Received $45 bank interest for the month of March.

Redeemed $50 credit card rewards (cash back) from our gas/grocery card. Deposited this snowflake into investments.

Redeemed $42 cash back on Citi card. Deposited this snowflake into investments.

Savings (From paycheck):

+$200 to investments
+$300 to cash**
+$900 to IRAs

**I did pull out $1,100 cash for Japan airfare.

Short-Term Savings (for non-monthly expenses within the year):

+$1,300 to cash
-$500 for life insurance

Short-term savings is robust right now (you might have noticed way more + than - in recent months) but that is mostly because we prepaid property taxes in December. Which leaves an extra $2,500 cash buffer or so since we've already saved up the next property tax installment (which isn't due until December).

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

Doings:

**Life has been busy. Mostly work.

**I did finally sign up for that credit card reward. $200 cash back + free prime for one year. Should get the rewards soon.

**Mid-month I get my OT check for the year. I will also have to sort out overseas trip expenses with my dad. OT should be way more than expenses. So I am mostly just looking forward to sorting all that out. Then we can see where we are at financially and look ahead.

**The funny thing about "more money" is more choices and stress. That's the mode I am in right now. A lot of stuff is popping up on the horizon now that we have some extra money. I think it's just a matter of time -we need to think through and prioritize. But for the moment I am feeling very overwhelmed. Some of it I haven't talked over with dh yet and I know it will be better once we sit down and talk it all out. (Who knows - he may outright veto me. That would make it easy).

Our "year of splurge" is definitely over when it comes to the frivolous, but there is still a lot of less frivolous stuff to sort out. Home improvements and medical stuff.

With the extreme drought situation here we may have the opportunity to redo our front yard landscaping. (Both city and HOA approval, perhaps. Both have been very picky with the unnatural lush green lawns). We can do the back whenever but it's been more of a dream more than a priority. Talking about being able to do the front yard too and having some extra money is suddenly bumping that up to the top of our priorities. Maybe the theme for us this year is "conservation". I really want to dump the gas guzzler too.

(We've wanted a more appropriate yard, for our climate, for ages. It's just not something we really thought through before we bought our house. We didn't really know the local climate either. Since living here for a time, it's always bothered me what a water wasting city this is compared to our last city. & we met a few people who had more appropriate landscaping so kind of put it in the back of our heads that is what we really wanted. It was just I had never heard of the idea before, I guess. When we did start seeing other kinds of yards we had no money).

Anyway, I went for a walk in parents' way more water conservative (though less dry) city over the weekend and saw a lot of ripped out lawns. I am going to broach the subject with dh. At the least let's kill the backyard lawn. Why have we not done that yet??? That part is a frugal (free) step. The problem is that I perused the websites/portfolios of a few recommended landscapers. So now I am dreaming of a fancy hardscape kind of backyard. I am sure everything I was drooling over was expensive.

Of course, maybe I should dream away. We are probably at a point where we could be rid of our gardeners. I'd love to keep them on but the most of what they do is mowing lawns. I don't know that they'd still help us with our meager yard work if we have no lawns. It is something to consider though. If we go REALLY low maintenance we would save $1,000 per year on help. Maybe this is sounding more sensible. Well, if I have to talk to dh about it and get some quotes. Our neighbors are kind of ritzy so I don't think I was looking at reasonable landscapers. (Neighborhood recommendations). It will be a little more work to seek out a deal. But, we won't know until we start getting quotes and doing more homework.

I think that is a lot of my being overwhelmed. I personally tend to estimate things high and plan for the worst. Which is good financially but maybe unnecessary stress at times. Right now I just have a lot of question marks.

Received $42 bank interest for the month of February.

Redeemed $25 credit card rewards (cash back) from our gas/grocery card. Deposited this snowflake into investments.

Redeemed $50 credit card rewards to our ROTH

Savings (From paycheck):

+$200 to investments
+$300 to cash
+$900 to IRAs**

**2014 Maxed out in Feb. On to 2015!

I updated sidebar for all of the above.

Short-Term Savings (for non-monthly expenses within the year):

+$1,300 to cash
-$515 for insurance, smog check, registration (autos)

The combination of low gas prices and putting some more wiggle room in our budget has been great! Our fuel expense was $75 lower than average last month though we made several trips to the Bay Area. Our usual strategy is to way over-save up front. Which is fine - it works very well for us. But this year our savings pace seems more realistic with our budget. OF course, I am fine with relaxing the budget because I am happy with our savings pace. (I'd say we are still pretty aggressive on the "pay ourselves first" but just not as much as the last couple of years. I still don't foresee ever having a penny left over at the end of the month to add to savings. It's relative).

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

An update to our free month of Amazon prime (trial): Dh got bored with the TV shows because we can pretty much get 90%+ of what we want elsewhere. (Which is what he has always said and why we have not gotten Prime before. Just that Hulu and Netlfix makes more sense for our personal tastes). Anyway, so our free trial expired yesterday I believe and now dh doesn't want to pay for it. So, phew! I may still do the free year but haven't gotten around to opening that credit card yet.

**I noticed that the projector that we just bought was selling for $200 less today. (Probably has been one sale for a while, isn't that how these things go? Did it go on sale the day after we bought it?)

I wasn't sure it was the same projector, but I forwarded the link to dh. He pretty quickly wrote back that he had secured a $200 refund. Woohoo!

**Dh found a large amount of change, like he always does. It was up on a ledge and so I presume he just felt weird taking it. Because it wasn't on the ground? Don't ask me. Noticed it while picking up LM from school and I was going to let LM grab it on the way home, but forgot.

Anyway, I remembered later when driving the kids home in the evening and BM popped out of the car and the change was still there.

Three quarters and three dimes!

Other Fiscal Doings:

**Payday this week; paid off projector purchase. (When I get the $200 refund I will put it to savings).

**I redeemed $40 cash back from the Citi double dash card. Will throw into investments (snowflakes to investments). I expect to have $3,000 by year-end. (Not ALL snowflakes, but heavily contributed to with snowflakes).

**I harvested gains in the kids' investment accounts. I thought I was going to skip this year, but I can't complain about the market.

I basically just sold and re-bought their funds, to lock in tax-free gains.

**I made a play on Target stock after the data breach and that is paying off this week!

**I paid $2.65 for gas this week.

Today is payday for me.

I won't be able to deposit my check until later today but the $5,000 transfer I made for property taxes showed up in my account today. So I paid all the bills I planned to. I can pay the property taxes after my payroll check hits my CU today.

I paid the mortgage payment and I paid off most the October credit card charges. The handful of bills I can't charge were already set to pay this Friday.

Next payday I will pay off the projector. IT costs exactly the amount that I usually put into savings every month, so we are just cash flowing it.

Other Fiscal Minutiae:

Received $33 bank interest for the month of October

Redeemed $50 credit card rewards towards my ROTH

Redeemed $50 credit card rewards (cash back) from our gas/grocery card.

Dh earned $35 cash from a focus group

Snowflakes into investment account:

$50 cc rewards (per above)
$15 internet savings (placeholder)
$10 from focus group
-----
=$75 TOTAL

I had planned to use focus group money towards most recent cell phone purchase, but I am projecting $11 left in the bank account at 11/30, so I transferred $10 of that into investments.

Fiscally, things are going quite well.

