Thursday, December 18, 2008

Whatever Happened to the $10,000 Check I Wrote in March?

A lot has happened since I wrote that $10,000 check which I promised to keep you updated about.

First, I stopped posting because all this blogging was getting too overwhelming!

Second, about a week after I wrote the check, I randomly met an old friend who I hadn't seen in eight years. She mentioned that she wanted to set up a memorial fund, at the same organization I had made my check out to, in honor of her teenage son who had passed away from Leukemia a year ago. And, she wanted to dedicate it on May 19th, one day before the date on my check. Sweet synchronicity!

Third, despite all the good happy feelings I had started off with, I suddenly got really stressed about being able to afford it. I spent an absurd amount of time worrying about it. Two months of worrying.

Fourth, by mid-May just enough money had come in from various random sources to pump my cash accounts to $11,500. (This included the stimulus rebate check, remember that?)

What then? I walked into the organization's office and handed in my check as a contribution towards my friend's fund. And I was still worrying and kept on worrying for a few more months.

You know what? Worrying is messed up. I know I did a good thing but I didn't get to enjoy it! What a WASTE!

Fifth, all that worrying led to a whole lot of financial "bad luck". Yuck! More on that later.

Sixth, I changed my attitude, quit worrying, and started to go with the flow again.

Seventh, the Universe sent the $10,000 back to me from another source. Yay! More on that later.

Moral of the story: Enjoy the process, let money flow, worrying is counterproductive.

Thursday, March 27, 2008

I Wrote a Check for $10,000

Yesterday I wrote a check for $10,000 and dated it 5/20/2008. That's less than two months away. It will stay in my checkbook until then.

My heart almost leaped out of my chest as I wrote that check. It wasn't fear racing through me though, it was excitement. Odd that I should be excited -and not fearful- about writing a huge check for an amount that is not currently in my accounts. Yes, that's right, I don't have all that money right now and I'm not sure where it will come from. I just know I'm ready to jump.

This check is for my favorite charity- a place I have worked with and supported for about ten years. Ten years, ten thousand, it just seemed appropriate.

Many years ago, right after I got married, my husband told me about a cousin who was having some medical problems. This cousin was a young guy who didn't have insurance when he had to go in for treatment and now had some hefty medical bills. I had an intense urge to give him all the money we had just received as wedding gifts to help him wipe out those bills. But I never said anything. My husband and I were pretty broke at the time- right out of college- with college loans, tiny paychecks, no furniture, and a car that was dying. I took the practical route and used the money to live on.

I think about that time often. I don't have strong regrets but I do wonder what would have happened if we'd given the money away instead of using it. I think it would have felt really good.

Really good. Like the feeling I had last night when I wrote my check. This time I'm giving it away for sure. Just waiting for the rest of the money to arrive...!

I will keep you posted.

Wednesday, March 19, 2008

Top 10 Ways I Make Money

Last month I wrote about the top 10 things I do to save money. This month I thought I'd make a different top 10 list and address the flip side of the personal finance coin.

So here are the top 10 things I do to make money:

1. Regular full-time job. This is currently my biggest source of income. I love my job but eventually I would like to make enough money from other sources to make this a much smaller percentage of my income. In the meantime however, I did get a hefty raise in November and I have plans to negotiate another raise soon.

2. Roommates who pay me rent. They get to live in my great little house for a fantastic price, and I get to have most of my mortgage paid by others. Win-win.

3. Second job This hourly job fell into my lap when a friend asked for some help with his business venture. The hourly rate is more than my full-time job but I only work about 30 hours a month. I am going to continue doing this job because I am actually learning some handy new skills and maintaining networking connections with people who I might want to do serious business with in the next few years.

4. Rental property I purchased a small 3br single family investment house a year and a half ago and have been learning how to keep it rented. This has been a tricky source of income because occupancy is never guaranteed. If I were to do this over, I would have negotiated a lower purchase price and better terms... and maybe bought in a neighborhood half a mile north of this one. However, despite the less-than-ideal conditions, my conservative side did insist on buying a house that I could afford even if it stayed vacant indefinitely. So far, I've been putting all the income from this house back into the property (either for maintenance or in a fund for emergencies/ improvements). According to my tax calculations, which take into account depreciation, I've had a loss on this property which has resulted in a nice tax refund. I also live in an area that escaped the housing bubble so property values are continuing to hold steady and even creep up a little. In the long term, if I can keep it rented, this house will be a steady little investment.

5. Business About a year ago I began to explore a side business. Getting this off the ground has been slow going... but fun. I have learned a lot. I am starting to pay more attention to appropriate marketing strategies for this business which provides products I have created for a very small and specific niche. So far I have broken-even on this venture and expect that I will be heading into profit territory soon. Once again, my expenses here helped to boost my tax refund.

6. Consulting Once in a while I do some freelance consulting. I am still of two minds about how much time I want to spend on this kind of activity. I would ultimately like to put less emphasis on sources of income that require a specified amount of time/personal energy to generate revenue.

7. Financial investments This includes any interest earned on my savings accounts and dividends and capital gains on stocks and funds. Last year I spent a few months trying my hand at more active stock trading but decided it wasn't interesting or lucrative enough for me to devote that much time to it. Now I stick to a more easily managed portfolio of funds that I don't have to think about more than a couple of times a year. This portfolio is still pretty small but one of my goals this year is to really pump it up.

8. Online activities My income from the internet is very small but I have decided that as long as the source/activity is interesting enough, then every penny coming in counts! These activities include such things as participating in cash rebate programs such as Inbox Dollars and Mypoints and having some advertisements on my blog. Some of these activities don't require much effort at all (but also don't generate much income).

9. Multi-level marketing This is brand new and still a... twinkle in my eye! In the next couple of months I am going to get involved with a company that two of my friends have had some success with and see how it goes. It doesn't require any money to start up so I figured I've got nothing to lose except for a few hours and I can help my friend out in the process.

10. ..... I tried. I couldn't come up with #10! I don't sell items on eBay or hold yard sales (I don't have enough stuff to get rid of and the stuff I do get rid of I freecycle). I don't babysit or mow lawns or shovel sidewalks. I guess you could read about the money that seems to find its way into my life without my necessarily doing much for it in Found Money.

That's my list. Perhaps a next step would be to make a nifty pie-chart and compare how much of my income comes from the different sources.

Monday, March 17, 2008

Rolling In It

We're only half way through the month but I am declaring March the best month of the year! Well, so far anyway; I don't want to rule out the possibility that things could get even better. I've had more money coming my way this month than I could have possibly imagined.

Here's how it breaks down:

  • Federal tax refund: $1800
  • State tax refund: $300 (anticipated, not yet deposited)
  • Side-business income: $1900
  • Refund from mortgage company for an escrow overage: $350

Total: $4350

This has made the following possible:
  • Pay off all my credit cards (including the business card)- check out the progress bars on the right!
  • Give about $400 away to people/causes that I support

Other good stuff:
  • I discovered that I could still open a Roth IRA for 2007 and deposit money into it. I did. I transferred the full $4K for '07 and another $2500 for '08 from my ING account.
  • Looks like my monthly escrow payments are going down by $40 each month.
  • One of my roommates will be moving out and I am planning on moving into her room and renting out my larger gorgeous room for an extra $100/month. This will bring my housing expenses down to $265/month. Throw in the $40 reduction from above and we're looking at a monthly outlay of $225. Wow.
At the end of the month I'll tell you more about how I've gone over budget in some areas... but it's all still good! Yay! This is my version of march madness and I love it!

