Wednesday, January 31, 2007

February Tracking Spending

Okay, I'm spending our tracking for February just to see if we are overspending. We're right now running in the red mainly because of tuition bills. Yeah, I know it's crazy, but we really need to try and buckle down. I already know I need to fill my car up with gas, and I'm going to use CC to track everything. Hopefully I can get DH to eat out of the pantry a lot, but our spending usually occurs on the weekend when we go grocery shopping. I am also doing this because I need to lose again the 30 lbs I lost and gained back last year.

Do I have goals? Lose 5 lbs this month, eat out less than 8 times this month (DH already has an extremely expensive hockey game he's going to, rink side seat), and hopefully no extra dog expenses. I will probably have to track back every few days. This will be eye opening because I know we're not huge spenders, but maybe I can be even more lean than usual. The toughest part is cash, because where we live cash is a used a lot.

Annual Raises???

Okay DH found out last night about his annual raise/bonus. He got the highest rating for the year from the company but no promotion. Probably next year because he's been working only for 1 year. So next year a huge bump up is the likelyhood.

However his annual raise was only 4%! I don't know whether to laugh or cry over his working so damn hard for what? I know he's upset, but hasn't said much because it doesn't feel like the company gave out a lot. This is different from when I worked

First off he got two separate ratings individual/company. He got the higest rating for both and still ended up with a "generous" 4% raise. The rating were 1-4 and he got a 4 = 4% raise. That's apparently high for the company. He seems upset/frustrated and we're not sure what to think. Is this typical? He realizes that at the company people get 2-3% and fired if they get bad ratings. Yep they dump the bottom 10% of people annually, usually people who get 1 ratings.

But then he got a larger than expected annual bonus because the standard was 8% but he got 110% and 120% "extra" performance based compensation. So he ended up with a 11% bonus overall. Plus stock bonus another 4-6% annually, 12% annual signing bonus, so his bonuses are making up a huge chunk of income.

Is this typical? Should he be happy or disappointed? Overall the 4% raise is nothing, because with the annual bonus his income overall comprised of 75% paycheck and 25% bonuses in 2006. Which is nice, but it's frustrating because I don't think we should always count on bonuses. He agrees and wonders how do you budget such stuff?

Can everyone shed some light on how this works? What to think about bonuses and raises? And how to assess the value of such compensation properly.

Tuesday, January 30, 2007

If you could turn back time financially...

The question for this next festival of under 30 finances is "if you could turn back time financially what would you change."

Thought provoking, but unrealistic. I wouldn't change a thing because everything I did lead me to where I am today, mistakes and all. If I didn't make those mistakes early in life I would be making them later. At 27, to be pretty responsible financially and (in my humble opinion) pretty financially fit, that we did managed well enough to overcome our mistakes.

Have we made mistakes? Yes for sure. I know one was that we should have pulled money from our home equity and invested in my Roth IRA. Why mine? Because DH as a visa holder wasn't eligible until we married to invest for retirement. So I could have saved into a Roth IRA for years 2003 and 2004 or $6k. Of course I had no idea the market would have gone up, but it might have been worth the risk. But do I regret this decision? No, because I don't like the idea of pulling money out of home equity when I didn't have the cash leverage to pay it off. Meaning we were making jointly $42k/annually gross in San Diego. Yes, I think it may have instead driven us into CC debt or student loan hell. So would I change my mind, I'm not sure. Leveraging a home is great when you can accept the risk involved.

Second huge mistake or not...was probably not getting married sooner for the tax purposes and for visa reasons. This is an arguable decision, we were living together for 4 years before marriage, and engaged for 2 years, but we were "saving" for our nice wedding. Also honestly our parents didn't want us getting married any younger than 25 and 27. So was it a mistake? Maybe, but it paid dividends to wait because it bought us the goodwill of our parents and their blessings that we weren't rushing into a mistake.

Another financial mistake which I have mentioned in previous post my best and worse money moves. Bad move was buying a home without being married, enough said. But you learn from experience.

Another huge financial mistake was getting a pet. I wrote about my worse investment ever here. I love my dogs dearly but it was a terrible mistake. Would I change my decision looking back? Heck no, there are some intangibles in life worth more than money.

So that about wraps up my worse financial boo-boos and I wouldn't change a thing. Every decision I made, I did what I thought was best at the time. Consciously it got us where we are today. It made me the person I am, and I like where I'm at and who I am. So NO WAY would I change a single decision. It might make me have a better life, but I am HAPPY the way I am now.

To me that is priceless. The learning experiences, the mistakes have all contributed to my well being.

Monday, January 29, 2007

Carnival of Personal Finance #85

This week the carnival of personal finance #85 is hosted by 5centnickel. My article on keeping up with the Joneses was included.