*knock on wood*

Aside from saving up for our homes, we are maybe $5,000 away from the most we have ever had in savings. Which would be more than we have had saved up since having kids. I don't know the exact (peak) figure since I just track net worth every 12/31. Since my first pregnancy went so well we diverted a lot of that money into retirement that first year. So pre-kids was the peak; we were saving up for multiple maternity leaves and so on. We spent it down and redirected because we never imagined dh would be out of work 5 years later, much less 12 years later! It's been slow going to build that back up, but we are getting there.

Along the same lines, I wanted to update about a "big picture" goal. Last year we achieved more assets than debts. We've always had a positive net worth, but I mean we reached the point where we could pay off our mortgage with our savings and investments. We reached that goal in March 2013.

Where are we today? Today we could pay off our mortgage and have $50,000 left over. Woohoo! I think that's great progress for one year. (& that was with a very very expensive and trying 2013).

The next big goal for us? More in retirement savings than owed on mortgage. We are within a few thousand dollars of that milestone.

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After years of consolidating and cleaning things up, we seem to be moving in the opposite direction. I am opening more accounts (two taxable investment accounts this past year) and I have to open a Traditional IRA for dh. He only has a ROTH. We had converted all of our money into ROTHs during some of our lowest income years, but I have a Traditional IRA from a work retirement plan rollover in the years since.

OF course, the kids have their 7% savings accounts and I just opened two bank accounts for bonuses. So, yeah, it feels like I am opening a LOT of accounts. I suppose that is a GOOD thing.

**For the first of the month I received $19 in bank interest and $100 in credit card rewards. ($50 for ROTH and $50 cash; two different cards).

**I am taking care of some fiscal chores. I finally got around to making sure I was set up as secondary custodian on kids' investment accounts. I was mostly concerned about those (real $$$). Though I guess I should look into getting dh set up as secondary custodian on their savings accounts.

**Got my first Ting bill ever! We signed up right after Thanksgiving? First 4 months were entirely free. For April, we were charged about $10. $5 of that is for our household.

Next month we will likely pay a full $26 for our half of the bill. That has been our consistent monthly usage.

**I plan to open Chase checking account this weekend. That will be a $200 reward earned in something like 10 days.

I am not sure what I will do with this reward. Might just set it aside for vacation/kitty hotel, though I don't know if that is necessary. Otherwise, will probably invest the $200. We are diverting our snowflakes into an investment account, starting this month.

**I opened a new investment account this week, for my current year raise and to divert all snowflakes to. The purpose is a supplementary unemployment fund, college savings, and mortgage paydown/retirement. Gives us a little more liquidity and flexibility for the first two purposes, but mostly expect to use it for retirement or mortgage payoff, eventually.

No firm decisions yet. If things go well we may do 50/50 mortgage paydown/investing. I think that is probably where we will eventually end up.

I guess we are all backwards. When we graduated college the IRA contribution limits were a mere $2,000 per person. But we were saving 50%+ of our income. We started out with much more money in taxable savings and investments than we could possibly put away into tax-deferred accounts. Over the years that has shifted and we have certainly tried to be very tax efficient. In the past we have also done the complete opposite. We were saving too much into retirement, but funded ROTHs anyway knowing that we can use that money for college and so on. IT ebbs and flows.

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**I think last year was a dud on the "vacation lifestyle" front, but this year is shaping up pretty nicely.

Had a few loose vacation plans fall through. (Yellowstone wedding is postponed for a year or two; National Parks don't seem to be in the cards for us).

But, several other things popped up in the meantime. Most of them involve free hotel stays and driving, and so I think I can leave most the vacation budget intact for my plans to visit my sister in Ohio in the fall. Other than that, we have a short trip planned every month for the rest of the year. The Northern California coast, the Southern California coast, Napa, Tahoe, etc.

MIL invited us to Disney. I feel a little bad for her. She wanted to do something nice for us. We could really care less about going to Disney. Even moreso though with the summer offer - hot and crowded! (Even our kids don't want to go. What did we do to our kids??? ). I might regret it, but we are giving it a go. Trying to compromise with Lego Land, which the kids are excited about.

**I can't believe it - I got a raise! My boss told me two years ago that no one else in office had gotten a raise for years. So I did not expect anything.

In the end, it was the biggest raise I have gotten in 6 years (since economy soured significantly). About 2.5%. What's even more exciting is that I had already covered health insurance increase with other cost savings, and so the raise is pure gravy. Which maybe has never happened since we have had children (our health insurance has gone up in cost 1,000% in that time). I feel like I have always just been grateful that any raise has covered our healthcare costs.

The net increase is $135 per month. With our cell phone savings, I will just round that up to $150/month and add that to our savings.

**Those that are "by the book" will be happy to know that this boosts our retirement savings rate up to 15%. (I've never particularly cared because we have been mostly saving more than we need for retirement, without saving that much. Some of it is utilizing ROTHs - no taxes later - the rest was just starting young and never contributing less than 10%).

We are already maxing out our ROTHs, and so I would like to open a taxable investment account for this money. (Which, for now, we won't be taxed on, due to low tax bracket and some simple tax management). But we are also a little behind on ROTH funding for 2013, so I think I will wait until April and see how things shake out. Honestly, I Was doing the paperwork last summer, to open a new investment account, because things were going pretty well, and then we had the "Great Murphy Year of 2013". I feel like we should be saving TONS at this point, but life seems to have other plans. IT seems silly to contribute a penny to a taxable account until our ROTHs are well funded. But I kind of feel like sometimes things never go right until I just dive in and make it happen. So, for now I will just assume we can get that started in April or May. Will see... At the least I won't open that account until 2013 ROTHs are funded.

To help get some momentum going, will probably divert all snowflakes over to this new account, for a while. Though I would like it to be a general hands-off account, it will have more purpose than retirement. $150/month is a nice match to the college money grandparents are providing ($1k per year, per child). Whatever is not used for college, will eventually go to mortgage payoff or retirement. I don't actually expect to use any of this money for college. Seems unlikely at this point, but just for a Plan B.

I am abandoning the mortgage payoff for the interim. This account will take precedence because my job is a bit up in the air, so this will help us get a good start to some "potential long term unemployment savings". I really don't expect to have to use it for that either, but just hedging our bets.

Of course, the only reason we were hitting our mortgage harder the past couple of years was due to losing equity in our house. Even at the worst, we never went below 20% equity. But it was close, and we took proactive measures. Today we are back over 50%. So, it's fallen lower as far as priorities. {I'd love to pay it off today, but have to balance wants with reality. Reality is I have to get college and employment sorted out first, and crossing my fingers this is just a giant "mortgage payoff" fund, in the end}.

Anyway, the plan is $150/month, plus snowflakes, starting around May. I'd like to be agressive with putting gifts and credit card bonuses and such in this account. Once we get some momentum going on this account, we may consider a 50/50 save/pay down mortgage type plan. Or 70/30, or whatever makes sense.

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

I work well under pressure. I did some major mad declutter and cleaning progress, last weekend. It generally would not be my preference to do that kind of big job in the middle of tax season, but apparently it works for me. (I never did as much as I wanted to last year because I got really bored with working and chores all the time - am used to fairly laid back summers and falls, and work was kind of busy too). So whatever, I will embrace it. Any chore I can cross off my list before, "want to relax and enjoy" time.

The problem is I got some major momentum and couldn't stop for a while. It might be okay for January and February. For March and April, I will have to slow it down and put work as a higher priority.

