Home > Archive: September, 2007

Archive for September, 2007

September Budget

September 30th, 2007 at 02:54 pm

Dang. I glanced at the budget this month and it was crazy. We spent a lot on clothes and car repair (more things we budget a certain amount annually - less of a monthly thing).

But other areas we did really bad were in Dining Out. I am not exactly sure why. I know we ate out a couple of times while we were sick - probably part of it. But dining out was $100 (vs. our $30 budget).

It's okay though because we only spent $350 on groceries. If dh goes to the store in the next couple of days it will hit our September budget (card) but I didn't get the feeling we were really short on food. Our budget is usually $500 and we have been hitting closer to $450. So $350 is amazing. So the dining is okay in that regard. I think grocery bill is down because there was a full week we were pretty much sick and couldn't eat. (Lots of toast and rice). & the kids were gone last weekend as well. (They have been eating like adults though lately - they are both in a growth spurt - most definitely).

Well I put $1k to my ROTH and $1200 to the IRS for ROTH conversions, so the cash outflow this month was just HUGE. I just felt like it was a horrid month, so was surprised to see how we did on most the budget. We did pretty good (way better than usual). Oh yes, and only $200 on gas (I budget $300 and prices have been going up like crazy). I think the whole sick in bed for a week helped with that. Sort of.

I expect October to be much the same. We have some big expenses coming up, but all of us will be gone 1 week on different "all expense paid" trips so I don't expect gas or groceries to be particularly as high as usual. Then again we have to drive to the Bay 4 times to pick up and drop each other off at the airport (or now that I think about it I think dh is flying out of Sac! Maybe not so bad - I just am not sure. But not driving to work for a week, and not driving to preschool for a week, will help offset that.

Well, I will look harder at September numbers once the credit card closes. 3 more days. The thing is we both have a full tank of gas, so I know our gas expense is set for the month.


The neighbor's cat is very sweet and likes to hang out in our yard, but this morning I caught a glimpse of her and pointed her out to the kids (who love to watch her and say hi). Of course I quickly realized she was playing with a dead mouse. Eeeeeeew. I am kind of revolted (particularly since the kids have had pet rats and they have pet rats at preschool). But then again I am thinking, if there are mice around, the fact that cat practically lives in our yard, is FAR less annoying. Kudos to her. I have a cat but she is declawed and therefore stays indoors (no I would NEVER do that to a cat - got her from the SPCA). So she is useless on the mouse front. The kids are fascinated. LOL. I hope they are not traumatized. Poor mouse.

Maybe I should be disturbed we have MICE. Eeeks.

Challenge Analysis

September 30th, 2007 at 01:48 pm

I finally got around to organizing my challenge money by item. Probably should have done this all along. It is interesting.

Interestingly, overtime, freelance work, credit card rewards and interest were the easiest for me AND the biggest dollars. Focus groups comes up pretty close behind, and as of next week it will be closer to the top of the list as well.

Actually, if I think about it none of the stuff on the list took a lot of effort. Maybe overtime, extra work, and writing money. I think the thing is I get so much more bang for my buck with my real job that I am a little burned out on writing. I really like if I am in the mood and I write a good article I can get some money. But I think the times I was making close to $100/month I was getting really burned out too. It is something I want to pursue in the long haul, particularly when I switch to part-time status or near retirement. In the meantime, it has been a bit much.

I also made $112 selling Cookie Lee jewelry (talk about easy money) though it wasn't a challenge item.

As far as cash gifts - anything I put into long-term savings I counted as challenge money. So we had some significant gifts that we didn't exactly save either. Mostly the gifts that were earmarked for specific things.

To date - challenge money is 12% of my income (paycheck). Total extra money this year was about 17%, but we had an extraordinary amount of gifts. Not exactly sustainable I am sure. (Either the 12% of 17%).