Sorry for having such a terrible week on blogging, but I went home and attended a funeral, and found myself unable to blog. I will need to address a few topics regarding personal finance later.

Sunday, January 28, 2007

why buying a house is stupid...

Got your attention? Well this is a major rant about people who think they will always make money on homes. It's about my parents. I love them dearly but sometimes they can be the dumbest people alive. Super brilliant book smart, savers, but impulsive spendthrifts.

They are moving next month, but are desperate to buy a home. Instead of looking and renting in the new city, they are impulsively trying to buy a "transition home." They think that they can buy a 1 bd condo, because it's cheap and they don't have to sell their other two homes, and if they don't like it sell it in 1 year or rent it out. My mom says she knows they will hate living in a 1 bd because of size, downsizing from a 5 bd/4500 sq ft home to a 600 sq ft/ 1 bd condo?

Can you see the stupidity of rushing to buy? They are buying because they think everyone makes money buy buying homes. They have made money on the two homes they own. However, they don't even know how long it will take to sell their other homes. They will have to take out a mortgage because they can't cash in their equity, whereas if they waited to sell they could choose to pay cash outright. A mortgage is not a bad thing, but I see it as renting whereas having cash in the bank is a different story.

They already know they won't be living there very long so why rush? I have no idea why, everytime I talk with them, they say it's their money which it is. I have lived 20 years in my family home (which my mom despises). She absolutely hated living there but couldn't move because financially it didn't make sense to sell and move. Well, here she is buying another house she's going to HATE. I have to listen to another 20 years of how she didn't get her dream house built for her, when everyone else did! Here's her chance. Of course instead they are impulsively trying to buy a condo in a sliding market.

Not only that...but they want to buy a fourth car. When does it ever stop?

Saturday, January 27, 2007

Is life passing me by...part deux

Well earlier in the month I contemplated whether life was passing me by. I thought more, and surprisingly on the Women in Red Message board on MSN found that others were asking the question. When they did and I read through many, many answers, I found another answer within.

That yes life's experiences in my 20s are going by but I'm giving it up for a greater purpose. I am giving it up to have children and be able to stay at home with them if I chose. To provide college for them if I chose. To be able to be secure in affording our home, our cars, our retirement. To be able to raise my children without the stress of worrying over money or debt.

I chose this path, it's different from being able to have a fun, freewheeling life, but I made a conscious decision. I don't know whether this financial sacrifice will be worth it in 30 years, but I am hoping to be so. I am making the best decision possible with information I have in front of at this moment.

So be happy with whatever financial decision you make. It'll have repurcussions to last a lifetime.

Friday, January 26, 2007

Festival Under 30 Finances Edition 15

The question for this festival of under 30 was what would you do with $10k? My answer to this question here.

The summary is it depends on financial circumstances. First off we don't have $10k in student loans, so I wouldn't need it for that. But if I were in debt that much, I would use it to pay off student loans. Only reason why is because all our retirement options are maxed out.

Thursday, January 25, 2007

Funeral costs

Who pays for funeral costs? In hawaii they have this thing where you give money "koden" when a person dies to help the family defray the funeral costs. Imagine according to the National Funeral Directors Association the average cost of a funeral as of July 2004 was $6500. I believe it. Plus you have the costs associated with dying in the hospital, which is morbid, but true.

So what if you cancelled your term life insurance or it ran out? Where do your funeral costs come from? I guess this monetary gifts from people who attend the funeral is to help the immediate need for cash. It's possible that many people do not have the cash on hand or are not joint owners on the account for immediate access to the money.

In the case of my family, truth is that my grandmother couldn't afford the funeral costs. They didn't have much money period. Thankfully my mom and her siblings do, so the monetary gifts are a blessing.

I guess if I were to die, I don't have any life insurance so it would be entirely out of pocket. Which I guess my DH would put on our CC and then pay it off as he accessed our cash. Fortunately everything is joint so he could transfer the money out our taxable accounts. If he died I would do the same, but he does have life insurance through work, so I think I would be better off than him.

How do most people plan on paying for funeral costs? What do you think your funeral will costs and is this something people have considered?

Tuesday, January 23, 2007

Keeping up with the Joneses or not?

Okay, so I enjoy surfing the web and reading personal finance message boards. Some are interesting about investing and saving, while others are cries for help out of debt. A common theme for many people is the idea that enjoying any of life's luxuries is a crime.

A lot of these people are getting out of debt, were previously in debt, or have just finished getting out of debt. They make automatic assumptions about people who use CC or use any money "unwisely."

This is a serious pet peeve of mine, when someone said that "Oh, and there is the personal satisfaction that I'm realizing that even though my friends might have better clothes and manicured nails, spend literally $1000 on christmas and birthdays for thier kids, I have more financial security, and my daughter will benefit from that also. I love my friends but I'm realizing that I'm actually better off than they are."