I had a genius idea this morning. I was thinking the downstairs was pretty decently decluttered, except for I have to sort through the piano music. I used to teach piano, and so I have hoards of materials. It just flitted across my mind this morning that I wanted to tackle that nasty chore this weekend. (Something I have just put off and off and off, otherwise). & it occured to me I could probably store a lot of that stuff digitally and be done.

I don't know why I never thought of that before!!! I've just got so many freaking photo copies of music. & part of me doesn't really want to give it up - could always be a nice side income stream. Storing stuff digitally is a good compromise, though I don't foresee "piano teaching" in my near future.

I will have to ponder that as I go through that type stuff in the house (things that can be just be kept on computers). For some things we are well ahead of the curve on that (financial records and photos and so on). But, for other things, we could use some strategizing and rethinking.

I don't expect to tackle all that music stuff this weekend, but I do hope to make a dent.

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

P.S. Dh just won $50 in Ting credits. One more month we won't have to pay anything (sharing Ting with my parents and will give them the benefit of the credit too). I am starting to wonder if we will pay *anything* for cell service this year.

We have crossed over. Woohoo!

More cash and mutual funds than DEBT!!!

*Most* our our savings is in retirement funds, so obviously not planning to cash that all out to pay the mortgage. But I am very pleased to be here. What might not be that exciting of a milestone to some is extra huge to us because of the high cost of living here. I don't think we would be in this financial position without or low-cost move.

This is a very tenuous goal, as these things seem to be. So, the next goal is just to KEEP it this way. To get so far on the other side that we will stay there. That might take one year or five years. I don't know. (Historically I find these kind of goals take about 5 years to stick, but that's with the economy in the crapper and everything).

There is nothing spectacular we have done over the years. Save a little every year. Don't borrow any money against home. That's really it. Time does the rest. I share because it's so important just to save what you can. To consistently save and to stay the course. I am sure I would have found these numbers overwhelming or impossible when I Was younger.

Being very debt adverse, the mortgage still has never bothered me much. (Though obviously no plans to keep it forever!!). Why not? Because if we wanted to be 100% debt-free tomorrow, we sell the house. The End. Debt Free. There is certainly a lot of bad mortgage debt out there, but we have avoided putting ourselves in that type situation.

So why is this such an exciting milestone? For the first time I can envision paying off the mortgage and being 100% debt-free, *while keeping the house.* That feels AMAZING!! That means, keeping a roof over our head and not having to pay rent or a mortgage. & to me, this is a level of financial security we have never achieved before. Woohoo!!

I totally understand it's a little premature to get too excited about it. But then again, it only took about 4 years to turn $100k to $200k. Our savings level is back to where it was last we both worked - trying to save about $30k per year. At some point it becomes an obvious choice to save and invest rather than to be "debt free, today."

At current, I still envision paying off the home age 45 or 50. I am 36 today. If we have another good stock market run in the interim, I'd consider cashing out at a peak and being debt free. It just depends on all factors. With these low interest rates I lean towards investing in mortgage payoff (4%) versus bonds and more cash. If interest rates were higher I'd maybe keep more conservative investments in cash or bonds, earning more than our mortgage rate. I am a risk-adverse type, so will not be putting 100% of our money in the stock market. & it seems silly to settle for less than 4% with the more conservative portions of our investments (above and beyond more immediate cash needs). This is something we just evaluate constantly as economic factors change. What I am doing this year might look totally different next year. It wasn't that long ago I had a 6% CD at the bank. So, will see.

In other news, real estate is HOT here. Our house might be worth $350k today and will easily hit $400k this summer. Homes are selling in minutes and going up in $25k increments. Bubble 2.0 is here. (I call it Bubble 2.0 because no one is putting down any money on these homes, nothing seems to have been learned in the first Bubble. I don't feel like we ever got anywhere near true rock bottom with all the investor speculation keeping home values artificially inflated. The market is spiking as real families are actually starting to buy these homes, to live in).

So, I talked to MIL to sort out the 529.

The final nail in the coffin was that BM's 529 plan didn't make any money in 2012. Even MIL knows that is "really terrible." !!

I don't have anything personal against 529 plans - they are a good tool for the wealthier. BUT, it is good to know how your 529 plans are performing and it is good to know if you are actually saving enough taxes to warrant the higher fees and all of the limitations that come with a 529 plan. I included a helpful article below, that discusses some of this. In addition, many tax cuts were just extended more permanently. For us, this means our taxable investments won't be taxed, for the foreseeable future. 15% tax bracket = 0% capital gains tax rate. & doubtful we will have gains large enough to bump us into a higher tax bracket, especially since we can harvest tax gains periodically. This recent tax law change makes the 529 plan pretty useless for our purposes.

I won't hold my breath until MIL gets her money out - I know stock broker will give her a really hard time about it. The penalties and interest don't amount to a hill of beans since the thing never made any money.

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9 Situations In Which a 529 Plan May Not Make Sense

https://blog.wealthfront.com/9-situations-529-plan-sense/

I've already talked about all of this, but will do one final 2012 wrap up.

Net Worth

Cash: +$5,000
Investments: +$32,000
Home Value: +$65,000
Mortgage Debt: -$6,000

Total Net Worth: +$108,000

I have failed on my net worth goals the past 4 years, but this almost makes up for all those years. (Real estate had plummeted those years, only to rebound to 2007 levels in the current year). Going forward, still have a goal to increase net worth by "50% of our expenses" on an annual basis. (This year, $108,000, is almost "200% of expenses" - which covers goal for past 4 years, and makes up for some bad real estate years).

Oh, and as of today our net worth is about exactly $300,000. Depends how the stock market does on Monday...

ETA: Officially ended the year at $300k!!

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Income

Income was *awesome* this year.

--A solid $2800 in credit card rewards (tax-free)
--$6,500 overtime (it helped that no one was in the hospital this year!)
--$1,000 in amazon and craigslist sales
--smaller amounts of bank interest and focus group money
--Cash gifts galore (tax-free)

The interesting thing is that this year we surpassed our prior two-salary income level (when you count all the extra in-flows). But it is not apples to oranges in the least. You will notice how much of the extra this year was tax-free. This means we blew our "two income take-home" completely out of the water, this year. I share because the one-income thing for us has always been about "working smarter, not harder." The linear idea that we literally live on "half as much" has always been completely ridiculous.

I know we are extremely blessed to receive some nice cash gifts this year. I also know we made excellent use of the windfalls (extra payments to the mortgage, bulked up cash, sped up ROTH contributions, visited aging grandparents, etc.).

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Expenses

As far as the monthly expenses, we are a well-oiled machine. Money to savings first. Live on the rest. As such, there is little variability to the sum of all our monthly expenses. (There may be give and take between categories).

The less predictable expenses varied more (some come from savings, from extras, etc.). BUT, I already noted that we didn't spend any more money in 2012 than 2011. I find that fascinating since we were able to buy and do so much.

The variable expenses breakdown:

--Dining Out - spent $600 less

--Home Repairs - spent $1,000 more (versus about -0- in 2011)

--Medical - spent $2,000 less (no surgery!!)

--Misc. - spent $4,000 more
(New dishwasher, new garage door opener, a bed for LM, new couch, new smart phones, new TV - feeling the prosperity - some long overdue purchases here. I couldn't fathom buying anything large next year, in comparison, if we fulfilled several years worth of waiting and wants in 2012)

--Mortgage interest - Spent $2,000 less (thanks to lower interest rates!)

