Wednesday, October 31, 2007

Happy Halloween!

Happy Halloween. I guess my only little financial thing today is how many children are going to show up today? I bought two bags of M&Ms, peanuts and regular to give out. Last year I bought a box from Costco and I had tons extra.

This year I'm hoping enough kids come so that I don't have any extra. Unfortunately I have yet to have one trick or treater. What is going on? I used to be so excited to go trick or treating. I loved getting candy.

If not I guess I should donate the candy or get DH to take it to work. It's not the fact it was $4 for the 2 bags, but I will gain weight if I sit here and eat all the candy. Sigh.

Hope everyone else has better luck.

Tuesday, October 30, 2007

Festival of Frugality #98

The Festival of Frugality #98 is up at Looks like a great festival. My article "Dining in can be expensive" was submitted.

A couple of articles I liked were "Top 10 Cheapest ways to exercise" by silicon valley blogger, and "Do vacations spoil you for normal".

My thoughts on cheap exercise is the way to go. Though living in CA, I had a great deal on a gym I used year round. Now out east, well let's say gyms are no longer cheap so I have to exercise outdoors/indoors alone. Ugh. I prefer the gym because the weather out here isn't the best.

And going on vacation spoils me because I hate going to work!

401k Match Bonus...

Every November the company my DH works for goes over their benefits and improves them. They also have open enrollement. Right now I'm debating eye insurance but that's another day.

For now I'm bursting with supreme happiness. Wowsa! DH got some fantastic news. Turns out the company has decided to do away with the vesting schedule with the 401k match. No more 3 years to vest. Fantastic. That means the 6% they've been contributing is ours immediately!

That's tremendous, it's like a 6% raise to DH's salary, without doing anything. DH complained he won't see the money until retirement, but every penny saved is a penny we don't have to save. Anyway it's nice to see our little nest egg growing fasting and knowing it's all ours. We don't have to subtract out the unvested portion anymore.

Plus, this new company every two weeks they deposit the 401k instead of the old company which took 6-8 weeks to make a deposit. And it every quarter they would make the match however it would the quarter after that the match would occur.

What a nice bonus.

Monday, October 29, 2007

Great Deal Eating Out...

I found a coupon for $25 for McCormick's and Schmick's. So yesterday we went to MS and had dinner. I had the monkfish, DH had the bluefish, and we shared the quahog appetizer. I took home half my meal and ate it for lunch.

The Monkfish was $20.95, Bluefish $18.90, and Quahog $8.85 the total bill was $48.70. The tax was $2.44 and the total was $51.14. So the $25 was applied and the final bill was $26.14. But I used a $50 gift card to MS. I bought 2 $50 GC to McCormick's = $100 for $80, basically a 20% discount. Also because I used am AmEx CC I get back 3%. So our bill including tip was $35.14. But we only paid 77% = $27 including tip!

For a seafood meal out for the two of us I was impressed with the deal. Plus they have a diner club where you get $1=1 point spent. So after 500 points you get a GC for $25. Another bonus.

Yes I could cook some of this fish at home, and I do, but I also enjoy eating out. And for a deal like this it cost less than going out to eat TGIF, Applebee's, etc.

Carnival of Personal Finance #124

The Carnival of Personal Finance #124 is up at the Millionaire Mommy Next Door. She did a simply awesome job. It is very well organized and beautifully done.

I submitted my question on Going Carless. Lots of great articles. I reccomend you checking them out. She has a poll going with different categories. And the winner in each category gets a free blog.

Anyway couple of great articles to check out, "the quiet millionaire" and "why personal finance is personal." Lots to read.

Sunday, October 28, 2007

Poll: Lying to a spouse

72% of people say they never lie to their spouse about finances and 27% say just a little lies to their spouses. Very interesting. No one actually admitted to lying to their spouse.

I find that strange because there are many people who are in debt, and say their spouse refuses to listen or participate. On the Women In Red message board, there are women who hide their debt from their spouses. Often afraid of letting their spouses know the real truth.

For example, on Oprah this past week there was a woman $135k in debt. Yep you read that right, not a mortgage, but CC debt. And her husband had no idea. He had ignored their finances and left them entirely to her. So is it considered lying or denial on the part of the husband?

So I find it great that most people don't lie to their significant others. So if you have debt then your SO knows all about it?

Personally I think DH and I both tell over/underestimation of costs. We never sit there and lie but we do forget to metion some expenses etc. But nothing big, anything over $20 we discuss. But the details are sometimes fuzzy.

Friday, October 26, 2007

Cell Phone Data Plan...

My DH wants to add a data plan to his cell phone for $10/month. I am against this. Now I'm about to sound extremely cheap, but please try where I'm coming from. First, DH works all day and the cell phone is barely used. I don't know how and why he really needs to be texting people and surfing the web from the phone, when he has a laptop at work and at home. I feel it's just because everyone else has it he wants it. He wanted an iphone, which I said if he saved his blow money $10/week he could buy it.

