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Archive for February, 2012

Citi & Financial Discipline

February 29th, 2012 at 07:40 am

**Got gas today - holy cow. I hadn't gotten gas in about 4 weeks - I paid 50 cents per gallon more than last time. Was $3.96 at the cheapest gas station I know of.

Of course, rising gas prices seems awfully predictable to me - we keep a buffer in the budget for that.

**I think dh got 10 credit card offers from Citi last week. When you put his middle initial at the end of his last name, turns his male name into a female name. So both him and his female alter ego received several offers for the Citi Platinum Diamond card. No rewards, so, meh. I think he got 3 or 4 of those??? 2 offers for the Simplicity (no rewards - marketed to those who pay balance off every month - no fees if you make one late payment. As if you couldn't just ask to remove it when you make a mistake once in a very blue moon -no thanks). Another offer for the Thank You card he already had for one-time rewards. The offer was good so will apply again. Not sure if they really mean it - since he already told them the first time he only signed up for the rewards. We just closed that card a few months ago.

There may have been more - Holy cow on the Citi offers. Still *none* for me though our credit profiles are identical. Even female alter ego must have an *identical* profile - same sex and everything. Wink

**Saw another interesting blog post today through mymoneyblog:

Text is http://bucks.blogs.nytimes.com/2012/02/06/your-mistaken-belief-in-financial-willpower/ and Link is
http://bucks.blogs.nytimes.com/2012/02/06/your-mistaken-beli...

I think this is so true and hard to get across. I am often complimented on financial discipline. Sure, I am sure I have a fair amount of discipline. BUT, it's not all about discipline. I think a lot of it is just about habits. This link talks a lot about automating everything. I actually don't really automate anything about my finances. I like to be more involved and in control. But "pay yourself first" is really of the same mind. When I get paid, I immediately make all transfers to savings and live with what is left. A - this is little more than habit. B - this has always paid off extraordinarily in the long run, so why on earth would I be tempted to touch that money?

Of course, automation sounds like a great means to the same end.

On another level, I just strongly believe in moderation. For example, I have never had the slightest desire to participate in a no-spend kind of challenge. No Thanks! For me, that kind of deprivation would only backfire. I know I do best with a very small amount of immediate gratification and luxury in my budget. If I am content, I don't have any problem with "paying myself first." If I feel deprived, I lose my discipline and everything gets out of whack.

Another example is how we tend to put 100% windfalls to savings. *Every day contentment* means it takes no discipline to do so. I mean, would I rather blow it on some crap I don't want or need, or have it there for when I really need it? Is that discipline?

I'd say this applies to just about everything in my life. I think both dh and I are good at simplifying things and being organized. I am continually amused how many people in real life how *perfect* and *disciplined* we are. IT comes up a lot. Which REALLY bothers me because I am probably the complete opposite of a perfectionist and dh and I are actually pretty darn laid back and low key. I can assure you "perfection" is not an image I try to project and is definitely not an image I am interested in projecting. Everyone is always asking me how I get the kids ready every day, pack their lunches, work all day, clean house, cook dinner, help kids with homework, do the laundry, bathe kids, on and on and on and on. & I always tell them, "Yeah, I don't do all that stuff." & they will never *get* it. I mean seriously, they do understand with my spouse at home we literally work half as much as them outside the house? They don't *get* it! We do the important things, we split duties to our strengths, and we are organized. Which means we work a fraction of everyone we know but appear to be doing more. I'd say we literally don't do half the stuff most our friends do. I mean, our kids aren't babies any more - they can chip in too - they can do some things for themselves, etc. Like our parents before us, we are raising our kids to be able to take responsibility of themselves in a culture where people *baby* their kids well into adulthood. Seems like "making life infinitely harder for no reason," if you ask me.

It's the same with finances. It's simplified, it's organized, it's habit, and that is the long and the short of it. Do I have more than average willpower? Heck no.

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ETA: Didn't see any articles worth sharing today in the tax sphere, but saw this and thought it was relevant to my blog today:

Are You As Busy As You Think?