--Piano lessons - Spent $1,000 less because in-laws decided to pay all year

--Vacation - Spent $2,000 more (due to gifts, and status of aging grandparents we intended to visit)


**Consistent expenses:

--Auto (fuel, insurance maintenance)

--Groceries (almost to the penny)

--Insurance

--Utilities (traded cable for smart phones)

--Mortgage principal (paid same amount as last year)

--allowance, clothing, gifts, gym/aerobics, HOA, gardener, haircuts, sports, Christmas

--The rest of our misc. expenses (not big purchases) were pretty consistent. Further details: script software for dh (after he finished his first script, ironically - he used free software for his script), watches for kids, toothbrush heads, hair clips, movies, SA meetup expenses, concerts, events (robot wars), blu ray burner, camera accessories, CDs to burn, birthday party/gifts for kids, swim goggles, school supplies, pet supplies (litter boxes), piano tuning, bowling, golfland, online backups. This stuff is just all too small for its own category; largely where we put any purchases or any entertainment.

On the expense side, there is room for improvement. If we hadn't done all the extras, you see we have room to trim expenses. This year reminded me of lower income years when it seems luck went our way and we did not spend large sums on home repairs and medical bills and such. To be fair, we had an emergency room visit, a broken heater, and had to replace a dishwasher and spent a fair amount on our garage door, and I think we drove to San Jose MANY times when Grandma was in the hospital, on and on. BUT, it didn't seem to come from all sides/all year like it had been doing in recent years. Phew!! For one, it made all the difference not to miss work because one of us was having surgery! I am still working on decreasing overall spending for next year. IT's give and take because I wouldn't be surprised if we had some large vet bills and appliance replacements in 2013. But, if we don't, it could be a decent year to decrease our overall expenses.

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I have no idea what to expect for 2013! I know we will be losing $130/month with the payroll tax holiday ending.

I know our income taxes will be going up, and we could possibly stuck with AMT too.

I know our health insurance and property taxes are going up significantly.

I don't know if I will receive any raise.

So, more to ponder once January shakes out. Too many unknowns in the immediate future - I hope to get some tax and salary clarification in the next week or two.

We also have absolutely *nothing* on the purchase horizon, but the cat is getting old, our cars are getting old, and so is our fridge and hot water heater. These are the predictable nearer-future expenses.

I quote Lucky Robin.

In the year 2007 I believe, I made a pretty aggressive goal to have "$150k in retirement" by age 35. I think I was thinking more like the day I turned 35, and was definitely counting some more work retirement contributions in that calculation (another $10k-$20k that I never got). & even then, this goal felt pretty "pie in the sky."

For reference, in the year 2007 I only had $55k-ish in my retirement funds.

But, for all the setbacks, and how aggressive I felt the goal was at the time, I am getting pretty darn close!!

As of yesterday, had about $135k, including cash I already have for ROTHs but did not contribute yet. I can't physically put any more money into retirement accounts (that cash maxes me out), so it is what it is. I also don't really have any other investments (aside from things that are in the kids' name - obviously not for retirement!).

& I could set aside more money "for retirement" (in taxable accounts) to meet my goal, but it doesn't make any sense considering big picture, tax considerations, etc. So I will not do that.

But, will see how the rest of the year goes. At this rate, I suppose anything is possible. 3 more months until my 36th birthday.

& I would be willing to max out ROTHs 1/1 to meet this goal. Off by 30 days from my goal? Who gives a flip! I am at the whim of the stock market. Who cares about *perfection*? I can't beat myself up about it if the stock market takes a dive tomorrow.

I'll post again on this subject and my progress, around my birthday. Again on January 1, if need be.

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Next goal? Pay off mortgage by age 45. I have no idea how - but I think even if I fail, I will be pretty darn close. What's the worst that happens? Pay it off at 46?

{Truth is, I can imagine scenarios where we pay it off in just a few years. Other scenarios it would be put off indefinitely - like prolonged job loss - but you just have to hope for the best}.

P.S. Our retirement vehicles are maxed out, so not much else to do there. To obviously be re-evaluated as economic and job factors change. But on the retirement, I do feel the *hard* part is done. Around the $100k mark, compounding really starts to take over. We can commit to max out, but other than that, I think it's prudent start hitting other financial goals. I think I am just a "one focus at a time" person - always have been. I really enjoyed hitting the mortgage hard when younger, and hitting retirement hard for a time. IT's going to be back and forth until the mortgage is gone. But I do think the *hard* part is done with both of these monsters. Plenty of work to still do, but over the hump.

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I like aggressive goals for two reasons:

1 - If you fall short, you still did pretty darn good.

2 - I am continually amazed at what I have been able to achieve in this life. It definitely takes more than "thought." But, by the same token, "thinking it" is often 90% of the battle.

Perfect example? My spouse told me he thought we should buy a residence, in our early 20s. & I thought he was out of his flipping mind!! But, we sat down and ran the numbers, it actually made sense, and we were buying a condo just a couple of years later. I basically went from "I can never afford a home here" to "homeowner" in 2 years.

I was catching up on my e-mail the other day, and lots of interesting articles in my inbox.

Big-money funds buy foreclosures -- to rent

http://www.ocregister.com/articles/says-370027-market-homes....

"No condos wanted, and no "McMansions", either. The objective: Bank-owned "family'' homes, with, say, 1,800 square feet and 3 bedrooms, in stable neighborhoods where prices are expected to rise.

That's the sweet spot for Carrington Capital Management LLC, a private equity fund with Orange County ties in an increasingly competitive field -- big-money players going after foreclosures."

I share because I have kind of watched in awe as the flippers have moved back in (& have been surprisingly successful). Most the houses in our neighborhood have been foreclosed, bought by flippers, and then bought by investors to rent out. I have also mentioned that most buyers are not even from the area; many not from the U.S.

So, what has changed??? The market almost feels more speculative now than it did in 2005. {I know a few individuals buying homes, but no one who is buying anything within the realm of reason, or with more than a 3% down payment. ???? So, what has changed?}

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An Ethics Test Your Adviser Might Not Pass

http://www.smartmoney.com/invest/stocks/an-ethics-test-your-...

New research suggests most assets are managed by firms with regulatory violations or conflicts of interest.

Man, I see this *so much* in my line of work. So, I didn't find this surprising in the least.

& ha, my favorite investment advisor, Merrill Lynch, made the list for felony, misdemeanor, SEC violation - they got a giant red x in every single category. Surprise surprise!!

Even Vanguard had commodities trade violations (on the red list!)

Critics also say that what Diligence perceives as potential conflicts are commonly accepted practices throughout the industry -- for example, the hybrid model of firms that both sell products and provide advice

But that's the problem - it's a HUGE conflict of interest! Just because it is a commonly accepted practice doesn't negate that.

P.S. I am skeptical how squeaky clean all those green companies really are - yes. I've seen it over and over with small asset management firms. A lot of them are squeaky clean until they run off with your life savings. So, you just have to be careful. Take this list for what it's worth - a list of companies that have already been caught red handed. Others yet to be caught.

**Interesting observation: Paid $0 for babysitting or childcare in the prior 12 months. {May have paid cash once to teenaged neighbor - but don't particularly track cash purchases, since very rare for us}.

This may be dumb and a waste but we decided to use drop-in place this month for Back to School night, though not needed. IT secures our registration for another 12 months, in case of emergency. We only need about 1/2 hour of care for BTS night, so no biggie. Maybe $20-ish when you factor time to drop off and pick up.