Yes he earns a good income and we don't have debt, but I don't like the idea of increasing our fixed monthly expenses. Already I feel that our monthly expenses are huge. We have cable, internet, and phone. Cable is even premium with HD, DVR and movie channels.

Should I agree to adding on the $10 data plan we should cut the movie channels? Is this unreasonable? It's just $10/month, but I feel if we keep justifying these expenses they add up fast.

I really have become the saver in the relationship where he used to. He's been changing a lot since MBA school where now he wants a new car. When we meet (8 years ago), he called me foolish for wanting a nice car. He said it was to get from point A to B. But now he feels like we're poor compared to other students. I just want to scream about we are not going to finance anything. I already hate we're taking out $8500/year to pay for his private MBA and cash flowing the other $10k/year. Most people in school with him are 100% loans. We're saving maximum for retirement and paying 50%+ of the tuition, books, etc.

I feel that this is a slippery slope to be walking down.

Dining in can be expensive...

In this article by msn, the author claims that it's more expensive to cook than to dine in. The truth is that it is always cheaper to eat in. However, it is true that eating in can be expensive.

The real comparison is determining the if the exact meal you prepare at home is as expensive as restaurant food. The article claims that a man claims to have spent $30 for the couple cooking, shopping, and preparing a meal. But the same meal would only be $17 from a restaurant.

I find this rather hard to believe. For example as a couple we had two very expensive meals over the weekend. We had cajun scallops and NY strip steak both courtesy of Costco. The scallops were $9.99/lb and the steak $6.49/lb.

Now we ate a one pound of scallops + cajun style rice, entire meal for two with rice, veggies, salad, scallops = $12. However, maybe an hour of prep time which could be $50. BUT because we're both salary we don't get extra pay for working that hour so it really only cost $12. Plus for us to both eat scallop dish at a cajun restaurant it would be easily $18/plate = $36 without tip and tax. How is eating out cheaper?

Second example is eating the NY steak. That would easily cost us $25/plate but we ate it for $8 for the two of us sharing a 1 lb steak and all the fixings. $8 versus $50 doesn't seem like much comparison.

And yet we all eat out. The reason? Convience. There are some meals which are just easier to easier to eat out. My DH hates making ravioli, so we usually eat it out or buy it premade. He also hates making pizza nowadays.

But reality also is that there are some foods which are impossible to make. More ethnic foods like Indian curries which have expensive spices that can be difficult to find. We enjoy eating out those foods which are cheap to make if you already have all the ingredients on hand, but difficult otherwise.

I don't think you can compare eating out with cooking at home. Do you think it's cheaper to eat out?

Thursday, October 25, 2007

Going Carless...

I have been thinking more and more about trying to go carless. Downsizing and getting rid of both of our cars and getting 1 car. But DH isn't buying it. He likes the freedom of having two cars. We only have two cars because where we lived apart for 2 years in Southern CA. It was impossible without two cars.

So we ate the major depreciation on the cars before we even arrived out East. When we first moved we thought about selling one of the cars. But then my DH got into 3 car accidents immediately and we negated the idea. But we've been fortunately accident free since then. I still rarely drive my car, though we have had issues with the focus.

So I decided to run a couple of numbers about how much we'd save by selling one car. We might get $4k for the Focus. Plus we would not have to pay for insurance and maintanence. Insurance would be $75/month savings we would have 2 drivers, 1 car, and no discount for multi-car. The gas would not drop much because we'd be carpooling, but DH drives to work daily, and I would need a monthly transit pass. Currently I carpool, bike, and use public transit occasionally. The pass would cost $90/month. So the savings might be close to a wash because I don't use pass now but rather pay as I go. The pass works best if you use the transit daily, and I can catch rides 50% of the time and biked daily during the summer.

I wonder if it would still be worth it? We basically would net the $4k for sale of the car. The monthly savings would be minimally. The biggest factor holding us back is the Focus is the car we use for hauling stuff around, going camping, going snowboarding. But it is a more unreliable car. The corolla doesn't have fold down seats and carry as much. But we'd have to keep it because it's so much more reliable.

I guess we still should discuss it more. I wonder if the convience factor is worth the $4k?

Wednesday, October 24, 2007

Pros and Cons of Landlording...

What are the pros and cons of being a landlord? I think there are many. On any financial board there is always someone asking the question of whether it's worth it being a landlord. And there are those who say it's great and those who say it's not. However the reality is that even landlords will tell you it's not an easy job.

The obvious pros of landlording, is having someone else pay your mortgage. If you buy a house in an area where rents are high and mortgages are low you'll come out ahead. Along with an enforced savings by paying off the mortgage, a landlord is able to reap the benefits of home appreciation. They are able to diversify their portfolio with investments other than stocks. Also in retirement, after the mortgage is paid off it a rental property can provide an alternative stream of income.