I wanted to quantify my progress and kind of look at what streams of income were really worthwhile. As we have met our goals for the year and are back on track I am re-evaluating. I used to never bother selling things, but this year we made $160. It is not a huge amount, but I think I will work on selling more items around the house. For one, it is something dh can do so I don't have to spend a lot of time on it. I have a pile for ebay anyway so I expect that number to go up through the end of the year.

Interest and credit card rewards we have always done, but really took it to a new level this year. I don't expect to do so good next year, as I don't want to open a bunch of new cards for rewards, or do more balance transfers beyond the ones we did already. But will be a significant interest stream through 2008 & at that point we should have almost as much cash anyway, as we do now with the balance transfers. So by the time we pay all those off we will be making some decent interest still. The credit rewards - we stand to receive $500/year with our current rewards card, and that's great.

We are saving so much money in the long run by dropping dh's broker and switching to Vanguard - I don't even know. That will turn into a huge amount of savings over the next few decades.

Well, my goal next year is to come up with $5k challenge money for retirement (dh's IRA basically). Retirement has really been on the back burner this year as I expect a large contribution from my job on 12/31 & as we needed to get our efund cash back up, etc.

But next year my focus will really shift. Retirement, retirement, retirement.

I will mostly focus on working overtime (primarily tax season) as a way to contribute to retirement. I think I would like to focus harder on getting back to a better work/life balance, and strangely, squeezing in more hours at work accomplishes that a lot more easily. I have to work so little to make so much more. Credit card rewards will be a significant contribution to that, and focus groups if we continue to get so many opportunities. The focus groups pay as well as my job on an hourly basis (sometimes better). We are mostly guaranteed a $1k cash gift that can go to his retirement as well.

I think we could pretty much max out both of our IRAs on my income, and all the challenge/extras would be gravy, if not for preschool. That is only 2 more years. I imagine by the time the kids are in public school that I will have enough raises that it will matter little. We may be able to divert the preschool money to the mortgage or something. (Or maybe should save for orthodontia and all that stuff!). As a plus, dh could work at that point without us spending so much money on care. So in the meantime my goals are not quite as lofty as I expect them to be in 2 years. There are other things that are more important to us while the kids are so young. It certainly won't be forever. But we are miles ahead all the same where we were when we first cut our income in half to be home with the kids.

So yeah, next year I won't count things like interest to my challenge. I am going to leave that to my efund. I guess only money outside my regular wage that goes to retirement, that will be my challenge. I think it will be a good motivator. Big Grin On the flip side I think I am going to be lazier next year. If we really maxed out both our IRAs that would be a 15% contribution to retirement, on top of my 10% work contribution. I want to get used to putting aside 15% for when my boss retires and I work somewhere that isn't so generous. Wink & I want to take full advantage of our tax-deferred ROTHs. But beyond that, it is way overkill on what we really need to do with our retirement. These are our lazy stay at home years. I am not going to kill myself over it. So I guess overall my challenge will look really different next year. I hope it's more relaxed and I will be far more focused on our ROTHs than anything.

Net Worth

September 29th, 2007 at 01:57 pm

Well, it was another great quarter for net worth.

Cash gifts and great stock market returns made up most of it.

Net worth is up $2500 for September.

& up $7189 for the quarter.

$1700 up cash, about equal to cash gift. Saved up some cash, but paid $1200 to the IRS and shifted $1k to retirement. So basically means I saved up $2200 this quarter and shifted it out of cash. Since I have met my efund goal I don't expect my cash to go up much the rest of the year. If my cash increases more than a few dollars I will shift more to retirement. Interest earnings I will leave in the efund though.

For the quarter, kids' investments are up $2250. Mostly gifts. I added about $150 to their accounts and the rest is cash from their birthday. Is the kids' money part of our net worth? It is in a sense, because the more they have the less we have to save for them or save for their college. For now it's too little to fret much about the logistics. Something to think about for the long haul.

Retirement is up $2300. I probably contributed around $1300 & that leaves $1k appreciation (mostly in the last month).

Oh, and we paid down our mortgage $900. Just regular payments.

