Are 401ks stupid?

Well that's the question asked by a 26 year old writer, "Are 401ks stupid?". Wow, I can't believe there is a 20-something who doesn't believe in the 401k.

Now she's got reasonable arguments when she says she needs to pay off credit card debt, student loans, car loans. Those cost more than investing in a 401k. However this women gets a company match, so free money. She should be putting in minimally to the match.

But her main argument is she wants to live now. She doesn't want to save money to buy a trailer in 40 years, she wants to buy stuff now. I'd like to know how she plans to live in 40 years? Guess that hasn't hit her yet.

A second issue she raises is the 401k match is not guaranteed, but discretionary where they can be "Nixed" if the business does bad. Also the match usually requires people to stay at certain period of time to "vest". Both valid points, but your contributions are always there. So at least you are saving something for retirement. Also employers matches should be considered "gravy" not the main entree of retirement savings. Many financial advisors say don't count on it and save 10-15% of your income without the match.

Third, while she makes the point highly compensated employees don't get to contribute as much, I'd argue that's not necessarily true. What? Well DH is highly compensated but his company and previous company did something called safe harbour contributions for all employees which meant that everyone could contribute the maximum $15.5k no matter what their income, because the employer put in $X for every employee. Many companies do this to allow their HCEs an opporunity to save as well while not being dependent on lesser wage earners to save. It also helps lower wage earners have something saved for retirement.

Fourth she argues why save in a 401k if you get hit with a hardship withdrawal? Say you kid is ill or mortgage shoots through the roof? Well you should be saving for these expenses outside your 401k. And if you aren't even saving in a 401k, what makes you think you'll save outside of it? A 401k is designed to support you in retirement, not during your working years. Also trust me, if you can't find a penny to save into the 401k which is tax free, you're probably living paycheck to paycheck right now. And if an emergency happened you'd be screwed whether you are saving into a 401k or not. And I'd rather see you have the tiny 401k savings than NONE at all.

Fifth, she says people who save are steady eddies, but she'll have spent her younger years living. And if she's eating cat food at 65, at least she'll have had fun eating great cheese, travelling, and enjoying life.

I'd personally rather eat rice and beans my whole life than eat gourmet cheese for 30 years and suddenly have to eat cat food. A steady diet of knowing what I have to eat is more appealing than having been used to a better quality of life that I'm unable to maintain as I get old. Plus honestly who'd rather have a few luxuries as they age and need it more than when they are young and able to live leaner?

Well you've got a lot of thinking to do Ms Twenty-Something. I'm also a twenty-something, but I'd prefer a slightly different lifestyle than the one you've got planned for your future.

College obligation?

Are you obligated to pay for your children's college if you can afford it? Meaning you already have a secure retirement, paid for home, and lots of extra money? Are you still obligated to foot the bill for college?

Does it make you less of a parent if you choose not to? Or are unable to because of poor financial choices in the past?

When did paying for college become an obligation? Now it's no longer raising your children till 18, it appears it's until at least 22. Is 22 the new 18? Are parents now required to pay all bills until the child finishes college?

And afterwards does it give the right for the child to do what they want? Or are they obligated to defer to their parents wishes because the parent paid for college?

Does parents financially helping mean they have a hold of $$$ over their children for the rest of their lives?

Can you be content?

How do you talk money with your spouse? MP Dunleavy's newest NYT article discusses how she talks finances with her spouse. For them, they enjoyed a conversation in the car while driving. But rather than a serious talk they discussed light-heartedly about what potential future the would have if they had a windfall of money.

An interesting line in the article was that MP's DH thinks that saving money and having more is greedy. If that's so, then check me into that lifestyle, I'd love to save more and have more money period.

But MP suggests that to live a lifestyle they dream of they'd need to earn $35k/year. Not a ton, and definitely a reachable number. Within that number she dreamed of $9k/year retirement savings (10%), $7k vaction, and $19k/year extras. She said this was totally possible because her husband had just started working part-time ($500/month) for the larger mortage. How this $6k/year extra translates into $35k, I'm not sure, but heck she's dreaming.

But something MP fails to see is a lack of contentment. They make a great income $72k/year, her husband can stay at home, and yet they are wishing for a $7k vacation and new car. From the previous article they have trouble saving for retirement, are unable to save for a 3 month emergency fund, and can easily waste $10k mindlessly. Will they really be able to save $9k for retirement if they were making $35k/year more? Or would it just go to increase a lifestyle?

