Carnival of Personal Finance #86

The Carnival of Personal Finance #86 is up at 2millionblog. It is featuring a lot of great article including an article from Jeffrey at savingadvice talking about the lies we tell ourselves. Included in this weeks carnival is my post on the tax break from kids. Enjoy.

2/12 Spending

Because I had to mail a book sold on Half.com, I ended up spending money today. I spend 4.28 at CVS for a bubble folder and valentine's day card. This is DH v-day gift, well actually an extra $50 for the hockey game tomorrow. Also I spen $2.07 on postage mailing the book I sold for $35.

So the running total is $362.55! Not bad for almost half a month. I think I'll be doing this a lot more in an effort to keep out spending to a minimum.

Suze Orman...

Okay I admit to last night watching Suze Orman's TV show on CNBC. It was very amusing and highly entertaining. I think that she uses a lot of simplification on her show and if you are reading this blog you probably shouldn't watch her show. It's really simple. BUT I think it's easy enough to understand for the average person just getting started in investing and understanding debt.

My favorite part of the show is her deciding whether someone calling in can afford to buy the item they want to purchase. They tell Suze what the item is, how much it costs, and how they will finance their purchase. Then she says approve or deny. Last night there were people asking for a cruise (approved), culinary school (approved), dog daycare (denied), a used Audi (denied), and investment property (denied). One of the biggest factors in deciding approval or denial was whether the person had consumer debt (CC or auto loan), any savings, and what their income was.

Overall though the show is extremely simple, I think it is a great tool for beginners. I suggested to my mom to watch the show and start watching it every Saturday night. She has basically just started to grasp what a stock is, mutual fund, and bond. This show I think will get her more interested in personal finance without intimidating her like other shows.

So I guess I'll give Suze a thumbs up for providing the inital steps to personal finance. Or a personal finance for dummies...

2006 Taxes Prep

So I did and off the cuff estimate of our taxes. Because of my stupidity regarding DH's bonus at the end of the year, it appears we will be getting back over $4k from the federal government. Also maybe another $1k from the state. Most people are probably like wow. But me, I'm smacking my head going darn it.

We just gave the government an interest free loan. Granted that a lof of it came from the end of the year bonus taxes taken out, but still. It's really baloney that I did something so done. Anyway, we're still taking it to an accountant. We want to be sure we do the timeshare donation correctly and are able to recoup our donation fully. It's a lot more complicated also with our bonuses this year, but hopefully if nothing major changes next year we'll be doing it ourselves.

We were supposed to go this morning, however due to my DH forgetting his schedule we're not seeing our refund until at least two weeks from now.

2/9-2/11 Weekend Spending

This weekend we didn't spend nearly as much on groceries, although we did spend a substantial amount more in the eating out category. We usually don't eat at applebee's but it was walking distance to our house and we were pretty tired on Friday.

2/9 Gas $21.41 (my car)
Stop and Shop $2.58 (water and butter)
Applebee's $27.28

2/10 Shaw's $13.27 (2L soda, celery, tomatos)

2/11 Asian Market $4.28 (tofu, hot sauce)
Stop and Shop $28.71 (4lbs of sausage, eggs, green beans, water, 3 lbs of onions, broccoli, red peppers, white peaches, and dented box of banana nut muffins).


I think this is sort of indicative of what we normally buy. We try to stay away from processed food, although the sausages are mainly for my DH. He loves them. But overall not a terrible weekend, we spent $97.53 overall for a running total of $356.20 this month. I am hoping to keep it under $1k this month but we'll see.

I'm not sure whether I should count normal bills like the electric, gas, cable, internet, cell phone, etc? Also if I should include our car registrations $62.50 for two cars, or the car insurance. Also if we should count paying the accountant. I am leaning towards not because a lot are fixed expenditures, not easily changed.

