After balancing our checking accounts last week, I was shocked at how much money we spent in December. Between holiday, charitable, party and vacation/travel spending during December we blew through quite a chunk of change. The vast majority of that spending was thoughtfully planned and also saved for, in advance, in our holiday and travel/vacation ING savings accounts. But some of our December 2011 spending was just spending . . .
I don't do well with temptations and if I'm out buying gifts at Target for the Angel family we sponsored for the holidays I might just pick up an item or two for myself (which happened). Or if I am at a charitable function with the "ladies who lunch" I might just find myself caught up in their spending cascade (which happened).
As a result, I have decided that I am on a 30 day spending fast starting today January 9, 2012. What that means for me is that I will avoid the malls, the shops, the catalogs (they will go directly into the recycling bin), the emails from my favorite retailers touting their post holiday sales (delete, delete, delete), I will refrain from downloading E-books, iTunes, iPhone apps, etc.
To the extent I think of something that I need or want in the next 30 days I will write it down and revisit it in a month. I will calendar the two rebate coupons that I'm carrying around ($15 at J. Crew and $125 at Pottery Barn) so I will not worry about forgetting them but also will not use them in the next 30 days so as not to be tempted into spending above and beyond the rebate amount.
Please consider joining me in my 30 day spending fast. If 30 days feels too long, consider a weekend or a work-week spending fast to jump start your habits in the new year.
Monday, January 9, 2012
Friday, January 6, 2012
Lost in Translation
Last night I stopped by CVS to pick up a prescription. Since I live in South Florida, which has a high population of Spanish speaking folks, CVS has moved to employing bilingual folks in the pharmacy department. While this makes perfect sense, some of these folks actually don't speak English very well.
The pharmacy tech gave me the prescription and then asked me for my card. I was perplexed since under our insurance plan I thought my prescription would cost $0.00. But, since it is a new year and health benefits change from year to year I was not overly surprised that what was $0.00 in 2011 might have a charge in 2012. I gave her my debit card and she said "no, no, card" and returned my debit card. I asked, do you need my insurance card (we have not received new 2012 insurance cards yet)? She responded, "no, no" and walked away and returned holding up a red CVS savings card. Now, as an aside I don't use those savings cards as I don't like corporate America tracking my every purchase. I do know folks who use them and get good discounts but use a fake name or their dog's name (and I actually have a savings card in Snarfle's name which I have used for his medications from time to time, since not covered by our insurance) so I need to look into that. I told her I didn't have a CVS savings card and asked what my total was? Her response, there was no charge for the prescription. So my follow up question was, what savings would I get by using the CVS savings card on a $0.00 transaction? Her response, no savings.
I left wondering about the point of all that back and forth. I'm sure the pharmacy tech is required to ask each and every customer for their CVS savings card so I don't hold her responsible. But, what should have been a one (1) minute transaction turned into a five (5) minute transaction. I was frustrated both because I did not understand what she was asking for and, when I did finally understand, what the point was. CVS is losing money because the employee is wasting time on pointless banter and I'm, as the customer, left with a negative impression.
If a pharmacy transaction is $0.00 there should be no request for a CVS savings card Since, logic would dictate, there is no opportunity for savings.
The pharmacy tech gave me the prescription and then asked me for my card. I was perplexed since under our insurance plan I thought my prescription would cost $0.00. But, since it is a new year and health benefits change from year to year I was not overly surprised that what was $0.00 in 2011 might have a charge in 2012. I gave her my debit card and she said "no, no, card" and returned my debit card. I asked, do you need my insurance card (we have not received new 2012 insurance cards yet)? She responded, "no, no" and walked away and returned holding up a red CVS savings card. Now, as an aside I don't use those savings cards as I don't like corporate America tracking my every purchase. I do know folks who use them and get good discounts but use a fake name or their dog's name (and I actually have a savings card in Snarfle's name which I have used for his medications from time to time, since not covered by our insurance) so I need to look into that. I told her I didn't have a CVS savings card and asked what my total was? Her response, there was no charge for the prescription. So my follow up question was, what savings would I get by using the CVS savings card on a $0.00 transaction? Her response, no savings.
I left wondering about the point of all that back and forth. I'm sure the pharmacy tech is required to ask each and every customer for their CVS savings card so I don't hold her responsible. But, what should have been a one (1) minute transaction turned into a five (5) minute transaction. I was frustrated both because I did not understand what she was asking for and, when I did finally understand, what the point was. CVS is losing money because the employee is wasting time on pointless banter and I'm, as the customer, left with a negative impression.
