Monday, December 31, 2007
1. Max out 401k
2. Max out Roth IRAs
3. Max out ESPP
4. Cash flow $20k/year tuition
These goals have been done every year since DH got a job. And our income gone up so just more to savings. I'm not sure what a real financial goal should be? Maybe I should try to make do without a student loan next year? That is $8500 more after tax cash for DH's tuition to his MBA program. We're shelling out $20k annually for the past 2 years and honestly it hurts.
Like yesterday when we wandered around REI, I realized that we've been paying $1500/month for his schooling, which probably equivalent to us being able to buy some stuff we'd like or nicer winter clothes. Or even saving for newer cars. Although right now we might be purchasing a used car next year from a friend, as a lateral move from DH's Ford Focus to a Subaru, this is under review
I guess that's my stretch goal, no student loan next year.
5. $8500 saved up cash I'm a bit terrified. This is a lot of money to cut from an already what feels tight budget.
6. Try an all cash month. This will be hard. I mentioned it to DH and didn't understand why we should do cash. He said why am I losing rewards, and am I not nitpicky enough about tracking every expense and budgeting it. He's mad at the idea of me becoming more of a cheapskate. And I admit I have a feeling I'll feel even less like spending than I do now. I am thinking of pulling out $250 for groceries and $250 eating out for the month of January.
1. Increase gas from $120 to $150/month. I am sorry to say, but I think higher gas prices are here to stay. Last January we started at $100/month and our driving did not change, just the prices. I also must add we drive less than 5k/annual (low mileage discount on our cars), so it's really that gas has increased a lot. It costs $30 to fill up a tank in both of our cars, so I'm buying 5 tanks/month @ 250 miles = 1250 miles/month. This is higher than what we do now, but I think gas will hit $4/gallon, so I might as well start pushing it up.
2. Increase Food Budget, I was spending out of control early in the year about $400. But then buckling down to $200/month. However, the prices of food has escalated. I think $300 is a more realistic budget in this next year, if prices continue to rise.
Sunday, December 30, 2007
Anyway we spent $667 on eating for the two of us for the week. About $84/day or $42/per person. Not bad. I had to average it out because we spent the majority of our $ in Whistler while Vancouver we spent about half as much.
So our running total for the trip turned out to be
Vancouver hotel $269
Dog Boarding $300
Airline Ticket $90
Transportation $208 - $150 to/from Whistler by bus, 2 day passes for Vancouver
Total - $2646 for 8 days
Now I'm happy that we came out about $500 less than I "budgeted" for. The biggest savings came from us not entering as many sights as we normally do. Many were closed so instead we walked the city, Stanley Park, the harbour, all free. If the Canucks had been in town we would have watched a game.
I know most people don't count in dog boarding in the cost of the trip as well, but to me that's a cost that always has to be considered. I think without it we might be more in line with what people spend on vacation. $300/day for hotel, food, transportation, shopping.
Now I'm off to pay for the spending portion of our trip. I have to admit it was relaxing knowing that the majority of it was already paid for.
Saturday, December 29, 2007
And even now we've yet to reach those prices again. Yet prices this year have been trending up. Due to a couple of different reasons, the use of ethanol to fuel cars and increased meat consumption.
This supposed increase in food prices will most affect poorer countries. But I question if they aren't underestimating the impact on Americans? With the slowing economy, many people's incomes are not rising as quickly as the goods they need to purchase.
Hence the prolonged period of cheap groceries has allowed consumers to spend a smaller percentage each year than if the cost had increased since 1974. This might have also caused them to become used to cheaper prices for years, and now suddenly having to increase the grocery budget is an eye opener.
Where will the extra money come from? How will people deal with groceries rising in costs annually instead of decreasing? Do you really think Americans can handle the jump? Much like how Americans are spoiled with cheap gas, in Europe and Asia, gas can cost $5-7/Liter. Hence we've allowed ourselves to continue affording large SUV/cars.
So will this rise in groceries cause us to curb our spending in other areas or will we just borrow more money to solve the problem?
Friday, December 28, 2007
1. They charge outrageous fees for everything. Nothing is free. Everything has a minimum, limit, or restriction.
2. They hold everything. Every deposit needs 24-48 hours. Every transfer into and out of takes 72 hours. If I deposit $5 into an ATM it's "on hold." If we get paid it's held for 24 hours. So I never pay bills until the Monday after it's deposited.
3. My bills though they supposedly are paid "electronically" they take 3 days to deliver. I have to pay everything 1-2 weeks ahead of time in case it gets lost. How it gets lost? I have no idea, but it can. Plus even though the payment is lost, I still have to cover the withdrawn funds.
So my bank is horrible. I have a lot of headaches, constantly following up with our bills being paid, our checks clearing, pretty much everything needs to be constantly monitored.
I've had large holds on many debits. I don't know if it's because of bank policy or the company debiting the amount. But in general I have to leave a buffer of $1k in my checking at any given time. I also buffer and extra $5k in my savings account in case payments get lost and I have to pay them a second time before I get the "lost" payment credited back to me. And this supposedly is a huge bank.
Well their customer service is awful. And their services in general are awful. But I am not going to change because I wanted to simplify my life by having all my accounts in one place. Hopefully next time I move, we can use a better bank.
How's your bank?
Thursday, December 27, 2007
I've only been unemployed 2 weeks. After college I had a job lined up. Then when I switched jobs and got layed off I had another job lined up to start that Monday after. I never had a problem finding a job.
