Possible Good News on the Real Estate Front

One of our tenants that is due to move out this weekend has asked to stay and asked to sign another lease. We'll see how it shakes out, but it would be better to keep the same tenant for, even another six months, than turn the property.

I'll be keeping my fingers crossed that they decide to stay. I think they have realized that they really cannot find another rental that beats ours, which is a bargain, and in good condition, and we permit a cat.

Follow Up on Pay Down the Mortgage

Following up on my post about paying down the mortgage. Yesterday, I read an article on cnn.money.com which reinforced JKC's position that putting extra money towards our mortgage is, perhaps, not the right move.

According to the article, putting money towards prepaying principal is not the best course of action if (1) you've got other debts (that is a no for us) or (2) you are not maxing out your 401k (also a no) or (3) you don't have 6 months of cash for living expenses (we are close on this one).

The next question, is how long do you plan to stay in your home. We plan to stay at least 20 years so that tips in favor of paying off the mortgage.

Then look at the tax impact, our tax deduction is $4700 the first year and our effective mortgage rate (minus the tax deduction) is 3.2%. So putting money in the stock market, like JKC argued,* is a better bet since the historical return for the the S&P 500 is between 6% and 7% (of course from 1/1/2000 to 12/31/2010 the S&P 500 provided a 2.4% return).

So, I'm still pondering this one.

*I very much enjoy getting feedback from others so I take no offense to JKC's comments or anyone else.

Cash at the Pump

This morning I paid for a tank of gas with cash. I cannot recall the last time I did that, probably 15 years ago.

Gas prices are up in my county, $3.33 per gallon for regular. But, I paid with cash and I received a .10 discount, so filling up I saved a total of $1.50. I don't normally have that kind of cash with me, but since we traveled last weekend I still had travel cash in my purse.

I read recently that many people are aggravated by the cash discounts at gas stations because the prices being advertised are cash. I guess I see their point, it does feel a bit like a bait and switch because you don't know the real price until you get to the pump.

Frugal Fatigue?

On my way out the door this morning, I heard the Today Show anchor previewing a story on folks who are tired of watching their pennies (also known as frugal fatigue). This term has been popping up here and there in the news the last few months and seems to correspond to the positive economic indicators.

I like this commentary and agree, strongly, with the parallels between fiscal fitness and physical fitness.

For one group, the recession and economic downturn were like being forced to go on a diet; while they are losing the weight, they are at risk of putting it back on again. The other group accepted the lifestyle change and are looking toward a lifetime of better financial health.

And there are good ways to manage your frugal fatigue, setting up an allowance system, which is what we use, allows one to spend day to day without categorizing or budgeting for each little expense.

Most people think being frugal is about restriction, but really it is about freedom. When you are free from your debt, you have more money to do what you want, travel, vacation, even fancy shoes. When you have money in the bank you have freedom, to a certain extent, from your job, from downsizing, from emergencies. Being frugal is about having a plan, and that plan can certainly include spending on the things that you truly enjoy.

So the question is whether you want to be fit and wealthy? I think most people would answer, yes and yes.

Memories Are Short

After two and a half years of reduced spending and increase savings consumers in 2011 have turned a corner and spending is up and savings rate is down.

In fact, 52% of consumers say the recession has "forever changed" the way they spend and save, according to a recent survey by Citigroup. But that's down from 63% when the same survey was conducted a year ago.

But that means at least 11% are back to their old ways, as the economy improves will you stick to savings or will you return to your spending ways?

For us, I think we are generally entrenched in our personal finance habits. We are in year 5 of working off a spending plan and allowance system and year 5 of not using credit cards and year 4 of a committed yearly savings plan. But, I recognize that the forces of evil, the free spending friends, consumer trends and advertising, are hard to avoid and hard to resist. As those forces go stronger we will have to recommit to focusing on our way of living.

I Love NetWorthIQ

I'm a big fan of NetWorthIQ, probably pretty obvious since I've been a member of that site since early 2007 and I'm one of the most "active" users.

Besides keeping track of our own net worth, I find it very motivating to compare myself to those, in our age bracket, who report net worth numbers on both ends of the spectrum.

While I'm not trying to keep up with the Joneses, I find it helps me focus to see what others have accomplished and how they have accomplished it. There is a Florida networthiq.com profile that exceeds $139 MM. Wowzer!

I'm also impressed with those in my age bracket who are working away at their debts. Many of them, with big debt numbers, seem to be chipping away at big student loans for medical school of law school. I'm not taking comfort in others' pain, but I find that thinking about having $100,000 - $200,000 in student loan at my age to be scary (of course others might find our $600,000 in mortgage debt to be even scarier). And thinking about others' debts strengthens my resolve to stay away from debt and to keep working on our own.

March is Real Estate Month

We have two turn-overs coming in the next few weeks.

First, one of our relatives has been trying on the snow-bird hat by using our smallest (and least expensive) investment property as a short term seasonal rental. Except, he doesn't really pay the rent and we don't ask him to. He did pay us about $1000 for three months of use, while we would normally get at least $2200 in rent for the home (plus we paid the utilities). This is our easiest rental, so Mr. Sam will do some painting (which we did not do when the former tenant moved out) and we'll get it back on the market before March.

Second, our tenants in one of our other rentals are leaving. So, Mr. Sam will be working to get that rental ready, probably will not have it on the market early enough to have it rented for March so we will lose a month of rent.

Love is in the Air

Driving home last night, listening to NPR, I learned that the average American spends $116 on Valentine's day. I thought to myself, well I spent $0 so ha! Of course, thinking more about it, I was focused on the $0 I spent on my husband. I spent $5 on cards and actually expended a total of $85.

I spent $5 on Valentine's Day cards for Gram and Grandpa, my god-daughter and her sister, my niece and my nephew. I also made three $20 charitable donations which included the organization sending Valentine's Day cards to my three closest friends (so really will be allocated as giving not spending). I also sent $10 to my god-daughter and to $10 to her sister in their Valentine's Day cards.

How about you?