SO my net worth is up $23k for the year. My goal was $25k-$30k by 12/31. We are well on the way. I will find out any day what my profit sharing earned in '06 (should be decent as it was a good stock year) and I will get a $7k addition to that this 12/31. So I am looking good for the $30k goal. SWEET!

In the interim I will need to pull some money out of cash for year-end bills, and I don't really have much plan to save through the rest of the year. So we'll see. If stocks keep going up, I might make $30k. If not, I think $25k is well within my reach. I am certainly happy with that.

We have added a lot to cash and a lot to retirement this year. My goal next year is not only to increase our net worth by the same amount, but most of it should be to retirement. I don't expect to do so well on the cash gifts in 2008, but we have invested so much that investment returns should pick up a little to fill that gap. I expect to save my raise and blahdeblah. I guess we'll see. This year we had a lot of EXTRAS, but all the same we put a lot in place to make the goal easier for next year. I should really only have to save about $7k to make my goal for 2008, and already have that in my plans.

If it is a token 10%-return investment year in 2008, technically we should be earning as much, or more, than we put into retirement next year. What is cooler is being so close to the point where the retirement starts working harder than we do. Where returns should start to be more than contributions, on an annual basis. Cool! I don't expect to the stock market to be hot next year, but then again I didn't expect it to do much THIS year. Anyway, what's more important is on an average basis, a 10% return of around $7k is about what I intend to be putting in the next couple of years. We're at about breakeven and it shouldn't take long to surpass that. (On the other hand I want to up our contributions considerably. So we'll see how that all works. If we put in more it will be harder to earn that amount - but then again our balance will just grow faster).

It's kind of like how our retirement balance almost equals one year salary. But my salary keeps going up too fast to really make that goal. Boohoo, huh? LOL. Either way there is little to complain about. My cost of living is not going up with my salary and I tend to measure things in terms of expenses, since historically we spend far less than we make. Trying to get back to that. I got well more than one years' expenses in retirement. That's pretty sweet!

Focus Group

September 29th, 2007 at 01:32 pm

Well I should have $60 from a focus group next week. Big Grin

This is the first one I have been eligible for.

I think yesterday was the first day I felt normal. I will attempt aerobics today. I also have to go into work for a bit. I was originally planning to go in for my token 2 hours overtime (trying to work OT to justify this preschool thing - and now that it's paid for - well it would still be nice to have extra cash). BUT yesterday turned out crazy. I think I probably should work all day but not sure if I am prepared for that. Will put in my token 3 hours and see where I stand. I don't mind working when I plan for it. But suddenly having to work all day and thinking about all that needs to be done this weekend for my trip? Ugh.

But yeah it feels nice to feel back to "normal." That flu bug was just awful.

Here's to a healthy trip. I leave in a week!

Interesting Older Article...

September 27th, 2007 at 09:38 pm

Text is and Link is

I guess I like collecting different ideas about measuring financial progress. This one had some unique perspectives.

First part is about homes and the 28% rule. Blahblahblah. (or more like - duh. Wink )

The second part confuses me a bit:

" Savings. Farrell suggests that everyone, at every age, should save 12 percent of their income every year. In his charts and calculations, that figure doesn't change. But the amount of savings accumulated, relative to household income, does change. He expects 30-year-olds to have 10 percent of their income amassed in savings, including retirement savings and other household savings. By age 35, that should be 90 percent.

Savings amassed at 40, 50 and 60 should be 1.7 times income, 3 times income, and 8.8 times income."

For one, 10% savings seems rather low for age 30 (but at least he has the whole curve thing going, where you don't expect to be very far at 30, but should progress much further, more quickly, with time).

Secondly, 12% to savings? All household savings. That is hard for me to quantify. I put 13% of my income into short-term savings. Clearly that probably shouldn't count as it is all stuff for within the year.

But as far as household savings? We have almost a full salary saved in cash at one point or another. But everything we saved beyond retirement has been meant for other things. I am aiming 7% savings of gross income for more long-term savings, but the account should ebb and flow. In the grand scheme of things I am only saving what I am planning on using.