Tuesday, March 4, 2008

February 2008 Blog Statistics

Statistics from my second month of blogging:

Age of the blog: 57 days

From February 1st to 29th

Number of Posts: 12 (pretty lame, sorry)
Number of visitors: 1539 (yesss! blasted past a thousand!)
Pageviews: 2262
Average pages/visit: 1.47 (this is dropping, we were at 1.82 last month)
Bounce rate: 79.08% (yikes! lots of tire kickers... that's ok, I still love you)
New visitors: 64.46% (nice, over 35% of visitors came back, last month was 25%)
Subscribers (that I know how to track): 24 (this has fluctuated quite a bit over the month, people come and go)

Most visited page (other than home): 382 page views What Can I Buy on a $200 per Month Grocery Budget?

Highest single-day traffic: 130 visits on February 12th mostly to What Can I Buy on a $200 per Month Grocery Budget? (almost identical to last month..., obviously many are interested in other people's shopping habits)

Top Traffic Sources (thank you!!)
Lazy Man and Money
Frugal Hacks
The Financial Blogger

Organic search: 124

Blog expenses: $0
Blog income: $6.32 The Inbox Dollars referrals are still giving me a little kick back and now I have a few Adsense Google ads on the site. Hope they're not too annoying.

  • I began experimenting with advertising on the site. It's slow going for now. When I manage to make a penny a day I am pretty thrilled. Don't ask me what a fool I make of myself when someone actually clicks on an ad. :blush:
Thank you all for reading!

Monday, March 3, 2008

February 2008 Budget Update

I started using a couple of weeks ago. (Confession: I discovered it by clicking on one of the Google ads on my own site which is apparently a huge no-no).

What an incredibly easy way to track my daily spending. The categorizing features on this free site are outstanding! It did take a little tweaking to get some of my expenses in the right categories but it learned quickly! The major drawback is that it doesn't let you create your own categories. Hopefully the folks at Mint will get that sorted out soon. In the meantime I am pretty comfortable with the choices they do offer. My favorite part? The clickable pie-chart under the "spending trends" tab. :swoon: Who knew spending could look so beautiful?

I highly recommend you give this site at least a trial run. It's totally free to use.

Now, on to the real reason why I have this blog: accountability. Here's how I did with my budget this month:

Earned Income after taxes and withholdings
Job 1: $1530
Job 2: $512
Total income: $2042

Housing/utilities/internet: $365
Transportation (gas): $72 for gas
Groceries and Supplies: $175
  • Grocery stores: $68 (wha....?!)
  • Restaurants: $86 (I only drink water and I eat cheaply... this figure shows I ate out a lot last month!)
  • Entertainment: $21 (rental movie marathon)
Transfer to "Save to Spend" account: $100 (also took money out from this account to pay for filter and oil change, and quarterly water bill)
Student loans: $87
Other debt: $725
Gym: $45

Repay myself for car purchase: $400

Total expenses: $1969

Good News: Well within budget in every category.

Bad News: Apparently I haven't learned any lessons from my January Spending. I am still eating bad-for-you food products that come out of a box and not out of the earth. @#$&!

Sunday, March 2, 2008

March Madness on Free Money Finance

Oh man, how come so many people write so well?! I'm starting to get an inferiority complex here.

Hurry on over to FMF to read and vote for the latest and the greatest posts from the past few months. I submitted my Minimum Wage post and would love to get your vote! (In fact, I would really really really love it. Thank you!)

Some of my favorite picks from Round 1:

  • Saving Money by NOT Changing your Own Oil - Many people believe they are saving money by changing their automobile's oil themselves. Are they really? Others believe they can only be sure the job's done right if they do it themselves. What's the truth? Let's find out...
(Yay! Someone's giving me a financial reason to avoid learning how to do that!)

  • Your First Million Dollars - To plan to be rich, it takes just that . . . planning. Becoming rich is hard work that requires a great deal of self discipline, basic money management skills, goal setting, focus and diligence. This post breaks down in very simple terms how to build wealth in an easy to follow step-by-step process.
(The charts here got me all excited. Compound interest rocks.. specially after you hit a million dollars!)

  • A little-too-late advice on building wealth - Well, we're all stupid. Some of us stupider than others, but mama always told me stupid is as stupid does. If you can read this list and you haven't messed up all of these points already, you may find a way to destupidify.
(When I can admit I'm being stupid, I will happily take advice to destupidify. I have much to learn.)

  • Personal Finance Is Like Learning to Ride a Bike- There are a lot of extended analogies in personal finance writing - budgeting is like dieting, money management is like football, debt reduction is like a snowball rolling down the hill - but I haven't seen one comparing personal finance to learning to ride a bike. Both personal finance and bike-riding are intimidating to newbies, but everyone can learn how by starting with the basics. This article draws parallels between basic biking skills and basic personal finance principles, hopefully making personal finance more accessible to everyone.
(Outstanding post! Analogies are great and this is one of the best I've come across.)

Help me get to the next round dear readers! And be sure to visit all the other great bloggers I haven't mentioned here.

I Need $2000: Update

A few weeks ago I talked about needing (or wanting) $2000 for a trip abroad this summer. I had decided that I wouldn't compromise my savings goals and I wouldn't overdraw from my emergency fund and certainly not put it on credit. I outlined ways that I could gather together the money from miscellaneous sources and found that I could only come up with $1600. Now, $1600 is pretty good but I was still short $400. At that point I decided to leave it up to the Universe to deliver.

And boy, did it deliver!

I did my taxes this weekend and it turns out I am getting a sizable refund this year- to the tune of $2200 (and that's not including the economic stimulus rebate). Last year I owed $1500 so this time I wasn't counting on much of a refund. Thank goodness for rental property depreciation and itemized deductions!

One might argue that this isn't really the Universe's doing, it's just me not being fully aware of my financial situation. That's ok. As long as it's a pleasant surprise to me, I will accept it as a gift and rejoice. Yay!

Thursday, February 28, 2008

Salary Negotiations: More Money For Me and Savings For My Employer

We renew our contracts in May. It may be a little early for me to be thinking about salary negotiations right now but I had an idea recently that's got me all excited.

I have mentioned before that I love my job. I also happen to love the people I work with and for. I believe strongly in this organization and I want them to succeed. I know a little about their financial situation and am well aware that they can barely afford the salaries they pay us. On the other hand, I am also at the point in the mental game of money that I am no longer willing to settle for a pittance for my efforts.

What I want is a win-win situation. I don't want to overburden the budget of this organization, and I want satisfactory compensation.

I have a pretty good personal budget that is easy for me to follow. After I pay off my debts this year I am going to have a lot more money on my hands each month that I can save. I was trying to figure out a way to put that money into a retirement account for some tax benefits and I thought of my 403b. (A 403b is similar to a 401k but is for certain non-profit organizations. Any funds deposited are tax deferred, i.e. I won't have to pay taxes on the deposits or the gains until I begin to withdraw at retirement).

Unfortunately I am already making the maximum employee elective contribution of $15,500 so I can't put any more money in. However, my employer is allowed to add money into the 403b beyond my contribution max. Currently my employer does not offer a company match to our 403b accounts.

If I can negotiate a lower salary amount but request a company match, I can keep my overall compensation exactly the same but still come out ahead because I won't be paying a chunk of that money in taxes.

Here's the part that really sweetens the deal though- this package can save my employer money as well. They will not have to pay FICA taxes on the amount they contribute to my 403b.

I can go one of two ways with this- I can help my employer out by keeping my total package the same but benefiting from the tax savings, or I can ask for a higher total package that keeps my employer's outlay the same but gives me even more benefits. Either way, I come out ahead without adding any extra burden on my employer.

I will have to check with our 403b administrator to see if coming up with this individualized package for me is going to have any negative ramifications on the whole system. But apart from that, I love this idea!

Can you spot any possible pitfalls or glitches in my reasoning? I would love to hear your thoughts... please comment!