Trust me, I'm all for increasing your lifestyle. You work hard and deserve it. But having credit card debt, car loans, no savings, implies that you are unable to afford the lifestyle you think you deserve. You are living a lifestyle you want but haven't achieved.

MP is the epitomy of Americans. Living well beyond her means. She doesn't save for emergencies, she doesn't save for retirement. Basically she's been living paycheck to paycheck. So her lifestyle isn't one of someone living on 75% and saving 25%, it's someone living 100% or 110% if you count consumer debt.

And the desire to still want more? Where does it stop? How does it stop? Can you ever become content?

I feel that if you are content with your lifestyle you'll be able to weather whatever life throws at you. That you'll be able to manage because you are happy with many intangible factors and the monetary numbers are worthless. Plus you'll be used to living on less and saving so you'll be able to survive a job loss, death, etc.

I think it's great to have dreams, goals, ambitions. But still being content with what you have is the way to financial freedom.

MP Dunleavy Wraps Up 2007

MP Dunleavy writes about her 2007 year financials. I was highly critical of her choice to purchase a second house for $225k at the end of 2007. Turns out, it was a bad move. She doesn't think so, but the numbers well they aren't looking any better.

Her Networth for 2007 started out at:
Consumer debt: $8,500.
Emergency fund: $3,300.
Long-term savings: $40,000.
Retirement: $12,300.
Home equity: $40,000.
Net worth: $87,100

MP Dunleavy ended 2007 with:
Consumer debt: $5,900.
Emergency fund: $2,100.
Long-term savings: $0.
Retirement: $17,400.
Home equity: $85,000.
Net worth: $98,600.

Basically she gave up a long term cash position to have greater home equity? Not a smart move. Also in the article she said that the value of her first home had dropped because of the slow market, but she had just bought a new house $15k over the list price. Hmm...makes me wonder how much her home equity is really worth.

Now she also wrote that she only saved $5k for retirement when she made $72k from her regular job and A LOT extra from her book. So basically she saved less than 5% of her earnings for retirement. Bad idea, considering she's 41?

So you want idea of what not to do? Don't do this. Basically if the renters don't pay rent, she'll be screwed. She has no cash on hand to handle any accidents, unexpected bills. Even if she only uses cash, where's the cash to pay for a month of double mortgage? Or a repair to a house she's not living in? She makes about $100k/year and she has $2100 in her Emergency Fund? This is a reciepe for disaster.

I also think her home equity is an overstated number. But if it makes her feel better. I'd rather have $85k in an IRA or 401k than in home equity. Equity which even she believes has gone down, yet she still purchased another home.

But hey maybe New York isn't going through a housing downturn. Maybe the houses will be her retirement savings. That is if nothing goes wrong and she doesn't have any repairs that cause her to go into foreclosure.

But she's a great poster child of what people of any age should not do. Do not overextend yourself and buy more house than you can afford. Do not live without an emergency fund. Do not count on housing prices to bail you out. Do not try vacation when you can't save for retirement.

Retirement Living Facilities

Living in an assisted living community can be expensive. Here's an example in Hawaii, it costs $2690/month starting rate for a studio, and $3200/month for a one-bedroom. Sure it's affordable for people who have a pretty generous savings/retirement, but what if you dont? My grandmother makes $800/month, I have a feeling that won't cut it.

DH and I plan on maxing out our retirement contributions for life. We are saving way more than the reccomended 15% because we have looked at these retirement communities and plan on retiring into an assissted living facility. However it takes money.

Sad to say, most people believe that their living expenses go down in retirement. Actually it can go up easily. When you start looking at assisted living facilities, nursing home, or 24 hour in home care, it's not cheap.

One other reason to consider these options is if your child is unable to care for you. What if they have a handicapped child? Or what if your child is ill or dies early? Will you still expect to move in with them?

I know it's harsh, but the reality is that many expected circumstances can happen which prevent a parent from moving in with a child. I fully expect my mom to move in with us if we are healthy and able to care for her. But she's hoping to afford a retirement community.

The financial circumstances of parents sometimes are not what we could hope for. The only thing you can do is plan for yourself, so you don't put your own children in the situation of trying to afford care for you. But people rarely plan and accept responsibility for their own misactions.

If not we wouldn't be in a subprime mess. We wouldn't have so much consumer debt on credit cards or car loans or student loans.

Parents moving in...

After the controversy about loaning money to family, another step in family finances is what to do when your parents move in with you?

How do you handle the financial aspect of a parent moving in? Do you allow them to live rent free and not contribute to the household? Do you expect them to contribute equally?