Now sometimes the jobs weren't glamourous, I've waited tables, sorted mail, and worked retail. But they were jobs and they paid something. One of the fastest ways to get a job is through a temp agency. They often can hire you within the week.
What's the longest stint of unemployment?
Wednesday, December 26, 2007
First you'll need one for surcharges on any hotel room. Now you can use a debit card but there will be a hold of maybe $100-$500 on your account because of it. Think not? It happens. And often these charges are not released for a few days. If you are an extreme budgeter this could cause your checks to bounce or payments to not clear. We're not extreme budgeters but I prefer not to tie up my cash.
Second the exchange rate on the credit card for foreign currency is better than what a bank will give you. I've tested it out and the credit card usually gives you 1-2% above the going day rate, but the bank usually charges you about 2-3%. And it does add up.
But what about carrying cash? Well sure it's nice to carry some cash, and absolutely necessary when travelling around the countryside of foreign countries. They don't use credit cards or debit cards. However, at that point you are better off going into a bank and exchanging US traveller's cheques than finding an ATM. We've been in the countryside of Asia and if they don't take credit or debit, ATM locations are just as bad.
Third, and what happened to us on our most current trip, if you buy tickets for a show or entertainment and it's cancelled, it's better on a credit card. You'll have an easier time disputing charges and getting refunds. We were told so by the people in the booth, that using a credit card would make the process faster, plus as foreigners we'd have protections in case the ticket booth wanted to charge us fees anyway for a show we never saw.
So perhaps a credit card isn't for everyone. However, I would not step foot of US soil and not take one. I've found it extremely useful, and easier to track my spending. As such, I have to go an reconcile our spending for our trip tomorrow.
Perhaps other avid travellers can share their experiences and debate whether they use a debit card or credit card. Most of our friends who travel extensively only use Credit Cards.
Tuesday, December 25, 2007
Monday, December 24, 2007
For example with tax we paid $90/night for a hotel in Vancouver. We are close to the waterfront, in downtown, and close to public transit. As we explored the city we have seen the locations of hotels we considered staying at. We could have saved $20/night if we had chosen to stay there, but we would have be unable to walk around and spent more time on the bus. With two of us, that is $10/day, and now looking back, I know we made the right decision to stay in a desirable location. Any further out, sure we might have saved $30-40/night but the 30-40 minutes on the bus would have definitely negated the savings.
So whatever you do, it's always measured against how much you value your time. Like hiring a housekeeper, gardener, etc. Or having clothes altered instead of doing it yourself. But I guess on vacation, when you have a limited amount of time to enjoy the city, the value of your time increases exponentially.
Now to decide between taking a cab or bus to the airport...unfortunately it's not just a $ choice, there are other complications involved like difficulties riding the bus with a lot of luggage and trying to transfer buses with a lot of stuff.
But how do you value your time?
Sunday, December 23, 2007
Like any vacation, the best days are the first few. After that, many times you desire to be back at home, just relaxing. But you paid to "enjoy" life outside the norm. So how do you deal with the diminishing returns?
Like any good you purchase the enjoyment diminishes overtime. The only thing you can do is enjoy it to the maximum and before you purchase your vacation, tv, car, consider if it is really worth the expense. Is will you regret the purchase or truly appreciate the value gained?
Personally I might not have snowboarded for 3 days. However the diminishing returns is tilted to enjoyment because my DH loves, loves, loves it. He totally enjoyed it to the fullests and went to the maximum all three days. And because he has so few pleasures in life, this was a great success. He doesn't have many hobbies or spare time. And his time is valuable because of his income. So while I felt it was diminishing returns solely based the hurt of my body, I know my DH loved the experience. And that in turn increased my enjoyment of snowboarding experience.
Also a consideration we could never have this experience in the East Coast. They have no powder or mountains like this. So we probably will not have the opportunity to do this again for a few years. And this potentially was our last trip as DINKS. So while I might consider each day less return for our money, I've also savored our time alone together.
Saturday, December 22, 2007
A final guest post by Lemony, a friend from a message board. I enjoy chatting with her about the role immigration plays in financial decisions. Being married to an immigrant, and having many, many immigrant friends, I understand that it does impact a family's financial decisions. It can be as simple as a checking account or credit card, or as large as the choice to stay or move home and saving for retirement in the new versus old country. So immigrants have a unique financial perspective not easily understood or even perceived by those who have never left everything they've known behind. But perhaps this post will help enlighten others about challenges faced by newcomers to this country.
Credit Unions - the banking solution of the Immigrant family.
Upon arriving in America, we were at a loss as to where to bank. Thank goodness we had used an international bank in Canada, because they were able to help us out with opening up a US dollar account, so at least we had some cash. However, to open a regular bank account in America required a credit check that would have proved fruitless. We had no American credit history!
Wells Fargo was happy enough to offer us a checking account, but said we could not get a credit card without a credit history. Seeing as we needed the credit card to establish a credit history, we walked out of their bank. Where to next? WaMu was a little more trusting and said we could open a credit card based on our Canadian credit score, but the credit limit would be a mere $300. That's not too bad but it's hard to remember to use the card when the amount isn't really useful.