If a pharmacy transaction is $0.00 there should be no request for a CVS savings card Since, logic would dictate, there is no opportunity for savings.
Thursday, January 5, 2012
2011 Savings - Final Tally
(1) Max out 401k(s) - $32,749 (99%)(goal is $33,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000)
(3) Add to e/r fund - $10,000 (100%)(goal is $10,000)
(4) Pay down mortgage - $5,000 (100%)(goal is $5,000)
(5) House projects - $2,314 (46%) (goal is $5,000)
Total - $60,060 (95%)
Overall, we are pleased with our 2011 savings performance. We completed, in full, three out of five of our goals. As for our 401k contribution, I maxed mine out and Mr. Sam almost maxed his out. He fell $255 short on his contributions, but he also received a match of $5,545 from his company. So, while we are not counting the match in our 2011 savings tally we are counting the 401k goal as completed. Comparing our savings in 2011 to 2010 we saved an extra $10,735 in 2011.
As previously discussed, most of that extra savings came from increases in our respective salaries and bonus money. So in 2012 we will be looking at whether we can boost savings by reducing recurring costs (i.e. we already reduced DirecTv by $240 a year) and discretionary spending.
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000)
(3) Add to e/r fund - $10,000 (100%)(goal is $10,000)
(4) Pay down mortgage - $5,000 (100%)(goal is $5,000)
(5) House projects - $2,314 (46%) (goal is $5,000)
Total - $60,060 (95%)
Overall, we are pleased with our 2011 savings performance. We completed, in full, three out of five of our goals. As for our 401k contribution, I maxed mine out and Mr. Sam almost maxed his out. He fell $255 short on his contributions, but he also received a match of $5,545 from his company. So, while we are not counting the match in our 2011 savings tally we are counting the 401k goal as completed. Comparing our savings in 2011 to 2010 we saved an extra $10,735 in 2011.
As previously discussed, most of that extra savings came from increases in our respective salaries and bonus money. So in 2012 we will be looking at whether we can boost savings by reducing recurring costs (i.e. we already reduced DirecTv by $240 a year) and discretionary spending.
Wednesday, January 4, 2012
Diving into 2012
While we have not finished out our 2011 year end assessment and we have not completed our 2012 Annual Spending Plan or 2012 Savings Goals, we have already started to make progress tidying up our financial house.
We were having trouble with our DirecTv box, so we had to call in to request a replacement box. While we had them on the phone we spoke to customer service and requested a reduction in our monthly bill. I have done this before and I have always had success. This time around the reduced our bill by $20 per month for one year which will save us $240 in 2012. We also got ShowTime, a premium channel, free for three months. We will have to call to cancel ShowTime or we will be billed, so I put it right into my iPhone calendar while we were on the phone with them so I won't forget. That is an extra $240 we can put towards prepayment of our mortgage or add to savings or even spend it on something more exciting.
Getting your financial life in order doesn't always mean you have to cut out things you enjoy, like pay t.v., rather you can ask for a deal and chances are good you might get one because DirecTv will spend less on giving us a discount vs. trying to get another new customer.
We were having trouble with our DirecTv box, so we had to call in to request a replacement box. While we had them on the phone we spoke to customer service and requested a reduction in our monthly bill. I have done this before and I have always had success. This time around the reduced our bill by $20 per month for one year which will save us $240 in 2012. We also got ShowTime, a premium channel, free for three months. We will have to call to cancel ShowTime or we will be billed, so I put it right into my iPhone calendar while we were on the phone with them so I won't forget. That is an extra $240 we can put towards prepayment of our mortgage or add to savings or even spend it on something more exciting.
Getting your financial life in order doesn't always mean you have to cut out things you enjoy, like pay t.v., rather you can ask for a deal and chances are good you might get one because DirecTv will spend less on giving us a discount vs. trying to get another new customer.
Wednesday, December 28, 2011
My First 2012 New Year's Resolution
Stop trying to be so dang efficient by multi-tasking. Said another way, focus on task at a time.
Today was the second time I've bungled an iPhone software update by trying to do it at work on my work PC. Of course, we are about to go out of town, tomorrow, of course I needed the update, but why try to do so from work when I know I might have trouble completing the update because (1) I am on a PC and (2) I am on a work PC with certain security settings. So here I am, now, without a phone trying to figure out how to restore it which means from home on my Mac or a trip to the AT&T store or both. And I'm distracted by this problem, which I created myself, instead of getting my work done before I head out on my trip.