And of course this is further complicated if you have siblings. If one sibling takes on the responsibility of allowing the parent(s) of moving in rent free, should the others contribute? Or should that child which steps up responsibility expect to inherit a larger portion of the parents money? Should that child use the money to care for the parents? Or will siblings feel that their "inheritance" is being squandered?

This is currently the predicament ongoing in my family. I doubt my grandmother can live alone. And she is not rich, nor does she have any money. Instead her children have always had to support her. Since she currently lives alone in my mom's second house, she needs to move out. At 80 years old she can't manage the upkeep or cleaning of the house.

But what to do? Financially it will be tougher on any child that takes her in obviously. But should they take her tiny monthly pension and social security? It amounts to less than $800/month.

I think this is a financial predicament likely to hit many boomers as they age. How to handle moving in with their children.

Family Loan?

Do you loan money to family? Ever? I sat thinking about that after reading an article on the New York Times about giving his grandmother money, a loan. He was undecided about it.

I'm firmly of the mindset and practice of I never loan family money. It's not a loan, it's a gift. However, I also usually do not give family money. I have and will pay a bill for a family member directly, but I won't just give them money to "pay some bills." No way. I want to see where the money is going, or else I'd end up like JW and his loan to his cousin. Turns out the cousin had said it was going to his family but it went to finance his new lifestyle.

Well that wouldn't happen to me. I've paid for my grandmother's phone, gas, bills, etc. And I've bought her gift cards for groceries. I've also paid a cousins bill when they needed money for personal reasons. But to give cash to someone, well it's just asking for trouble. Is it ever right to give a family member a loan? Or is it just a gift? Or money should never be exchanged between any family members?

Property taxes..depressing

So we got our quarterly property tax bill, and the assessed value of our home dropped yet again. I thought it would decrease our property taxes, but instead they raised the rates of our property taxes so it turns out, it's a wash.

We used to pay $9.33/$1000 of assessed value. Now it's $9.70/$1000 assessed value. So basically if your house dropped more than $35k the taxes were lowered a bit, if not it's a wash.

Should I be worried about our house value dropping? Yes and no. We're not moving so everything right now is on paper. Until you realize the loss or gain, all home values are relative. This means that it's only on paper you are rich. If not it's lost opportunity cost. Whether you rent or own you still need a place to live.

So should we be worried? I think if we were going to sell maybe. But the longer you stay put, the better the odds of breaking even. Now the likelyhood of us losing money is NIL. I know we're in a unique scenario, but one of the job perks is not losing money in real estate

Bond Investing

I don't mind investing in Bond Index mutual funds. However, right now we don't invest in Bonds. Having bonds usually stabilizes a portfolio and doesn't decrease the returns by very much. However the reason we're not doing bonds right now, is because we have have a heavy cash position at any given time. The reason for this is because of DH's tuition and uncertainty in the job market.

Because of our heavy cash position, it's not necessary to put 20% of our portfolio into bonds, because cash acts pretty much the same way to stabilize the returns of our portfolio. However for most people I'd suggest a 80% stock/20% bond portfolio. I would keep this until retirement at which time I would slowly scale down into a 70%/30% mix. I don't know if I would go less just because you need to keep up with inflation during retirement and don't want to lose your purchasing power.

Now along with buying Bond Mutual Funds, I also like the idea of buying individual bonds with your cash on hand. One of the better ways to do this is using TIPS (Treasury Inflation Protected Securities). TIPS are a good way to buffer against inflation using bonds.

But it matters when you buy TIPS. Why? Because TIPS are not normal bonds. They have a fixed rate component and variable rate component. This allows it to pay different dividends depending on inflation. So you could make as much as 9-11% (back in 2003) using TIPS. Wow! Great returns. Plus they are good for 30 years.

But timing the purchase of TIPS is important. What am I looking for and watching for my mom? Well when the fixed rate component hits 2% I'll tell my mom to dump tons into TIPS. This way she'll be able to keep a minimum 2% plus whatever else the economy is doing. Also there isn't a fee for reedeming after 1 year of holding. That's not a bad deal.

I've read many articles about it, and TIPS are a great way to hold bonds which can help buffer agaisnt inflation in retirement.

Investing Strategies for 2008

By the way I'm not an investment guru or anything like that. I am not involved in finance at all. This is just something DH and I cooked up over the weekend for our plans for 2008. We're going to bank on the US dollar dropping maybe 10%. And because of this we're going to have a heavy tilt into international stocks.

Also we think that a recession is coming. So we've dropped all retail stocks and are picking up instead energy and resource stocks. We hope to buy international resources. Also we plan on putting a nice chunk into emerging markets.