Wednesday, February 27, 2008

Carnivals and Choices

I've had a slow month of posting and I did not submit any articles to carnivals this week. However, I have been reading through the fabulous posts at Carnival of Money Stories at Collecting My Cash and the Festival of Frugality at No Credit Needed. I think Carnivals are a great way to find new blogs and new perspectives.

I was struck by a number of articles that reminded me of the power of choice. The value I put on choice and individual empowerment and responsibility runs through most of my posts (if it doesn't then I need to become a better writer because I'm certainly thinking about choice whenever I'm writing about money)

Cash Money Life describes an instance where he had to make the choice between what is is right and what is easy.

Small Cents tells us about a friend who is having trouble making the choice to get out of her financial mess in The Grass is Browner on the Other Side of The Fence.

The Wastrel Show has a detailed article about how she and her family set priorities and now live debt free.

Smart Easy Money argues that you don't have to judge someone for the choices they make. Those choices may not work for you but they may be perfectly appropriate for them. Read her thoughts on why she doesn't think living a frugal life means being anti-luxury in Consumerism vs Frugality.

And finally, Quest for Four Pillars gives us an example of how luxurious our lives can actually feel if we choose to take on a different perspective in Living the Good Life as a Custodian.

There are many many worthy articles at these carnivals so be sure to check them out!

Tuesday, February 26, 2008

What Got You Into Credit Card Debt?

From what I can gather, credit card users fall into two main categories:
  • Those who use credit cards as a tool: they pay off balances every month and collect rewards, or use low APR offers to make money, and they like the organizing features of credit cards that can simplify finances.
  • Those who use credit cards as a crutch: they carry a balance and pay interest because, for one reason or another, they were unable to have access to personal cash when they needed/wanted it.
What are the folks in this second category putting on their credit cards? I am really curious. Sometimes I am just appalled at the number of people who are deep in credit card debt and I just can't understand how they could let it get to that point. I am tempted to assume that they spend on "frivolous" things. Am I right? Am I wrong?

The absolute foundation of personal finance is to spend less than you earn. If you spend more than you earn, then you're in debt. If you spend as much as you earn, then you're fine until something unpredictable happens, and then you're in debt. If you spend less than you earn, you will probably be ok unless you get hit by a serious emergency.

So, what's behind these huge credit card balances? Here's what I've been able to figure out:

I can understand the following expenses, although I do think almost all of them can be prevented.
  • Healthcare costs: If a big chunk of your credit card debt is on hospital bills etc., then you were either going without insurance or were under-insured. My cousin recently had a crisis situation with her toddler needing neurosurgery after a fall while they were in the middle of a move, two weeks before their new plan kicked in. Yikes! They set up a payment plan with the hospital and the miscellaneous health care professionals. No credit card needed.
  • Living expenses when you've lost your job: This is why an emergency fund is so important. If my emergency fund was still small and I lost my job, I would be out there picking up hours even at minimum wage to make ends meet while I hunted for a better job.
  • An unexpected home or auto repair: Yep, two words: "emergency fund"

Now, I don't understand why one would carry a balance for the following:
  • Wants: electronics, gifts, books, dining out, travel
  • Standard living expenses: groceries, utilities, phone, car insurance, clothing
Both these categories, wants and standard living expenses, should be paid for by your income. These are things that can be planned for. If you want them and there isn't enough money coming in, earn more money. If you're putting these items on your credit card and paying interest, then there is a fundamental flaw in your understanding of income. Credit cards are not income.

So I want to know, when the media talks about the huge credit card debt statistics, what category are they referring to? The people who are using credit cards as a tool? Those who are using it as a crutch to get through tough emergency situations? Or those who simply don't know how to manage their money enough to not spend more than they earn?

Any ideas?

(In case you were wondering, my credit card debt is all at 0% and will be paid off before I have to pay interest. I used it for doing some home improvements when I purchased my house. I have always had the money to pay it all off if I chose to do so.)

Monday, February 25, 2008

Why My House Is An Asset

Ever since Rich Dad, Poor Dad by Robert Kiyosaki came out, there has been some confusion about the definition of asset and liability. Flexo explains this succinctly on this comment at Lazy Man and Money
An asset is something you (can) own. A liability is something you (can) owe. Kiyosaki wants to make up his own definitions, but a “Kiyosaki asset” is simply a cash-flow-generating asset and a “Kiyosaki liability” is an expense-generating asset. It’s one thing to say that expense-generating assets should be *treated like* liabilities, i.e. eliminated wherever possible, but it’s another thing to say they *are* liabilities.
I admit, I read Rich Dad, Poor Dad and it changed my whole perspective on how to approach money. I love the idea of money working for me rather me working for money. How revolutionary!

In Kiyosaki's opinion, your residence is a liability because it generates expenses. There's the mortgage you have to pay every month, there are home repairs, maintenance, and property taxes. That's quite an outlay. Depending on the market you are in, your home may be appreciating in value but that equity is not liquid. You cannot access it unless you sell the house or take out a loan or line of credit.

Even if you don't go by Kiyosaki's definition and refuse to call your house a liability, it's still a pretty clunky, cumbersome asset. Is it worth all the work?

I bought a house two years ago with the sole purpose of decorating. I had been renting for my entire adult life and I was tired of white walls and boring kitchens. I wanted to get creative. Oh yes, my home buying decision was no walk down investment lane. But, being the frugal person I am, I did my research and got a great deal on my property and on my renovations.

As a renter I paid about $550 a month for a 500 sq foot apartment. I had to step out into the elements to do laundry. I had to climb up and down stairs to get to the parking lot.

Now I pay about $850 a month for a 1200 sq foot house with a yard and a private driveway. I have all the creative freedom I want. My laundry is on the second floor right next to my bedroom (!!!!!!) and my house is beautiful.

Over half of the $850 is tax deductible because it covers interest and property taxes which saves me about $100/month. That leaves me with an average monthly cost of $750.

I live in a part of the the country that totally escaped the housing bubble. In my neck of the woods property appreciation just about keeps up with inflation. A home is not a nifty retirement savings vehicle here.

So What Makes My House An Asset?
According to the standard definition of asset, my house is one simply because I own it (not fully yet because I have a mortgage, but I do have some equity in it). But my house is also an asset by Kiyosaki's definition because I found some roommates. I got roommates who cover the remaining $750 worth of payments. There are still some housing expenses that I have to pay but I am still way ahead of where I was when I was a renter.

I call my house an asset because it generates some income for me that has improved my bottom line. I like those kinds of assets. Money working for me.

Sunday, February 24, 2008

Why Do People Hate the Word 'Budget'?

I've been trying to figure this out. The word "budget" seems to be one of those heavy words, full of negative connotations for many many people. Why is that? It's just a word. It doesn't have any more power than you give it.

What's So Bad About a Budget?
Where does this strong reaction to the word budget come from? Is it because of early life experiences and imprinting from parents who were stressed out about money? Does it make you think of disappointment, deprivation, and squashed dreams? Does it make you think you are poor? Does it make you afraid of money?

Why I Love Budgets
I love having a budget. It's my map, my plan, my path to my dreams. It reminds me that I want something bigger than the little impulses that pop up during the day. It puts me in control of my destiny. My budget removes the fear that I do not have enough. With my budget I can see clearly that I do have enough to pay my bills and buy the things I need. If it looks like I don't have enough in one category then I can move numbers around until it works. And in the extreme cases where there really isn't enough money coming in... then my budget points it out and I can start taking steps to increase my income. That makes me feel powerful, not poor.