Finally, we walked into a local credit union. They were only too pleased to help us. My husband worked for a great company so using that knowledge they were only too pleased to give him a credit line of $4000. Yay! We've never used more than $600 at one time and we always pay in full at the end of the month, so the utilization % would help my husband establish credit quite quickly. Unfortunately, they could not put me on the card as an authorized user, as I had no social security number. Nonetheless, it was a good card.It took six months for the first credit report to show up at the major CRAs (Transunion and equifax) Three months after that we were able to negotiate a mortgage on a new house. Our interest rates are still very high because our credit is so new, but we took what we could get.
Six months after that, I got approved for a social security card. We took it immediately into our little credit union and applied to make me a joint cardholder. They approved me within 20 minutes and I'm just now awaiting my card. In six months I'm hoping Equifax belts out a credit report with my name on it.
Friday, December 21, 2007
Tips for Getting the Best Possible Mortgage
1. Choose a mortgage broker first and let him choose your real estate agent. A mortgage broker’s bread and butter usually come from realtor referrals. Allowing your mortgage broker to choose your realtor, contingent upon your approval, is a dream come true for your broker!
This will more than likely yield you a better deal with the mortgage broker. He won’t be as concerned with making a large profit from you as he now expects to get several referrals sent to him from the real estate agent he referred you to. It’s an I’ll scratch your back if you scratch mine business.
Understanding this concept can buy you leverage. Just make sure you convey to your broker that you understand how the business works and you expect better loan terms because of your generosity.
NOTE: Get a copy of your appraisal and credit report from your broker. Should you have to switch to another broker, this will save you money and speed up the process. Credit reports are good for 90 days and appraisals are good for 180 days. Also, never give your broker original copies of any of your documentation. Again, this makes it more difficult and delays the process of switching brokers.
2. On the day and time you are ready to lock your loan, get a good faith estimate from another lender. On the day your mortgage broker is ready for you to lock your rate, you and he may have already discussed what lender he will use to obtain your loan. That particular lender may have had the best rates when your broker looked them up yesterday or the week before, but things may have changed today.
In fact, due to market fluctuations that can occur multiple times a day, it is imperative you have your broker get rate quotes from at least one other lender he had compared in the past. This comparison will need to be timed as closely together as possible, which will help to ensure an apples-to-apples comparison and feel confident you are getting the best possible deal.
3. It may be wise to shop around for a title company and appraiser. Mortgage Brokers often refer their clients to the same title companies or appraisers. In some cases it may be advantageous of you to use the recommended appraiser or title company due to a good working relationship between the parties; however, this does not mean you can’t have a smooth transaction with other third parties just because your broker doesn’t normally work with them.
I would suggest calling around to get price quotes. Chances are you will find a cheaper appraiser and/or title company.
4. If you have excellent credit, advise the broker of it during your initial interview process. Besides informing your mortgage broker that he can choose your realtor, letting him know your credit is superb may also help to persuade him into giving you favorable terms that he may not offer to anyone else.
Often, a person with excellent credit will not have as many roadblocks in regards to getting a lender’s underwriter to accept the loan applicant. This makes your broker’s job easier. On this flip side, if your credit isn’t so hot and you would like to use a service to improve your credit score, let him know he can pick out the credit improvement company contingent upon your approval.
Your broker does not (should not) receive a kickback from the credit improvement company because kickbacks are illegal. Again, this is an I’ll scratch your back if you scratch mine business. Your broker now may receive a referral in return from the credit improvement company. Understand this and use it to your maximum advantage!
5. You may want to consider accepting a soft prepayment penalty. It may sound counter-intuitive to request a prepayment penalty to be in your contract, but in some cases, this may save you money. By having a soft prepayment penalty clause in your contract, you are agreeing the loan will not be paid off in full or extra payments you make will not reduce your loan by more than 20 percent during a 12-month period. This is typical, but always check what the rules are.
Soft prepayment clauses usually last only 36 to 60 months. This option is great when interest rates are historically low and you are unlikely to refinance during the agreed time period. The soft prepayment penalty, however, should allow you to sell your home at anytime without incurring a penalty. Should the situation arise where you have to pay your prepayment penalty due to a breach of contract, expect to pay around 6 months worth of mortgage interest.
6. So how does a soft prepayment penalty save you money? It is not unusual to reduce your interest rate by up to .25 percent on a 30 year fixed mortgage! The lender offers this because they are increasing their chances you will keep your loan with them longer, thus increasing their profits in the long run.
This can make a sizeable difference on your payment and increase YOUR savings in the long run. But don’t expect you broker to tell you about this option! In fact, many unscrupulous brokers will add this soft prepayment penalty in your contract without telling you about it and keep the money you would have saved on your loan.
NOTE: There is something called a hard prepayment penalty. Avoid this at all costs. It is not advantageous in any way to accept one of these. The only reason you should ever accept this is in cases where your credit is poor and this is the only way a lender will do business with you.
Thursday, December 20, 2007
Use Grand Central to lower your Phone Bill
If you have not already gotten your Grand Central number then all you have to do is send me an email or leave a comment and I will send you the invitation to get one. Grand Central is a free service that allows you have a number that controls all of your other numbers.
This way you can have telephone number to give out to people that you can feel comfortable with. I do not like giving out my home phone number to everyone that asks for a number so I have a Grand Central number (that is a different area code) that I give out. This way the people that I work with have a number to contact me that is local to them and I have the privacy of keeping my cell number secret.
