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Archive for March, 2007

$1 for a house!

March 31st, 2007 at 03:42 pm

This morning my dh asked if I knew a rucicks cube is only $1. Huh? I didn't really care, wasn't interested. He was reading the paper, figured he saw an ad and wanted to spend money as usual - LOL. Just $1 but whatever. So I was kind of annoyed - I don't know, while I am thinking "do we need a rubicks cube???"

Then he told me why he had asked. He was reading an ad for a house. It said for $1 you can buy a rubicks cube, OR get a no money down deal to purchase a house! & of course the house is WAY better than an old rubicks cube.

Wow. Well if they put it that way, maybe I should go buy some more houses!!!!

Wink

How obnoxious!

We were joking the rubicks cube was a much better deal - hehe. Well, it is!

Interestingly, the same paper had a big article yesterday about how high foreclsures are getting in certain areas of California. Go Figure.

Of course now think dh is going to go out and buy a rubicks cube anyway because he is all excited how cheap they are. Whatever, if he can really find one for $1.

$20 challenge

March 31st, 2007 at 11:55 am

$20 challenge:

$830.64 - Balance 3/15

$ 50.00 - Interest

------------------
$880.64 - Balance 4/1
------------------

If I do nothing else my money will earn me an additional $600 or so over last year, even though I have way less, because I am earning 5%+ interest. Woohoo.

I think by June I will be earning about $60/month!

Tax Freedom Day

March 29th, 2007 at 09:52 am

[url]http://www.taxfoundation.org/press/show/22300.html[/url]


Just an article summarizing it takes the average american 4 months (of pay) to pay their federal income tax obligation.

But I don't buy it for a second. The article is assuming your entire income is taxed at your top taxable rate, assuming the average american is in a higer bracket, and doesn't look like it is allowing ANY deductions. I am not sure where they got these figures. I got enough six-figured clients who don't pay in nearly that much.

Just wanted to say it takes me a week to pay my income taxes, and I make a really good wage.

I am a little jealous reading the article though because the reason is COL is so dang high (but lots of deductions). It's going to take me 6 months to cover mortgage, property taxes, and our health insurance. God forbid someone got sick or hurt and we had to start shelling our more money to healthcare.

I just don't really buy the hoo-ha that income taxes are so expensive. They are at historic lows. I just keep wondering what people will do when taxes get raised to cover these huge deficits. I am saving my pennies because I know I will not pay such low taxes forever. Trying not to get to used to it. I paid in a whopping 3% of my entire wage last year and got $200 back. (I had other taxable events as well to boost my income so maybe it was more like 2.5% effectove tax rate). The year before I took time off work and the government gave me $1500 or so - $1500 of the government's money (child tax credit) because I didn't make enough to owe any taxes. Sure I would gladly give it back - I will be paying that back tenfold down the road.

I think a lot of us who have hung around here are probably smart with 401ks and such and minimize taxes as well.

I am not sure if they counted social security and other payroll taxes. If so it would take me a month of gross wages to cover all of my federal and state income tax and payroll tax liabilities.

A 2nd wage is another story. A full 35% would go to taxes. & then there is the cost of working and daycare. If you did not believe me it was cheaper for my dh not to work, maybe the fact that it takes a week to pay my income taxes, maybe that will convince you. As is I get to keep 90% of my check and we don't have all the expenses and headache of a second job.

Of course if he could get a job with a 401k, that is another story. OR some good benefits so I could save this $10k+ a year we are shelling out in insurance.

I know many people assume I have a lot of tax tricks up my sleeve. But I don't. I got a big mortgage, insane health insurance (high enough to deduct much of it) and all the deductions and credits that come with kids. Sometimes I wonder if we are really that bad off living in a high COL area. All that money would go to taxes instead if we paid the mortgage and didn't have such expensive healthcare. There may be something to that...