I called the person on it and asked how do you know the other person's real financial situation? How do you know that the person buying better clothes, nice nails, and spending on gifts cannot afford a $1k Christmas? How do you know the person you think who is keeping up with the Jonese cannot afford to do so?

I guess what bugs me is people making these snap judgements about others. How do you know the person didn't inherit a lot of money? Or makes a lot of money working? How do you know they don't have any bills, no kids, very minimal expeneses? I think that people are quick to assume and judge because they are jealous. They resent that their income doesn't allow them to enjoy "luxuries" in life. But that's because of choices THEY made. They choose to eat out, they choose their careers, they choose their homes/cars.

I'm one of those people who enjoy getting their nails done. In fact I want to have it done today if I have time. Also in the past 18 months gone to China, Japan, Switzerland, Canada, and Hawaii. We also enjoy travelling. To people who don't know us, their snap judgement is "your in debt up to your eyeballs and can't afford it" Truth is yes we can, enough said.

Another common misperception is assuming those who use CC are in debt. If 25% of Americans don't have CC, and 30% pay it off in full, that means the majority of Americans are not in CC debt. However the 45% minority have more than enough to spread it around to be an average of $8k in debt.

But then the DR followers try to quote "but CC spend more." Not really, if you know exactly what your budget is, it doesn't matter how the money is spent. I can tell you what my balance is on any given day and when it's close to my limit I just stop spending. I've lived like that for 10+ years, I doubt it's going to change now.

People who are in CC debt don't have the self realization or control to know that a CC is cash on a card. If you charge it, you have to pay for it later. It shouldn't matter whether you pay in cash now or 30-60 days later. Imagine instead you had a check register and wrote out every single charge against your cash, it's the same principal. Except you can get 1-5% back and it's easier to track every single penny you spend.

My point is that so many people judge others and make these assumptions about whether or not people are keeping up with the Joneses. They never assume that people are able to actually be the Joneses sometimes...

Sunday, January 21, 2007

Tax help or not?

Okay, I signed up yet again to see a tax guy for help this year. Last year we moved and I felt frustrated reading over the new state tax laws. So we ended up paying someone to file for us. It was $575 last year but he did do our federal and two states. I'm not sure if this is a lot, it's the first time we've used someone. Until now our taxes have been pretty simple so we usually did Turbotax or some online E-file

This year, being stupid, I seriously overpaid our taxes. I think we're due a $5k refund if not more. I am really frustrated because it wasn't our tax guys fault. It was mine and DH's company. I paid taxes all year on his estimated bonus, but didn't realize they withhold extra from the bonus. So I shouldn't have even calculated the bonus at all. Yep, bit stupid tax.

This year I'm wondering if I should also perhaps I should try and save money by doing it ourselves? Do most people do it themselves? I guess we sort of have a lot of with company stock bonuses, home, our investments (DH's stupid stock trading hobby), school tuition, etc.

We have a Stafford subsidized loan, but I got in the mail a receipt saying we paid $128 in interest. So do we claim it though we didn't pay it? The government did. Also do we get to deduct our tuition reimburstment or just want we paid and wasn't reimburst? And how does it work if DH was reimburst after 2006, does it count for 2007?

I am feeling rather frustrated, plus no W-2 have come in and only piece meal of our other 1099s, etc have come in. Do you pay for tax help?

Saturday, January 20, 2007

McDonald's brainwashing

So tomorrow we are going to be watching our friend's son. He's four and we're keeping all afternoon and through dinner. This is a huge deal for us, it's only our second time watching a kid and last time it was at least my neice. So if we broke her (which we didn't) it would have been okay. We just feed her ice cream at 4 pm and had her zooming on a sugar high.

Well I think we're going to dinner at McDonald's because we're not really sure what to feed a kid. We haven't eaten at McD's in years, it's gross, but the brainwashing McD's does is amazing. They are able to get kids to believe in them and no other fast food joint. I recall my nephews loving McD's, and my brother hating it. What hold does this company have over the other fast food joints?

Is it the toys? Is it the marketing? It can't be the food, because I think the burgers taste better at Wendy's or Burger King. Although McD's does have the best tasting french fries I think. Maybe it's the atmosphere? The big red haired guy and playground?

Whatever it is, McD's is raking in the dough and has managed through generations to keep capturing the interest of youngster. Personally I had a few birthday parties there as a kid, I think age 4-7, I'm ashamed to admit. But my mom invited my friends, we had happy meals and a playground and it was the best!

I wonder if by the time we have kids we'll be going back to McD's? Much like my brother hating it, yet unable to resist the lure of something fast and easy? I wish I could think up something like McD's and be able to keep reeling in kids for generations.