The other really great thing with Grand Central is that you keep that one number forever. If you move to a new city and get a new house phone all you have to do is edit the settings in your account and the rest of your information remains the same.
You can use Grand Central to control the amount of access that different numbers have with regards to your profile. If you wanted to set up a group with people that you work with then you could easily do so with just a few clicks. Then you could set up all calls that go to that number to go straight to your voicemail if you wanted.
If there is someone that you need to always take the call then you could set it up so that number always goes through to your phone.
Setting up Grand Central is easy and you can pick any area code for your account, regardless what your home area code is.
If you are looking for your Grand Central number then just let me know and I will send you the invite.
Wednesday, December 19, 2007
The last time I was asked to guest write for Living Almost Large I wrote about the Purpose Driven Budget. How developing a spending plan on paper is the foundation of getting your finances under control as a first step and key to financial victory. Always on paper, always on purpose.
The next key piece of financial victory is one you don’t see often written about in financial blogs. You’ll see plenty of ideas on budgeting, frugal living, investing, how to buy a car and other vital information. But what you won’t often see if how important it is to take the next step…..setting goals.
I’m not sure why you don’t see financial blogs dealing with this more. Yet the process of setting goals will take you from being a learner to a doer which leads to becoming an achiever.
For some reason, many of us like to get mired in the learning process. You can read a non-fiction book a month for the rest of your life. You can glean financial blogs, listen to motivational tapes or see and watch every key guru. Bottom line? While ongoing learning is important, sooner or later, all that information will be wasted effort and time if you don’t do something with it.
If you're like me and initially struggled with having a Purpose Driven Budget, for me goal setting trumps in difficulty even the most difficult budget process. Thankfully, I’ve found some wonderful resources to assist in starting my goal setting process. Let me share some of the things I’ve learned.
First, envision what you want as an outcome. Place yourself in that outcome. Begin believing that you are achieving that outcome. See if it’s really a comfortable place for you. If it is, then go for it.
Take the time to write your goals on paper. Get them out of your mental processes and get them on paper. It goes back to the processes we did with our Purpose Driven Budget. By putting our spending plan on paper, on purpose, we got to see how our money was behaving in a clear and concise manner. Do the same with your goals. By writing your goals on paper, on purpose, your goals are no longer competing with all the other mental thoughts and problems you must process on a daily basis. They now stand alone and you control them. You choose when to deal with them, see them, act on them and measure your results.
Always express your written goals positively. Don’t write goals in a manner that beats you up. Don’t make them punishments. Make your goals something that you desire and want to accomplish. Your mind wants to deal with the positive in life and will work against you by blocking out the negative. To keep you goals top of mind, always express them in a positive manner and outcome.
You must make your goals precise. Put in realistic dates, times and amounts so you can measure your progress.
To make your goals meaningful, you must set your priorities. You’ll likely have several goals going on at one time. By setting priorities, you’ll maintain sanity because you’ll have a clear understanding of each goal and their pecking order.
At this point I’m going to make you do a mental 180. Goal obtainment must be rooted in performance, not outcome. It took me a long time to get past not having an outcome as a goal. But after 30+ years of failing to have the outcomes I set, I have found that rooting them in performance gets me closer to the outcomes I’ve envisioned. And it gives you more control over what you are doing. You have control over the inputs, which are the performance elements.
Next, make sure your goals are specific. Name your objectives. Name your time frames. Name your performance inputs.
Make sure the goals you are setting are realistic for you. They can’t be based on the desired outcomes of other people. They must be about you and your desires and dreams. Someone elses goals aren’t realistic for you. Sure, if you’re married or employed, you need to have the buy in and co-ordination of those in your immediate sphere. But if done properly, you likely won’t be answering to anyone who is attempting to control you through goals given for you to obtain yet set by them.
Another part of having realistic goals is having the necessary information that gives you a clear understanding of the skills, knowledge and other performance inputs necessary. Remember when we talked about ongoing learning? This is where all that pays off.
Goal setting is best when done in appropriately sized bites. Make goals that are just out of reach rather than too easy or too difficult. In other words, they must be set at the appropriate level. Too large and we choke on what we’ve attempted to take on. You’ll soon be too tired, too worn out or simply too burned out to carry on. You need some level of achievement to re-adjust and strech to the next level.
Set your goals too small and you’ve not stretched enough to move forward. You’ll never get to where you want to go or achieve anything of real worth.
Finally, think your goals through. Get an understanding of why you’re setting the goals your setting. Factor in the skills and knowledge that you’ll need. Understand where you can find the necessary resources, help or assistance to get through roadblocks and further develop them. Review your goals for any assumptions or better ways to achieve what you desire.
Tuesday, December 18, 2007
How does it all work? Well let's start with a married man making $48k, a stay at home wife, 2 kids, and house bought for $169k (80% mortgage = $135k). I picked $169k the median home price in 2000 right before the housing prices started skyrocketing.
Gross Income = $48,000 ($4000/month)
15% to retirement = $7200($600/month) - Roth IRA
Social Security (6.2%) = $2976 ($248/month)
Medicare (1.45%)= $696 ($58/month)
Federal Taxes (standard deduction) = $0 (0/month) , because of child tax credit, personal exemption, standard deduction
State Taxes (2%) = $740 ($61.66/month)
Health Insurance (pretax) = $6000($500/month), I assumed 50% of average family
Net Take Home = $30,388 ($2532/month)
-these are the fixed costs which I think belong in the group before you even consider getting a mortgage. Notice retirement to me comes up at the top of the list. It all goes to Roth IRA because I don't know if people have a 401k match or not.