ETA: I am at a loss how they calculate this. Total federal government revenues divided by total american income or something. Revenues from what? All revenues? a big chunk that corporations paid? I don't know. Does this include social security then? I don't know. Kind of a shock factor thing that doesn't make much sense for the average american. The average american does not fork over 1/3 of their income to the federal government. I just am not really sure how they calculates this thing is all. Was digging further trying to figure it out. But you can do your own experiment, look at how much you owed the government for the year (not how much you paid in, not how much you owed April 15th, but your total tax for the year on your tax return...) and divide it by your salary, you can get an idea how big or little it is.

Bye Bye 401k

March 28th, 2007 at 05:16 pm

I look forward to when all my retirement is set up. Well less moving around anyway.

I had a really excellent fund in my old 401k (closed to new investors) and I sold it for Dodge and Cox Intl(new offering) around January. I Was replying to an old thread why you might want to consider keeping an old 401k when the thought occured to me D&C is not a closed one, but likely will be in the future. & to date it is the star of my portfolio for 2007.

I decided it is time to take the plunge and diversify into some more mid and small cap funds. & to buy D&C directly. I had considered it with dh's IRA but found it more prudent to invest in some index funds. Since he wouldn't have a clue to do without me, probably not a bad idea. But with my money, hmmmm. I want to play a little. Plus I really like diversifying between managed funds and index funds - have a little both. So my IRA will be mostly managed, his index. Indexes are great but I don't mind paying a 1% expense ratio for some of these funds that have 20% historic returns. The indexes don't have returns like that.

I am reconsidering the Bruce Fund (Revisiting), a mid-cap fund in Fidelity (easiest to keep some there), and of course Dodge & Cox Intl. None of them but Bruce have fees nearing 1% so don't fret.

A lot of paperwork and fees which annoys me, but I swear I won't be doing this again anytime soon. This is it. Plus if I split it up it will be easy to convert into ROTHs in baby steps. I can't even do it now until this movie thing straightens out - want to see what our taxable income is and if we had a decent windfall might not qualify so have to sit and wait but will save my pennies for when the time is right - probably has to be this year or next before a 2nd income enters the picture again. If no movie money by November may do the ROTH thing. Another $1500 or so but would make us 100% ROTH meaning we could contribute to any of our funds. I can't contribute to any regular IRAs right now. Maybe a small token but won't know until I do my taxes for 2007 - frustrating.

On top of that I have been seeing a lot of favorable stuff about T Rowe and am considering a target retirement fund over there. If I can really just contribute $50/month and no fees that is probably what I Will open late this year or early next year. I can't contribute to my existing IRAs so sounds like a plan.

I am kind of like a kid in a candy store. I just want to try a bit of everything. Was just reading how target funds like that fare well and T Rowe looks like it has some excellent diversification in managed funds at low costs. I was looking at Vanguard Target retirement but it looks like our portfolio as is - mostly holds Total Stock MArket Index. No point to invest in that unless we drop the funds we already have at Vanguard. Would just be a big overlap. So I started poking around and T Rowe really caught my eye.

Well it took me 5 years but I finally closed out my old 401k. Wink

I am embarassed to admit how many funds I will be invested in when all is said and done - too many to count - $4k here and there. But we intend to invest a lot the next few years - I think we have a good solid foundation to build on. Access to Fidelity, Vanguard, T Rowe, plus a couple of the smaller gems out there.

I am excited to invest some of our e-fund in a balanced fund, down the road when we have money to spare, and invest the kids' money (when we have some).

I think I am officially addicted to mutual funds...





Rounding Dollars

March 27th, 2007 at 10:36 am

[url]http://www.bargaineering.com/articles/dont-budget-to-the-penny.html[/url]

Just came across this article and I found interesting.

Since I am an accountant, people often assume that I am a stickler for pennies, accounting to the dollar. When we go to lunch people expect me to break out the calculator, and I laugh. I rather just split the tab evenly, because saves time and all works out. Since my frineds don't try to screw me over by ordering lobster while I order a salad. Wink But even if they did I would round my portion in my head and be okay with that. No calculator here.

You may have noticed I usually talk in term of round dollars, heck, I round to the nearest $5, $10, $50 often.