Focus on the Positive
I think people often use their distaste for the word budget as an excuse to avoid dealing with the reality of their situation. So if the word is turning you off, change your attitude towards it. Figure out what unpleasant images and feelings it brings up for you and compare them to what the word actually means. My description of why I love my budget is the polar opposite of why I think people hate budgets. The same word brings up exactly the opposite feelings for me.

A quick-fix short term solution is to give it another name that doesn't bring up the same feelings of dread. But don't be fooled, you will eventually have to look those scary feelings in the eye and tell 'em to scram. There, add that to the list of courageous things one has to do on the path to financial freedom.

Whether you call it budget, spending plan, cash flow plan, goal, or even Frank, ultimately we're talking about being aware of the money that flows through our hands and consciously directing that flow. We're talking about living on purpose.

Wednesday, February 20, 2008

Of Courage and Carnivals

Once again, I am awed by the number of bloggers out there who share such fantastic information and insights with the rest of us on our personal finance journey. I've been perusing three carnivals this week and thought I would pick out a few articles that highlight something I've been thinking a lot about lately: courage.

It takes courage to make changes in your life.
It takes courage to step out of your comfort zone.
It takes courage to look at yourself and admit you've been making mistakes.
It takes courage to keep pushing through even when things are really hard.

Congratulations to all of you who are working courageously towards your goals.

Where I Need Courage

The gaping courage-hole in my life is my resistance to stepping out of my comfort zone. For some reason I have decided that most DIY projects are too much for me. If I could just muster up the courage to learn a few skills and not be so afraid, I could definitely save a few hundred more dollars every year.

At the Carnival of Money Stories, Getting Out Of Debt writes about a simple car repair that I don't yet have the courage to handle. I've Paid For This Twice Already talks about a simple dryer vent repair that I would have spent way too much money on.

At the Festival of Frugality, A Dollar a Day asks what unnecessary expense is worth it to you? I have a few that I could give up if I had the courage to deal with the inconvenience of creating and adjusting to a new routine.

Big Courage
There are some things that require tremendous courage. It is when we tap into this "big courage" that we begin to find out what we're really made of. These posts from the Carnival of Personal Finance might give you some food for thought .

My Two Dollars reminds us that we are not our "stuff". How many of us base our identities on our possessions because we're too afraid to look ourselves squarely in the mirror?

A Dollar a Day is reflecting on some emotional issues surrounding money. As women, many of us have been raised to reject our power and it is going to take a lot of courage to reclaim it.

I've only pulled out a few articles here but I highly recommend that you check out the rest of the great entries at the following sites:

Carnival of Money Stories at College of Cash
Festival of Frugality at Mighty Bargain Hunter
Carnival of Personal Finance at The Financial Blogger

Thursday, February 14, 2008

What Am I Going to do About a Roth IRA?

One of my goals for the year is to fully fund a Roth IRA. I have never had a Roth so I need to do a little research to figure out the why what where when and how of it.

Why a Roth?
If you've been reading for a while, you know that I liquidated some old stocks just before the market tanked with the intention of paying off some debts and funding a Roth. But why a Roth IRA instead of a traditional IRA? I first heard about the Roth on the radio back in 1998 when I was working in the back room at Borders. I was obviously making very little money at the time and had nothing left over to consider retirement planning, but even then I recognized that this was a good deal.

What's so great about a Roth? You pay taxes on that money now, put it into your account, then all the growth on it is tax free. And as a bonus, you can take the money that you already paid taxes on out of your account at any time (after 5 years) without any penalties. (Read about some restrictions here).

This can be huge. If you have a long time before retirement, then your growth potential is fairly high. This means that under a traditional IRA you would have amassed a substantial chunk of money that you will eventually be paying taxes on. With a Roth, you've paid the taxes on the smaller amount, and hopefully at a time when your tax bracket is lower (I for one am hoping to increase my income and consequently my tax bracket as time goes on. This may not be the case for those of you who are already making a lot of money). That's the simplified explanation that makes sense to me. If you want to get into more detail and compare the pre-tax value of this money, play around with this calculator at moneychimp. Also read Roth Accounts Are Bigger at Fairmark.

What Should I Invest In?
Ah, the million dollar question. There are as many choices as there are grains of sand in all the beaches of... well, not exactly but you get the picture. The key here is to figure out what my parameters are.
  • I don't have the time or interest to heavily research stocks and individual investments.
  • I want to keep my finances simple.
  • I want a decent rate of return that will beat inflation.
  • I want risk to be accounted for as I get closer to retirement.
There are two categories of investments that fit these parameters. Index funds and Target date funds.

Index Funds are mutual funds that invest in companies listed on any of the major market indexes such as the S&P 500. The advantage of this type of fund is that your returns will essentially match the market without you having to do any work. The disadvantage is that you might miss out on the high gains that could be possible from a more actively managed portfolio and that the market could be falling in the years you want to withdraw money. But then again, they say you can't time the market right? Index funds are easy and typically have very low fees associated with them. However, I am anxiously awaiting a post by Jacob at Early Retirement Extreme about why one should not invest in an index fund.

Target date funds are a new breed that have become popular in the last few years. Once you select your target retirement date, the fund automatically adjusts its allocation of stocks, bonds, and cash as the years pass. In the early years the fund will be more heavily invested in stocks for aggressive growth, and will shift towards safer bonds and cash as you get closer to and into retirement. The main advantage of a target fund over an index fund is the fact that your portfolio is safer when you are close to retirement. You won't be as affected by a sudden market drop like we saw last month if your holdings are mostly bonds and cash. Read why target funds may not be for everyone at Kiplingers and their more recent article advocating target funds.

At this stage I am leaning towards a target date fund for my Roth rather than an index fund.

Where should I Invest?
I'm not going to work too hard on this one either. I want
  • low fees
  • an easy online interface
  • a solid reputation
Vanguard fits that bill for me. I used to have an index fund with them and I am familiar with their website and their service.

When and How Will I Invest?
This sounds like a simple enough question. The answer however may not be quite so simple. I have two options:
  • Invest in a lump sum. This is not possible for everyone, but I do have the money sitting in my ING account and I can invest the maximum within a week or so. That will get it out of the way and I won't have to think about it for the rest of year. I won't be tempted to spend it on other things that may seem more important in the moment such as traveling abroad this summer.
  • Invest a certain amount each month. If I have the money, why wouldn't I invest in a lump sum? That's the other million dollar question. I wouldn't have considered this as a real option if the market hadn't suddenly decided to wobble in January. With all this talk of a possible recession and an uncertain market, it is likely that stock prices could continue to fall over the next few months. I could take advantage of a strategy called dollar cost averaging. If stocks prices do continue to fall, then this would be a good way to get in on the sale prices. Of course, I can't predict exactly what the market is going to do, but with the way things stand, this might be the year when dollar cost averaging comes out ahead.
What's going to work for me? I think I will probably go with the psychologically simpler method and just do a lump sum investment.

Here's what I have decided: I will put a $5,000 lump sum into the Vanguard® Target Retirement 2035 Fund.

Okay wait! Being able to summarize all that thought and research into one sentence just seems wrong!

Tuesday, February 12, 2008

Carnivals Abound

I've had a very busy week of not posting. I am a little taken aback at how quickly this week has flown by. I need to make some sort of commitment to myself about posting more frequently. More on that later!

In the meantime, if you're looking for useful personal financial stuff to read, head on over to some of the carnivals published today:

Lazy Man and Money has put together the Festival of Frugality #112. There are links to a great set of articles about frugal tips, romance, grocery spending, travel, money management, health, and entertainment.

Mrs. Micah is hosting this week's Carnival of Money Stories. This carnival is a good resource for learning about people's personal experiences on their journey to controlling their financial lives.