Mortgage $135k @ 6%, 30 years = $9712 ($809/month), 25% of net adding back retirement, but if not 32% of net income
Property Taxes @ 1% = $1650 ($137.50/month)
Repairs @ 1% = $1650 (137.50/month)
Food (low plan USDA) = $7351.12 ($612/month) (I think this is high, but it's the national average)
Car Gas = $1200 ($100/month)
Car Insurance = $1200 - ($100/month)
Car Repairs = $600 ($50/month)
Electric/Gas Utilities = $2400 ($200/month)
Fixed Costs = $25763 ($2147/month)
Total Income - Fixed Costs = $4625 ($385/month) leftover
This is how I would draft my annual gross budget. I would try to figure out my taxes, my savings first. Then look at my "fixed costs" and minus it from my income leftover after my taxes and savings. This leaves me with $385/month to play with. If I had more income I might be able to enjoy life more. The more I cut with car expenses, food, utilities, etc I would be able to enjoy luxuries.
Also realize this budget would need to be tweaked for things like health insurance, co-pays, utilities, property taxes, etc. I just try to do the best estimates as an example of how to set up an annual gross budget.
Before we even bought our first house this is how we started budgeting. Because it was so tight we really needed to see every single penny accounted for before we moved forward with buying out condo. Because of the tax break we were able to afford it because we were able to pay less in taxes. Plus we accounted for things like property taxes, repair, etc to help us think about recurring budget expenses.
While this may not seem a feasible method for many people. I think a gross annual budget is a great starting point when planning a budget. The next step would be reconciling spending with categorized amounts. Please consider setting up an annual budget for 2008.
Monday, December 17, 2007
Sunday, December 16, 2007
But back to how to use priceline. There is this website called Bidding for Travel, which tells people how much people have recently bid for rooms in the area you are interested in on priceline.
I looked up the Vancouver area and found that people were paying about $75/night close to the time we were interested in. Also I figured out which hotel they had gotten for that price. The website also has a list of hotels for each star category. This will give you an idea of what hotels you potentially are bidding for and how much others have paid for them in the past.
I use this to help me get and idea of what to bid for the area and star quality of hotel on pricelines. It's a great tool for getting a cheap hotel. Enjoy.
Saturday, December 15, 2007
To save money I'm sticking 2 boxes of granola bars in my suitcase, 1 box of oatmeal as quick snacks. This is because we're going snowboarding for 3 days and we want to maximize our time snowboarding. Another trick I'll be using, is I plan on not drinking during this trip because I am in the process of losing weight and it will keep the daily expense of food down.
Today I booked our hotel in Vancouver for $89/night including taxes. Taxes were $16/night so the room actually only cost $73/night. The taxes in Canada includes a General Sale Tax (GST) or consumption tax. Our room originally cost $92/night but we got a $50 credit for booking a hotel room using a mastercard on travelocity. Nice deal, so 3 nights for $269.
For snowboarding, we're spending $1062 for 4 nights/3 days of skiing and hotel. This includes the 10% lodging tax and 6% GST. So we're paying $265/day for skiing and hotel for 2 people. Not bad considering lift tickets are $70/day/per person.
An added expense is our dog boarding. We dropped the dogs off a day early (today) because of the storm coming and I was worried about driving out tomorrow night to drop them off. Unfortunately the only kennel we trust is about a 1 hour drive. It cost us $307 for 11 days of boarding, not a bad deal because we got a 10% off for the number of days.
So our running total thus far for the trip
Airline Tickets $90
Dog Boarding $307
Vancouver Hotel $269
Running Total - $1728
Estimated Food $800
Estimated Total $3028, I wonder what the real total will be.
Friday, December 14, 2007
What sort of costs are involved with being overweight? Well for many people it can cause increased medical costs. Such as taking medication to control high blood pressure, cholesterol, or diabetes. I read in NEJM that 1 pound of extra weight = 4 extra pounds on your knees, so overweight people are also likely overstraining their joints and bones, possible also causing them to take painkillers. Even with prescription coverage, these medications can add up if you have to continually pay the co-pay every month.
Second, it's harder to find clothes. I have talked to overweight people who find it difficult to buy clothes. Sometimes the clothes need to be altered. Or they need to shop in speciality stores and pay more. Thus they are usually unable to shop sales or thrift stores.
Third the grocery budget. Being overweight typically is due to eating more calories than you expend. To lose one pound you need to expend 3500 more calories than you ate. So imagine being 10 lbs overweight means you potentially ate an extra 35,000 calories. That's a lot of food. People have distorted what a proper portion size is. So people often eat more than the suggested or reccomended serving.
All these things do add up. If you wanted to save money, and you've already cut your budget, consider looking at your health. If you are overweight, maybe you can lose weight and decrease your medical and grocery budget. The benefits will be more than just financial.
Thursday, December 13, 2007
That's what happened yesterday. A gift arrived in the mail from some friends whom I've never exchanged gifts with before. In college, I put a stop to all gift exchanges and I told friends honestly I couldn't afford to exchange gifts. Fortunately this has prevented me from going crazy and spending money we didn't have to exchange gifts with people that might not be useful.
But these friends just got married last year and though I've known them since college, I haven't been terribly close to them. So we've never exchanged gifts. Well now I am torn as to what to do?