Huge stupid tax...timeshare

Yep, years ago we bought a timeshare. Really dumb, probably our dumbest mistake. Very very stupid. Bad idea. Our biggest problem was the annual maintenance fees. I never actually calculated how stupid it was but I am about to here. This is also something stupid we did that we never mentioned to anyone.

First the cost, we bought a timeshare 2003 for $5k for a great week in Daytona Beach. It was Bike Week a motorcycle week. Not a bad idea, but we were never going back to florida to use it. Instead we were just going to trade it in. So that $5k should have gone into my Roth IRA or paid off the house or bought a nicer car. Stupid idiot (me).

Second there were annual maintenance fees of $200. Sure it doesn't sound like a lot, but it adds up if you keep it for years. Idiot! Again it's just a reoccuring cost that adds to what you spent to "vacation."

Third, there is a fee for RCI, a timeshare exchange company of $99/year. Sounds like a great idea. But how will you really trade your timeshare in? We did, and it was great, but when you "exchange" your timeshare then you end up needing to pay another fee of $189/exchange. So annually you are out of pocket spending $600 for a hotel room. Yep it's a nice room, but you also spent the $5k upfront costs.

Thus why people have such trouble giving away timeshares. I believe that we spent $5k + (2x300) + (2x100) + 189 = $6000 in all for our timeshare we never used. Great idea. So there was my brilliant vacation plan.

Yep my stupidity now out in the open for me to look at and cry about. It was such a dumb dumb idea. I hope no one in my family reads this because I can't believe how stupid I am. Or how dumb I was.

But I finally got rid of it this year. Buyer's remorse. I couldn't sell it though we tried. Instead we donated it. Which turned out to be a blessing in disguise. Good thing we did it now when our income was much higher and we get better tax break. You can't undo our stupidity, but you can try to stop the money leak.

All in all, would I change a thing? Not really, I need to make a few money mistakes in my life or else I'll never learn anything. But this was one of my more idiotic lessons.

Festival Under 30 Finances Edition 16

Today the Festival of Under 30 Finances is published at the Endless Gibberish. The theme of this festival is if you could turn back time and change things financially would you? My answer NO! Here's my post on if I could turn back time...Enjoy a few insightful posts and many other stories from under 30 bloggers.

Latte factor necessary or fake?

Okay in his recent money magazine article Walter Updegrave writes about not giving up lattes but instead focusing saving on the big ticket itemes. The summary of his article is that you can save $400k easily by doing three things. One, drive cheaper cars, for example a new $21k Honda Accord instead of $30k Acura RL. The lifetime savings will be $180k. Two, send your child to a public university instead of a private university, lifetime savings $164k. And finally save $1k each year on your vacation. The lifetime savings is $122k. All of this will add up to an easy $400k saved over your lifetime.

Do I buy this or do I think it's easier to stop buying coffee everyday? Truth is I think carefully thinking over big purchases more important. Yes it's important not to waste money and perhaps buy less fancy coffee. But that coffee can be paid for in cash if you aren't "house" poor or "Car" poor.

In today's world it seems like people are more very expensive homes and having trouble affording them. This drives the use of CC and HELOC, etc. So how to curb this? Not buy cutting out daily lattes $5 x 365 = $1825/year. Yeah that's not enough. What would really help someone annually is not having a mortgage that is 36% of gross but rather 28%. Or not having a car payment of $500/month. Those items would save THOUSANDS of dollars a year not just $2k at most.

I understand that tracking your money is important. And foolish spending isn't helping the problem. But if a lot of people are already running towards the red with just a house payment and car payment, then tracking every penny doesn't matter if there isn't enough income to cover even bare bones expenses.

What do you think? Is it the latte factor or the overconsumption of expensive big ticket items?

New Debt Free Website

A friend has started a message board for those who follow (either die hard or loosely) Dave Ramsey's plan. Also if you are just looking for a way out of debt or motivation or anything...then use this website "financial peace". http://financialpeace.proboards107.com/index.cgi
By the way I am LivingAlmostLarge there and am back in BS2. Though hopefully the day DH graduates that debt is wiped clean (Cross your fingers for me, I think it will happen).