Friday, January 19, 2007

Make easy boarding

Since we're going home we have to board both of our dogs at a kennel. They probably wouldn't do well staying at someone's house, not that we known anyone who could watch them for 5 days. But also they need some sort of companionship and walks. So the place we go to is a private house, 1 hour away from where we live, and costs $30/day for two dogs. That is dirt cheap comparatively speaking.

We used to spend $30/day for our 1 dog at places in the metro area or in San Diego. Can you imagine? Most places keep anywhere from 5-20 dogs a day boarding and they charge $30-$50/night! Wow. Also that's just boarding, it doesn't even include doggie daycare.

Dog daycare costs on an average of $20-30/day just for someone to watch your dog play with other dogs in a playgroup. That's right they just watch your dog have fun. Unbelievable! With two dogs it costs me twice as much, however I have to send them because our new rescue dog needs "socialization". Trust me I think it's stupid, yet with his aggression issues and biting, I can't say it's not money well spent.

Well we're talking about stupid waste of money on pets, I also paid a dog behaviorist to come in an examine our newer rescue Bichon. Yep $200 down the toilet to have a guy come in an evalute my dog's psyche. But back to dog boarding..

So I'm thinking to myself I really ought to start a dog boarding/dog daycare business because imagine the money I could be making staying at home all day. And there is a lot less liability issues involved as opposed to watching someone's kid. Not to mention it's a lot less effort and responsiblity.

Thursday, January 18, 2007

the $10k question

The question for the festival of under 30 finances is what would you do with $10k if you were 25 years old and had $25k in student loans? Retirement, savings, home down payment, student loans, or college for your child? The rate of return is the same as the interest on the student loan. Also would you answer change if it was $25k instead of $10k?

I guess it's an interesting question. I'm not sure what I would do, because it depends mostly on income and circumstances. But since it's personal, I'll personalize it and say that for us we're DINKS so I'm ruling out college. Second since we have a house with 20% DP, I'm ruling out saving for a house. Third, we save for retirement the maximum allowed in appropriate retirement vehicles, so that's out as well. I guess that leaves me with paying off the student loans.

I like the idea of paying off my student loans because being debt free, except for the mortgage means one less fixed payment and lower need for monthly income. Second, the question said the rate of return is the same as the student loan. So it really is not necessarily beneficial to save it. Also because the rate of return is the same, and the investing would have to be done in a taxable account, any income/dividends would be taxed at my bracket 25% + 5% state tax, so I'd rather pay off my student loan.

Now if I were able to use the money for other options such as paying for our current school etc, then I would might do that. But for now my option would be paying off the student loan.

Would my answer change personally if it were $25k instead of $10k? No, but I'd be a lot happier to get that much more.

My advice to a 25 year old in that situation would be to pay off half $5k to the student loan and $5k to a savings account as an EF. This would prevent the person from having to use CC in case of emergency. Also if the person go $25k, I would still do a half and half pay off so they can save a bit for a house/EF and get faster out of debt.

Do I need a will?

This week obviously I haven't been thinking much about finances or being frugal. I haven't spent money on anything except trying to go home, board the dogs, but I've been contemplating life and my relationship with money a lot.

The question now raised is do DH and I need a will? We're DINKS who really have built our assets together from the scratch. We don't have a lot, and I'm pretty sure that for DH's company life insurance I'm the beneficiary as he is my beneficiary. So the question is do we need a will?

We both feel at this time a will is unnecessary because if the other person dies then the survivor should get everything. However I was thinking that perhaps we need a will to let our parents know our wishes. DH and I know we each want to be cremated and would like our ashes kept to be scattered when the other person settles in a permenant home (not Boston). But also I think we may need a will to allow our parents to understand that DH wants to be kept alive and I prefer to not be kept alive if a vegetable.

I think if my life is not happy and healthy, I don't want to live. But I am not sure if my parents could deal with DH taking me off of life support. By the same token I'm not sure what DH's parents would want. It's funny that your parents, who love you dearly and raise you, would never discuss this with it. The idea of losing a child is the most painful loss. Because it's ingrained that the older personw ill die first.

I guess I'll discuss at least informally DH and I putting our wishes down on paper. Does everyone have a will? Was it put together with the conception of your first child or earlier?

Wednesday, January 17, 2007

redeeming air miles

Today I redeemed air miles on United to go home to hawaii. It cost 35k miles from Boston to Honolulu and I still needed to buy another interisland ticket. However I was surprised it was so easy to book at such a late date. I guess the airlines relaxes the seat rules when it's 6 days before you have to leave. They just want to fill the plane and don't care at that point how many people are redeeming miles.