Also we're avoiding things like retail, healthcare/pharmaceuticals, and banking. The banking if it should drop more, and the books start to balance, we'll jump into Citibank is what we're thinking.

We're avoiding retail because we think people are going to be spending a lot less this year with the recession and salaries are not going to keep up with inflation. So people will be cutting discretionary spending. Although huge drops like 30-40% may induce us to buy some stocks.

Also we both feel Medicare Part D will be revamped by Congress. Expect Medicare to be able to negotiate with Pharmaceutical companies. This is a HUGE deal, this will cut pharmaceuticals companies profits. Right now the US is 2/3 of the income revenues of all drugs, and there is no regulation of price. Other countries negotiate price of drugs with these same companies. So sure Merck and Eli Lilly are coming out with blockbuster drugs, but the time of unlimited drug charges are coming to an end. Thus there is too much uncertainty to invest in.

But overall we're moving into a rather aggressive posture for our investments this year. We're looking at 40% international, 30% small cap, 10% emerging markets and 20% large cap US equities.

No bonds this year, I think I'm waiting to buy TIPS. Watch TIPS on May 1st. For everyone whose 40-50s. I'll explain what I'm waiting for TIPS, and why I'm waiting to buy some for my mom and myself.

Correcting a mistake?

Do you correct a mistake if a store rings up an item the wrong price? I would say yes, but half the time, I don't even catch the mistake until I'm home. I don't actually look at my receipt unless there is a huge discrepancy of a few dollars or more. But a say $1 I probably won't catch it.

This makes me wonder is it wrong? I have returned an item to a store when it was not rung up. I got home and realized that I hadn't paid for something in my bag, which wasn't mine. Actually I had gotten a bag of groceries from the previous customer. But I didn't catch the error until I got home and unloaded the groceries and thought, huh I didn't buy that.

But I haven't really checked my receipts carefully. I check eating out totals, but otherwise, I assume it's right.

What do you do? Do you check every item on your reciept? Do you correct the store if they make a mistake? I do, but I feel like I don't have a choice. Why?

Because of Karma. I have serious good Karma, having lost my wallet 3x and had them returned. Also this year I dropped my keys and had them returned to me. Yep, I need all the good Karm I can get because of my forgetfulness and stupidity. I can't have bad Karma surrounding me with my behavior. I am one of those people who does a lot of stupid things. I need all the luck I can get.

Retiring early - pipe dream?

I'm about to say that, honestly I think my dream of retiring early is a pipe dream. Now why would I say that? First of all because I am unable to determine what I need to retire early. DH and I are super conservative when it comes to projecting returns on our investments, how much we'll need, etc. But the one area that we are unable to get a handle on and the most important area is health insurance.

What will we do if we retire at 55? Until then we'll be covered with employer provided insurance. We cannot be denied nor turned down. However at 55, we run the risk of being ineligible for coverage due to pre-exisiting conditions. This may mean certain health factors will not be covered. Also it could mean that we cannot buy insurance at any reasonable rate. So we'd be stuck without insurance or working until 65, when Medicare kicks in.

Of course, we've thought about this, and come up with a few different options. One, we work part-time in a job which provides benefits. Places like starbucks, borders, home depot are known to provide medical so many retirees work there for the prescription coverage. Or we could work part-time at our current jobs at that time.

Two, if we own a business, what is the likelyhood of buying insurance through our business? This is another possibility. Three, likely I should get a government or state job which might provide insurance after retirement like my mom.

My mom retired at 55 with free medical insurance for the rest of her life for her and my dad. The insurance premium is $1k/month for the two of them and she pays nothing. This insurance becomes supplemental after 65 (ie like my dad), so they pay nothing for his medical care. Also it includes vision, dental, and prescription coverage.

Fourth, move to Canada. This is something we've discussed more because of their universal health care. DH loves the idea of moving back, and after visiting Vancouver I'm more keen about it.

Maybe I shouldn't be so negative about retiring early. It could easily happen. However, I feel that the reality is it could be impossible. And this is why we are saving as much as possible for retirement. To be able to manage every curveball thrown at us, and plan for any unforseen circumstances.

The only way to reach a goal is to plan for it. It's great to say "I want to retire early." And even better to save money for it. But you also have to realize potential problems or issues that may arise, and how it will affect you.

I've spoken with many 30/40-somethings who want to retire early. But most, not in a health related field, believe they can do it being debt free and with little savings. Everyone who works in a hospital, health insurance, etc tell me no way. Most have not considered what they will do to replace employer provided insurance. They beleive something will magically appear, or say they will do a high deductible health plan (HDHP). But they have no researched at all or seen any estimated costs or coverage.