401k lagtime...real or BS?

Okay I'm really pissed with DH's 401k from his company. They take forever to deposit the money into the account. The last deposit was on 1/17/2007 for the deduction from the 1/5/2007 paycheck. He is paid biweekly, so the 1/19/2007 paycheck has not been deposited, nor has the 4th quarter match from the company. What is going on? Also he got his annual raise/bonus on 2/2/2007 and of course nothing has occurred, though his 401k was deducted out of the bonus for $1500 that should be deposited.

I think this is utterly ridiculous that the company can't get their act together. I am fine with the company taking 2 weeks to input the deduction, but it's over well over two weeks now for the 1/19 paycheck and it's been over a month for the company match since the end of the 4th quarter of 2006.

Is this how all companies work? I think that the company should be paying for this loss of time. I am hoping that it gets posted by the end of February which might make up the shortfall we experienced last month in net worth.

Heat Auditor determines...

Our house is super inefficient! Woohoo! That explains our heating/electric bills.

Okay, so today I had a honeywell heat auditor come out to our house to determine how efficient/inefficient our heating system and house is. He laughed when he saw our house. First of all our furnace is in the attic. Yep it has to pump down hot air through three stories of our townhouse with only 1 vent. Thus why our bottom floor never gets warm. And why it is absolutely necessary to use electric space heaters.

But what do we pay for heat? We use on average to heat our house only 424 therms/year. Low right? Well we also pay $2/therm so about $850/year for heat, not including using electric space heaters. Also because we use keyspan our heating bill will be going up by 40% in March, since they were currently bought out.

Another point our house is cold. Period. We leave it cold because getting it warmer is not possible. How cold? We leave our house to 50 when we are gone, 68 only when we're home, and 62 when we are sleeping. That is cold, most people leave their homes at 72 when home and warmer when gone. But for us getting the third floor to 60 is next to impossible.

Also this winter in the NE has been very mild even compared to last winter. Thus our bills have reflected this by a substantially decreased need for heat. So I expect if we had a terribly cold winter our bills would be double what they are now.

Second our house is entirely electric. Yep, our washer/dryer and water heater is run on electricity. Woohoo. And we have gas in the house, which makes it more unbearable to have an electric water heater. Our electric bills run about $156/month for an average usage of 836 kWh/month. Meaning we pay about 18.6 cent/kWh. The average cost of electricity in the us is 6.66 cent/kWh. Yep we pay 3x that on average.

So overall we pay approximately $300/month all year long for gas and electric on a newly refurbished 1900 sq ft 3bd/2.5ba townhouse. What were his suggestions?

1. Insulate the attic pulldown staircase, $200
2. Caulk flooring
3. Insulate all wall outlets
4. Install gas log in fireplace to heat bottom floor, $4k
5. Heating unit in basement for bottom floor, $40k
6. Install water heater in attic using gas instead of electric
7. install ceiling fan in bottom floor
8. Suggested a different energy efficeint light bulbs
9. More ducts from attic to bottom floor ($20k)

The company offers financing at 3% for 10 years up to $15k to do these renovations to your house. Will we do any? I have no idea, I am guessing we are going to do the caulking and pull down of the attic and insulating the wall outlets. One consideration will be that we may end up installing the gas water heater, which will cost about $500.

Coupon shopping yea or nea?

Do you coupon shop? I've been trying since the beginning of the year to look for coupons online and in the Sunday paper that I would use. We typically spend about $400/month for two people for groceries. This includes all toiletries, household goods and cleaners, etc. Yet rarely do I find the opportunity to use coupons.