I have to assume this means more long-term savings. Like when our retirement is maxed we will invest outside of our retirement. The rest of our savings is good, but it has no long-term staying power. It's just meant to be used up some point down the road. (Orelse obviously it goes to retirement for the tax savings). I might include my emergency fund in the "savings" column, but that's about it. I don't really expect to grow it though - there would be no point. But at some point we should have enough money to have an investment "emergency fund" for college, early retirement, emergency, whatever. I guess for me I would consider something like that savings. But little else. Yes we had a huge amount in the bank and we put it towards our home and maternity leave and retirment and other things as we planned.

I try to shoot for a decade ahead of where we should be, so at 40 we would need to have 1.7 times our income in savings. WE are probably closer to 1.3. As far as 10% of income (the real 30 measure). Well isn't that a slam dunk? I Think we have had more than 10% since like a month after graduating college. IT's like it assumes you would not save any money until you turned 30. We probably saved most aggressively in our 20s ourselves, before life got in the way (babies and such).

OF course it also means I should shoot for 3 times income by age 40. I actually have a goal of 2 times income in retirement by age 35. 3 should be pretty easy by 40, if I make that mark. PArticularly as my goal assumes 1 income and age 35 is around the mark where working would be a profitable endeavor again (for my spouse).

As far as debt this is fairly aggressive:

"Add up the mortgage, the student loans, the credit card balances and the remaining balance on the car loan. At age 30, you'll have your highest levels of debt relative to your income, says Farrell. He pegs that number at 1.7, meaning that if you're earning $50,000 at age 30, you should be $80,000 in debt. As people age, they should reduce their debt-to-income ratio by paying down their mortgage and aggressively cutting auto and credit card debt. At age 45, debts should equal your annual salary. By retirement at age 65, those debts should be zero, he suggests. "

My debt to income ratio is more like 2.8. & I Thought we were doing darn good. Frown Which basically means my mortgage should be no more than $123k at 30. Ha! Maybe it is a good general rule of thumb, but it won't fly to far in the state of Califorina. Big Grin Oh, but believe me, we tried. We were close. Just bad market timing (trying to sell our old home post-=9/11 - lost about $100k in the deal. Our whole goal was to have a $100k mortgage when we moved here. We did try! OF course interest rates could be a factor too. We pay much less for more debt. WHich is why the $200k mortgage made little difference to us in the long haul. Was less than our old mortgage, on a monthly basis.).

By age 45 my debt should equal my salary. Hmmmm. That one would probably be easy. My mortgage is set to be $125k with no prepayments, at age 45, and we have a goal to pay it off around age 45 anyway. With inflation if we hadn't payed it down, our income should be more than our mortgage in 15 years. The potential of a 2nd income gives us much more leeway too. Probably a slam dunk.

Pay off all debts by 65? Of course. Was aiming for 45. Wink

Sounds like you can take on a little more (actually A LOT more) at 30 and still be ahead of the game even by his debt standards, for the long haul. I mean seriously, if we become lazy and don't prepay a dime, our house (only debt) will be paid off by 55. We are certainly on the right trajectory, according to this article. Oh, but the 10-year ahead thing. Hmmmm. Well on the way for the long haul (pay off 55 would be my goal then). Debt = salary at age 35? Not going to happen. Oh well. Just me? Seems awfully aggressive. Well my excuse is I lived in about any other state I would. Then again my wage would be lower. So a catch 22. I don't know how feasible that really is. Or if it even matters. Since we are well on the trajectory for 10 years ahead of schedule (maybe 20 years when it comes to debt).

Well, was another interesting perspective...

Been Lazy

September 27th, 2007 at 01:51 pm

I haven't been very posty and I guess it has been the same on the financial front. Was a little behind on bills and stuff. I think mostly since this "bug" hit I have been way off. I felt awful last night, for one. Blech - for dh and I it still comes and goes, one full week later.