This reminds me, I was also going to sign up the kids for before and after school care, in case of emergency last year, but never did. This year they made us fill all the paperwork anyway, but not required to pay a registration fee unless you utilize more than twice. SCORE! So, it's available if needed, but no financial commitment if we never end up needing it. This is really nice.

On the drop-in place, if we don't utilize again in the next 12 months, we will let our registration lapse next summer. BM will be 10, and all this is getting to be pretty moot. {& if we ever actually do need it - we just sign up again, then}.

In order to cut babysitting costs, dh and I have been meeting for lunch dates (taking advantage of lower lunch costs and the kids being in school). Most the neighbors are out of work so there is always someone to pick up the kids from school or take them for a couple of hours if need be (dh has had a lot of random Doctor appointments the past couple of years - usually when this comes in handy). Kids are often away at playdates anymore. & this does not factor that my MIL begs to watch the kids here and there and sometimes sends us off on vacation just so she can get the kids for a week.

This is an expense that seems to be mostly gone from our lives. Phew!

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I mentioned the kids were into money-making schemes lately.

I have no idea how it came up, but we got on the subject of stocks yesterday. So, I ended up having the kids pick about 10 stocks and we set them all up in yahoo finance as if we had bought $100 of each stock. This way, BM can look every day when he does homework and checks his yahoo e-mail. It's easy to see if his stocks are doing well or poorly, based on if his balance is over or under $1,000.

BM is now a whiz at researching the stocks on yahoo. We looked at graphs and dividends and all that jazz. I explained the Dow Jones to him. He soaked it up pretty quickly. I figured we would have to track dividends (at least input them into yahoo as they accumulate) so will give us a project to do. This is probably a good challenge for him since he is way into math these days. Just another way to make math interesting and useful. Heck, he also got a fair lesson on public and private companies since we looked up quite a few things that were private companies that they could not invest in (Legos, Minecraft, etc.). So that means I had to explain to them the difference, and so on.

I figured we could track through the end of the year and maybe for next year we can do some actual pretend stock trading. This year is more learning about it and next year can be them actively participating a little more. Might as well learn the hard lessons while young and with nothing to lose. If they do well, I would probably pay them the profits. I'll have to think on it, because I wouldn't ding them for losing. I think they'd get the point though. When I think back to money lessons of my youth, my parents always over-rewarded me too (like 100% match for meeting a savings goal).

Mental Note: Must look into DRIPS - might make sense for some real investing for the kids.

Today is investment clean up day. Lots of portfolio adjustments.

In addition - I am consolidating down to:

--Dh has one ROTH
--I have one Regular IRA
--I have two ROTHs - one for mutual funds and one for cash and stocks (brokerage)

{We might have had 7 accounts or something at some point - don't ask me why!}

Of course, I still want to convert the regular IRA to a ROTH, so there is more consolidating in my future.

On the investment cleanup, I really thought that I was going more away from "Target Date" type funds, now that we have passed the six figure mark and can really start to diversify.

Funny thing? I am leaning more towards "less is more/simpler is better." SO I am cleaning things up but am ending up mostly with one mutual fund per account.

I don't know why I have been so resistant to simple index investing. At the end of the day it fits my personality and life strategy better. Keep it simple; don't over-think.

I have been picking a lot of smarter brains (smarter/older/more wise than me), and this is where I have ended up.

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Not much else to report. Haven't been spending *any* money and payday comes tomorrow with most of it going into savings.

Oh, and my kids turn 7 & 9 in the next couple of the weeks. How the heck did THAT happen? I swear I will blink and they will be adults.

**Is it weird that I am bummed that first mortgage payment is not due for another month?

I think I am just itchy to make first payment and to see how extra principal payments are handled. The CU website does not have a space to enter "extra principal" with payment, and I am not keen to revert to a paper and check method (I do have paper coupons). I think I will just make the paymnet and send an e-mail about the principal application. I can't be the only one online who wants to just pay it at the wesbite, without a paper check.

Anyway, it's probably best to replenish savings with next paycheck. April 16th should bring me some serious cash inflow. Or not. I need to wait for my overtime to be 100% sure how much I want to put to the mortgage, anyway.

**I am thinking a lot more about tax gain harvesting. I share in case you are not aware that the long term capital gains tax rate is 0% for "15% or lower" income tax brackets. {Expires this year? Maybe not expiring with all this election stuff?} I've got too many tax shelters to bother with taxable investments, so it doesn't mean much to me, but am thinking about it in term of kids' UGMAs and my folks (who have no income at the moment, but lots of investments). Regardless, I was also thinking this was an easy scheme to skirt around the kiddie tax. To harvest gains. If the stock market stays up like this... I googled a bit and apparently this is quite common. I just hadn't thought about it before. Will need to think about it more as the stock market performs well and their balances grow.

**So much of marketing is getting you to pay more for very similar products. (Or, allowing you to pay much less, if it means you wouldn't buy it otherwise - i.e. senior and student discounts. Better to sell at lower prices than not all, to certain demographics).

Funny experience today. Dh met me for lunch. I had $7 cash in my wallet, and wasn't so interested in eating out, as I just wanted a break from craziness at work (but no time for the usual drive home). So we go to the Wendy's across the street, and I just look at the Dollar Menu and get some junior bacon cheeseburger thing. & some value fries. Dh orders the Baconator! It came out to like $7. Neither of us eat there very much at all (once every couple of years?). I am a BK gal and he likes Carls Jr. So, we sit down to eat and dh looks at his very small burger, and looks at mine, and says, "What is the difference??" I said, "It looks like it has a thicker patty?" He didn't believe me, but I thought it looked very slightly more substantial. Though otherwise it was pretty identical. So he tells me, "I paid $4 for this thing!" I just had to laugh because though it was a perfect size for me, there was no way that little burger was going to hold him until dinner. He was thinking big giant Carls Jr. type burger, know what I mean?

So he did complain about it - they told him it had a "premium bun" (looked identical?), more bacon, extra cheese, and a bigger patty.

Pfffft...

I am sure all fast food chains have similarly priced type items. We just happened to order the budget-priced and the cadillac-priced version of the same thing. No discernable difference. We were both business majors (he majored in marketing), so there is nothing surprising about this. But I just thought it was funny. My dh was not amused!

Ah, I love the dollar menu!

I actually just noticed the other day that the BK shakes were almost $4 as well. I was thinking of getting one. I looked at the price and thought, "Like hell!" Their little fudge sundaes are $1. I figured the difference was negligible there, too.

I don't buy stock for 10 years (individual stock) and the first one I buy post-2011 is the "#1 Stock of the Year." Up 68%, as of this morning. (Netflix).

I think *we* are up about 60% - except I already sold some at a 30% or so profit.

I actually don't want to share my strategy on this. But I will share after the fact.

Of course, this is the point where *I* would take the money and RUN! & it's in our ROTH so it is TAX-FREE profit.

But dh has a point. Now that they showed some awesome earnings and beat analyst's expectations, people will start jumping back in. That's his theory and I think he has a valid point.

Anyway, I will be making moves on this soon, so will you keep you updated. But, we agreed not to sell any today. Well, not at current price.

I kind of expected dh to relearn why we aren't in individual stocks. It's very soon and I admit it is very likely we will relearn all the bad. But, I amfraid the opposite has happened. It's been kind of fun. Though seeing the "#1 stock" headline was a wake up call. This is as good as it gets. Basically, a reminder not to expect anything like this. Ever again. We got lucky. I mean, 60% return in a couple of months??? Definitely not average.