I also discovered The Random Yak. They hosted the Showcase Carnival (of new blogs) yesterday. There are numerous posts worth reading, and some new blogs I am tempted to bookmark! I enjoyed this personal story by Tiffany about taking responsibility for missed opportunities.

Happy reading!

Tuesday, February 5, 2008

January 2008 Blog Statistics

Being new to the blogging world, I am very intrigued by the history of other blogs I visit. I usually dig into the archives and read their first few posts. I also hunt down any posts about how their blog has grown.

I have no idea where my little blog is headed. I began it on January 4th because I was feeling inspired by my financial goals for the year and thought it would be nice to write them down. I had never been a regular reader of a blog before. I had heard of blogs and read a few posts here and there but really didn't know much about the world of blogging. And what a world it is! I have learned SO much in the past month and continue to be amazed by the quality and quantity of blogs out there.

In case my blog continues to grow, and I continue to feel like writing, I think it will be nice to have a record of where it has come from. And if not, it might still be of interest to the curious readers like me out there!

So here is the first in a series (hopefully) of posts about my blog statistics.

January 2008 Blog Statistics

Age of the blog: 28 days
Number of posts: 19

The data below is from January 7th- January 31st unless otherwise noted:

Number of visitors: 954 (thank you ALL for visiting!)
Pageviews: 1741
Average pages/visit: 1.82
Bounce rate: 68.45% (yikes!)
New visitors: 72.85% (nice, over 25% of visitors came back!)
Subscribers (that I know how to track): 14

Most visited page (other than home): 324 page views How Would I Live on a Minimum Wage Income

Highest single-day traffic: 111 visits on January 23rd mostly to What Can I Buy on a $200 per Month Grocery Budget?

Top Traffic Sources (thank you!!)
Frugal for Life
Moneycentral on MSN
Early Retirement Extreme

Organic search: 35 (I'm surprised I showed up at all!)

Blog expenses: $0
Blog income: $0.33 (yes, that's 33 cents) from Inbox Dollars referrals. This was a nice surprise because I didn't come into this with any thought of making money... but now, who knows? Every penny counts, right?

  • Got mentioned on Moneycentral! (Thanks to Jacob at Early Retirement Extreme for bringing it to my attention)
  • Almost got a thousand visits this month... maybe if I'd had a full 31 days I may have hit that milestone.
I have never considered myself a writer- quite the opposite in fact. I am very surprised that I have any visitors at all. I like these statistics! Hopefully these numbers will keep me motivated about posting.

Many thanks to all of my readers!

Sunday, February 3, 2008

Top 10 Things I Do To Save Money

I just read a post at Family CEO listing 25 things they do to save money. Apparently Frugal for Life has been gathering similar lists from people so I thought I might try it out.

I'm only going to list things that I have consciously added to my repertoire and not behaviors I "was raised with". Unfortunately, I couldn't come up with 25! So here are 10 things I do to save money- or more specifically, to cut costs.

1. Reduce
. Just use less of everything- particularly household supplies like detergents and toiletries.

2. Reuse
-my stuff. Lose the habit of using disposables. Real towels instead of paper towels, china plates instead of paper plates, reusable containers instead of plastic baggies. This also includes ceasing to think of clothes as disposable.. they do not need to be washed every time you wear them unless they are soiled.

3. Reuse -other people's stuff.
  • 3a. Buy books used online. But only after having read them already (borrowed or speed-read at the bookstore) and deciding that they will be referred to often in my personal library. (I do frequent the bookstore to look at new books. Because I read so many books there I do make a point of buying some at full price from them occasionally. I do not have any ethical issues with this though I am sure some people may.)
  • 3b. Find a good used clothing store and shop there. There's a Goodwill store in Arlington, VA that I always stop at when I am down in that part of the country a few times a year. This city has plenty of well-off people who donate quality clothes they have never worn. I can go on a crazy shopping spree for $20.
  • 3c. Check out craigslist or for used furniture etc.
4. Use a price book when grocery shopping.

5. Keep my hair long so I don't have to cut it so often. If I was particularly fashion conscious I might consider learning how to cut my own hair but I don't see that happening any time soon. The long hair idea may not work for most men out there but it's easy to cut your own hair with electric clippers if you keep it short.

6. Find a place to live that is within reasonable commuting distance to work. I live less than 5 miles from work.

7. Live with a roommate and cut down on housing costs. (This depends on being able to find a suitable roommate though)

8. Plan meals and eliminate wasting food because of spoilage.

9. Decide what I am looking for and research numerous options before making a purchase. Step 1: Figure out my real motivation for wanting the item Step 2: Figure out what aspects are not negotiable Step 3: Shop around and see what's available that will meet my needs/desires. I am often surprised at what I have found.

10. I don't watch cable!

Saturday, February 2, 2008

What My January Spending Taught Me

It's one thing to have a spending plan and quite another to stick to it. Ok this concept is not news to me, but I was reminded of it once again during January. If I just look at the numbers, I did quite well with my budget. I stayed within $20-$30 of all my major spending categories, spent less than I earned, and saved everything I intended to. The problem is that I can't just look at the numbers.

The information hidden behind the numbers is what is going to have a big impact on me and the world in the long run. And it's not pretty.

A Closer Look at My Gas Spending
I wrote a whole post on how I intended to maximize my gas mileage. I came in just $2 over budget, which I think is great considering I still have enough gas left in the car to go another week or so. But I didn't do the things I planned. If I had followed my own advice, I would have gotten better results. Why does that matter? After all, I stuck to my budget didn't I?

It matters because in this day and age, I have to be careful with my fuel consumption not only to prepare myself for rising prices, but because even the smallest steps will impact the environment. I forgot about that. A gas budget is going to be moot if we have no environment to live in.

A Closer Look at My Grocery Spending
This one is shameful even though my numbers here are pretty phenomenal. $135 at grocery stores including food, tp, toothpaste and hair color, $65 in eating out, and I even got a haircut and gave the lady a 35% tip. Plus I have plenty of food left over for a few more weeks. This looks good on paper!

The problem is I forgot to put my health into the equation. I have written about the importance of maintaining your health into old age and even wrote up a skeleton menu of healthful foods and how they would fit into my budget. But I didn't do all that stuff! In fact, this has been one of the most preservative-laden months I have had in a long time. Canned soups, frozen dinners, too much ice cream, and even drive-thrus at unmentionables. Yikes!

Why did this happen? I know a few things about myself that I failed to make accommodations for.
  • Over the past year or so I have developed a low tolerance for hunger. If I am hungry I will eat right away. All proactive thoughts about health and nutrition lose their power. In order to accommodate this, I should keep healthful foods on hand at all times. I didn't do that.
  • I do not like to cook. If I am tired after a long day the last thing I want to do is put together a meal. I avoid it like the plague. I need to give myself more time to prepare meals and also have meals all set to go for those late evenings. Again, I know this but I failed to do it.
  • I can't say no to sugar. If I put that first bite in my mouth, I'm not stopping until that food item is completely gone. I can't bring home more than a single serving of dessert. I haven't found my off switch yet. Guess how much ice-cream I ate in three days because I purchased a half gallon of it. Yeah, too much. Some people don't know how to use credit wisely, I don't know how to use sugar wisely. It's best if I maintain strict control of my access to it.

So What Did My January Spending Teach (or remind) Me?

It reminded me that I must keep all of my priorities in balance. If I am so busy focusing on one thing that other priorities suffer, then I need to make some adjustments. Sometimes the adjustments are simply a matter of being more aware and renewing my commitment. I can do that. But if I want to really make a difference, then I have to look closely at why things are falling behind and come up with some strategies to prevent that.

My gas spending I think simply needs a renewed commitment. The grocery spending however is going to require the additional strategies outlined above.

Here's hoping for a budget-wise, healthy, and environmentally friendlier February!