How did I end up in this situation? Trying to get it done now, in the background, while working because that would save me time. Thinking that the work PC related problems I had before would be different this time. Why would they be different because I've figured out how to work around them in the past (of course never with an update has it worked).
I really am going to resolve to do one thing at a time in 2012. Multi-tasking never seems to save me any time.
Today was the second time I've bungled an iPhone software update by trying to do it at work on my work PC. Of course, we are about to go out of town, tomorrow, of course I needed the update, but why try to do so from work when I know I might have trouble completing the update because (1) I am on a PC and (2) I am on a work PC with certain security settings. So here I am, now, without a phone trying to figure out how to restore it which means from home on my Mac or a trip to the AT&T store or both. And I'm distracted by this problem, which I created myself, instead of getting my work done before I head out on my trip.
How did I end up in this situation? Trying to get it done now, in the background, while working because that would save me time. Thinking that the work PC related problems I had before would be different this time. Why would they be different because I've figured out how to work around them in the past (of course never with an update has it worked).
I really am going to resolve to do one thing at a time in 2012. Multi-tasking never seems to save me any time.
Tuesday, December 27, 2011
Other Goals from 2011 - Part Two
In addition to our 2011 savings goals and our other 2011 personal financial goals, I had a couple of other big projects on my list for 2011.
First, one of my big goals was to clean our my closet. This goal is basically completed. During the summer, I took everything out of my closet and spent a weekend trying everything on (except for clothes that were current - meaning I had worn them in the past few months). It was an exhausting project, but I estimate that I got rid of 50% of my clothes/shoes/purses. I got rid of clothes from high school and college, I got rid of clothes that no longer fit, that were not in style, that were poor quality, etc. I even got rid of clothes that still had tags on them, meaning I never wore that particular piece.
When I was done, I had two huge trash bags of clothes for Goodwill and another huge bag of purses and shoes that went to Goodwill. I also had a huge trash bag of business attire which I still have as I'm trying to find a place to donate business clothes. However, if I don't locate a proper charitable organization for my business clothes, I will drop this bag off at Goodwill as well. In order to complete this goal I need to drop off this last bag.
Mr. Sam also took all the racking out of my closet, painted and we put new, and better designed, racking back in. I organized the remaining clothes into color, type, style (business or casual), and put it neatly back into my closet. I still have too many shoes, but overall the closet project has held up well.
Second, my other big goal was to get our office organized. This goal is 75% completed. I pulled a ton of paperwork out of three file drawers (I still have one left to do) and went through all of it. I shredded hundreds of documents that were old and no longer needed. I also implemented a new system for our filing. Mr. Sam and I each have different color folders for our personal filing, we also have different color folders for each property and a different color folder for the dog too. I also purchased a new two drawer file cabinet, as our filing was completely overstuffed in the original space, to keep all filing related to our real estate.
I still have one file drawer to go through and I can't pretend I'm doing a good job at keeping up with day to day filing. I'm trying to figure out a system that works for me, as I'm a fan of systems, to keep up with the filing. I need to do 5 minutes a day or I need to do an hour a week or two hours a month or something. At present, I have six months of filing waiting to be filed.
How do you keep your papers organized and how do you keep up with the inflow?
Sunday, December 25, 2011
More on the Mortgage
As previously posted, we are working on both our 2012 Annual Spending Plan and our 2012 Savings Plan.
One of our goals for 2011, which we completed, was to prepay $5,000 on our primary home mortgage. I expect that we will repeat or increase this goal for 2012. But, I'm somewhat conflicted because I know that our primary home mortgage is fixed rate, at 4.6%, for 25 years. I also know that our mortgage interest is tax deductible so the effective interest rate of the mortgage is even lower. Most likely, we could get a better return on our money if we invested it in the market. However, in Florida, especially South Florida, we could save quite a bit of money in insurance if our home was mortgage free. We could reduce our coverage, reduce or drop wind-storm insurance for our carriage house, we could self insure, etc.
Liz Pullam Weston opines that we should basically do anything else with with our money besides paying down a mortgage. Although she doesn't suggest spending it on frivolities.
First, Ms. Weston suggests investing in one's 401k to get a guaranteed 50% return rather than paying down the mortgage. As an aside, I get so annoyed that every financial writer out there assumes that an employer provides a match or a match of up to 50% of one's contribution. I've been contributing to a 401k for 10 years now and during that time (with three different employers) I've never received a match from my employer. Even, Mr. Sam who gets a great match does not receive a 50% match, rather he receives a 30% match and it is all in company stock. Putting all that aside, I agree that it doesn't make sense to forego contributing to a 401k or an IRA in order to prepay one's mortgage. For us, this advice is not applicable because we are already maxing out our retirement accounts.