As unfortunate a circumstance it is, it appears that going home so abruptly turned into the best use of our miles. The huge problem is that we have a 10 hour layover on the way back from SFO to BOS. So what can I do? I'm determined to try and get on the earlier flight back, so cross your fingers.

This is a huge relief to me. I am able to see my grandfather before his cremation and stay for his service. Finally a chance to use those stupid air miles which I always rack up but never am able to use.

Tuesday, January 16, 2007

going home

This is a short post to say I'll be flying home to see my grandfather before his cremation and stay for his funeral next week Friday. I think I can go for about $800 per person which is not too bad. I am happy that I think I can make it home.

Monday, January 15, 2007

Carnival of Personal Finance #83

At Young and Broke this week's Carnival of Personal Finance #83. My article on do you need life insurance is posted.

Sunday, January 14, 2007

Measuring your life

How do you measure your life? By the money you've saved? The money you've spent? The things you have? Or the time you've spent with your family? Or the effort given to care for your family. What is the measure of a life well lived?

I sit here thinking of my grandfather who passed away last night. How can you measure his life? Financially he would be considered a failure, however he possessed riches abound from his family, enough to make a rich man jealous. I guess how you measure someone's life is determined by what you value.

Right now I think I need to save for the future, be responsible, and raise my children right. But I am sitting here thinking that no matter what I earn or what I save, I hope my relationship with my family flourishes. That I am able to nuture our bonds and connect with them.

It's so tough for me to live here and be so far away. I am so torn between trying to go home and yet needing to stay. How do you qualify what is really important financially and what is really important emotionally? How do you slow down and appreciate life?

Saturday, January 13, 2007

Medical Insurance

Well we pay $48 every two weeks for our blue cross/blue shield PPO coverage for DH and myself through his company. Overall deductible in network is Zero, overall coinsurance maximum in network is Zero.

Now to important stuff family planning is $10 copayment, Infertility treatments $10, Labs and X rays is Zero, Maternity Services is Zero, annual Ob/gyn visit is $10 copay, 1 annual eye exam for $10 copay, well baby is zero. Not to shabby, and much more comprehensive than I would expect. Of course nothing matches what we had from DH's grad school where everything was covered no copay, but I think this is pretty generous medical coverage for little money.

The only issue is that we don't often go to the doctor now so we're currently not using our $600/year benefits. It'd probably be cheaper out of pocket, but when we have kids or are trying to have kids I'm sure that will change. Anyway though our medical insurance is about to get a work out because we're going to go for genetic counseling for DH's retinities pigmenosa. I'll post afterwards what it cost us.

Friday, January 12, 2007

Festival Under 30 Finances - 12th edition

Festival of Under #30 Finances, posted at The finance journey. The question of the edition is where do you see yourself in 10 years? See my post fast forwarded 10 years...

Thursday, January 11, 2007

Vision Insurance

DH's work provides vision coverage for $120/year per couple. However it only covers up to $115 for contact and $100/year for glasses. In our family I am the only one who needs contacts, and yes I'm looking into Lasik corrective surgery. Unfortunately my vision has been deteriorating still and with pregnancy I'm not sure if I should even get it now. But that's another discussion.

Well the point is that our medical plan covers one eye visit a year with copay so I did that last year, because DH forgot to sign up for vision. Turns out it's not worth the money. It's a hoax and only worth it if two people need coverage. If not we're better off getting the prescription, filling it at Costco, and using a FSA for the tax break. Which is exactly what I did this year. So my contacts will cost us about $80 overall and we don't have to pay for vision.

Sometimes insurance can be such a crock. Tomorrow I'll probably discuss our medical coverage, which is really good coverage for a great price and cover amazing amounts of stuff for pregnancy.

Wednesday, January 10, 2007

full or partial car insurance?

Well for the past 3 years we've been carrying only liability on our cars. Our cars are a 99 toyota corolla and a 00 ford focus. The savings were substantial because we were under 25 for a chunk of those years, and our rates have been dropping.

However since we've moved to NE it's gone up. When we got here unfortunately we decided to go with liability again. Also unfortunately my DH had three car accidents within a span of 3 months (yeah probably why I don't buy a new car). But seriously I wonder what is the break even point of coverage and should we have been carrying full coverage?

Well where we live it cost approximately $1k more for full coverage and that's with a $1k deductible. In CA it was the same thing, so we dropped it. The cost of either of our cars $4k would be made back in 4 years right? Actually sooner if you consider we'd have to fork over a $1k deductible.

But on another message board someone said they paid for full insurance because they couldn't afford to replace their car. However the difference in full coverage versus liability was a lot less. Mine's high because it's a state run insurance program, so bad drivers like my DH is paid for by good drivers. Thank god he had all his accidents here, not in CA.