So in many cases retiring early might be a pipe dream. Even for me, I realize I won't really know if the numbers are enough until probably around age 50. I'll be able to at that time see if the medical system has changed, how much insurance is, and what we really have saved.

Browsing a bookstore

Is it wrong to browse in a bookstore and not buy? This was a question raised on The Simple Dollar. It really made me stop and think, because I never buy books at a bookstore. The person asking had read and article by a small bookstore owner complaining about people who browse but never buy.

Saying that many people would come in and browse, write down titles, then go online and order the books. Or others would go the library to borrow the books, I tend to fall in this category. Anyway, though the owner was complaining about the loss of business.

And people responded that if they didn't buy books, they did use the coffee shop in the store. And that many went online to the same larger book retailer. But for small shops, they didn't have any answer.

Do you think it's wrong to browse and not buy books? And specifically walk out and either borrow the books or buy them online later?

What a moral dilemma. The frugalite in me says it's not wrong, but now I do feel bad for browsing in the bookstore. I love books, and am a passionate borrower from the library. I also do paperback trade, and usually if I do buy a book, it's used and online, never new. So I feel terrible now, but I also don't ever go into a small bookshop. I only go to the conviently located Border's or BN.

But does that justify my browsing? DH loves to go and listen to CDs, but again he'll either buy it used, online, or I'll get it from the library.

So is browsing in a bookstore not frugal, but morally wrong and actually cheap?

Retire Rich...

An interesting interview by Walter Updegrave with Henry "Bud" Hebler about retiring rich. Mr. Hebler runs the website AnalyzeNow.com.

Mr. Hebler addresses some myths about retirement. The first being that your spending will decrease as you age. I absolutely agree with this, I don't think my parents have cut back that much. Also how hard is it to go and have takeout or eat out instead of cook? Go to the theater, join more activities like golfing, ballroom dance, etc.

He suggests buying an annuity immediately. I'm not sure I agree with this. However, I assume he suggests this because many people are not financially savvy and probably cannot invest their nest egg well. I would suggest a simple retirement portfolio using vanguard index funds because it's cheaper. But obviously again my parents fall into this category. And since they refuse help, perhaps an annuity is better.

I agree that you can't forsee all possible events. And people should set aside money for these unforseen events. Finally, he suggested that 10% used to be enough to save for retirement. Now he says 15-20% is more required because people don't have pensions.

I agree with that fully. Another thing people fail to realize is previously employers provided healthcare after retirement. Not anymore. Now people have to pay more medical after retirement. And this is expensive and costs are rising quickly.

But overall a neat, concise interview. Enjoy.

Car Choice

Okay so as an update, our friends who visited mentioned selling their car. It is a 1998 Subaru Impreza with 125k miles. According to KBB, it's worth $4k maybe. We are very interested in the AWD and we know them very well, and know it's been well maintained. So this is not your typical used car.

If we sell DH's 2000 Ford Focus, according to KBB it should be worth $4500. This move sounds like a lateral move financially. But is it a smart move financially?

Should we buy an older car? I think it's a better car than the Focus, but it's a tough choice. We have until this spring to think.

When the money rules don't apply

According to MP Dunleavy in her follow-up article to buying a new house, she says there are times when the money rules don't apply. Sounds like the typical mindset of many Americans, that they deserve the new car, bigger house, vacation, eating out, etc and they deserve it now.

Now in the article MP suggests they didn't do the math before they lept but they thought about it afterwards. I have to say that's a for sure reciepe for disaster, looking after you leap.

First they bought a house about 2x what their current mortgage is. Not a big deal if they were selling their first house, but they aren't.

Second they spend $5k/year in repairs on their current home. But somehow, MP suggests this $5k in repairs is no longer their worry. Hmm..interesting because renters ususally don't pay for repairs. Nor does she mention how she'll pay for it. Instead she says her new house doesn't need repairs. For now, I would say she'll love her new house, until something breaks and she hates it.

Third, her husband found a part-time job to cover the extra costs. Sounds to me like she is expanding their budget to fill all areas of their incomes instead of using the extra money to pay off debt, save for retirement. Getting caught up again in the two income trap.

Fourth, if you read her Women in Red updates here is the most recent. MP still has $7700 in consumer debt, and her retirement is at $16k for a couple in their 40s. They are only saving 8% of their income for retirement while saving instead of fancy vacations. I also don't see a 6 month cash Emergency Fund in place. This is a must for someone whose about to become a landlord. Also since she has a new baby, I also don't see any college savings, which is not necessary, I'd put over taking an annual vacation to Spain.