Second, she advises that paying down other debt before prepaying mortgage debt is probably the way to go because other debt likely has a higher interest rate. Again, while I agree with this point, for us this advice is not applicable because we don't have other debt.
Ms. Weston's last two points, however, are interesting and I think more applicable for our situation. Specifically, she suggests that we might be better off putting money we would use to prepay our mortgage into our emergency fund because we would have more flexibility. I've got to agree with that, the $5000 we prepaid on our mortgage in 2011 is $5000 we cannot currently access. We do, already, have an emergency fund, but we could continue to add to it rather than prepay the mortgage. After a few years, if we found ourselves with an overly large emergency fund we could make a lump sum prepayment. The only problem with this plan is that we are more likely to spend money that is available to us (even money that is in our emergency fund). If we prepay our mortgage that is forced savings since we can't then turn around and spend that money.
The other point that Ms. Weston makes, and it is one I have already identified as something we need to look at in 2012, is that we should make sure we have adequate insurance coverage and if we do not we should be using our extra dollars for same. Her point, if we don't have proper life or disability coverage, we could lose the house (and all the prepayment monies) if one of us became disabled or died.
So, are we going to prepay our mortgage principal in 2012? I think we will still put a sum of money towards the mortgage principal, but we are still discussing the issue and this article has raised at least one point, the insurance issue, we have not really properly considered.
One of our goals for 2011, which we completed, was to prepay $5,000 on our primary home mortgage. I expect that we will repeat or increase this goal for 2012. But, I'm somewhat conflicted because I know that our primary home mortgage is fixed rate, at 4.6%, for 25 years. I also know that our mortgage interest is tax deductible so the effective interest rate of the mortgage is even lower. Most likely, we could get a better return on our money if we invested it in the market. However, in Florida, especially South Florida, we could save quite a bit of money in insurance if our home was mortgage free. We could reduce our coverage, reduce or drop wind-storm insurance for our carriage house, we could self insure, etc.
Liz Pullam Weston opines that we should basically do anything else with with our money besides paying down a mortgage. Although she doesn't suggest spending it on frivolities.
First, Ms. Weston suggests investing in one's 401k to get a guaranteed 50% return rather than paying down the mortgage. As an aside, I get so annoyed that every financial writer out there assumes that an employer provides a match or a match of up to 50% of one's contribution. I've been contributing to a 401k for 10 years now and during that time (with three different employers) I've never received a match from my employer. Even, Mr. Sam who gets a great match does not receive a 50% match, rather he receives a 30% match and it is all in company stock. Putting all that aside, I agree that it doesn't make sense to forego contributing to a 401k or an IRA in order to prepay one's mortgage. For us, this advice is not applicable because we are already maxing out our retirement accounts.
Second, she advises that paying down other debt before prepaying mortgage debt is probably the way to go because other debt likely has a higher interest rate. Again, while I agree with this point, for us this advice is not applicable because we don't have other debt.
Ms. Weston's last two points, however, are interesting and I think more applicable for our situation. Specifically, she suggests that we might be better off putting money we would use to prepay our mortgage into our emergency fund because we would have more flexibility. I've got to agree with that, the $5000 we prepaid on our mortgage in 2011 is $5000 we cannot currently access. We do, already, have an emergency fund, but we could continue to add to it rather than prepay the mortgage. After a few years, if we found ourselves with an overly large emergency fund we could make a lump sum prepayment. The only problem with this plan is that we are more likely to spend money that is available to us (even money that is in our emergency fund). If we prepay our mortgage that is forced savings since we can't then turn around and spend that money.
The other point that Ms. Weston makes, and it is one I have already identified as something we need to look at in 2012, is that we should make sure we have adequate insurance coverage and if we do not we should be using our extra dollars for same. Her point, if we don't have proper life or disability coverage, we could lose the house (and all the prepayment monies) if one of us became disabled or died.
So, are we going to prepay our mortgage principal in 2012? I think we will still put a sum of money towards the mortgage principal, but we are still discussing the issue and this article has raised at least one point, the insurance issue, we have not really properly considered.
Friday, December 23, 2011
Other Goals from 2011
In addition to our 2011 savings goals, we had a couple of other 2011 Goals.