However, there are many cons against owning rental properties and becoming a landlord. First, renters do not care for the place like an owner. Thus, typically most rentals are trashed and require more $$ for upkeep. What sort of upkeep? Well if a water heater breaks on a weekend you can't tell the renter to wait, you need to fix it asap. Unlike being frugal at home, with a rental you have to fix the house immediately, not wait for a good deal.

Second, the possibility of a renter not paying and needing to be evicted. Or being unable to find a renter and having a property sit vacant. This means needing to have amount of cashflow to carry the property during times when the mortgage isn't being paid by the renter.

Third, landlords often have to carry extra insurance in case their renters get hurt or have someone visiting who is injured on the property. They should also form an LLC and protect their other assets in case any renter/visitor sues them.

But overall I think the pros and cons balance out. The main thing is finding a property which will have a return on investment of at least 8% annually by having a strong positive cash flow. I would never be a landlord if the rent generated by the property did not cover the mortgage, insurance, and 10% maintenance costs. If not I think the money and time would be better spent invested in index mutual funds.

Another factor is being a landlord takes time. If you hire a management company they will take 10% of the rent which increases the amount needed to generate a positive cashflow on the property. Hence it could be a good retirement or job for a stay at home parent. But it might be too time consuming for people working full-time.

Tuesday, October 23, 2007

California Foreclosure

Okay so I now know someone going into foreclosure over $50k. I don't know if this is a wise move or not. Yes it's a lot of money. And yes the person does have the $50k to pay it off, but they refuse to "throw good money, after bad."

The question, is this a smart move or not? The foreclosure will ruin the person's credit. However, is it worth ruining one's credit over $50k?

I guess it's much like bankruptcy. For one person $50k is enough to drive them to declare. While for others having $300k in debt is nothing. It depends on the situation.

Would I do it? Probably not, mainly because there are too many variables which could arise from the foreclosure. It will make finding another job more difficult. It can make getting any loans more difficult. But I say the same thing about BK. However I realize I could quickly end up in either position given the right circumstances.

I wonder though if this is the right move? To the friend, my advice was to carefully consider if it is worth doing just for $50k. That's barely more than what they paid for their fancy car.

CA wildfires...

I am hoping our friends home in CA are fine. They've all evacuated from the Rancho Bernardo area, Irvine area, etc. My best friend's house was very close to the wildfires. She was within 3 blocks of the fires. Our other friends also are hoping to hear news about their house. Right now they are just watching and waiting.

I guess this is a good reason to keep your insurance up to date. My best friend hadn't made her payment, but she caught up on Sunday. She was being lazy. Geez.

Monday, October 22, 2007

Car...what you need or want?

DH and I went to look at a couple of used cars this weekend. We specifically were looking at Subarus because of the space and AWD. We had never test driven or even seen a subaru. We just picked a Subaru outback, legacy, & impreza based on what everyone we work with and live by has said.

So we saw a pretty good deal on a used 2004 Subaru Outback Station wagon. But while we were there we also saw the new 2008 impreza wagon. They were similar in price $17k for the impreza and $13k for the outback.

We were very impressed with the handling of both cars. We were also very happy with the larger space in both cars than what we currently drive. But we realized that the two cars we saw were very different cars. The Outback was substantially larger than the Impreza. We decided we would start thinking about replacing my DH's Focus next year but we needed to nail down a target price range and car specifically.

DH preferred the Impreza, while I preferred the Outback. So we talked in the car. The Impreza is a car which we might have to replace in 3-4 years after we start our family. It's a little larger than our cars and has a bit more storage space. The Outback is easily a car we could fit 2 children, dogs, and stuff into.

DH said a car is a car, you should drive what you want. I think we should look long term and buy something which will be usable longer than just a few years. This lead to the discussion whether you should buy a car you can use 90% of the time or a car you think you'll use 70% longer term?

My DH's argument is that we'll use the smaller car for 90% of the time for the next 3-4 years. Then if we have to trade it in for something larger because of necessity, then at that time you reevalute it. He equated it to buying a stock, you reevaluate at each point in time. You buy a car you will use for 90% of the time and rent if necessary.

I pointed out that cars depreciate quickly. That if we bought even a used car, it would depreciate in 3-4 years and we'd again have to be dumping more money on the table to buy another new used car in 3-4 years. If we moved up into an Outback from an Impreza, then we'd eat a harsher depreciation, time, energy expended buying another car versus just buying a car we can grow into till it dies.

It's a difficult financial decision. So do you buy a car you need or want? Is it purely a financial decision?

So as you can see this is about 1-2 years away our decision but we need to start planning and looking. I would like to pick up something used. And it would be lovely if something would just drop in our lap. But we have to keep our eyes open and our finances ready just in case.