Should I send a thank you note and graciously accept the gift? Or should I order them something online? Or should I send them something small in the mail?
My DH will say send a note and hope they never send another gift again. Me, I'm torn because I sort of want to just send a cute thank you note and pray they don't send a gift again next year. Another thing, this year I am not feeling up to do Christmas cards.
While financially this is not a big deal, I do feel gift giving out of a sense of "obligation" is a big deal. I don't like to get started card/gift giving because I hate keeping up with it. And the list it seems just grows are you get older, not lessen (well until after a certain age :p)
But seriously, I talked with my mom just back from another tour, and what were the words out of her mouth? "Oh I need to send Christmas cards to all these new people I just meet". My response? Why bother, screw it, they don't want a card from you. They probably just want to rest. She said I'm a terrible scrooge. Which I guess put me in my current conundrum.
According to how I was raised, I'd run out and buy a gift. But my upbringing is strongly wrestling with my adult practicality and I don't want to waste money on gifts for people I don't know that well, nor would I care if they never sent me a gift again.
Wednesday, December 12, 2007
Well for example a $300k home, would allow the owners assuming they pay cash for closing a $300k nest egg. Sure, they could live there and pay approximately $3k/year maintenance, $1500/year insurance, $3k/year insurance. So monthly they would be paying about $625. However there is lost opportunity cost on the $300k sitting in home equity. Assuming a very conservative 6%, that is $18k/year or $1500/month. So in actuality owning a home is costing the homeowners $2125/month.
But why sell? Well let's assume they invest the $300k in a Bond index fund. And only harvest 4%/year leaving 2-4% reinvested annually. They'd still have $1k/month to rent with. Now assuming they could rent a 2 bd/2ba apartment for that they'd come out ahead. But you're moving from a single family home to an apartment!
Well the truth is as you age, you will become unable to do home repairs yourself. You will rely more on hired help. It will be harder to mow the grass, weed, paint, repair shingles, etc. Things you might have done yourself a decade ago. So your maintenance costs on your house might easily double. Especially if you haven't been properly maintaining the house for 30 years and left a lot of it deferred. Hence it won't just cost you $625/month, it could be more like $1500/month to live in a house.
When you rent, as an elderly person you don't have to worry if the sink breaks, toilet floods, etc. You call the landlord and they deal with it. As an owner, you have to afford these repairs. So renting can make sense, especially for people who are disabled and unable to do any projects themselves.
But $1k/month isn't enough to live on. Well then why not harvest 8%? Assuming you invest it in a balanced fund at Vanguard getting 8% returns isn't hard. This would allow$2k of expenses month. Could you rent a place for that much? Likely yes.
The problem is the attachement people have to their home. It doesn't actually make financial sense to own as we age. Also if you forced into a care home/nursing facility, it's a lot easier to move out of a rented apartment versus trying to sell an ancient home.
As I write this, I think about how I'm still trying to convince my parents to stop taking our mortgages and buying home at 56 and 76. They have bought into this notion that real estate is wealth. When the truth is they are spending more buying than if they would just rent.
But growing older I wonder if we aren't more stuck in our ways due to habit rather than looking at the best financial options?
Tuesday, December 11, 2007
I enjoyed "travelling in your backyard". Although it costs money for me because I like to eat, and I enjoy eating when I go out, not just from my lunch bag.
Also check out "reducing the grocery budget - eat less meat". Nice idea but it won't work for me. My favorite meat is fish and seafood. So it's not cheap. Plus I prefer wild caught fish, it's tastier. I don't like farm raised. And DH loves steak and lamb. So to us, we don't save by increasing veggies with our meats. We just don't eat the meats we love period.
This is a phenomenal deal. It will cost you $15 to get a new Senseo. All you are paying for is shipping and handling. The machine itself is free for completing the survey.
Of course that's not how the company is making money. Much like ink jet printers which manufacter's practically give away, the real cost comes from buying the coffee bags. Yep, buying the pods are somewhat expensive. However, I think it's worthwhile if you are in a household, like mine where only DH drinks coffee. It's so wasteful to try and make large amounts to only throw it away.
Because of this DH will only have cofffee at work. But this machine is great. It also makes tea.
We got it today, and tried it out. A day late for DH's birthday, but still he loves it.
Monday, December 10, 2007
Lots of great articles. Check out these two articles "End of the year tax planning" by My dollar plan and "turning in money you found" at Smart Money Daily. Very fun stories.
I'm still looking for more guest posts. Please email me @ firstname.lastname@example.org. Thanks!
Sunday, December 09, 2007
So buying them gifts is difficult. I am not a person to buy clothes for anyone other than my DH. Why? Because you don't really know what size they are unless you see them all the time and have shopped with them. For me seeing my family once a year makes that a bad idea.
Next because I live so far, I have to worry about shipping issues. I can't just send large, bulky items, or super heavy items. So what are some gifts I do?
I've done magazine subscriptions for people. For my mom I've done Money Magazine and People for my grandma. But my mom doesn't actually read Money, so I've cancelled it this.
My best option has been gift certificates for manicures/pedicures or restaurants. I know they enjoy these two things and would go anyway, so it saves them money. What are other ideas people have?
Right now I have to get DH a birthday present and Christmas present. I think I'm getting him a took and maybe sunglasses.