I think a lot of my behindness on the bills came from stuff I had to mail. I went a good few months with the new postage rates without mailing a SINGLE item. But I gave in a bit ago and mailed a few things. I guess I am just stockpiling things since there is so little we have to mail these days (all the online bill pay and everything). So I went through yesterday.

Sent $150 off to LM's UGMA. I am doing $25/month, but the automatic investment feature is not working on his. Dh has to call Vanguard and work it out (it's in his name but he hasn't a clue - I set it up online and do all the work). We have to pick a time when we are both home during business hours to call and straighten that out.

So that included $50 gifts and 4 months of contributions - set for 2007. Now I can procrastinate on working that out for about 3 more months. Maybe 5. Wink

Renewed membership to Fairytale Town. $50. Money WELL spent. "Free entertainment" for the year so we take the kids a lot. It just takes 4 visits to recoup our cost, and we go much more than that throughout the year. (Actually it may take only 2 visits now that LM is 2 - think he pays to get in now too).

Still getting the paperwork for my $1k ROTH contribution.

Oh - I upped my life insurance. Dh and I both have $500k coverage. We only pay $500/year for the next 25 years or so (we locked it in our 20s - smooth move since it was significantly cheaper then). BUT I have been feeling like dh needs much more coverage than me. If something happened to him, little would change for us financially. I can still work. I could make GOOD money part time even if I chose to be here more for the kids. On the flip side, he just doesn't have near the options. I told him I would get this extra insurance until he begins to bring in a steady income again. It is pretty cheap through my professional associations. $100/year for $200k. I will receive a rebate on the premiums, so it will be closer to $70/year or something. We are doing well enough on money right now, though I thought about it before, now I can justify it. I think ideally dh would put the $200k in "retirement" and live off the $500k. He could stretch it a long while (certainly until the kids turned 18). As for me, the $500k from dh? I would invest it all. Our life insurance broker kept saying we would want to pay off our mortgage. Is he crazy? Um, no. No need. That $500k in the bank would do me FAR better. I'd probably downgrade the house to one I could pay cash for anyway. I could move into the house next door and do that. Hopefully it never comes to that anyway though. I feel better with dh having a little more until he gets back into the workforce. It would just be nice to know if I was gone dh would have TIME for the kids. Though in reality his parents would take care of him anyway - LOL. Not that they have a lot to give, but they take care of him way too much as is. If I was gone I imagine they would give him substantial financial support. Between that and the insurance I think they all would be just fine.

Preschool next month is ugly. Since the 1st is a Monday and the month is 31 days, that is 5 full weeks for the kids. Around $600. I had a good thought though. November is a short month AND the preschool is taking a week of unpaid vacation. Therefore that month will only be $360 (or about usual for one kid). So, PHEW is all I have to say. December we pay for like 2 weeks the kids don't even go (holiday). That kind of sucks, but whatever. It's the way it is. I used to be self-employed and I understand why it is. It just sucks to pay for like a full month when you only get 2 weeks! I think last year I was feeling a little over my head and then they ended up taking 2 months off to medical emergency. So it will be interesting to see what they do for the holidays and stuff - never been there through the holiday season. As nice as that was on the pocketbook, I am glad everyone is healthy. Wink

I also shifted some of our investments around. Got out international investments to more of a 25% allocation (was inching up closer to 30%). Shifted some things around. I will eventually sell my D&C fund in Fidelity and pick up a Fidelity fund. I just don't know what. I used to have a bond fund I was rather happy with. Thinking about it, but I am so heavy in cash and everything. Then I look at my balanced fund and it is kicking butt. So I don't want to sell that one to get into a bond fund. I try to diversify our portfolio across all our IRAs, but makes rebalancing a little tricky in a sense. We'll see I guess, with time. Will probably have to pick some Fidelity Fund. Or just be heavy in small or mid caps for a while (what I currently have). I guess I don't really see the need for another fund. I transferred so much stuff around this last year I just don't see transferring money out of Fidelity an option right now. With time it will matter little. The rest of our portfolio will grow and I can have all my Fidelity money in one Fidelity Fund (small-cap I think I have now).