Sunday, October 21, 2007

Review: Debt Consolidation Site

I said I'd write an unbiased, objective review of the Debt Consolidation Care Website. First of all this is a website for people who are in debt and attempting to get out of debt. This website does not appear to be associated with any financial "guru" or celebrities like Suze Orman, Dave Ramsey, David Bach, etc.

They provide a service where they help people to get out of debt. The first way they do is this by suggesting that people consolidate debt through them. This is supposed to lower interest rates and make the monthly debt payment more manageable. This appears to a standard service. Because I am not consolidating any debt, I did not attempt to try out the program.

The second part of their website, is the forum discussing debt. The forums covers a broad range of topics including getting out of debt, bankruptcy, and getting loans after ruining your credit. The topics in this area seemed well organized and easy to follow. It appears that many people have a lot of experience in dealing with creditors and how to pay them off. This area also appears to give support to those getting out of debt. This area does not however suggest cutting up any and all credit cards, etc. Rather it stresses getting out of debt but not being critical of those still using credit.

The third part of the website is blogs of people getting out of debt. The blogs do not appear to be the typical blogs I enjoy visiting, but I'm sure there are many blogs which would be helpful for those interested in reading blogs about digging out of debt.

Fourth, there is a section to read about how to get out of debt under articles. I really liked this section and felt there was a lot of information well organized into topics. Also the calculators for determining how long it will take you to get out of debt and how much to pay is easy to use.

Overall this is a very easy to use website. It looks like it could be supportive of those getting out of debt. It might be a starting point for those looking to improve their financial situation.

Saturday, October 20, 2007

Curbing a spender?

If you are a saver in a relationship with a spender how do you curb a spender? Do you just budget all the necessary expenses and savings and allow the spender to use the rest? Do you ask for guidelines that they are allowed to spend $X per month or pay period?

When asked by the old roommate, about merging finances as an older couple, she mentioned her S.O was a spender. She has always been a saver. So so doubted that if they married, she would be able to curb his spending habits.

So the question arose how do you manage the situation? The easiest answer is marry/cohabitate with someone who has common financial habits. But that's easier said than done. I know I have it relatively easy because I'm married to a saver, while I'm considered in the relationship the spender. Which seems quite a stretch when compared I would say against the average. But to curb my own spending, is I typically ask myself "Do I really need it?" And I put down an item and promise to come back another day and get it if I really do want it.

So what creative methods have you found to curb your spendy partner's habit?

Friday, October 19, 2007

Coupon Update #5

Unfortunately I haven't been using my coupons very much. I am overstock on health and beauty aids for at least 3 years. And I am somewhat stocked on certain foods.

But I've still found that the majority of the food we buy and eat aren't huge coupon savers. One area I've started eating is Oatmeal. I eat it everyday for breakfast, so I suppose I can save a lot on a box of oatmeal.

But overall buying meat and fresh veggies hasn't changed. I've gone to eating frozen veggies, but my DH doesn't like it. He prefer fresh veggies and complains about it. So I try to do one day fresh, one day frozen. Apparently the vitamins provided by frozen veggies are substantially less than fresh/raw veggies because it doesn't withstand the freezing process

Has my couponing this year been a help or hindrance? I'm still debating, I think it's been more work than it's worth. But I did learn about getting free/cheap shampoo, toothpaste, deodorant, etc. So maybe it's not a complete waste of time.

I am doing still doing it but very, very slowly.

Thursday, October 18, 2007

Dental Update #3...

To summarize, I refused to pay $350 for a cancelled dental appointment in July. I have sent back proof about changing insurance, I have sent proof the dental office was not eligible for coverage with my new insurance (they are but OUT OF NETWORK). I called and reported them to the insurance company, and it turns out they have been reported multiple times for violations of misleading people to get work done when it wasn't covered.

I have written two more letters saying I'm not paying it. Got another 3rd letter saying I'm responsible for the $350.

What are my options? My DH says to keep saying I'm not paying. This time to explain the cost of the cancellation was way above the reasonable guidelines of the state. They were deceptive, which they were but refuse to acknowledge. I also reported them to the state dental office, but hey they obviously don't care and have been reported before.

Can they send it to collections? How will this affect my credit? What are their recourse? Should I offer to settle for $50?

Wednesday, October 17, 2007

New Poll: Lying to a significant other?

The question is whether you tell financial lies to a significant other? Most people I guess will say no. However I wonder if it's really true or it depends on how you define lie?

In general I would have to say I don't lie to my spouse. However, I do sometimes get the numbers wrong and hence I do think I tell white lies to my spouse about our finances. Like what?

Well I bought this shirt for $8.99, I might say $10. Or I got a haircut for $40, but it was $42. Just sort of a rounding of numbers. I noticed my DH does it as well, he'll round up and down and be in the ballpark of the number. However later I might see the charge or he'll see the charge and ask why is it $X?

Is that a lie or just a slip of the tongue? Is it important? Should we be counting every penny and accounting for it?