If I were a financial planner, I'd tell her she's crazy. She hasn't got the cashflow or cash on hand to whether any issues that may arise from landlording. She is still in debt, and way behind on her retirement savings. They need to stop going on vacations and start paying off debt seriously, and get into saving for retirement.

She previously stated she makes $80-90k/annually, but looking at her vital statistics they sure havn't saved like they have made that much.

So do the money rules not apply? Or is she just making excuses to have them not apply?

Worthless Dollar?

Well quick post about the worthlessness of the US dollar. Here is an article where the Iran president called the US dollar worthless. The worse part is that as Americans we can't really argue about it. We're in severe trouble with the housing market. Our national debt is $9 trillion dollars, a far cry from our surplus of the 90s.

This national debt causes the devaluation of our currency. And our interest rates do not encourage outside investing, although our goods are supposed to be cheaper now for people to buy, but we're not seeing the benefit.

Where can we go from here?

Net Worth 2007 Final Tally

The final net worth for 2007. Was it a good year? I think so for reasons non-financial. But financially not as much. Our net worth for the year appeared to have increased only by $20k. Not much at all. Mostly because we added according to my calculations $13.5k. in student loans. However last December I counted only $4500, but this year I just added $8500 at the beginning of the school year.

So our retirement accounts increased from $34782 to $67786. Nearly doubled, and a bit shy of the $75k I was hoping to have. However we didn't make our Roth IRA contribution yet for 2007, and after reviewing out paystubs I believe we're good to go, so that will happen in January. If you are close to the limits of not contributing to a Roth IRA, I believe you should wait until the next year and do it. Our problem has been DH switching jobs, worrying about any stock benefits that might cause a problem taxwise to our situation. So we decided to wait every year until we see what plays out and try to contribute in December. So I guess in January we'll hit the $75k I had hoped to hit.

We increased our debt from $4500 to $17k for student loans. Ugh. We however paid our house down from $450168 to $441986. I love to see the number going down.

So overall not a terrible year. Also we still haven't figured out DH's new ESPP so we have a bit of unaccounted for money right now probably $5-10k, which will go directly to DH's tuition bills. We use the ESPP as a monthly savings for it.

I guess my goal for next year? Well save $25.5k, so our retirement accounts will be over $100k, I guess with returns I should hope for around $115 in our retirement accounts next year. Wow, that's huge seeing as we started with zero a few years ago.

To everyone out there starting out, there is HOPE! Keep on contributing and working hard. It pays off quickly. I never thought to see our accounts growing so quickly, but it's awesome. I wish I had started earlier, but I used all of our savings to buy a house instead. I wonder if it was a mistake? Ah well, hindsight is 20/20. But honestly at least we are happily in a home and are quickly I feel catching up on retirement savings because we're 28 and 30 years old.

Our returns for the year have been very decent. I calculated in our stock portfolio DH made about 40%, I made 15% for the 4 months I invested = 45% APR if extrapolated for our Roth IRAs, and DH's 401k made 9% for the year. Not bad at all.

Happy New Year!

Happy New Year. Gee we're doing not much today, but plans are to clean our house! Woohoo...Finally.

2008 Goals and Budget.

Do I have any goals for 2008? I am sitting here mulling what might be a good financial goal.

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.

Budget Changes

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.

Vacation Spending

Well I got more real numbers for our trip. Not too bad, not super fantastic. We totally enjoyed ourselves and definitely did everything we wanted to do. Turns out Whistler is ridiculously expensive, but it's a resort area so they charge double what normal places charged. But by sharing meals we saved quite a lot of money while still going out. And I didn't gain weight over our holiday which is HUGE! I'm so excited. Normally I gain 10 lbs from a week of eating out but not this time.


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

Whistler $1062
Vancouver hotel $269
Dog Boarding $300
Airline Ticket $90
Food $667
Transportation $208 - $150 to/from Whistler by bus, 2 day passes for Vancouver
Gifts $50
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.

Rising Food Prices

I read on the plane an article in the Economist about "Food Prices - Cheap No More". Interestingly food prices had previously until this year been on the decline. The peak grocery prices hit actually in 1974.

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?

Things about Banking

Just a couple of things about my bank I hate. And maybe your bank is different. It probably is, but I am with a nationwide bank I hate. If I didn't have a mortgage with them, I'd be using a credit union. As it is, we're stuck and I hate them.