& I think dh I and make a good investment team. We respect each other's opinions but have different points of view. I already sold some to hedge our bets, for one. But dh kept me from selling it all. So, will see... (You know, it's not "my husband threw away all our money and I didn't agree" or "My wife wouldn't let me invest one penny in stocks," and talking it out really helps us think it through).

For reference, last we *gambled* in the stock market, it was almost everything we had (because we were young and didn't have anything to begin with). These days, we are sticking to 1-2% of our investments. It's a very different game. I hear 5% recommended, but we are pretty conservative, plus just dipping our toes back in. We have never put anything in stocks we couldn't afford to lose, but I think we took much heavier losses in the past. Was maybe 50% of our investments, in the 2001 era. & we lost it all (all the stocks). So, there you go. Losing 1% is much easier to stomach. Plus I think we are much smarter investors these days.

**When dh made the NFLX buy, it went up about 25% in a week or so.

I felt it was prudent to sell off the profits. Make 25% in a week or two? SHOW ME the money!

Dh didn't agree and we left it in. It went up further. HE said, "I was right."

Then it went into the toilet.

I figured all along dh just needed a reminder why we *don't do stocks.* So I wasn't overly worried about all this. Though maybe a little annoyed. My strategy is simply "risk adverse non-gambler." Which dh also is, but his brain goes out to window when it comes to stocks.

Anyway, my dad called me to tell me NFLX had hit 100. I wasn't near a computer yesterday and had no idea. (Not sure if dh is living, breathing the stock status like he promised me he would - like I didn't want to find out the day after if some news sent stock prices dropping. Likewise, prices getting back to my sell point - he should have told me). I told dh as I was walking out the door today that I was selling my 25% profit as originally planned (if not too late), but we could talk about snatching up more shares if it dropped again. I was waiting for him to argue, but he didn't say anything.

For reference, after trading fees and everything, I sold my 25% profit today.

I sold 1/4 our shares for about $300 and Amazon was at $175 or something in that realm, so I just snatched up one share of Amazon. We each have 1% of our retirement portfolio in stocks. I chose Amazon, but paid way too much (couple of months back), it seems.

Stupid quote from dh: "I forgot about the stock market as a whole." For when NFLX dropped substantially with the rest of the market.

Seriously dh? Seriously? Because losing $100,000 in home equity while trying to sell our house, when those planes hit on 9/11, that didn't do it for you? Completely unpredictable "out of nowhere" events can put the markets in a tailspin??? (I just don't know how you can lose so much financially in one random event and not be wary in the future. To be clear, not that I think our own financial whoas amount to a hill of beans when it comes to the Tragedy of 9/11. But, just saying that dh should know better).

See, I'd probably be better off if he lost miserably. He's a very smart, practical, risk-adverse guy. But just mention the word "stock" and his brain goes out the window. But, he is also not a big gambler so I don't foresee this becoming much of an issue. IT's just maddening to watch him relearn what I learned very loud and clear in the year 2001. We lost a lot, financially, that year. All those glorious tech stocks ended up in the toilet, too, lost several thousand dollars. The home equity would have recovered, quickly of course, but we had already bought another home and were moving - so just had the luck to completely ruin our plan and put us $100k behind. That sure was a financial lesson.

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**I read "The End of Normal," by Bernie Madoff's daughter-in-law. Kind of interesting, very sad. Her husband (Madoff's son) committed suicide. They claim he (son) was totally innocent and that Madoff had stolen from several family members, etc.

More along the theme of "Your life can turn upside down in one instant" without you having a clue what is coming. For that, it was riveting.

**Randomly picked up "Moby Duck" and barely started, but so far is a really good read.

"Moby-duck: an accidental odyssey : the true story of 28,800 bath toys lost at sea and of the beachcombers, oceanographers, environmentalists, and fools, including the author, who went in search of them"

LIBRARY ebooks, of course!

**A friend flaked on me Sunday, so I finally sat and watched the first 3 hours of Battlestar Gallactica, with dh. I had tried before, but usually fall asleep (as I would watching anything post 8pm at night). But I was really dragging my feet on devoting the time, if all it did was put me to sleep so far.

Okay, so after those initial 3 hours, I am SO totally hooked. What an amazing show. Dh was right, which is why I kept trying. Every episode is 45 minutes, after the first two, so I can live with that. What's nice is we can watch it around the kids. (We have been watching HBO shows after kids go to bed and I am way off my schedule). So I told dh I would watch it if I could watch it after dinner - no more LATE bedtimes for me, during tax season.

So, yes, I was planning to be all social and all that, but instead I have been in introverted bliss. Worked all alone Saturday, watched TV and read all day Sunday, and now I've just got a few days to finish my Moby Duck (I got it before 2 other books that all became available about the same time, so is the last one I got to - didn't expect it to be so good?).

& financially? Not a heck of a lot going on. Like, nothing. I still haven't heard on that appraisal. I should probably call the CU and make sure they got it. Which would take me out of my introverted bliss. *sigh*

**Heard in my house recently: "If you can't behave/listen, no more online math for the rest of the week!" Yes, I had to giggle when I heard dh say that to BM. No extra-curricular school work if you can't behave! Well, the threat worked...

On top of that, he has been going to math club 2 afternoons a week - also threatened. The math/accounting genes apparently run DEEP in our family. (Dh's family has a number of mathemeticians, and my family has a lot of CPAs. I've never thought of BM as a CPA type, yet, but this ordeal made me wonder).

**Interesting updates on my car. It was making a burning smell, with no other problems. The transmission fluid wasn't *low* but was close to low. So I put about a half quart in yesterday. It didn't do the burning smell thing on the drive home, like usual, BUT it had really cooled off yesterday. It has only been doing the "burning smell" when I drive home after the car sits in the sun/heat all day at work. (I have been trying not to drive it too much otherwise). So, I think it is likely the car didn't even get very hot on the drive home yesterday. Will keep an eye on it.

I also noticed, to my relief, that a little plastic piece had broken off some part of the engine. It didn't really do anything useful, and the assumption would be that it just fell out onto the ground. BUT, it would sure explain the weird burning smell every time the car heats up to a certain point. I looked around the engine for a long time and couldn't find it. But, I am thinking it is very likely that is the issue. Will see...

**Tons tons tons of road work being done in California. We have taken note not to drive between here and family at night - unless we want to sit in road construction traffic for 50 miles or so. So, anyway, I just read they are re-paving the stretch of freeway that I commute every day (about a 10-mile stretch). Long overdue. I saw specifically in the accouncement that all this was part of an effort to give more work to construction workers out of work, etc. I have mixed feelings about it. Sounds great, but where is the money for all this coming from???

**I bought some stock. Hell froze over and I bought stock!!! Actually, dh wanted to buy some netflix. It was a little deja vu from when we lost thousands in tech stocks. He seemed awfully bullish, and I was skeptical. BUT, I told him I didn't mind the opportunity to invest in stock without an official broker broker. (We never have - I would be prepared for some last minute stock buy if I ever get the itch - if I went through the process now). I also read equal parts "netflix is the worst investment every" to "buy buy buy" so I figure that's probably about as good as it gets. (If everyone things you should buy, it's probably overvalued, and it the majority thinks it sucks, it's probably a bigger gamble than I'd take).

I think this was a good reminder to invest in what you know. Like we couldn't have made a killing off of apple or amazon the last decade - you know? I am telling myself to pay attention on Facebook to what EVERYONE is talking about. Obviously hindsight 20/20 makes it appear easier than it is, though.