Also is not telling your significant other the $ amount a lie? Where I go grocery shopping and he knows I went or sometimes not, and never realizes what I just bought? Should I say I went shopping this evening and spend $40 (more likely $37.xx). Or is it just water under the bridge?

Tuesday, October 16, 2007

Retirement Poll Results

Wow. Looks like people reading the site are doing great in saving for retirement. The poll closed this evening and it appears that 45% of readers have saved more than $100k for retirement. 18% have between $25-100k, and 31% have less than $25k, and only 1 person doesn't have retirement savings.

This is quite remarkable considering the average savings rate in US is supposed to be 1-2%. And that the average retirement savings in the US is $45k.

Great job! I look forward to joining the $100k club as well.

Why Tip?

Do you wonder why the US the only country where tipping is expected? That is most other countries they include tips in the price of food? The prices of services have already factored in the "tip".

I would prefer that we not tip as a society and instead increase the price of services. That way people don't have to sit and wonder about tipping. They don't have to ponder how much to tip a dog groomer, dog walker. Or what's appropriate for a cabbie who doesn't help you with your door and bags. Or do you need to tip your hair stylist every time and then extra at Christmas? Or your babysitter every time and Christmas as well.

These so called rules get very complicated and confusing quickly. It seems like you need to tip for every possible service in the US. Eating out, carrying a bag, delivering an item, etc. Often you feel awkward and unsure not only about whether to tip but how much?

If we moved to a system where a tip was considered a bonus I think it would be so much easier. We wouldn't have to worry so much about offending the tippee. Plus I think that the people expecting to be tipped outrageous.

Nowadays everywhere you go, there is a tip jar next to the register. Which leads me to wonder just for punching a cash register I need to leave a tip? Basically every time I spend a penny someone else is looking for more money?

Would it stop you from purchasing an item if it was a bit higher and no tip was necessary? I think not. It might make you consider your purchases more, but you'd feel it was more worth it because you wouldn't have worry if you were "breaking" the rule by not tipping.

Would you pay more to stop tipping? Or is tipping just part of the culture and too ingrained? Or are we moving towards overtipping?

Monday, October 15, 2007

Cell Phones...

We're out of our 2 year contract for cell phones and we're starting again. Our Motorola Razrs have been pretty much dead for the past 6 months. But we've been waiting until our contract was up so we could just get new free phones.

Of course to get the new free phones cost us signing another 2 year contract. I wonder if it's worth it? Would I really cancel my cell phone? When we lived in CA, we only had cell phones and didn't have a landline. As we were living apart during the week, it was cheaper than paying for 2 landlines. Plus I was able to chat for free with my parents, friends, and family.

But the phone my DH wanted was $79, so he talked to customer service and explained the need for retention of customers. After discussing with him our reasons for staying with Cingular they agreed and gave us the same phone for free. Here's the Sony Ericsson 580i we got for free.

I guess as usual it never hurts to ask. But we do have another 2 year contract. Would I live without a phone? Probably not and if I were broke enough to try my mom would buy me a spare line and give me the phone.

She'd die if I tried to go without a landline or cell phone. My mom's paranoid, in college I didn't answer the dorm phone so she sent the cops to check out my room. And then she had a peephole installed because I couldn't tell who was knocking. So I consider it an investment in my mom's nagging.

Sunday, October 14, 2007

How much do you make???

Do you know how much other people make? I don't, I can guess based on their purchases and spending habits. At least I think so. But I could be completely wrong as well.

This came up because my mom was talking about how my Uncle knows exactly how much each of his kids make, and their spouses/SO make as well. She was so surprised. She couldn't believe that after meeting my cousin's girlfriend they knew as a nurse she makes $60k/year.

Which brought up and interesting question, my mom began to hint how much we make. I said enough, which is strange right? But my parents have never been honest about their finances, and until recently I had no idea exactly how well/poorly they were doing.

Then I was thinking, if DH and I can't even share how much we make with our own parents, how are others so open? How do they just spill all their financial details in real life? I'm more open here on my blog than in real life.

Do you know how much your friend's and family make? Do you share details of your financial life freely?

Friday, October 12, 2007

Broken Window

We have new double paned storm windows. Today the plumber came in to do our gas line and he opened two windows and broke the latches on both. He muscled the windows opened and I now noticed that the windows are unable to latch.

I am not sure how to bring up that he broke both latches. They were working fine because I've opened and closed both windows recently.

Should I let it go or tell him about it?


I'm a bit behind my the times. As I find out last minute what the hot toys are. This year apparently my neice wants webkinz.

It's this toy where you purchase this doll, right now the hot seasonal item is a black cat, and you take this doll and register it online. Then you are able to play in this online world of games with your friends.

In this online world you shop and buy Kinzcash to pay for stuff. It's pretty nifty way to suck up the parent money. The toy itself isn't that expensive I think $10-15, but once a child has one they become addicted to having more and more toys within their collection. And they need to spend more money online to play games with friends.