If you kept your checkbook in round dollars it would all pretty much even out over time. I am probably a little too anal for this - I do enter everything to the penny in my checkbook and in Quicken. But for the most part if all my investments started rounding up to the dollar or $5 I really wouldn't care. Over time it wouldn't really skew the end result.

I think I gained this attitute from my job, interestingly. My first job out of school was auditing and the first thing you figure out when you are auditing is what is a material amount for the financials you are auditing. If the materiality threshhold is $50,000, well you don't really give a damn if the bank statement is off $5 from what the client has. IT is not worth the effort to adjust it to make it perfect. Who cares. & so it goes.

Since I came to work for a smaller firm it actually drives me batty because one guy continually will ask me to make changes int he realm of pennies to account balances. It drives me so insane. It is so not worth $125/hour or so charged to the client to waste 5 minutes fixing an account for anything less than $1. Even $5 is pretty questionable. I find most people agree but I do have to work under some sticklers occasionally.

& this is probably why I don't save my change. I just find it an absolute ridiculous waste of time. I actually just spend my change as I go. My change is my fast food/eating out luxury money. I think Suze had some thing if you saved all your change you would save x dollars a year. Great I think, but then I Would have to take that much out of my ATM since most of my fun money comes from my change. So though I agree you can squeeze your change for all its worth and get something out of it... Putting it in a bucket and then driving to the bank to count it seems like an awful big waste of time to me. But that is me, if you want to do it great. Just sharing why you won't see me doing so. Wink

Another thing I round on is a lot of my bills. I round up my mortgage (which has its benefits) and the credit card I just round to the nearest $20 or so when I pay. I just don't like accounting for pennies. Unfortunately, for utilties, I don't want to confuse them so I pay to the penny. I don't know if it is necessary though. ??? & the big one-time bills I will pay to the penny. So my pennies can earn interest in the bank for the next few months. I guess those I hold on to. It doesn't really matter so much I guess with online bill pay and my automatic downloads to Quicken. Less effort on my part I guess.

But yes, for the most part, my conclusion is that pennies are not worth the time and effort on many levels.

I think this kind of goes with frugal philosophy. I rather chase the big savings than the little savings. Not that I wouldn't save 30 cents where I can (because believe me I do), but only if the savings is worth the time. I better either enjoy what I do to save that 30 cents or it better take no effort. OTherwise I probably just won't bother.

When I made minimum wage I probably felt differently. As you move up the wealth ladder though your attitude does change. Or it may not. But I know too many extremely wealthy individuals who are so penny-wise and pound-foolish. It drives me batty. I just don't want to end up like that. It doesn't serve one well. Probably another big part of my frugal philosophy.

Up .10%

March 27th, 2007 at 07:43 am

I was just downloading all my interest income for this month (for whatever reason my CD and my MM posts around the 25th of the month) and I noticed my GMAC bank account (most my savings) upped their interest rate 0.10%. Wooohoo!

Virtual bank - remains the same. Good thing all I have is dh's PS3 money in there - about $200. Wink

I just drained my short-term savings for property taxes. The account sits at about 0. Since I just moved around my bank accounts and GMAC is getting 5.10%, I think I will build up my short-term savings in there. I can't even remember where I had my ST savings before - LOL. Probably VB. I think I was intending to keep it there,and use GMAC for LT savings, but the interest rates are getting too good everywhere but VB... Just means more bookkeeping to keep it all straight. Oh well.

Holi 2007

March 26th, 2007 at 09:33 am

Oh gosh, this is another reason I can not imagine moving out of this area. I could never describe what it is like to live in such a melting pot and so close to so many big cities full of so much culture.

But one of my best friends is Indian and invited me to the Holi (festival of colors) at Stanford last year.

It was a Saturday and I had to work. & well I had just gotten my new van. The idea of getting covered in paint and getting my brand new pristine van covered in color did not sound fun either.

So this year she invited me again and I considered it, and I Went back and forth, and finally at the last minute another friend who said she couldn't go with me, decided she could. IT was on a Sunday this year, so finally just bit the bullet and went for it.