Friday, February 1, 2008

January 2008 Budget Update

It's already February! Time flies when you're having fun.

Here's how I did with my budget this month:

Earned Income after taxes and withholdings
Job 1: $1530
Job 2: $512
Total income: $2042

Housing/utilities/internet: $365
Transportation: $82.68 for gas (still have half a tank left, can go for another week)
Groceries and Supplies: $221.63 (have enough food left for another two weeks)
  • Grocery stores: $134.84
  • Restaurants: $62.53
  • Haircut: $19.95
  • Post Office: $4.31
Transfer to "Save to Spend" account: $100 (also took money out from this account to pay for car insurance premium)
Student loans: $87
Other debt: $725 ( 0% to my sister)
Gym: $45

Repay myself for car purchase: $400

Total expenses: $2026.31

Good News
  • The tenants at my rental property just paid their rent.. on time.. and they haven't been calling with complaints and problems! I was a little concerned that they'd be high-maintenance but I was wrong! I love being wrong about stuff like this.
  • My 403b withholdings are all set up and I've already contributed $1290 this month. This should continue for the rest of the year.
  • I liquidated some old investments before the markets fell. I have already used $5000 to pay off some of my credit cards. I am holding the other $5000 until I open a Roth, which should be next month.
  • My remaining debt breaks down as follows:
    • Sister 0%: $8525
    • WaMu 0%: $1250
    • Advanta 0%: $2063
    • Student loans: $835
  • February is a short month. I have enough food to last me a couple more weeks and enough gas to last another week. I have a week off which I may be spending with my family (even more free food!). I expect my living expenses to be fairly low next month which should allow me to save up for my summer trip or eat out a few more times :)

Monday, January 28, 2008

I Need $2,000

Just when I had my budget or 'spending plan' all figured out, I find that I need another $2,000. Actually, I should say I want another $2,000.

A dear cousin recently got engaged and the wedding date will likely be set for the summer. Weddings in my family are a fun and fantastic affair. I will get to see relatives from far and wide and will feel all kinds of joy and mush. Good stuff. The catch is that they live oversees, as does much of my extended family.

Round trip airfare during peak travel season and some (very limited) spending money is going to run me just short of $2,000. Even though that's a pretty hefty price tag, I would like to go very much. I haven't been back for about five years and the timing feels right. This is one of those quality of life things that we earn money for.

What's a girl to do?

  • I have made a commitment to max out my retirement accounts and to retire my consumer debt this year. Those funds are not to be compromised.
  • I will pay for this trip in cash and not credit. (Fortunately I am not in the habit of turning to credit without great deliberation so this won't be a big temptation.)
  • I must have the cash available before the trip- about July 2008
  • I believe in the importance of an emergency fund so I will not drain that account (but using a small portion of it is ok with me).

Possible Sources of Money
  • I wrote about sources of found money recently and discovered that I could easily accumulate about $1,000 this year from random other sources. I think I can reasonably expect to have about $400 of that by July.
  • If things go as scheduled, I might get that economic stimulus package tax rebate by then as well. Funny, I hadn't expected to spend it on consuming "stuff" but I guess airfare falls in that category. A $600 rebate brings my total up to $1000.
  • I could put $500 from my emergency fund towards this bringing the total up to $1500.
  • There is some built-in wiggle room in my budget. I can make a commitment to save an extra $20 each month towards this trip for the next 5 months (=$100) which would bring me up to $1600 by July.

Something's Gotta Give

I am not going to compromise on my savings goals, my debt reduction goals... or my travel desires. According to the numbers above, this isn't going to work. Something's gotta give!

The savings, the debt, or the travel? Oh wait, I forgot to put one more thing into that equation. The Universe. The Universe gives.

Will the Universe give here? Can't say for sure. However, if past experience counts for anything, I know that when I am doggedly (and happily) determined to do or have something, I pretty much always get it.

So, for now at least, the last $400 I need in order to reach the $2000 amount needed to fund my trip, will go under the category of "Generosity of the Universe".

But what happens if the Universe doesn't deliver? Then I won't go.

But the Universe always gives. As long as I know how to joyfully receive it!

I will keep you posted on how this all works out.

Wednesday, January 23, 2008

$6 an Hour for Clicking Emails?

One of the ways I accumulate a few extra dollars each year is through online programs such as Inbox Dollars and MyPoints.

These programs seem to be designed mainly to get you to shop through their websites so they can accumulate their own affiliate rewards. The way they entice you is by offering you a share of the rewards by giving you a rebate either in the form of cash back or points. However, the thing that works for us frugal folks is that they also give out small amounts of rewards simply for opening the advertising emails they send you about their affiliates.

I recently mentioned these programs in my post Found Money. Jacob (who has a fantastic blog if you haven't already seen it) wondered if clicking these emails was worth the time it took. I decided to find out.

Here's what I discovered:

It took me just under one minute to go through three emails. This involved opening the message, clicking on the one (or two) required buttons to confirm that I had read it, and then deleting the message. I do use tabbed browsing with Firefox so while the advert was opening in another tab I was easily able to move on to the next message in my inbox.

At Inbox Dollars my earnings seem to be averaging about 3.5 cents per email read.
At the rate of 3 emails per minute, that's 10.5 cents per minute or $6.30 per hour.

At MyPoints each email earns 5 points.
At the rate of 3 emails per minute that's 15 points per minute or 900 points per hour.
What's the dollar value of 900 points? See this discussion at I've Paid For This Twice Already
for some interesting details. If I go with the most expensive redemption value (which means I could earn more) then I can get $1 for every 150 points.
So if I have 900 points, that's worth $6

Isn't that interesting? It looks like my hourly rate for clicking emails is more than the federal minimum wage.

By the way, the Inbox Dollars links here are referral links. You can get $5 for signing up (and after you reach a certain earnings level I will get $5 too... so thank you for joining!)

  • I use a separate email account for these kinds of programs so their emails don't clutter up my regular inbox.
  • I used tabbed browsing with Firefox (I believe the newer versions of IE have that too) which makes it easier to zip through the emails.

  • I'm not a shopaholic so I don't get tempted by the offers. Many of the offers are from your standard retailers and the deals can be pretty good.
  • If you are already planning to buy something and can't get a better rebate froma different program, you may want to shop through these sites and earn rewards a LOT faster than just by clicking their emails.

Who is Responsible for You?

Meg at All Financial Matters does write some wonderfully provocative posts! I just read her article Take Responsibility for Your Money Problems. I agree with almost everything she says.

But then again, I am a firm believer in the concept of choice, and that we all have it in spades. Every moment of every day, I am making a choice. I can choose to act a certain way, to react a certain way, or to not act at all. The more conscious I am of the choices I am making, the more I am able to control my 'destiny'.

Who is responsible for my destiny? My parents? My employer? The government? The markets? Luck? Is that what I want?

Destiny is not a matter of chance, it is a matter of choice;
it is not a thing to be waited for, it is a thing to be achieved.
William Jennings Bryan

Who's responsible for your destiny?

Tuesday, January 22, 2008

What Can I Buy With a $200 per Month Grocery Budget?

I have mentioned in a couple of previous posts that I plan on a grocery budget of $200/month this year. This budget needs to fit the following parameters:
  • It is for one person only (I am not trying to feed a family on this budget)
  • It must include as many whole foods as possible and minimize prepackaged "food products"
  • It must include funds for household supplies (toilet paper) and toiletries (shampoo etc.)
  • It must include funds for occasionally eating out.
Is that a tall order? I don't think so. I have come across a number of posts and forums where people claim to feed a family of 4 on under $200/month (I'll have to hunt around for those links and get back to you). Some resources that have been recommended are the Grocery Game and Coupon Mom. I haven't used either of the services so I can't say how useful they are.