I guess this is what bothers me, trying to buy Christmas presents people don't hate and find useful and not a dustcatcher.
Saturday, December 08, 2007
This does not sound like a bad idea at first. Great time to buy with lower interest rates recently, prices of homes dropping meaning good deals to be had. However, reading the article it sounds like a clear cut case of the GIMMES, and I WANT IT NOW!
Mia chose to make a full price offer on the house. Because location is everything, no one knows if this is a good or bad deal. However a day after their offer a second competiting offer in cash came in. She felt she had NO CHOICE but upping their offer to match the deal or lose the house.
What's the problem? First, her initial offer was already at the edge of her price range, because the counter offer was SOLIDLY out of their price range. But they went and offered it anyway. What? Well MP DUNLEAVEY literally said they "Bid first and did calculations later."
That is the worse possible financial advice or dribble ever written. I nearly spewed my drink reading her justifications about why they needed this "dream home". That if they missed this home they would only have regrets. She says they moved forward against her better judgement and logic because it felt right.
Of course not having all the numbers she isn't even worried. Well neither would I, because MP Dunleavey probably has NO IDEA how much debt she just took on. Do you think she calculated how much the Principal, Interest, Taxes, and Insurance (PITI) for each house is individually and how much of her gross income it is? How much the two mortgage would be of her sole income? Nope.
Instead they are flying by the seat of their pants. They have no cash reserves in case they are unable to sell their old home, find a tenant, or if a major repair comes up. They cannot afford a new washer and dryer! They can't handle if anything breaks in the new house.
How is this in any way, shape, or form a good idea? This is a roadmap to bankruptcy. I hate to say it, but she's quickly travelling down the path of no return. One misstep and they will fall into a deep abyss of debt. But hey, writing this makes it seem all the more real. The mortgage mess we're in as a society, here's another contributor!
Friday, December 07, 2007
Well there is a lot of fat in my budget sadly. I could easily cut our cable down to basic internet, no home phone and no cable. So from $130/month to probably $40. Savings $90/month = $1080/year. Yowsa. Maybe we should consider it anyway.
Second up eating out. Tracking our spending we spend about $200-250/month. However this would be completely eliminated. If we didn't have a job, then eating would be necessary but not eating out. Also our food budget of $300-400/month would be decreased $200-300/month. That would mean eating less meat and buying more processed/canned goods. We would no longer be picky but eating more from coupons. This would be the first thing back in our budget however. Savings would be $300-400/month, wow $3600-4800/year! That's an insane amount of money.
While it is feasible to stop the eating out or lower it, I will definitely not jeopardize my family's health for a couple of bucks savings on groceries. I think cooking from scratch and not eating processed foods important to us. It invests in our cholesterol, blood pressure, weight, etc. This has long term affects like being healthy as we age. Lowering our future medical bills. So groceries I definitely look at as an investment more than just costs. So I would try to eat healthy just for less.
Third, would probably be our dogs. If we couldn't care for them we'd have to find new homes. I think they reasonably cost us $200/month for food, medicine, vet bills, boarding, grooming, etc. If I couldn't provide adequate medical care and time, I would be obligated to find them a better life. Now this is a very last resort for cutting expenses because we do have a responsibility and obligation to having adopted our dogs.
What else? I'm not sure what other luxuries we have. We aren't huge spenders and we'd go into lockdown mode, meaning we buy nothing other than groceries. We've lived like that before and I hated it. And we can do it again.
A final step in cutting expenses I think would be selling one of our cars and $4k from the sale. We would also save $75/month in car insurance. But the major depreciation hits have already occurred and both cars are paid for. And looking at lost opportunity cost it would be @ 10% = $400/year since our cars aren't worth much. But that's another sacrifice we might investigate if we were really broke without jobs.
Also we'd never vacation or visit home if we didn't have jobs. That would save us $3-5k/year. Right now our luxuries in our budget that seem disposable are eating out and cable. The savings on those two items are pretty large we'd save about $3-4k/year. Add in vacations and we'd be looking at $9k/year. However the other costs of a second car, better quality food, and pets I'm not sure would be worth the replacement factor.
As I write this, I've decided to downgrade our cable and lose all movie packages. This will save us about $30/month. What are luxuries in your budget?
Thursday, December 06, 2007
However I probably don't work the deals as much as most people because we're DINKS so we don't use as much stuff as a family. Hence I just don't need the deals as often as other people and I don't stockpile as much stuff. I try to limit myself to 5 of anything or 10 if it's something small that we use quickly. That being said I wanted to give some tips to people looking to save some money on household goods, cleaning supplies, bath, and beauty supplies.
How does CVS extra care bucks work? This week for example, if you buy $20 worth of Proctor and Gamble items you get $5 extra care buck (ECB). That's a 20% discount. Second step, find manufacter's coupons to help decrease price. Third, use CVS coupons to further decrease out of pocket costs.
Something important to realize is that you don't get $5 cash back. Instead you get a printed coupon for $5 to use on your next trip to CVS. This coupon is an incentive for you to come again.
Of course I realize many things at CVS are more expensive than say Target, Walmart, or even Costco. However there sometimes are deals which make items free or next to free.