So we drove 2 hours to Stanford yesterday with our kids and just had an absolute BLAST.

We decided this will indeed be an annual tradition.

As for me, a big reason I did not want to go this year was that I am so stressed and busy. The idea of driving 4 hours on my day off wasn't the most appealing. & I am quite exhuasted.

But rejuvenated as well - hopefully gets me through the next few weeks of tax craziness. Was nice just to do something purely fun.

[url]http://www.ashanet.org/stanford/[/url]

Oh yeah - and these people are not even 1/2 as colored as we all were yesterday. There was a hardly a person not covered heat to foot in mostly pink - LOL. I think we had more fun than the kids.

[url]http://www.ashanet.org/stanford/events/holi2007/holi_pics/holi_pics.html[/url]

I even got scolded because my son seemed to have trouble telling who he should and should not throw water on (for one aiming a squirt gun at a baby's face). So on the way out he was squiritng dry people who I figured wouldn't appreciate it and when I scolded him, someone said, "hey, it's Holi!!!" LOL. I guess they had a point, if you didn't want to be covered in a mess, what are you doing there. Hehe.

The whole day I think cost me about $40. $15 for the festival (worthy cause), $10 food, and then lots of gass and bridge tolls, but luckily shared so not so bad. Was worth it indeed - used my writing money. Plus my parents treated us to a divine dinner at my favorite mexican restaurant. Not bad... & as usual kids were spoiled bu my MIL - toys, balloons, new clothes, etc.

Also, I found one more reason (to add to the list of many) that not having a working driver side window brings - makes going through a toll bridge a PITA. LOL.

I will probably go get it fixed like April 18th - I just do not have any time to spare with dragging the car to get fixed. So anyway, just one more reason April 18th can't come fast enough. Wink

Enjoying the new pages...

March 24th, 2007 at 07:56 am

I added some pages on the side - really like the feature. Particularly nice for the $20 challenge and my list of items bought new/used/free. Easier to find and update than going through old entries - woohoho.

So I did update the new/used/free list. Dh keeps buying these cheap beard trimmers that don't last long and just bought another one. I wish he would just buy something nice! & we mutilated the house phone. Kids are so rough with it we figured it had a premature death - seems like we just replaced the old one a couple of years ago. So we discussed it and decided to get something cheap until the kids are a little older. Was the answering machine/phone combo. So dh picked one up and it was pure crap. We are really limited to the type of phone with all the interference from other electronics. So dh found a nice phone with 3 handsets (so we can replace if 1 gets broke) for around $99 and another one for $109 at a completely new phone frequency. We figured we'd try the $99 one first and if didn't work, maybe try out this new frequency. Anyway, the phones are really nice. We have a 2-handset one for upstairs and I have an alarm clock/phone on the bed so we added one handset upstairs and kept 2 downstairs. Basically added one to my office and one to the theatre room. MEans we have like an actual phone for every dang room in our house - LOL. Way overkill, but will be nice when the kids break another handset that we have a couple of extras.

Well dh's mom is a teacher and we were ordering scholastic books through catalogs and warehouse sales (great deals) when his mom found out and gave us her online password to scholastic - said she has a zillion points for free books - we couldn't possibly use them all this life. So dh ordered a few books last night. & 3 video games he tells me (2 leapster games and a Game Cube game for the kids). All FREE though, just can't beat that. Added it to me free list on the side.

In other news, I had an "aha" moment. I saw the discussion of adding some emergency funds (over the minimum) to mutual funds. I had never thought of that before. I would really like to have $30k-$50k in an emergency fund, which I know to many is overkill. But I feel good having some decent cash. Though for job loss and such we need little - my industry is just insane right now - the odds I'd be out of a job for more than one day are slim to none and weathered the last recession easily, even before all this craziness. So I have been considering once we get our 3 months expenses (around $12k) in cash that we will invest a little in a balanced mutual fund. Something like Vanguard Wellesely which historically has never gone down much but has some decent returns. Odds are we won't need the money, and yet I will sleep better knowing we have liquid assets if I indeed lost a job or our house flooded away. But I won't be wasting away too much money in cash. Anyway, it's an idea. If so I would probably move over the $3k minimum (keeping 3 months in cash) and from there contribute 1/2 our savings to cash e-fund and 1/2 to mutual fund e-fund. We also need to save up money for a car but prospect is that it will be a good 10 years. So all the more reason - make it the car fund or something. Since we are in such a low tax bracket I may consider moving the mutual fund back over to cash before our income got too high with a 2nd job all the same. Oh depends on capital gain rates and all that at the time I guess. Does not have to stay there forever, but in the meantime seems like an idea.