Text is http://online.wsj.com/article/SB10001424052970203358704577237603853394654.html?mod=career_newsreel and Link is
http://online.wsj.com/article/SB1000142405297020335870457723...

Interestingly, the author has written books on both money management and time management.

Ouch!

February 28th, 2012 at 05:53 pm

Mojo with *across the street* neighbors is not good in our family these days.

Parents' neighbor's house just burned down.

Ouch!

Just horrible. I can't even begin to imagine.

By some miracle no one was hurt. No civilians anyway. Fire fighters are working hard to contain it - mom says it will burn for hours, but seems contained to the relief of everyone since the homes are so close together. IT's a goner. No one knows how it started - no one was home.

Frown

We've seen a few Christmas Tree/Holiday fires over the years. Frankly, this is the first time I have a heard of a fire so close to home and it wasn't a Christmas Tree incident.

I guess I am just in shock, but feeling very sorry for the family.

Another Article

February 28th, 2012 at 01:47 pm

Not tax related, but SO true and well written.

Too Rich, Too Soon

Text is http://online.wsj.com/article/SB10001424052970204131004577235252437857234.html and Link is
http://online.wsj.com/article/SB1000142405297020413100457723...

An Intelligent Tax Article

February 28th, 2012 at 10:24 am

As promised. I read something stupid so I will pass along something with some facts in it.

Few Wealthy Farmers Owe Estate Taxes, Report Says

Text is http://www.nytimes.com/2005/07/10/politics/10tax.html and Link is
http://www.nytimes.com/2005/07/10/politics/10tax.html

It's an old article, but it's the best I can find right now.

For reference, when I was about 25 and had an income of about $50,000, we implemented estate planning in our house. Life insurance, and living trusts. The cost? Dirt cheap.

If you have a million dollars + in net worth, you generally have the sense to do the most basic of estate planning.

I will give you that if the estate tax reverts to $1 million exemption again, this could become more of a problem in the *long run.* But it seems extremely unlikely that things will go back that way. There are a lot more important things regarding taxes to address and worry about in the here and now.

& why the masses are worried about a tax that only affects 1% (at most) of the population, I will never know. It reads: "Those poor rich millionaires." Yeah, my heart is bleeding...

To be honest, the estate tax doesn't collect that much to begin with. So, if the obliterated it tomorrow or not, I could tell you I really couldn't give a flip. But the misinformation out there just makes me roll my eyes. I'd be pleased if I saw an article that said, "The estate tax does not bring in any real revenue for the government - it just makes lawyers and accountants rich." Now that is a statement I can agree with! So, no, I am not in love with the estate tax. But, I just don't see that it's really hurting anyone. So, meh.

Anyway, this is one myth that just won't die!

This & That

February 28th, 2012 at 06:50 am

Reminds me, kids and dh had a quiet week at home - they spent no money. They did things like go to the park and the library. I had asked him if he anything planned and he didn't. I didn't exactly say "don't spend any money," but did say, "Glad you don't have anything expensive planned."

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MORTGAGES

Mortgages mortgages mortgages

A client came in and bought a second home with 3% down. Rolleyes {They can barely afford the first?} Many clients have been requesting pay information for lower income employee's mortgage applications. One I know is a single mom with a $25k-$30k income. I wondered what on earth kind of bank loan this woman was applying for. (Homes aren't exactly affordable/cheap here - nothing that works with that income - not even a condo). Her mom is the office manager and when I talked to her later she said, "I don't think she can afford it - I don't know what she is doing - but she really wants this house." She said what I had already figured as an extremely removed third party. IF it's a house it would have to be $200k+ for anything even remotely liveable, for reference. If she *really wants it* maybe it is even more.

So, yeah, did I mention NOTHING has changed around here? I am sure she was putting $0 down or something like that - like the most of them.

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I did my parents' taxes. Dad is 61 and bummed that this is the first year *ever* that he can not contribute to an IRA. {No Earned Income}.