My goal as it stands for next year is to put $400/month into IRAs. I am not sure if this will be feasible, but I am thinking $200/month to my T Rowe fund (well diversified Target Retirement fund - just started AIPs so am building it up to a decent level). & then $100/month to Vanguard Total Stock Index and $100/month to the Int'l Index (dhs Vanguard IRA). That would keep us a good 25% in international.

The small-cap and mid-cap funds are in my IRAs. I think with any windfalls I get will be a good time to consider contributing to those, just to keep them in line with my allocation goals. Something to evaluate at least annually.

Outside of my 401k that I had maybe one year, we have never made regular investment contributions. So it is nice to get back to that. We are putting away $100/month as is right now. It's small, but it's better than nothing. For sure. I think this is a major step to managing our wealth better. I may only be able to invest $200/month next year. But that's okay. We start small and inch up. I don't have to save up to buy a house. I don't have to save up for my next maternity leave. It's a REALLY good place to be. It's nice to be 30 and think, the only thing we really need to save for at this point, is retirement. I guess college and all that, but that is SO far away. Easy Peasy. Wink It's a mind shift, after working towards so many very BIG short-term goals.

Of course retirement is a BIG long-term goal. Kind of scary. I think our whole adult life we have averaged 10% contributions, and that will continue regardless if we contribute a dime (due to my current job). BUT we are trying to make retirement more top of mind. My goal is to make 15% contributions (max out our ROTHS) in the next few years. Saving raises... Working overtime... Saving windfalls to retirement... Challenge money... We have met all our other financial goals, so next year challenge money can ALL go to retirement. Sweet. We may just have a chance to contribute the max $10k next year. (Just sounds so daunting).

We are getting close to having one year salary saved in retirement. Maybe next year.

September Interest

September 26th, 2007 at 07:43 pm

$20 challenge:

$8,504.87 - Balance 9/22

$ 152.00 - Interest

$8,656.87 - Balance 9/30

Well I don't expect it to be SO good next month. Interest rates are falling and balance transfer is being paid - even if little by little. So this is probably the peak.

$80 from my GMAC account, around $25 from CalFirst (CD) and around $45 for my local credit union CD. September Interest.

Not bad! Talk about passive income. There was a discussion on one of my favorite personal finance blogs about how passive passive income really is. In this case, quite passive. Sure I had to shop around a little and get some great rates. But for the next year or so I am pretty set with these rates. Easy money. Big Grin

In other news, we haven't turned on the air inside all month. The weather has been perfect as it was a tad cold, but then warm, and as it fluctuates outside our house has settled on a nice 75 degrees. Sweet.

Oh yes, and someone has expressed interest in our "ugly" chair. Haven't given up hope yet.

At work I am working on some ugly project - some guy who inherited millions right before his death and we are trying to figure out the tax reporting on the elaborate "tax shelter" his lawyer came up with or something. Tedious and difficult and crazy. If not for this and my vacation I would probably be feeling pretty caught up. We hired a new person and our distant employee is working out rather well. I am shifting 2 more clients to him and think I might actually start to feel caught up. Right around the time I go on vacation. Figures. No last minute craziness here with the 9/15 & 10/15 deadlines though, so that's good. They'll have to figure out this estate mess thing while I am gone anyway. Didn't plan it that way, but works out. Wink Since all the tax returns are due 10/15. & I'll be in JAPAN!

I think I have been in a real funk because of work this last year (just crazier than I ever imagined it would be) so with things settling down it feels like a load off. & with the kids away at school 2 days a week I think dh has been in a much better mood. Lm has been sleeping so well in his bed too (knock on wood on that one. I won't breathe a sigh of relief until he gets his final molars - he sleeps so poorly with the teething).

I haven't hit the gym though since we got sick. I still feel kind of off but I think I will attempt aerobics tomorrow. We'll see... Blech...