So how do I intend to pull this off?

  1. I know my eating habits and preferences.
  2. I am willing to put in the time to prepare my food at home (I think!)
  3. I am not an impulse snack shopper; I shop with a list.
Here's the breakdown for the month:


Meats: $50
Chicken/red meat: $20
Fish: $30

Vegetables: $40
Salad greens: $15
Onions: $5
Tomatoes: $5
Potatoes: $5
Misc. Seasonal Vegetables: $10

Grains/Beans/Lentils: $15 (super cheap stuff and can provide the bulk of your calories)
Rice: $5
Lentils and beans: $5
Oatmeal (old fashioned): $5

Fruits: $20
Berries: $10
Seasonal fruit: $10

Dairy: $30
Cottage cheese: $15
Plain yogurt: $15

Desserts: $10

Oil/Condiments/Spices: $10

Household Supplies: $10

Dining Out: $20

No alcohol, cigarettes, or recreational drugs needed.

When I lay out the numbers like that, it doesn't look like that's a lot of food. However, these numbers are based on actual prices from my local grocery store, and a skeleton menu plan. I didn't do any comparison shopping to find these prices.


I find a skeleton menu plan very handy. I decide how to balance my meals and then just do slight variations over the weeks. Here's what a typical day would be like for me:

I cup slow cooked oatmeal (takes 5 min in the microwave)
I cup cottage cheese
I cup chopped berries

3-4oz meat/chicken/fish (takes 5 minutes to grill in the toaster over, or I can stew up enough for the week)
salad greens
cooked vegetables (spinach or potatoes etc.)

3-4 oz chicken/meat/fish
rice (bless the rice cooker)
a spicy condiment

Ice cream or a piece of chocolate

There are usually some left-overs from the meals so I can have a couple of snacks during the day as well.

Possible Hurdles
  1. Laziness (ahem!). If I'm not careful about planning sufficient time to prep my meals, then I will be sorely tempted to resort to using prepackaged items.
  2. I may want to hang out with friends at restaurants more often than I am planning. I will have to come up with strategies to deal with that.
  3. I've been reading The China Study and am wondering if I need to rethink the amount of animal protein that I have in my daily diet. After I spend some time mulling that over, this whole menu might change. Hmmm.
Household supplies
I am not a big consumer of household products. My biggest expense in this category is toilet paper. I don't use use chemical cleaners or paper towels. Shampoo and toothpaste last quite a long time. I really don't have to lather, rinse, and repeat. Laundry detergent also lasts a long time. Which TV ad convinced moms in the 1950s that you can't wear your clothes a few times before you wash them? How absurdly wasteful!

Saturday, January 19, 2008

Being Organized Can Save You Money

I admit, I enjoy organizing. I like things to look neat and orderly, I put things away and my home is beautiful (to me anyway). But I wasn't always like this. In fact, I was quite a slob. Too much clutter, too much paper, too much stuff, and not enough getting done.

When I first started working, I made very little money. I had to learn to live on a small income really fast. Getting organized, and learning to love it, was one of the best things I did.

Here are some of the ways that being organized saves me money:

No Late Charges $$
I don't lose bills and statements in a pile of mail and forget payments. I never have to pay late charges, overdraft fees, or ATM fees. I know how much money is going into and out of my checking account, and when.

Quick tip on how to handle mail: when you pick up the mail, walk directly to your recycling bin (with a table next to it). Open each piece of mail, tear up junk or useless items and toss them in the bin right away. Save only the one or two sheets needed from your statements or other important mail. With a highlighter mark the due date and put it on your desk for bill-paying day. Don't have an intermediate holding place for all your mail between your mailbox and your desk unless you religiously schedule in time to deal with mail.

No Unnecessary Shopping $$$$
A good storage system saves tons of money by eliminating unnecessary spending. I know a lot of people who simply toss a new purchase into a catch-all closet or drawer because they found it on sale, or it looked good... and then completely forget about it and go out and buy another one.

Quick tip for organizing storage: Use plastic drawers- they are easily stackable yet keep contents easily accessible. If my things aren't easily accessible, I tend to avoid using them. If I have to move two or three items out of the way to get to them, forget it. In your closet, hang up as many of your clothes as you can- this is easier to maintain than folding, and keeps clothes visible. I like having a visual reminder of how many things I have- cuts down on the urge to buy more stuff!

No Wasted Food $$$
Menu planning and using a price book are fantastic ways to slash your grocery budget. Menu planning eliminates impulse buys, unhealthy snack purchases, and wasted food. Maintaining a price book keeps you on track with getting the best prices for your regular purchases. Check out Organized Home for more details on how to make and use a price book.

No Last-Minute Expensive Gifts $$$
This one used to be a killer for me. Rushing out to buy someone a gift at the last minute is a sure0fire way of busting your budget. I now keep a gift box which I stock throughout the year with items I find on sale. If I were a dedicated gift-giver (which I am not), I would probably make a list of all the people I buy gifts for and note down things they would be interested in. then I would keep an eye out for those items and buy them when I found them at a good price. There is a good collection of gift giving tips at The Dollar Stretcher.

No Stressed-Out Urge to Spend $$
I do believe that over-spending is often a mechanism we use to cope with stress, much like over-eating. The problem is, it's a vicious cycle and ends up causing more stress. I also think clutter is an insidious source of stress. Read more about stress and clutter here. So, maintaining an organized home is a very good way to reduce stress and spending.

The Dollar Stretcher has a great set of articles on how to get organized on a budget. Check it out!

Friday, January 18, 2008

Brief Thoughts About the Stimulus Package

I am a little conflicted about this talk of a stimulus package. I am no economist, and actually know very little about the broad implications of federal economic decisions so I could be way off base here. However, the idea that we need to give out a rebate to people so they can start spending more makes me pause.

So, our whole economy is based on spending. How much spending? From what I have seen, things get pretty crazy when spending gets out of control. That's what's gotten us in this mess in the first place.

Maybe I just need to re-frame the issue for myself so I can feel more comfortable with this. Perhaps the idea is to get money back into circulation.

I will have to ponder this more.

Thursday, January 17, 2008

More on How to Live on Minimum Wage

My Minimum Wage post is by far the most visited page on my blog. I guess a lot of people are interested in this topic. I decided to do a little search and gather together some of my favorite posts on the net about minimum wage living.

Please add your favorite links so we can get a good list going! Keep them positive though. We're looking for things that will provide encouragement and ideas for handling a budget (or ideas for getting out of min. wage)

Ten Steps to Financial Success for a Minimum Wage Earner at the Simple Dollar
How to Live on Minimum Wage by Exjackly
How to Get Wealthy on Minimum Wage at Early Retirement Extreme
Saving on Minimum Wage at Tight Fisted Miser
Breaking the Shackles: How to Escape From Minimum Wage at Get Rich Slowly
Minimum Wage Challenge series of posts by L R Johnson
Can You Live off Minimum Wage in Los Angeles? at

Wednesday, January 16, 2008

A Moment of Gratitude

I am feeling incredulous. Incredulous that in the last ten days my non-retirement portfolio has lost all the gains it had made in the past three years.

I am feeling grateful. Grateful that seventeen days ago I made the decision to use the money in my portfolio to pay off my debts and start a Roth IRA. Grateful that twelve days ago I liquidated my portfolio.

How did I get that lucky?!

Ever heard the quote "...the moment one definitely commits oneself, then providence moves too...."?

I made a commitment to get rid of my debt and max out my retirement. I started writing a blog. I talked to the folks at work and made arrangements for my retirement deductions. I made a decision to liquidate my non-retirement portfolio in order to help me do that. I made that commitment. But did providence move and help me act just in the nick of time?