He had unemployment (paltry) and that was tax-free. All of his capital gains/dividends were tax-free (15% tax bracket). HE did a $50k ROTH conversion that was taxed at 15% - no state taxes (because state does not tax unemployment - no taxable income with deductions). We did good tax planning. When unemployment runs out it will be even better. Well, presuming he still wants to spend the cash to convert.

It will probably be the same the next several years, except he is still hoping to find employment again. But in the interim, no other income and just investments. Social security, IRA distributions and all the like will push up their taxable income *significantly* down the road. I could at least warn them about that. I have a lot of retired tax clients - I bet money on higher taxes down the road.

Reminds me, I wonder if dh's parents did their taxes yet. I am worried they are in for a *huge* tax hit. This was their first year of retirement and MIL seemed to act like they were rolling in it. I glimpsed enough of their finances to see their social security/pension/side work income was very high. I wondered if they were withholding any taxes. Will see. I might get an ear full about it later. Or they may surprise me by being prepared. But the thing is my dad is VERY financially savvy but he didn't even realize social security income is taxed if you have other income. So, if *he* didn't know it, I think it's safe to say that in-laws are in for a surprise. I Was going to talk to them about it but just never did.

Will see...

FIL retired more due to the economy than anything else. Most our entire family was out of work the entire year of 2011. Economy on the rebound? Ha! Frankly it only seems to be getting worse around here. Like I said, the last year my dad went an entire year with no earned income, was *never.*

One More Week

February 25th, 2012 at 07:44 am

February has been good financially. Will see how the next week goes. Credit card closes next Saturday, so have another week. I foresee spending $100 on gas and $100 on groceries. Nothing else is planned or on the horizon. Will see...

I added $1000 to the credit card payment, since I have been hoarding cash anyway. Might as well pay off our big purchases this month. I decided to do that rather than max out our ROTHs. I might be able to max out mid-month (next paycheck). Another refi date has passed, so time to badger them again. This couldn't possibly take longer than our longest refi ever? Could it? 4 months is our record, but that was some *crazy* financing. All they asked me for was a couple of pay stubs and my employer's info to verify employment. & they did an appraisal 2 months ago. I couldn't tell you what on earth takes 3+ months. We refied only three years ago and it took 2-3 weeks. I know mortgage broker guy is pissy we didn't go with him again. It comes down to the rate. Waiting 3-4 months is fine for the better rate. As annoying as it is, it isn't *that* annoying. It hasn't taken any more effort on my part. I've been a little more proactive, but they also didn't really ask me for much of anything, so I think it evens out on how much it has put me out. So far...

Anyway, the Visa closed for the month and so I carded the DMV ($85 tags on older car) and auto insurance on van - both due in March. Last time I carded the insurance I had to pay it that day. Since it is due in March I was waiting for next credit card month. Today I put the pay date as 3/1, on a whim, and it took that date. So I think they updated their system to take future payments. Woohoo! I would have set it to pay, ages ago, if I realized.

All the March bills are paid.

So, between now and April 15th I have to max out our IRAs, pay the IRS about $500, and pay the property taxes ($2000). I will probably just pay the IRS when Grandma pays me to do her taxes. Last year she gave me $300. That will mostly cover it. IRAs will be maxed with April 1 paycheck, but I can cash flow it sooner. Property taxes are already saved for.

It will be an ugly/spendy 30 days or so with all this stuff, but being prepared means that it means very little in the grand scheme of things.

Will see how March goes. BUT, since dh and I did not have surgery this January I am actually on track for some record overtime this year. Last 2 years have been pretty abysmal with "life in the way" and many years prior to that I am sure. I didn't exactly work a ton of hours with toddlers and babies, for one. I don't think I earned *any* overtime last January with my surgery, for one. So means I have already earned about as much OT this year as I did last year?