Well it's an idea for now. Won't have the minimum in cash plus the $3k Vanguard minimum for another year at least. We'll re-evaluate then. Just pleased to think of something new I hadn't thought of before. It doesn't have to be so all or nothing. If I Want $100k liquid funds, doesn't have to all be cash. Hmmmm...

P.S. I decided to take Sunday off and we are going to the Bay after all. I must be crazy - but I look forward to a fun day. I am taking the kids alone so dh can get a break - hence the extra craziness. Work is really crazy until the 30th but I think the worst will be over April 15th - well I REALLY hope so. So a weekend day off just to enjoy and have fun sounds nice - will hopefully get me through the next 3 weeks.

Mortgages and Sub-Prime Whoas

March 21st, 2007 at 10:26 am

[url]http://sacrealstats.blogspot.com/2006/11/how-can-they-afford-this.html[/url]

I was looking up something on impound accounts and came across this blog. Caught my interest because was about my city. I read it and was not surprised by the least.

But I think this is the perfect example. Is it the lender's fault or the buyers? I don't have much sympathy for a buyer who did not read the paperwork and who bought a home for 8 times their income. Duh. But the lender is most definitely a shady bastard. & of course will likely get away with this scot free. That is just not right. The bank and the lender will get their money most likely. The buyer will be left holding the bag. Even if the bank/lender loses this one, oh well, they made enough off of all these insane loans. Not too worried about them.

Mortgage brokers work for a commission. I have a friend who is a broker but and overall is a standup guy. But he is big on undocumented loans. He has pushed the boundaries a bit since a lot of his business is small business owners, new, with no income. But he still gets the loans. HE has asked me to fudge letters saying these people have been in business 2 full tax years (Which is the rule). No way in hell I want a prt of that.

I don't think he would do anything near this shady. But all the same I would never trust a mortgage broker in the least, not even a friend. You have to protect yourself, because no one else will. When it comes down to it their livelihood depends on how many (& how big) the mortgages they sell.

Of course most of the people I know are looking at houses in the $400k range with a $60-$70k income and I think they are absolutely insane. This blog takes it to a whole new level. Then again I have an acquaintance who thinks she is rich and has arrived because they bought a McMAnsion in a gated community. She got a 2nd full-time job and still can't pay the bills. Now you have to wonder if they even went fixed or not - maybe they are paying interest only - who knows. Never even thought about that. I just find it how ironic she brags about arriving - when clear to everyone else all she has arrived into is something way over her head.

Anyway, my head is still reeling at the thought of a $4700 monthly payment. Yikes!!!!!

Doesn't look like a sub-prime loan but I have had friends who make $60k/year that were eligible for a $400k sub-prime loan (the interest rates on those are insane). It's all in the same realm - the sub-prime factor just makes it that much worse. But the undocumented loans will have similar failings for many who suffer hardship or easily got in over their head. Or more like this case even, simply major fudging of numbers to qualify for twice as much as you probably should.

-------------------------------------

Oh yeah - as much as I am for home ownership, I also wouldn't have considered buying a home for less than 20% down. If people had to put money down, even just 5% or something, a lot of these current problems would not be surfacing so heavily and so fast. Just saw another wise article on the subject of not getting in over your head. As much as I Am pro-home-ownership. The flip side holds just as true - don't do it until youa re ready!

[url]http://www.dallasnews.com/sharedcontent/dws/bus/columnists/pyip/stories/DN-moneytalk_19bus.ART.State.Edition1.3795d19.html#
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