The agreement was we could put 1% of our portfolio in netflix, if dh agreed to keep his ears open - he pays far more attention to the news than I do.

& if it goes terrible, I know it will be 10 years + before dh asks me again. He was admittedly far more humble this time around.

My generally feeling is that I am pretty burned on individual stocks. (I am always reading in the newspaper how the dart board picks always win the carefully picked stocks, for one). BUT, my grandfather and father have made a good haul with some pretty good stock buys over the years. Since we will likely inherit some of their good fortune at some point, I mostly feel like, "Let's quit while we are ahead." Kind of the same way I feel about California real estate. If we mostly stand to inherit California real estate, and put most of our money into a house here already, why would I put MORE money in that basket?

I bought NFLX through Fidelity. My first choice would have been Vanguard, but I had to open a seperate brokerage account to do so. Bah! T Rowe was the same way. Fidelity let me buy stock the moment the fancy hit me. Their cost was the same anyway. We need to buy more stock to make a seperate account worthwhile. Maybe, eventually.

ETA: I also bought some Amazon. Mixed the mark a bit because I don't know what I Was looking at but didn't see the below-200 price when I checked it earlier this week. My dad mentioned it as a good buying opportunity and I agreed with the small price dip that still remained. I think the kindle fire will be hot, and Amazon is a GREAT company anyway.

I hear almost on a daily basis how home prices are rock bottom throughout California, and the "deal of the century."

????????

Honestly, I've read enough articles and talked to enough people to know that the majority of home buyers around here are outside investors (other cities, other countries, other states), and buyers with little-down loans (FHA?). That's what is keeping the home market from collapsing in Sacramento, specifically. People who know nothing about the local market, and more creative lending.

Oh boy!

I know a handful of people who got off the fence and bought - maybe with some decent down payments and fixed rates (but I wouldn't know for sure - the terms of their purchases). But, that's rare. I know far more broke people buying because "it's a good investment and no money down required."

The more I talk about this with people, the more disconnect I see between their lofty "get rich quick" schemes and the real estate reality.

I even went through zillow and examined historical home prices in several cities I am familiar with because there is such a huge disconnect between what people are spouting about home prices, and reality. As I expected, home prices are largely higher today than they were in 2001 or 2002. Zillow backs up my impressions. (Zillow runs pretty accurate here because home sales are so constant. Home sales prices are a good indicator, and there are tons of sales).

Sure, prices are lower than the peak, but any year before or since about 2005-2008 would be lower than the peak. That doesn't MEAN anything!

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Anyway, in 2004 or 2005 I saw a graph of Southern Cali Home prices compared to median incomes. It was a historical graph with a HUGE and sudden spike around 2002-2004.

I had seen similar graphs in regards to Sacramento real estate. Back then, it seemed obvious that home prices were unsustainable.

So as I hear all this nonsense, in recent days/months, I was poking around to see if anyone had updated any of these graphs through the year 2010 or so. I'd mostly expect home prices to either have leveled off, or still be quite high. I wouldn't have expected prices to have dipped down to some historic low. Because they haven't. Not from the long historical perspective.

To the next person who tells me I am a crazy investing know-nothing about real estate:



Courtesy of econintersect.com

http://econintersect.com/wordpress/?p=4487

Look at all those graphs on this blog post. Beautiful!

"And the irrelevance of interest rates to home prices during a housing market depression is obvious when one looks at the ultra-low interest rates of the 1920s and 1930s accompanied by home prices one standard deviation below the historical average."

"There is no way that a thorough look at the data can lead one to rationalize that the housing market is poised for recovery."

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If you are wondering why I am not running out and investing in real estate, this would be why...

**Well, my 5.5% CD matures in September. I thought it was October. Glad I was on top of things - it was end of September. Ack. But got all the paperwork in to roll it over to my brokerage. It is a CD in a ROTH.

So, I made out well for the short time that interest rates were "decent." They haven't been most of my adulthood, that is for sure.

(I Also spent most of 2007/2008 earning 6% on credit card arbitrage).

I was actually going to roll my CD into a mutual fund in 2006, but at the time, I saw a great deal on this CD - for THREE years. I decided to go for it. I had a feeling this whole housing mess would implode. I didn't expect it to be so hard and fast. Funny enough, I regretted this decision early on...

Of course, the market has been so hot lately. I don't know. I am just transferring it into cash. If the market is significantly lower than 2006 (hard to say without looking at it) I will just buy into stocks. If not, I may slowly buy in. I have a little research to do.

Has my attempt at market timing panned out? Perhaps. All I know is I am consolidating my retirement accounts further, and don't plan to chase CD rates any further. It's pretty much a PITA. When rates improve, I will chase them in my taxable accounts. But no more of this CD ROTH business.

This CD is an old relic from my "young and saving my retirement in cash, because I didn't know any better" days. I am ready to move on.

(Hmmmm, DOW was 10,600 in Sep '06 and is currently 9,600. I can't help but feel I Would be better off waiting a bit though. But, I don't know. Will see where the DOW is at when the money appears in my account!)

Truth is, I have come out ahead and should just invest it! I shouldn't be greedy - I already leveraged this CD for some low stock buying - in the DOW 7k range. I took some liquid ROTH cash and bought at some of the low points. This CD will refill my ROTH Efund Cash reserves. I am relieved it is maturing, for that reason.

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**Education - isn't that a hot topic lately?

I am so PLEASED with BM's education right now. 1st grade has far exceeded my expectations. I am sure this is one of those areas where "luck" plays a part, but GOOD, affordable education is extremely important to dh and I. It is something we will always strive for. Certainly didn't fall into our laps. While so many friends and acquaintances were so concerned with "appearances," our attention to true substance has paid off.

But yes, the school has certainly talked to talk. Their walk has exceeded my expectations and I am so happy for that.

I also feel extremely alone in my feelings. When I rolled my eyes about acquaintances misinformed ideology on class sizes, I realized this year maybe I Was too narrow minded in my thinking. With the economy as it is, and budgets being slashed, class sizes are growing once again. (All schools in our district have increased class sizes, but the Charters who are hanging on to small class sizes for dear life).

Maybe the private school crowd had it right? Or did they? I have friends who are leaving Private schools because they are so under-enrolled this year. Isn't that interesting? My one friend actually prefers public school, but the private school is cheaper for full-time care (cheaper than after school public care). So, she has stayed, but she is worried about there only being a handful of children in the class. Her school is not known for doing well with the higher grades though. She just wants out before her child hits 3rd or 4th grade. & also doesn't want going from a class size of 10 - to 30 - to be a shock. !

Anyway, everyone seems to have educational worries these days. Public private, etc.

It's not all roses for us. The assigned middle school leaves much to be desired. But, that is so far off. I can only take one thing at a time. Who knows, those whoas may all be resolved in 5 years anyway... & there are certainly other affordable options than our "assigned public school."

(I forgot to mention - because of my friend I did look up after school care costs. Yowsers!!!!! More affordable than preschool childcare? Yes, but not by much. Dh can stay home a few more years. Yeesh).

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**Um, I learned something new?

When I last checked my credit report, it occured to me that some of that stuff should start dropping off soon. Didn't we refi out of our first mortgage in 2000? Why would that still be on our credit report, anyway?

I went on a quest to learn more about credit history and such.

I was surprised to learn that "bad stuff" drops off your report after 7 years, but "good stuff" stays on for 10 years, after an account is closed.

Seriously?

I had no idea.