I thought about it and decided, I would still wouldn't cover my car if I couldn't afford to replace it, and save the few bucks. Why? Because of that stupid high deductible. If you have to fork over $1k anyway, you could set aside the difference every month into a car fund and buy a cheap used car for $2k probably by the time your car was totalled if not more.

Of course this is all based on the premise that you'll save the difference. I know I'm not saving the difference, but I like not having a deductible. Of course if DH has another accident I'm not fixing his car he can drive it all beat up, if it drives and if not, then he's getting a $1k car period.

Tuesday, January 09, 2007

10 years fast fowarded

Where do I see myself in 10 years? That's an interesting question, I'll be 37 and DH 39...I hope that we'll both be done with our schooling obviously. And I hope to have at least 2 kids, ideally 4. But financially where do I see us?

I see us living back on the West Coast in a lower cost of living area. Between southern cali and NE, I can't imagine living somewhere else so expensive. I expect to own a single family home finally and two rental properties. Why two? Because we'll probably buy two homes/condos for our parents and they will rent it back from us. Already our parents are trying to get us to hurry and settle in our final location so they can buy something nearby. As an only/youngest and DH the eldest and only married, I guess we're considered extremely responsible young adults.

I also see our income minimally doubling in 10 year probably closer to 3x what we make now. I'll be done with graduate school and DH done with an MBA, so it's not unlikely that our incomes will go up.

I hope to hit a NW of $1 million by 34 (projected), and by 37 and 39 amassing $1.5 million dollars. These projections are based on our current saving rate and funneling all raises into savings. Not sure if that will happen, but it's a good goal. Ambitiously I see us hitting $1 million by 32 and 34.

I also forsee us having college fully funded by then because another mini-goal is $10k in a 529 by the time our children are 1 year old. We've already got $1k set aside for kid #1. Now I've got to get serious about saving.

And since we're 37 I'll probably be driving an SUV and minivan, and live in a 3000 sq ft single family home with a yard and a garage, and be materialistic and consumer driven...maybe even a stage mom???

Do you need life insurance?

I'm going to write a few posts about insurance, life, car, home, and umbrella policies. But to start I'll discuss whether I think we need life insurance as DINKS in their 20s with some assets.

I'm constantly fighting internally over my internal desire for life insurance and the fact I don't need it. DH says no way, not until we're pregnant are we getting life insurance. His logic is that he gets 2x his salary from work, and as the breadwinner that amount will more than adequately take care of me. With our assets and his insurance I could live in our house if I choose for at least 5 years. If I die, he can manage the mortgage note solo and our current assets will more than take care of burying me. So his position is that we don't need insurance. My position, it's a really cheap rate and I feel nervous.

Right now we're both below 30, and rate are exceptionally cheap. However, I do acknowledge not having dependents makes it somewhat difficult to justify paying for life insurance. Also I am constantly wavering between 20 and 30 year term life insurance. Experts say long enough for your youngest to be done with high school. But we don't even have kids and we're not sure when they'll come or how many we'll have. So how do I know we'll have enough? But do we really need 30 years? I think we'll be self-insured probably by 20 years from now, so is it necessary to buy the longer term?

Another major issue that prevents me from buying life insurance is that I make very little money, and DH is starting his career (1 year) and the growth potential for both of us is huge. So if we were to buy 10-20x my income it'd be 300-600k. But I'll outstrip that when I graduate, and if we bought 10x DH's income it'd be minimally 1 million. But this really are our lowest earning years so if we buy now will be underinsured in say 5 years? What do we do if our income doubles or triples when we finish school? Suddenly will 500k policy be enough if we make $250k/year?

I guess this is part of the reason I am not currently pushing for life insurance. I feel as though we don't have enough information about our future. We're not sure when we're having kids, we're not sure how much we'll be making, we're not sure how long we'll need it for. I wonder if this is a problem other 20-somethings face when you feel as though your starting out and getting prepared, yet not all the information is in front of you...

Monday, January 08, 2007

Roth contribution or many?

People always ask should they contribute one $4k deposit to a Roth IRA or should they contribute $333/monthly? The answer should deposit $4k on January 2nd of the year to get the longest possible time of tax free investing. Because you deposit every year and leave it alone, that will be a form of dollar cost averaging. The idea is that the capital gains are not taxed, unlike leaving the $4k in a Money Market earning income and transferring $333/month. Every month you'd dollar cost average, but you'd also be paying short term capital gains on the interest.

However the reason why investing $333/month is popular is not many people are able to stash aside $4k for a lump sum contribution. Therefore it's better to invest what you can when you, than to not invest at all. I'd rather see someone putting away $500/month into a Roth IRA then trying to save up $4k and never doing it.