So what should I do? The problem is that we don't eat a lot of the foods that are sold using coupons. You are probably think I'm nuts. For example we spent $267 this weekend on groceries. The bulk of which was soda, on sale for 1.99/12 pack. Great price. So I loaded up and bought 42 x 12 packs of soda = $108 including tax, bottle deposit. Yeah I know, but soda is a major vice for DH and I won't have him buying it individually.

The rest we bought a 7 lb ham, half a pound of sliced steak (hot pot), $2 off steak, beef and shrimp balls, 3 crowns of broccoli, cauliflower, 2 heads of lettuce, pack of carrots, 5 bananas, 10 yogurts, 3 lbs of grapes, 5 bags of chips, 1 dip (superbowl stuff), 5 cans of soup, milk, hoisin sauce, peanut oil, and that's it. So I guess I could have looked for coupons for the soup, peanut oil, chips (though it was $10 for the 5 bags and dip). But we don't usually buy chips and the soup is backup for when we don't make lunch.

I guess the point is that we're not huge coupon shoppers. We try an shop sales mostly and eat a lot of fresh, non-processed foods. I notice that a lot of coupons are for processed foods and toiletries. Instead I just load up on toiletries when they go on sale at Costco. Example I bought 8 bottles of dove body wash for $30. Not the small size bottles but the large 24 oz bottles. Same with toilet paper, paper towels, and laundry detergent. Because there is only two of us, we just load up when there is a sale and live with it.

But I'm not sure if maybe coupon shopping could be cheaper. I'd love to try, but DH refuses to eat most of the stuff on sale. As I track my shopping this month, I'll post about coupons I manage to use or not.

Carnival of Personal Finance #86

The Carnival of Personal Finance #86 is up at the Simple Dollar. A lot of great articles this time, beautifully summed up by Trent. My article "is life passing me by part deux" is posted. Hope you enjoy the carnival.

Brown bagging it everyday?

How often do you bring your lunch to work? It's an interesting question. I posted on www.savingsadvice.com and WIR message board. The most common answer is everyday. I guess because most people on financial message boards are very financially savvy. So the population of people polled will not spend a large amount eating out.

That being said, I had a fun laugh this weekend. DH sit in bays of 4 people, so out of the 4 people there is one guy who eats out every day, the other two eat out 3-4x/week, and he's the only one who always brings lunch. He was told on Friday that he's the most disciplined guy they ever meet, he pretty much never goes out to eat lunch and brings something everyday. He's worked there over a year, and before this job, DH pretty much always brought lunch.

Eating out is a luxury for us. I guess both of us grew up with moms who always packed lunch, though they could afford to eat out. Both of our moms thought that what we ate should be monitored as we got older because we'd get fat. When we were kids it was price because they were less affluent, later because it would encourage fast food eating. So to both of us we've never had exposure to not brown bagging it.

I wonder if we'll change as we have kids and earn more money? I don't think so because honestly I gain weight very easily eating out. Even with portion control it's very fattening. Thus for me personally, it's not the cost of eating out, it's the weight gain. I find I don't monitor as closely my calories and I eat a lot more unhealthy food choices eating out. So I guess I'll have to be a brown bagger for life.

I did want to do a poll for people, but was unable to figure out how to embed a poll. But if you'd like to weigh in on how often you bring lunch versus eating out, that would be great.

2/4 Spending

Today we went and bought a few more cases of soda and peanut oil for lunch. The running total is $19.22. The monthly total thus far is $258.67, what I expected because of our loading up on soda this weekend.

Stop and shop 13.25
Stop and shop 5.97

2/3 Spending

Today we spent $166.48. Broken down as:

Russo's 11.51 (groceries)
Stop and Shop 69.14 (18 x 12packs of soda, groceries)
Super 88 26.85 (groceries)
Petco 38.84 (dog food
Post Office 6.76 (mail off book sold)
JMP 8.39 (indian food)
Indonesian Food 4.99

Well we ate out for lunch today. Our first time of the month. It'll be interesting if I can manage to keep our eating out to once or twice a week or less. I have a few free gift cards which I guess count as eating out.

