didn't spend back into our ING account and I have just a few weeks to get ready for the next trip.