Personally I do a lump sum investing in a Roth IRA. However, I just made 2006 contribution in Jan 2007, why? Because of our strange circumstances with bonuses and income, we are on the cusp of being phased out of the Roth IRA income limits. Thus I am not fond of the idea of withdrawing my contribution in March 2007, and paying taxes on any income if we're over the $150k married filing joint limit.

The problem is that the only deduction eligible for deciding what you modified adjusted gross income will be is a 401k contribution. We already max that out last year so I wasn't sure if what our income would be. Last year our income was getting close and this year too. Especially since my DH's annual bonus, raise, and promotion is in February. His signing bonus occurs every december so you can understand how we're never sure what our income looks like until the end.

But I personally like the lump sum contribution, plus by saving it during the year, it acts like an extra cash EF for emergencies. Which I think is great because it gives me more flexibility without having to pull it out of our stocks.

Carnival of Personal Finance #82

This week the carnival of personal finance #82 is hosted by get rich slowly. It's theme is superheros of finance. Check out my post on "Is life passing me by?" It's my meditation on whether it's worth it not being in debt or am I saving for a future that may not happen?

Sunday, January 07, 2007

Expensive hobbies

I think as DINKS we have a few expensive hobbies. My DH loves to snowboard and the warm winter is killing him out here in the NE. We bought snowboards last year, at a great price, yet it was pretty expensive $400 a board/boots/bindings package for each of us. Then there is the price of lift tickets, which is pretty expensive as well. So he's researching a weekend trip to go ski somewhere else, maybe home in Canada while I'm wanting to stay home and veg.

Another expensive hobby of his love of video games. Can you believe how much the PS3 costs, or even the Wii? We have one and I'm wondering how parents afford these things? At $250 for the system and $50 a game, I question what sort of money parents make to afford these games? Personally I see these things as targeted to young single men in their 20s and 30s with money to blow. I think the other thing he loves is any electronics he can get his hands on.

My "hobby" is probably watching movies. I enjoy going to watch movies, but right now at $10 I can't justify going to the theaters except if it's something we can't wait to see. Last year we watched I think 3 movies in the theater, Talladega Nights, Borat, and Pirates of the Caribbean.

My other hobby is eating out. I think this probably adds up to his ski trips and video games because if I had more money I'd probably eat out more. As it is, we don't because I'm trying to lose weight. Yep, yet another year where I'm losing weight. Last year I lost 25 lbs and gained it back, so I'm back on the treadmill (literally and metaphorically).

Do you have any expensive hobbies? Is there something cheaper we should pick up? Our together hobby is dogs, but pets, well they are ridiculously expensive. Our older dog has to go again to the Vet Opthamologist for eye surgery this week so I"m guessing about $200 at a minimum. Yeah our dogs run us a nice vacation every year.

Saturday, January 06, 2007

quarterly estimated tax payment time

Okay Jan 15th is the last day to make a quarterly estimated tax payment for 2006 without a penalty. Last year I ran our numbers off the cuff, and determined we would owe about $5k to everyone, so what I did was I paid Federal, MA, and CA about $1500 each and hope we'd come in close. We did, we got a small $200 refund from CA and MA, and we owed another $1400 to the Federal. What we probably should have done was estimated payments through the year, but it was too difficult to follow.

This year, I've already run our numbers and because I'm stupid, we'll get a huge refund of I think $4k or more back. Yeah, I know, what the heck? Well the issue came with DH's bonus in December, they didn't tell us they would withhold way more than our bracket of 28%, they held back 40%. So we budgeted to pay the right amount but they overheld. We should have been paying less all year.

Hopefully this coming year we'll be more spot on. These past two years have been hard with the move, buying/selling homes, learning about bonuses, etc. The beauty of having the estimated payment is you can calculate roughly what you think you owe now and pay if you need and you don't have to worry about it the rest of the year. Of course this doesn't work if you don't have the money.

Friday, January 05, 2007

Shopping Sabbatical?

A group of people in SF decided to try go a year without shopping. Jan 3, 2007 marked a year and it was reported here. The group found it very liberating to be anti-consumerism that they are discussing repeating the trial again for 2007. They did however exempt food, toiletries, and other essentials. This new crazy has caught on in other cities around the world, where people have taken it to extremes by dumper diving and sleeping homeless.

Could you do it? I'm pretty sure I could probably do it. We rarely shop and I can count the number of times I've been to a mall this year on one hand (1 at Christmas). I've never gone into a Pier 1, haven't shopped Pottery Barn, and pretty despise shopping. If I go it's usually for a specific purpose, like a birthday gift, something broke, or the one time I went to the mall was for Christmas shopping.