OF course, that said, it will go fast. When/if I get the check mid-April. Will replenish refinance costs, and will cover our medical deductible for 2013. If we have anything left over, I will probably apply the rest towards maxing out our IRAs on a calendar year basis. If this refinance ever finalizes I have some additional principal payments planned (not a lot, but to work we need to pay more this year - so we can pay less later). & on and on and on it goes. IT would also be nice to earmark $1k-$2k "some day" to a nice vacation. For example, to visit dh's family in Florida without having MIL foot the bill. But, I suppose it becomes obvious when managing a big windfall that is the least of our priorities. It's certainly not going to happen this year. At this rate, I'd just be happy if it didn't all go to medical bills.

So here is to March, health and some more overtime!

ETA: Ugh. Just realized I should pay property taxes next week and be done with it. I don't want my CU, or any bank, touching my property taxes with a ten foot pole. Fretted about it a bit and decided to pay online like I did last time (skipped the extremely unreliable local postal service) and will send receipt to loan officer with a request for a new ETA on closing date. The last ETA I had has just passed. I can inform her at that point that my property taxes are paid so don't bother with them, thanks. {Banks don't have the best track record with caring about paying your property taxes on time - certainly not as much as *I* care and can ensure myself. I just realized we are getting close to property tax due date and they will likely ask for the tax payment at closing}.

I guess that means property taxes on 3/1 pay day and ROTH/IRS next month (April 1). Maybe I will reduce that $1000 off the credit card again and push it to next month. Then cash flow is just all kind of the same in the end. I'll just pay the taxes early and the rest will still be on the early side if I pay 4/1.

Insurance Update

February 22nd, 2012 at 06:50 am

**Holy cow, my auto insurance went DOWN about 15%. Due to reporting mileage and paying on a tiered mileage scale. We last paid dh's insurance after a few big driving trips, so I expect his to go down in July, too. In fact, I just commented how low our driving was right now. At least the less driving will pay off.

**I got my insurance rebate yesterday and just put it to last month's expenses. My shortfall is still something like $150, but I can live with that, and think we will make it up this month anyway.

I get an annual rebate on my life insurance and disability insurance through my professional association.

This makes my net cost as follows:

$43 annually for $200,000 life insurance
$184 annually for disability insurance ($4000/month benefit)

Of course, the true picture is that my professional association dues are $600/year, BUT my employers have always paid those.

So, I am thinking I will increase the life insurance coverage next round.

**On the life insurance, I have also considered applying for a new 30-year term. I am happy with dh's life insurance and he can probably no longer insure at a good rate (brain tumor and all). The thing about our insurance is we both have a $500,000 term that we got *dirt cheap* in our 20s. (About $20/month for each of us). Since we were both working and not relying on each other financially, we got it with the kids in mind. IT was never really meant for each other, though it would certainly be helpful and make up loss of income if something happened to one of us.

But, life has changed drastically since those times. My wage has skyrocketed and dh seems mostly unemployable. I bought the $200k policy as a supplement when he was home with the kids - and my income was about half so it covered many years of wages - it renews annually. At this point, it would pay off the mortgage and the $500k would give him time to get back into the workforce. I think he will be fine. But I am starting to think in terms of "what if he never works again?" I think we are under-insured in that scenario. But there are also a lot of other factors where I don't think it matters. So, what I need is some real solid quotes to make an informed decision. IT will certainly be cheaper to lock in now, and better while we have most our health still.

**I can't remember if I mentioned, but my disability insurance went up a ton because I turned 35. It might have been $130 last year.

**I've been getting intense marketing for a long-term care plan through my professional association. Um, not buying that so young. No thanks! BUT, it is interesting to know I have the option. I am sure it will be far cheaper than anything else I can get. The insurance products are of high quality and so I am pleased. I don't have any "benefits" to speak of through my job, so this seriously helps make up for it.

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ETA: I got some quotes and life insurance prices have doubled from what we currently have. So I will definitely *not* replace my current long-term policy. I will consider applying for an additional policy - going with another company to hedge my bets a bit. But might as well keep the "dirt cheap" on our first $500k of coverage.