Well I suppose my $10 gift will cost my sister a bunch of money more...oh well. Brillant marketing scheme.

Thursday, October 11, 2007

Tithing versus Time Donation

I read the website Need To Be Debt Free, and think they are working really hard in pursuit of getting out of debt. They made over $10k net last month in income by working 2 jobs and overtime at their primary jobs. They worked something like 12-16 hours a day. I don't know if I could make that sacrifice to get out of debt by losing time spent with my family, but I do understand.

Anyway though, they mention a lot about tithing. Any extra money they make they tithe, or give 10%. I think it's fine, but I have suggested that they donate their time in exchange of money so they can get out debt faster and thus spend more time at the church and with family. I suggested that they divide the amount of money they feel they owe by their hourly rate and help the church by making flyer, stuffing envelopes, cleaning, cutting grass, basically anything.

Sure we donate money to charities monthly. But personally I don't find it very satisfying. The bigger satisfaction comes from actually going to the food bank and physically helping out. Or going to the woman's shelter and donating goods and helping them organize the goods. Those feel so much better.

Our roommate is a devout muslim and faithfully donates Zagat (muslim tithe and it's 12.5%). Anyway he also teaches Sunday School and helps out with prayers. The Zagat is a starting place, but he gives more time because he feels it's important.

Thus I do understand being loyal and having to give God 10%, but is tithing just because you have to? If it's not just because you have to, then why aren't you going out and helping the church above and beyond the money? Why aren't you donating more time?

Wednesday, October 10, 2007

Poll: Separate or Joint Accounts?

The poll for separate or joint accounts is now closed. Strangely the majority of people 65% have joint accounts. With 25% of people having 3 accounts, 1 joint and 2 separate. And only 10% of people having separate accounts.

I thought the number of couples having 3 accounts, would be the highest number. Because it seems like most people scream that couples need their own money and control of the money. Hence I thought having a joint account with my spouse and sharing all money was abnormal. Turns out it's not as weird as it seems.

It seems like most couples prefer to share their fiscal checkbooks.

Tuesday, October 09, 2007

To budget or splurge???

Here's the scenario...If you were remodelling your bathroom, and found tile you loved but it cost an extra $1.40 than you budgeted/expected. Meaning you had set your budget for $5 but found stuff you loved for $6.40 instead. This extra would cost you $700 extra to finish your project. Now you had come in and extra $200 on other items for your renovation. So it would just cost $500 extra.

Now would you pay the extra $500 and buy the nicer tile? Or would you buy tile you didn't love just because it fit in the budget?

Extra information. The couple is very financially wise. In fact they try to emulate the millionaire next door theory. So they coupon shop, and sometimes go overboard with being frugal. They save the maximum in your retirement accounts, have no debt except the mortgage. In fact their mortgage is due to paid off in 6 more years at 43. You pay extra money to the mortgage every month. They can afford the $500/month because they pay $1800/month extra to the mortgage, in fact they barely break a sweat.

But what should they do? Take an extra $500 and buy the tile they like? Or not buy the tile and stick to their original budget. Also they have extra cash in other sinking funds, so they can still make their $1800/month extra mortgage payment and instead slowly pay back their extra pot of money.

What should they do?

Sunday, October 07, 2007

the 25% mortgage rule...

So a lot of experts recomend "the 25% mortgage" rule. Where you're mortgage including property taxes, insurance, interest is not greater than 25% of your salary. Some suggest this on a 15 year mortgage like DR, while others are content with a 30 year fixed mortgage. But which is right?

Well the average price of a house is $220k in the US while the median price was $227k. So assume the normal price of a home to be $225k. And a DP of $45k, so the mortgage would be $180k.

Now a 15 year payment @ 6% would be $1519/month. So PITI would be assuming 1% property tax and 1% repairs/annually, and insurance $600/year = $425 extra month = $1944/month PITI. This would require a net/gross salary of $7776/month or $93k/year. How many people make $93k, which is 2x the median salary in the US to afford just the average home of $225k?

A 30 year payment @ 6.5% would be $1138/month. So with the extra $425, the PITI would be $1563/month. So a family would need to earn net/gross $6252/month or $75k/year.

Honestly how many families earn that sort of income to stay within the 25% rules? I'd be very surprised to find many.

But I think for a couple starting out a 30 year fixed is not a bad choice. It makes it easier to afford a house. Plus there is the possibility of raises to help lower the % as they increase their incomes while the mortgage stays fixed.

But the 25% is probably best a guideline. It's not hard and fast, but something to really consider before you do anything. Personally I'm right at the 30% line and it's gone down since we bought. But we did consider what it meant to go higher and lower than the rule.

Budget Busters...

How to build a budget seems to be a common question for people in debt. Seems easy but what I've found from talking to people it's not the actual drawing of the budget it's sticking to it that's tough. So perhaps cash would work best to keep people from overspending.