Following on the P&G example, I bought 2 Bounty Packs @ $6.49 and 3 Charmin @ $2.49 = $20.45 Total. Then I used a $4 off $20 coupon and 5 - $1 manufacter coupons bringing the total to $11.45. Then if you count the $5 ECB, I paid $6.45 for 2 - 8 packs of Bounty, 3 - 4 packs of Charmin. Not a bad deal and definitely worth stocking up. We were running low on paper towels. Realize that I already have a stash of ECBs so I paid nothing out of pocket because I continually roll-over my ECBs
A second winning deal this week is buying $15 of Pepsi products, get $7.50 ECB back. Well I loaded up on Propel water bottles @ basically half price. Except I combined my $15 spent with a $3 off of $15 CVS coupon. The regular price of a 1L bottle is $1.79, I paid 60 cents/1L bottle.
This is a short tutorial on how the Extra Care Program works at CVS. Since I've finally mastered the system and started getting great deals, I decided to share this frugal tip on saving at CVS!
Wednesday, December 05, 2007
So I had Amazon.com call me and they told me to immediately cancel the order and reorder the whole order with the gift certificate. I did that and the gift certificate code was no longer working. I was frustrated and again had them call me, and explained about my gift certificate which I hadn't used. So they attempted to "fix" the order.
Turns out they didn't. I got an email on Sunday 12/1, that my order was incomplete and cancelled. Apparently the order was unable to be processed because I hadn't paid for my items. It appears I was not credited the gift certificate amount.
So on Monday night I called Amazon.com and spent almost 2 hours asking about my order.
Another problem I have with Amazon.com is before my items were even shipped, the prices dropped. Ugh. So I got a refund of $50 for the gift certificate. I got a refund of $4.49 for item #1 and $8.04 on item #2 all back on the credit card.
Then the Wok Shop called and ordered directly from them instead. I cannot believe the issues I'm having. This is a reason to use a CC when ordering online rather than hasseling with a debit card and arguing with a bank over all these mistakes.
Tuesday, December 04, 2007
I personally checked out and enjoyed "Don't Skimp on Toilet Paper" by AskDong. Reminds me of myself and my parents. They buy the cheapest stuff while I only use Charmin now. This made me laugh with the calculations. Anyway I began buying Charmin after we moved and DH got a real job.
And of course as a dog lover, I had to read "Practical Lessons I learned from my Dog," by Dividend money. I found it hilarious, amusing, and totally true.
Monday, December 03, 2007
Great articles to check out are "5 lessons monopoly can teach us." Great post by Twowiseacres. I had to laugh when I read the article.
Also Chief Family Officer writes her 2008 goal is to save $22.5k to pay cash for a new car. Nice. Guess I should get cracking on my financial goals.
But this merger seems like a smart move. Vivendi (AKA Blizzard) is a company known for PC-based games. And ATVI is typically known as the younger sibling of Electronic Arts (EA). However this year I think they've managed to have a stellar/breakout year.
How so? The biggest seller this Christmas is Guitar Heroes 3. People are buying this game like hotcakes. Normal video games sell for $49.99 upon release. So does Guitar Hereos, however ATVI has a brilliant marketing strategy of selling the guitar packaged with the game for $89.99. And it doesn't end there. ATVI is selling faceplates for the guitar and stands. How'd they manage to sell a $100 game? And kids are begging for it. On Black Friday I saw people rushing for Guitar Heroes 3.
So with this new deal, do we wait or sell our ATVI? We're going to reorganize our portfolio at the end of the year. So we'll see. Right now we're up about 40%
Sunday, December 02, 2007
As far as spending went we had a higher than average month. We spent $377 on groceries, $178 on dining out, $93 on gas, $234 on entertainment, $1222 on travelling. The groceries was a higher than average month probably because of Thanksgiving. We've been pretty good at keeping out eating out to under $200/month recently. For some reason we spent less than half on gas, I think because our roommate used the car and filled up the tank for us so that would explain the missing $30/tank.
Entertainment included buying a $99 car stereo for my corolla, mario galaxy, and ipod stereo for DH. Not bad. The travelling expenses are for next month's trip. We're spending $90 on tickets, $1132 on hotel for 4 nights + 3 days skiing in Whistler, Canada.
Overall not a terrible month, but I wish our investments were doing better.
Saturday, December 01, 2007
Well turns out Circuit City returns policy sucks. They do no returns without a receipt. So if you buy someone a gift and they don't like it, make sure to get a gift receipt. Because they don't take a return without a receipt.
But my store turns out okay. We were sitting eating lunch at the mall food court when a woman asked us where we got the ipod dock. We said CC, but then said it was $25. And then we sold it to her and she said it was the best gift she ever bought. So we not only stole a sale from CC, we also prevented a shopper from going in and browsing.
So at the same time we had my car stereo purchased also from Circuit City installed by their firedog. What happened? Well we waited for 2 hours, walked around the mall until they were done. Turns out they didn't install the stereo completely. Nope the auxillary output to an ipod connector was not connected. We drove home unable to figure out why it didn't work and decided we should probably read the manual.
Well we drove home and read the manual. Turns out the cable wasn't connected. How'd we figure it out? DH took it apart and connected the wire. What a waste of time. For a free installation it certainly wasn't worth it to have DH work on it anyway.
My take on Circuit City? Definitely not a place I will buy electronics from again. I'm sticking with Costco and their awesome return policy and customer service. Also just basic electronics servicing, I wonder how intelligent these people working there are? Guess this is why you don't buy extended warranty, because I bet Circuit Cit couldn't fix a problem even if they tried. And the warranty isn't from the manufactorer.