I'm happy to report that just this week I finally rolled over my old 401k. This "to do" had been on my personal to do list for six months when I put it on our "2011 other goals" list. That means I've been thinking about this personal project for 15 months. But, listing this "to do" on our "2011 other goals" list got me to do it before the end of 2011. And, crossing this "to do" off my list before year's end makes me happy.
We also had a goal to get our debt under $600,000 in 2011 and we were able to accomplish that goal as well. We actually added to our debt load, a bit, this year when we rolled refi costs for one of our investment properties back into the loan. Right now our debt load is at $595,088. In January 2011, our debt load was at $613,291. Which means, in 2011, we have paid down $18,203 in debt. As we think about our 2012 Savings Goals, we are thinking about whether to renew the goal to pay down mortgage principal. I vote yes as I find paying down debt more fun than savings. I wonder why this is, I need to research and spend some time thinking about this issue.
Regarding our debt load, it doesn't really make sense for us to pay down the debt on our investment properties because our tenants are doing that for us. Since we will be holding these properties for some time there really is no advantage to prepay when our tenants cover the carrying costs for us. Even though this debt is on our personal balance sheet and in our personal names it really is business debt.
But, when it comes to our primary home, I would really like to pay down that mortgage. Being personally debt free would, of course, be awesome. Without a mortgage payment we would have a lot of extra money to invest and save. And if we paid off our mortgage we would have flexibility with our wind-storm insurance which is very expensive in South Florida. However, I still question, as we should, the economic benefits to paying down our mortgage when we've got a low fixed rate and it is tax deductible. On the other hand if I'm using dollars to pay down our mortgage that I'm not using for savings/investing, well that probably makes sense. For example, if we reduce our eating out expenses and use some of those dollars to pay down the mortgage. Could we get our debt down to $575,000 in 2012, I think we probably could. That would mean paying down @$20,000 in 2012. And in 2011 we paid down more than that, but we added some debt back in during our refi.
We still need to find a new accountant. We have got to prioritize this goal for early in 2012, because I would like to get our taxes done on time and not file for an extension again.
Also adding to the other goals for 2012 is revisiting our insurance on each property and on our cars. We need to determine if we have the appropriate coverage and determine if we can save and/or take advantage of discounts.
I'm happy to report that just this week I finally rolled over my old 401k. This "to do" had been on my personal to do list for six months when I put it on our "2011 other goals" list. That means I've been thinking about this personal project for 15 months. But, listing this "to do" on our "2011 other goals" list got me to do it before the end of 2011. And, crossing this "to do" off my list before year's end makes me happy.
We also had a goal to get our debt under $600,000 in 2011 and we were able to accomplish that goal as well. We actually added to our debt load, a bit, this year when we rolled refi costs for one of our investment properties back into the loan. Right now our debt load is at $595,088. In January 2011, our debt load was at $613,291. Which means, in 2011, we have paid down $18,203 in debt. As we think about our 2012 Savings Goals, we are thinking about whether to renew the goal to pay down mortgage principal. I vote yes as I find paying down debt more fun than savings. I wonder why this is, I need to research and spend some time thinking about this issue.
Regarding our debt load, it doesn't really make sense for us to pay down the debt on our investment properties because our tenants are doing that for us. Since we will be holding these properties for some time there really is no advantage to prepay when our tenants cover the carrying costs for us. Even though this debt is on our personal balance sheet and in our personal names it really is business debt.
But, when it comes to our primary home, I would really like to pay down that mortgage. Being personally debt free would, of course, be awesome. Without a mortgage payment we would have a lot of extra money to invest and save. And if we paid off our mortgage we would have flexibility with our wind-storm insurance which is very expensive in South Florida. However, I still question, as we should, the economic benefits to paying down our mortgage when we've got a low fixed rate and it is tax deductible. On the other hand if I'm using dollars to pay down our mortgage that I'm not using for savings/investing, well that probably makes sense. For example, if we reduce our eating out expenses and use some of those dollars to pay down the mortgage. Could we get our debt down to $575,000 in 2012, I think we probably could. That would mean paying down @$20,000 in 2012. And in 2011 we paid down more than that, but we added some debt back in during our refi.
We still need to find a new accountant. We have got to prioritize this goal for early in 2012, because I would like to get our taxes done on time and not file for an extension again.
Also adding to the other goals for 2012 is revisiting our insurance on each property and on our cars. We need to determine if we have the appropriate coverage and determine if we can save and/or take advantage of discounts.
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