But what I've found the major problem for people in debt, is budget busters. What's a budget buster? Well a too large mortgage payment, excessive car payments, large CC minimums, or huge student loans. Usually I've found that people are not overly spending on eating out, buying things, etc.

But those budget busters are something which society calls acceptable. Like stretching to buy a house that takes up 30-40% of your pay. Or cars which cost 25-50% of your salary. Or student loans 3-4x your income. These budget busters are all considered acceptable by normal standards.

Sure I think student loans, mortgages, and even car loans have a place in a financial plan. But not when they are budget buster. Not when you cannot afford to budget because there isn't enough money to cover basic living expenses. Then you've overspent.

Cutting lattes, cigs, eating out, cable, internet are nice solutions to trim a budget. It would save me $300/month. BUT that's barely a car payment, monthly property tax, or student loan payment. So you'd be better off cutting one of those big ticket items to make your budget really work, then trimming the fat.

There is nothing anyone can do to make a budget stick if 100% of the salary is gone to a car, house, and student loans, before you even get to food, clothes, and fun. But maybe I'm looking at most people's budgets the wrong way.

Saturday, October 06, 2007

Wanting to be the Joneses...

Okay after my old college roomie visiting for last weekend and this weekend, made me a bit jealous. Not jealous where I wish for them to have less, but hopes that I can have as much.

So they both are working full time in SF earning obviously very decent salaries. And not being married and not owning a home means they have a ton of disposable income. It became very apparent from going out with them that they are awesome DINKS with tons of earning power. I also realize that they are on vacation so their spending is not typical.

But we sat chatting and talking over dinner and wine and realized that our lifestyles have sooo dramatically changed from college and living together. We no longer consider ramen noodles a meal and we both drive reliable cars (never had one and she had such a junker it broke down all the time). The lifestyle that once looked so beyond our reach we're now enjoying.

But back to wanting to be the Joneses. We spent the day out around the town and BF forgot his sunglasses. So he just went out and bought a pair of Revo Sunglasses for $230. This just set me back a tiny bit. But I realize they work super hard and deserve everything they earn. It just made me wish I had their life.

But then I snapped back to reality and realized it doesn't matter because you have to be happy with what you make period. So my friends are the Joneses, but hey they are very kind and generous by treating us to dinner. So I'd rather keep them as friends then chasing them away.

By the way these are not my only Joneses friends. My best friend is the same. And worse is they are major savers and investors too so they aren't irresponsible.

Friday, October 05, 2007

DIY versus paying someone...

Most people would say that doing it yourself saves you a lot of money. And in general I agree. But at what point do you stop and hire someone? We've done a lot of home repair, definitely more than average and I know my DH is handy. His family did pretty much all DIY. Unfortunately they learned the hard way that you occasionally should just pay someone to do the work around the house.

For example, our condo undertook building a backyard retaining wall. Beautiful, cheap, and relatively easy. Our share was $2k, great considering the additional value. However, we also need to repair the retaining wall holding up our parking pad. That is a much larger, more labor intensive job using special tools, not just hand. Could we have undertaken rebuilding it ourselves? Yes, but the scope of the project definitely made it worth hiring not only an contractor but engineer to certify the wall.

Another example of DIY not winning out is cleaning our gutters. One of our neighbors mentioned saving $150 it costs to clean our gutter by doing it himself. We nixed the idea when because we have a 5 story house and if he fell down, he'd die. Sure we'd have insurance, but there are some cases where it's better to hire a licensed/bonded professional who can accept the risk of falling off a roof. Besides the point that they are less likely to fall off the roof because they are an experience professional.

I guess the question is how to measure when a job even a small job is worth paying for because of risk, and a larger scope job is worth investing the time to do.

Thursday, October 04, 2007

September Spending Wrap Up

Well I decided to sit and tally our spending for the month of September. This month was a lot harder to keep track of expenses, because we've had so many guests and still do. Unfortunately I didn't track our cash spending as well as I usually do, so I had to guesstimate.

But we didn't have as bad a month as I would expect. I estimated an extra $1000 in expenses and I think I was about dead on. We spent $550 on travelling. Which was still pretty good in all.

However for the month of September we spent $230 for gas, $110 overbudget. We fortunately only spent $537.92 on eating out because our parents paid for some of the meals. We also ate at home quite a bit spending $455.52 on groceries for the month.

I had been loading up on wine prior to my parents, in-laws, and friends arrival so I only had to spend $48.95 on wine in September since I had close to 6 bottles on hand. We finished 1-2 bottles a night depending on how many people were drinking.

Considering on average we had 2 extra people everyday this month I think we had a fantastic month budgetwise. We didn't totally blow our budget and I saved a ton by prebuying wine and some food stuff. Plus we were able to eat out some meals at cheap food court places which allowed us to only pay for ourselves instead of everyone.