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?

Longest Unemployed?

This got me thinking from the comments. What's the longest amount of time you've been unemployed? I will probably post a poll as well.

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?

Credit Cards are better for travelling

Many people might disagree with that statement. But the truth is when you are travelling you're better off using a credit card. Maybe it's not so bad if you don't leave the US to only use a debit card, but if you travel at all internationally be prepared and take a credit card.

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.

Merry Christmas

Merry Christmas! Suppossedly a day of rest, but instead I'm spending it cleaning up my house. I have so many things to do...ugh.

Measuring your time value

In every scenario there is a point where you value your time over the cost. On vacation is when it becomes apparent. Before when we travelled we had to evaluate whether it was more important to save money on a hotel by staying in a less desirable location or paying more to have more time to enjoy the city.

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?

Diminishing Returns?

Well since we're still on vacation, I decided to write about diminishing returns, as it pertains to our vacation. We snowboarded for 3 days in Whistler. Each day cost $77/day/per person. Unfortunately the greatest value gained was on the first day when we were excited and energized. Unfortunately by the second and third days there was diminishing value from being able to go boarding. Our bodies were fatigued, bruised, and hurt. We weren't as excited or energized. But was it still worth it?

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.

Credit Unions - the banking solution of the Immigrant family.

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.

Tips for Getting the Best Possible Mortgage

This guest post is from Shizane over at www.savingadvice.com. I think that anyone getting started in buying a home should read this. Even if you have bought a home before, this post is a great refresher on the ins and outs of getting a mortgage. I knew about floating a rate, shopping title companies (never allowed in the states we're in), but I hadn't ever considered a soft prepayment option. Anyway I think this is one of the better posts about how to shop for a mortgage.

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.

Use Grand Central to lower your Phone Bill

A second grand post by a new blogger Lulu. Her blog "How I save Money", is about trying to pinch every penny possible. She's a broke college student (weren't we all?) trying to get out of credit card debt. Please enjoy this post and her blog. I think this is a great tip for cutting essentials like a phone out of your budget.

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.

It's FREE!!!!

Follow-Up - Setting Goals...

A follow-up guest post was last time written by fellow message boarder cjohnston. Great advice and wisdom. I love this post and it got me thinking about the future. Perhaps before the year is done I will do a goal list for 2008. For us, DH and I don't typically have clear financial goals, we have life goals. That happens to entail finances, but mostly it's getting where we want to be and finances happens to be important to get there, but not the end all be all. Please enjoy this wonderful post...

Setting Goals

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.

Festival of Frugality #105

Check out the festival of frugality #105!

Carnival of Personal Finance #131

Up at Get Rich Slowly Check out the Carnival of Personal Finance #131.

Creating a Gross Annual Budget

Most people don't budget from gross and many more find it difficult to create an annual budget. I always budget from gross and try to do a annual budget. Why? Because it gives you a firmer grasp on all areas of your budget including your taxes, savings, and spending.

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.

Debt Free or Free of Fear?

In Dave Ramsey's baby steps, step 7 is being completely debt free including the house, and being able to fully enjoy your money. It's living like no one else because you are debt free. Wow what a concept!

But I've pondered this and I being a scientifically minded person, I'm not sure if I'll ever convince myself or DH to retire our mortgage early. Meaning I don't know if DH and I would ever prepay our mortgage. We agreed our mortgage would be retired the month we retired, but any earlier is not necessarily part of our long term financial goals. So we might never be debt free until we retire.

But does that mean we won't be financially fit or at peace? I don't know. I have mulled this over a lot, bouncing ideas off of my DH and debating just rushing to prepay a mortgage. And that's how we came up with being "free of fear." What does that mean?

We discussed it, and I think I'll be free of fear when we have enough money in taxable accounts to pay off our mortgage and generate enough income to live. According to my calculations that will likely be by our mid to late 40s. So though we'll still be carrying a mortgage we'll be in a position to pay it off ASAP in case of emergency while still being able to live.

Have I made peace with not being debt free? Definitely, so instead I'm working harder at achieving financial freedom by being financially savvy enough to save my extra mortgage payments instead of spending it.

Most people prepay the mortgage because they lack the discipline to save the the amount and invest it. I could potentially fall into that category, however, I am a firm follower of automatic investing. I plan my budgets backwards setting savings as a line item before any other expenses including my mortgage/rent, etc. So I would do the same thing for saving my "mortgage overpayment" and investing it.

Tip to using Priceline...