I am perusing my CC statements actually to see what stores I frequented this year. None. I have gone to Walmart and Target on average once every two months, I go more often to Petco/Petsmart. And I do go to Costco every other week. But other than that, I think my greatest consumption is Border's Bookstore, but I rarely buy books, I just sit there and have a coffee because I feel so cheap sitting there reading all day.

I haven't shopped for clothes this past year, although we did buy new laptops because ours broke. However I did go 5 months without one till I found the one I wanted at the right price. All in all, I think I could do the challenge, but I won't. Why?

Because my one luxury was my vacation this year to Asia. I couldn't give up taking a vacation, which buys into consumerism. I didn't over spend and paid cash, but it still would have to go. Plus not eating out once for a whole year would be a challenge. I would lose what little social contact we have out here.

Could you do it? Could you spend absolutely no money this year?

Thursday, January 04, 2007

Is life passing me by?

Sometimes I am seriously tempted by something I really want and don't have the money for. I've never charged on a CC and not been able to pay in full, so I haven't had the rush ever of getting something I can't afford. Recently there are moments of weakness where I say, I wish I could go on an expensive ski vacation or trip to Europe. I never went after college to tour Europe as so many people seem to have done. I didn't have the money. Neither did DH. I always wonder how did these people make it?

I've actually asked a lot of my friends who would go for 3 months to 1 year, how did they cover the expenses? Many said parents, some said savings, and more than a few said they just threw it on the CC and worried about it later.

I wonder if I am missing out by not going to Europe now when I'm still young and active? Should I chuck responsibility and throw caution to the wind? I mean I am somewhat borderline compulsive about being prepared financially for everything, so it's tough for me to justify a trip to Europe or even an expensive weekend getaway. And yet at the same time I know I'll only live once.

So I wonder if I'll sit here on this blog 10 years from now regretting not taking the chance to go and experience life; or if I'll instead appreciate the sacrifice of delayed gratification? Instead I'll be happy with a large retirement account, possible early retirement, money in bank, college funded, and lots of home equity?

I already know I chose a home in my early 20s over travelling and having fun. Turned into a good investment, but I think I do regret giving up some of the fun. I also know that by keeping my car instead of trading up saves me a lot of money. But will I regret my ways later? Am I over the line stingy? Should I be experiencing life more? What if there is no later?

Do people in CC debt regret it? Or do you have great memories to recall and experiences you treasure? Did you enjoy life to the fullest? Am I planning for a future I may not have?

Wednesday, January 03, 2007

Budgeting Systems Review

Okay so I'm about to discuss my experience with Quicken, Microsoft Money, and Excel. So last month right before Christmas holidays I attempted to use Quicken and Microsoft Money. I hated both systems. I couldn't reconcile anything, pretty much everything attempted to get downloaded off of website, but they wouldn't reconcile.

How so? Well the BofA checking would only go back to May, and I just had to pretend it started off with a budget after a set date. Then when I attempted to put in categories for each entry, it worked mostly, until it came to CC payments. Then when I called it a CC payment it wouldn't reconcile with the CC statement. I downloaded the statement, but it would instead show 2 payments instead of reconciling the two accounts. This occurred in both Quicken and Money.

Then I also tried to track our portfolio, however it wouldn't go back far enough to track the buy dates for some stocks. It also wouldn't track all the entries for the 401k purchases.

Another thing is I couldn't reconcile the paychecks breakdown. It was impossible to setup the paychecks because it was variable at the end of the year. So again I found myself stuck using the computer program. I guess I'm not very computer adept.

As far as excel, I have a simple spreadsheet showing due dates of bills and costs. It isn't fancy, and when I pay the bill, I input the confirmation code. Simple? Yes, does it help budgeting? No, but it makes sure I pay all my bills on time.

I may try youneedabudget or an excel spreadsheet. I'll post when I figure it out. What are other's experiences with Quicken/Money.

Tuesday, January 02, 2007

Net Worth 2006 Wrap-Up

Okay, I'm going to simply wrap up our net worth for the year of 2006. We started 2006 at $147,936 and we ended it at $196,732. We increased our net worth by $48796 or 33%. That sounds pretty impressive for me. I didn't expect to do so well. Plus not all 401k contributions were added by the end of the year by the company so it would be higher if not.

Overall we had a wonderful year. We saved money, went to Japan/Hong Kong, my mom had a successful eye surgery over this Christmas holiday (I went home to help), and we managed to pay cash for most of DH's school tuition.

Carnival of Personal Finance #81

This week at mighty bargain hunter's site is the Carnival of Personal Finances #81. See my post on Living without a Budget. I hope you enjoy this week's carnival.

I'd like to add, I can't believe people are coming and reading my blog.

Monday, January 01, 2007

Happy New Year

Been jet lagged getting home, but this is a short post of Happy New Year to one and all. May your year be healthy, happy, and prosperous for your families!