All in all a nice month. We still have guests, everyone's finally leaving on Monday. I'm beat, this has been a stressful month and it's still carrying over to this month. This is our last really spendy weekend.

Wednesday, October 03, 2007

Part III: Splitting Dating Costs?

This part of the finances of an unmarried couple applies more to newly dating couples. I've found from interviewing dating couples, they fall into a routine where they both pay for things and feel it evens out. No one ever feels that one person is more put out than the other.

However when you start dating, I've heard from many singles it's tough. It's expensive and you never know how it will turn out. And they often hear from married/coupled friends to go on cheap dates. Which is great when you've already started more serious dating, but the reality is most people do not start out that way.

I think a perfect first date is coffee or a happy hour drink. Why? Because it's a cheap way to figure out if you have any chemistry. And if you don't it's easy to end the date while not suffering through an appetizer, dinner, and dessert. Then the next date can be a full dinner potentially or lunch.

But why is dating so expensive? Consider that most people will go out to dinner and have an appetizer, drink, dessert. Where I live, when all that is said and done with tax and tip at a restaurant where entrees cost $15-20 (average of chain restaurants), for a date you are looking at $60. Then a movie? Or music bar, etc. It adds up fast. But who pays?

Most men and women say men, but I question this. If both people are exploring the possibility of a relationship why isn't more the norm to just split the date? Why is the burden placed on one more than the other?

Our current roomie is single and he moans about the cost of dating. As a single guy it gets expensive to date. Plus even free dates like hiking costs him money because he has to rent a car, gas, and still pack lunch. Another cost of dating is looking good. This is more a cost factor for women than men. Having to maintain themselves to be able to attract the other sex.

So how did you split the initial dating costs? When and how did you switch to a more informal splitting of costs? Or is there a large disparity of income which makes one party more likely to treat the other?

Tuesday, October 02, 2007

Part II: Buying a house while being unmarried

Well yesterday we discussed how difficult it can be to merge finances as a couple. It appears to be increasingly difficult as you get older. Even harder to navigate is whether to buy a house together. At around 30 whether you are single or not, it seems many people get bitten by a bug to buy a home.

But the question is how do you buy a house together if you are an unmarried couple? The simplest route and one which I took is buying the house 50/50. Where both people put down approximately equal amounts and each pay 50% of the mortgage. Then if you split up, the house is split 50/50.

However the real trouble arises when there is a disparity between the couple regarding the down payment and affordability. K mentioned that they were in negotiations for how they will manage buying a house together as an unmarried couple. First problem is her BF will be supplying 90% of the DP, and she will supply 10%. This is causing a bigger problem because they have to negotiate all details in a written agreement because her BF's DP is a "gift" from his parents. Hence they need to settle what they are going to do.

BF wants the equity to be split on DP. But K wants to keep the equity she pays down because she'll be paying 50% of the mortgage. So I'm not sure what they are going to do. Because financially this is not just a business transaction, it's a relationship. I can see both sides of the argument, BF is taking more risk in buying the home by putting more money down. But K is also taking risk and she's paying down equity so she wants to keep her dollars.

But what is the answer? I guess we'll have to see what they decide to do. My advice? Don't buy the house, just get married then buy the house and it won't matter.

Monday, October 01, 2007

Part I: Finances as an Unmarried Couple...

Managing your finances as a unmarried couple is tough. There are many stages of dating, and even trickier is the many stages of finances. This weekend an old roommate (K) visited and is coming back next weekend. She's been with her BF for 3 years and they are 29 and 31 years old respectively.

So we were talking privately when she asked how DH and I manage our finances. We all had been joking about not having money and DH said "I never see my paycheck..." So she asked if we didn't have separate accounts? So we dicussed how to merge finances.

K said that even after dating three years and planning on moving in together next year, they hadn't discussed finances at all. She had no idea about his money yet, because they took turns paying for eating out. Then they knew the other person shopped and bought stuff but she didn't know if he had CC debt. She said it was tough because they were older, independent, and used to not answering to each other about every penny. They earned similar amounts of money but they didn't reveal to each other how much in retirement savings they had.

So she was a bit scared of sharing accounts and money. Having to be accountable to each other. But the plan was to move in and split all common bills in half. I couldn't give her much suggestions because I had nothing to hide when I met, moved in and married my DH.

I think that being an older, more established couple makes the merging of finances more difficult. You suddenly have to ask the other person to reveal their financial background. You have to share important decisions like buying a house, car, debt. You no longer have the final and ultimate say. It's so much harder to compromise when you've lived without ever needing to.

I don't know if K will ever have just one account. From the way it sounds even if they marry, K and her BF want to keep separate accounts. But I did suggest really discussing their future finances and finding out how much savings and debt they each have. She metioned they have glossed over these discussions but not in detail. He knows she's got a ton of student loans, and she knows he doesn't have much saved. But the details.

Part II...buying a home...