I love priceline. I am was about to use priceline for my vancouver trip but decided against it. Mainly because there is a special deal at Travelocity, where if you book a hotel for 2 nights using a Mastercard, you get $50. This added to the fact the hotel we were interested in dropped from $108 to $92/night and is again back up at $108/night means we got a steal of a deal.

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.

My vacation plans...

I want to spend less than $100/day for 2 people eating out every meal. We did not reserve a room with a kitchen, and while we might eat breakfast in, we are looking forward to dining out in Vancouver a lot. We dearly miss Asian cuisine and it's time to indulge. We're going to have everything that grew up with and no longer can get.

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
Snowboarding $1062
Vancouver Hotel $269

Running Total - $1728

Estimated Food $800
Sights $500

Estimated Total $3028, I wonder what the real total will be.

Cost of being overweight?

Does it cost you money being overweight? I think it does. Many would argue that it depends on what you define as overweight, but I think that if you feel "overweight" you likely are.

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.

Gift Giving Obligations?

What happens when someone gives you a Christmas present you weren't expecting? Not necessarily a huge present, but a present still? You suddenly feel very weird. There's a feeling of dread in the pit of your stomach. But what do you do?

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.

Renting in Retirement

Does renting in retirement make sense? In some cases it does. In others it does not. However, from a purely financial standpoint, I think it does. But of course no financial decisions devoid of emotional value. So why does renting make sense?

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?

Festival of Frugality #103

The 103rd Festival of Frugality is up at Plonkee. My post about "how to save money at CVS".

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.

Senseo for Free!

http://www.sharesenseo.com/q5/1.jsp;jsessionid=A15D7A1764831389451A8834A126402E

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.

Carnival of Personal Finance #130

The Carnival of Personal Finance #130 is up at Money Smart Life. I submitted my article on "Cash Wedding Registries."

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 @ livingalmost@gmail.com. Thanks!

Christmas gifts ideas...

What do you give to people who have everything? I sit here pondering what to give to my mom, dad, grandma, and DH. It's so hard because the truth is they have everything they could need. Plus they can probably afford most items they would want.

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.

MP Dunleavey, why oh why?

If you read MP Dunleavey on MSN, well she's also taken to writing for the NY Times. I like reading the message board hosted by MP called the Women In Red. There is a lot discussion about money from a female perspective. Anyway this week Mia writes about her decision to purchase a new home.

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!

Luxuries in my budget

Well Clever Dude talks about cutting expenses if necessary in a 3 part series. He asks what could you cut?

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?

CVS Extra Care Bucks Explained...

I've been doing the CVS extra bucks program since March of this year. I have gotten a ton of stuff for free or pretty cheap. There have been savings and since starting out I've learned a lot of tips.

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!

Amazon is ridiculous...

I hate Amazon.com. I attempted to order some stuff online last Thursday 11/28 because I had a $50 gift certificate. I forgot to input the gift certificate code before I pressed the send button. So I tried to input th code afterwards, but it did not appear to have worked.

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.

Festival Of Frugality #102

This week the 102nd Festival of Frugality was hosted by the Lazy Man and his Money. Lots of great post. Included was my "5 frugal tips for brown bagging a lunch."

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.

Carnival of Personal Finance #129

The 129th Carnival of Personal Finance is up at Cash Money Life. Lots of great entries. My post "Have I saved enough?" was submitted.

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.

Video Games are HOT!

Well yesterday it was annouced that Activision (ATVI) and Vivendi would be merging to form the world's largest video game company. We actually own ATVI because we decided this was the year for video games and systems. Turns out it has been.

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%

Net Worth Update November 2007

Well it's been a terrible month for investments. We lost money in our retirement accounts and taxable investements. Our networth dropped by a lot, even though we of course contributed $1250 to 401k, paid $697 in our mortgage, and $400 was applied to our credit card last month (2 payments of $200). So overall we lost 1.26% of networth or -$2778. My only hope is that we are able to make it up this December. Though that seems unlikely. Well we have to keep on trudging. For everyone else I hope you had a better month than what we did.

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.

Looking for Guest Bloggers

Hi, I'm looking for guest bloggers while I'm gone on vacation in December. Please email me if interested. Thanks.

livingalmost@gmail.com

Circuit City...a rant

I had to return a ipod portable stereo system today to Circuit City. I found them hard to deal with and rude. My DH lost the receipt, so I figured we'd return it for store credit. We actually had two of the memorex ipod dock. DH wasn't sure if he wanted one for work as well as home. So we bought two and decided to think about it later. It was on sale for Black Friday for $25.

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.