Spending today

Today I spent $72.97. I spent $19.89 on Gas, $52.08 at Stop and Shop, and $1 on a Redbox movie. Unfortunately this will be a budget breaking weekend. Why? Because coke is on sale at Stop and Shop for $1.99/12 pack. Which is a fantastic deal. So we bought a total of 12 - 12 packs. Yeah I know we could have saved a ton today by not drinking soda (4 x $7.77 = $31.08).

But DH takes a can everyday for lunch. It's his major vice. Second he also like to have a can with dinner and usually another one later in the evening. So what's a person to do? And nope he's only a BMI of 19 with excellent health so it's tough to play the overweight card.

Another thing, today someone at work commented that DH is the MOST disciplined person they know. They mentioned he always brings a lunch to work. This has been a habit for us since we've pretty much meet. We've never had a chance to be able to afford to eat out for lunch, and perhaps we should eat out? That'll be tomorrows post.

Want a tax refund??? Have more kids...

Okay, I've known for a long time that we can't afford kids yet. I mean we can, but not comfortably. Anyway this year I realized that with each child if you are married and make less than $110k, you are able to get a $700/per child tax credit. Insane.

Sure it costs more to have kids, but on a message board someone is getting $9k back from the government on top of not paying any taxes. Holy Cow. Here's the woman's post "Yes, you can definately get back more than you pay in.We have 8 children and hubby claims 10 on his W4 so they hardly take out anything and our return (fed. and state) is almost $9000 this year! Rebuilding EF, paying off son's private school tuition for the year, and the van!!!"

I am okay with people not paying taxes, when we pay a lot. However I wonder if it's fair to get back so much when they pay nothing in? It makes me wonder if someone pays no taxes, makes $60k and gets a $9k refund doesn't that mean they are making substantially more than someone who has 1 or no kids making the same? Does it equal out having kids and paying less taxes?

I don't know. I guess it just got me thinking that having kids really isn't as expensive as people think. With these tax credit and incentives, it seems like we're encouraged to have children. But this is all hypothetical. Mainly it's coming because I'm sad at how much in taxes we have to pay. But for what it's worth, it's because we chose to live in a high cost of living area. So I'll accept full responsibility for that, until we are able to chose to live in a cheaper area.

January 2007 Wrap Up

This month has been a bad month for us financially. We ended up decreasing our networth by $4232 or 2.15%. This was mainly due to DH getting the second half of his stafford loan disbursed. This increased our total debt to $8500 in student loans.

Hopefully next month is a better month with a raise, bonus, and tax refund.

Spending more than we earn?

I can't believe that for the second year in a row Americans are spending more than we earn. Our savings rate is at -1% for 2006, shown here in this article. In 2005 the savings rate was a -0.4% also bad. Only two other years has the savings rate been negative in the US, 1932 and 1933, during the Great Depression.

Can you imagine that we as a country are spending more than we're earning? Of course this does have positive effects because it appears that consumer spending is up 0.7% and driving the economy. This helps people in general.

But the truth is that this will hurt us long term. Long term that means people are not saving for retirement, not saving for an emergency. Instead they are spending tomorrows savings today. Betting on having more money when there could be none.

I'm not sure what the answer is. I would love to have higher retirement contribution limits. That would really help us. But that may not be the answer. The answer could lie in automatically enrolling people in 401k and IRA. And making SS private and letting all contributions go back to the people who contributed. I'm not sure because a lot of people will suffer, however as a nation we are a capitalist society, so why is there SS at all?

I mean everyone wants to pay less taxes, have less government intrusion, then why even pay for SS or expect anything in return? It comes down to personal responsibility. If all these americans are crying about taxes and SS, then they should step up and say they want to take of savings by THEMSELVES.

However it appears that as a nation we are incapable of doing so. How else do you explain a negative savings rate?