This & That

February 21st, 2012 at 07:50 pm

**Tax misinformation in the news is going to make my head explode today!

I just read an article that might as well have been gibberish - it made absolutely no sense. ??? Be careful what you read. (Granted, taxes are complicated, but makes me feel like the news is making me dumber. What other misinformation is filling my head that I don't know is misinformation?)

Mental Note: I will try to pass along useful/good articles on the subject of tax. There are not enough hours in the day to become a tax educator blogger and I am not interested in that anyway. But I can mindfully pass along good articles when I come across them.

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**Got the new dishwasher installed. Woohoo!

They tried to tell dh he owed another $20 for the hoses or whatever. Rolleyes Oh, that stuff does *not* fly with him.

He handed the installer a $20 (to get the dang thing installed) and then immediately called Sears and asked for a refund. He got it. {Well, will credit $20 to our credit card - I Won't rejoice too much until I See it}.

They said it's true, but the website should have added it to our total when we ordered it. So they cut us a break.

**The rebates on this thing are interesting. I was also feeling duped when I tried to complete rebate form, because we didn't qualify because we don't have an electric water heater. Seriously?

The funny thing is dh and I were arguing about that because we have SMUD (city) for electric and PGE for gas. So he told me it was a SMUD rebate. I said it was PGE. He said it was SMUD. I said it was maybe both or either/or, but in the store there were "PGE rebate stickers" everywhere. Rolleyes

So we failed SMUD which is where we get our electricity. Why on earth would PGE give us a rebate, we barely pay them anything, just for hot water? (In regards to a dishwasher?). BUT, I dug deeper after the SMUD rejection and PGE just says we have to use them for gas or electric. *shrugs* Okay. A $50 rebate will pay for 2 months of our gas bill.

It's funny because the Energy Star rating is all about water and electricity. I didn't see anything about the gas usage it would save. So, basically, no real rhyme or reason to these rebates. There never is and I shouldn't be surprised. When you try to cover a wide variety of scenarios, and cast a wide net, people will always slip through.

**Apparently new washer used about 50% the water of our last one - they were both Energy Star, but the technology just keeps moving on. (We couldn't find any indication of how much electricity the old one uses). Actually, when looking up the rebates I saw Kenmore and Bosche by far had the least water and electricity usage. Wasn't my angle, but I will take it!

**In other news, I saw that ATT is paying out $1000 per person in a class action settlement to customers from about 10 years ago (landline).

Several things of note:

--I didn't hear about this. You can't win them all I guess. But I Am mourning the loss of a potential $1000. Yeesh!

--They didn't have adequate records, so decided to advertise the settlement. IT is possible I saw it and A - didn't want to bother for a couple of pennies or B - thought it was a scam. C - I just never saw the ads (apparently I Am not alone).

--I keep receipts and records for a VERY long time, but frankly don't know if I could have produced any proof I was an AT&T customer like 9 years ago. So, oh well! {& I suddenly don't feel silly for holding onto some of that stuff???}

The Flipper is Floundering

February 21st, 2012 at 10:18 am

I mentioned flipper bought house on our street for $250k (about going rate) and is trying to sell for $315k? Rolleyes

That said, these type sellers have surprised me in the past. There are suckers everywhere. (Yes, you'd be a sucker to pay 26% more than the fair market value).

Anyway, it's been listed about 2 months, and I am kind of surprised to see they haven't budged on the price. ($299k asking price would be basic common sense, at the least).

Apparently they are busy fixing up the landscaping. The feedback must be "No one is going to pay that much for that ugly yard." The inside looks gorgeous (marble floors, etc.).

I am curious to watch this unfold? A few thousand dollars in yard work? Is that really going to cinch the sale???

Actually, looking at the pictures, the guy has the crappy builder standard white tile in the kitchen and the bathrooms. So, what's next? A more realistic price? Or marble countertops? Wink Seriously, we have that tile in our upstairs bath and I hate it with a passion. (It's like the cheapest tile the builder could possibly find. It's the *only* thing we didn't upgrade at all, and I have regretted it since day 1).

To be continued...