Whether it did or it didn't, I am grateful!

Here's the rest of that quote (from

Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness concerning all acts of initiative and creation. There is one elementary truth, the ignorance of which kills countless ideas and splendid plans; that the moment one definitely commits oneself, then providence moves too.

All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision raising in one's favor all manner of unforeseen events, meetings and material assistance which no one could have dreamed would have come their way.

I have learned a deep respect for one of Goethe's couplets: "Whatever you can do or dream you can, begin it. Boldness has genius, power and magic in it. Begin it now!"

-W.H. Murray

Monday, January 14, 2008

Saving on Heating Costs

I've been doing some research to figure out how to bring down my heating costs. See the collection of links at the end of the post for some good ideas.

For those who have read my previous posts, you know by now that I live in a place that gets a decent amount of snow. Even with our unseasonably warm (and whacky) weather this year, this town gets cold. And I don't like being cold.

I recently got on the budget plan with my utility company so I have a consistent payment every month. However, I have been keeping an eye on the details of the bill anyway to compare my usage this year to last. I would ideally like to bring it down, not just to deal with the rising cost of fuel but also to be a little kinder to the environment.

So, what do I already do, and what can I improve?

Programmable Thermostat
Thankfully my house has one... and I know how to use it! I used to keep the temperature at 68+ degrees when I was at home but this year I seem to be managing just fine with 66 degrees in the evenings. Here's my temperature schedule:
5am-8am 68 degrees (I hate getting out of bed into cold air, the warmer the better)
8am- 7pm 59 degrees (this is the time I am at work or running errands etc.)
7pm - 10pm 66 degrees
10pm-5am 62 degrees

Wear Warmer Clothes in the House
You'd think this was a no-brainer. I didn't like doing it because the clothes felt so restrictive. But I got a couple of large roomy sweatshirts that I now love bumming around in. I also started wearing socks around the house. What a difference that made. Can you tell I wasn't raised in a cold climate? The things one learns.

Sealing Windows and Doors
The previous owner left a cute "draft dodger" for the front door. But the back door sure lets a lot of air through. On a particularly windy day I can have quite a bit of snow inside my back door. I need to get proper weather stripping there. Newer windows throughout the house so their weather stripping is pretty good. I just need to make sure they are closed and locked properly.

Hot Water Heater
I can turn down the temperature on my hot water heater. I can also shorten my showers and use cold water in my washing machine.

I will make sure to check/replace my filter every 2-3 months.

I will add more insulation to my attic.

That's the list I can handle right now. When I feel a little more adventurous I shall tackle a few more of the suggestions that can be found in the following links:

12 Simple Ways to Save Money on Utilities (and the Planet) at Fivecentnickel

Save Money on Heating Costs at

Home heating tips to save fuel and money

Saving Money on Home Heating
at Pioneer Thinking

Eleven Ways We are Going to Save Money on Heating Costs This Winter at Blogging Away Debt

And this huge archive at The Dollar Stretcher

Sunday, January 13, 2008

Simplify Your Finances

I want money management to be easy. Yes, I like organizing and planning and reviewing... but I don't want to do it for the same subject forever.

Below are the steps I am either taking now or plan to take very soon to simplify my finances. If you scroll down to the end of the article you can find some links to other writers who have some great suggestions.

Direct Deposit
Oh the joys of not having to get myself to the bank and deposit my paycheck! Now I just need to find a way to automatically deposit the rent from my tenants. Ideas anyone?

Automatic Retirement Deductions
This is taken out of my paycheck and sent directly to the 403b brokerage account. No muss, no fuss.

One Checking Account
Everything comes into and goes out of the same account

The Orange Savings Account by ING

Maybe if I did more research I could find a simpler way to manage savings.. but I'd be surprised. I love how ING lets me have as many savings accounts as I want (there may be a limit but I haven't come close) and lets me transfer money between them instantly. And I can close them and rename them with just a few clicks as well if I start feeling overwhelmed. I have brought my savings accounts down to four:
  1. Financial Freedom: this also serves as my emergency fund. Any amount above a certain level will go into a mutual fund.
  2. Save to Spend: Here I save for quarterly or annual bills, upcoming vacations, irregular bills, etc.
  3. Rental: All funds related to my rental account get transferred to and from here
  4. Interest Income: this is a just-for-fun account so I can see how much interest I have been accumulating over the year.

Consolidate Debts

After I purchased my house I did some remodeling (definitely worth it) on 0% credit cards. But now I have 6 credit cards and too many due dates, which is a pain. Plus it hasn't been good for my credit score to have so many maxed out cards. My wonderful sister has offered to be my next 0% balance transfer offer (gotta love family). I am using her to consolidate my credit card debts and cashing out some old investments to pay off the remainder. Now I make one simple monthly electronic transfer to her bank account instead of paying 6 credit cards.

Online Bill Pay
I love online bill pay and have been using it for years. Organized as I am, putting a stamp on an envelope and putting it in the mailbox is one of the hardest things for me. Go figure. The first time I get a bill from a vendor, I quickly input their info into my account and from then on it's two clicks and we're done!

Automatic Payments
I do this in two ways:
  1. On my credit card: This is my first choice. If a vendor will accept an automatic credit card payment I add 'em on and rack up the cash-back rewards.
  2. Through my bank: Some vendors will automatically deduct payments from my back account on the due date. This saves me from having to send them a check through bill pay.

One Rewards Credit Card for all Purchases
Using a credit card isn't recommended for people who have problems with over-spending. I don't have that problem so this system works amazingly well for me. I put all of my purchases on my credit card- from the smallest to the largest. This gives me a nicely organized and categorized statement of all my spending on a monthly and yearly basis. It also gives me rewards for purchases I would have made anyway. Using a credit card over a debit card also has the advantage of giving me some float time and simplifies my bill paying.

I have been using Discover Card for about ten years but I am going to switch this year for two main reasons. Discover still isn't accepted as ubiquitously as Visa/Mastercard and there a couple of places I frequent that don't take it. I don't want to miss out on the cash-back by having to use my check-card. I can also find a card that gives me a higher cash-back percentage. I will keep you posted on which card I decide to go with. (And obviously, I won't be closing my very old Discover account with the perfect payment history or my credit score will likely plummet).

Having a Schedule
I keep a master schedule (which has been so regular for so long now that I just keep it in my head) of when I get paid and which bills come out of which paycheck. Most of my bills are automatic so I don't have to do anything. The only ones I pay are my monthly credit card bill, the transfer to my sister, and the transfer to my savings accounts. My bank doesn't allow me to automate a payment to another account holder (and my sister doesn't want me to send her a bill-pay check because she dislikes lines at the bank as much as I do). The other two I like to do manually because they are irregular amounts and I like to check them over before I send the payment.

Going Paperless
My life changed after I decided to stop receiving paper statements. Now I no longer fret about mounds of paper I should keep or shred. Online statements are all I need.

Online Account Aggregation
There are many services that will gather data from all your financial accounts into one place for you. I do this through my bank and I highly recommend it to everyone. This process allows me to see all of my accounts at a glance with the most up-to-date information. It keeps old but unused accounts on my radar for suspicious activity. And it calculates my net worth for me as well. Wonderful stuff.

Below are what some other folks have said:

How to Automate Your Personal Finances at Get rich Slowly
17 Ways To Simplify Your Personal Finances at Your Credit Advisor
6 Easy Ways to Simplify Your Finances at Moolanomy
4 Ways to Simplify Your Finances Where Possible at Consumerism Commentary
Simplify Your Finances at the Motley Fool
10 Ways to Organize and Simplify Your Finances at The Digerati Life

What are your best tips for simplifying your finances?