I am continually perplexed by the misinformation out there about credit history, etc. But the truth is this, nothing has ever dropped off of our credit report. Everything we have ever had is still on there. Our many mortgages, and our many credit cards.

No wonder closing old cards hasn't amounted to a hill of beans as far as our FICO.

I also read uninformed forum talk about how it can take 20 years to build a 800+ credit score. Okay, yes it CAN. But if you pay all your bills on time, it is possible to get there in just a few years. It does NOT take 20 years!!! The discussion was about how fast it could happen. Seriously.

So basically, since I always close an old card when I open a new one, and none have dropped off my report, than my FICO score is none the wiser. Thing is, by the time my 10-years-closed cards drop off, I have already built 10 more years of credit history.

So, does it really matter? My experience has been no, but this points out why.

Obviously everyone's situation is different. There are other factors at play. But, yeah, I learned something new.

I guess our first mortgage will drop off our credit reports in the middle of 2010. But we have 10 years of on-time payments to show for it, since.

What will be interesting to see is what happens when my first credit card drops off. I closed it around 2006, after having it for over a decade? Then again, I tend to keep my cards about 10 years before something better comes along. Could be worse if I switched cards every year? But averaging 10 years doesn't seem to matter much.

Yeah, I am not losing sleep over it...

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**Extra-Curricular Stuff

BM is worn out by karate. He LOVES it, but it is on a bad day. The long school day isn't jiving with it.

I am sure I could find him more expensive classes elsewhere. On a better day. Ugh. But I really don't want to. Will see! (Price just doubled since he turned 5, as is. For 2 hours vs. 0.5 hours per week. HE only goes one hour a week since it's a bit of a drive though).

He did get into his other extra-curricular class, after all. The school opened more classes due to high demand. Another $80 down the drain.

Of course, that was before this karate development? At least this class is less physical.

Piano... Was I supposed to be teaching him that? It's been frustrating getting into homework habits and practice habits. Too much at once?

BM always begs to stay after school with "the other kids." But he whines when he can't come home and crash. Which is understandable - such a long school day for a small child. I'm afraid he doesn't know what he wants.

We didn't sign him up for soccer because it started at the same time school let out. ! I now think it was for the best.

I am definitely not one to over-book my child. He loves sports. We think it's important he learns music (he is interested). & he's still at that stage where we are just "trying new things." I guess it just happens, huh? I guess dh and I hated sports, so we didn't have to choose. BM has more to juggle in that regard. Throw in a long school day, and here we are.

Just looking at my year-to-date returns. I keep track in yahoo. I enter my fund shares at the end of every year. The performance I track is everything I had invested as of 12/31 of prior year. I can track more current progress in Quicken.

My first thought is I wonder when some people who "Cashed out" at the low are going to bother to get back in. Some relatives come to mind. Not counting new money, my portfolio is up about 25% for the year. There's certainly been a lot of upside!

Secondly, one my my funds really stood out as I was perusing them today. I have a T Rowe Target Retirement fund that is up 25%. It's having a good run this year. The funny thing is the only reason I bought it was because I could invest T Rowe with a mere $50/month (& no other initial investment). Today I have almost $4k in there. I chose the Target retirement fund because it had a slew of high performing managed funds for a low expense ratio. IT hasn't always beat the market by a mile, but this year it is kicking the other Target funds' butts! Ironically, it has a more conservative mix than most the others for the same target date.

Other things of note? I have considered selling my Dodge & Cox fund because all I hear is how these funds were awesome in their hey dey, but that they are so bloated with assets that the fund is no longer very manageable.

Today, I am glad I didn't listen. Highest performing fund of ours, up 36% for the year. I am a long-term investor and wasn't ready to just sell. Though I was looking at it critically in recent months.

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Any surprises in YOUR portfolio?

LM's account hit $3k yesterday, AND the stock market was up this morning. So I executed a trade, for today. Trading his Star fund for Vanguard's 2025 Retirement (He'll hit college age in 2023).

Success! I have been keeping an eye on this for 2 weeks. It's been frustrating.

This changes his stock/bond mix from 65/35 to 80/20. But also is a cheaper expense ratio, and I can put on auto pilot if I like (gets more conservative as 2025 approaches).

For now, just not enough to spread out any more (can't buy more than one fund!). I may prefer to manage it more as the balance grows.

BM is not so lucky. His account was like $5 short today. Bummer.

If August wasn't such an atrociously expensive month, I'd probably transfer $50 over to his account, and be done. I just don't feel I have a dime to spare for it. & I figure, whatever, if the market tanks, may be better to exchange it later. Will see. Maybe in October I will have $50 to spare.

We are also considering matching the kids' gifts going forward. All of their college money is pretty much funded by one grandparent. But they are retiring and we can probably match it starting 2011. (Next year is iffy - match will be easier once both kids are in school). I figure it's good to match it as there may be nothing to match, eventually, as they retire, etc. Then we can take over where they left off.

Dh and I spent pennies on our college, so though I think it's important to save up for it, I also don't feel the sheer panic that most parents do. Colleges here remain abundant and cheap, even today, where we live. (The abundance of colleges means kids won't have to go away to college, etc. Just means plenty of less expensive options).

We also have an entire second income to tap if the kids decide they are destined to be doctors or lawyers. From every angle, I Don't sweat it. BUT it will be nice to put a little aside. IT's been hard to justify until now. (Or until next year, I should say).

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Today I updated all of our savings balances through 9/30, etc. I have an idea since we don't pay most our bills (Credit card) until the following month. I think I got a handle on August bills (though admittedly, the month is not over).

& was pleased to see a $23,500+ balance in our savings.

$25k is so close I can almost taste it!!!!!!!!!!!!!!!

$30k is my goal. $25k is a pretty nice "we are almost there" point, though. Once we reached $30k, we wanted to splurge on a trip to Hawaii. (Well, wanted to reach a little more - did not want to drop below $30k for HAwaii trip).

With all these car repairs, not feeling optimistic on making it next year, after all. But still quite confident that Hawaii in 2011 can be the backup plan. Will see.

So I will enjoy my balance for another month. & I am pleased that even with all these car expenses coming up, that we can probably keep our cash upwards of $20k. That is a pretty nice feeling. Not a feeling we've really had since having kids.

For now the balance is broken down as:

$ 7k ROTH Efund
$ 5k Cash Efund
$ 2k Medical Fund (Deductible)
$ 9k House/Car Fund
$0.5k short-term
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$23,500 TOTAL
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One thing that helps is I just paid the last of the regular short-term expenses (auto insurance) for the year. Well, about $4k of expenses is due in December (property taxes and insurance). But that will build during the next 3 months and make my cash balance appear cheerier than it really is, in the interim.

I still may get the Mid-Term savings (house/car fund) to $10k this year, regardless of all this. I can hope! The balance on 1/1 was something along the lines of $0.

Today I feel like it's been 3 steps forward, and one step back. I can deal with that. That is the whole point of my savings goals - to stay ahead of the curve.

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In other news, kids had clean bill of health (teeth), BUT we were officially told LM will need braces, eventually.

No surprise there!

Funny, they never mentioned for BM. There could still be hope??? (He's older!)

They got my genes and LM's mouth is clearly a mess. I've already been saving up for that, too. IT's just a little more official, I guess.

One thing I may be less prepared for is little kids orthodontia. I didn't get my braces until I Was 10. It seems these days, they start with baby teeth. Will see. I hope I can wait a few more years! But if they can start earlier and if he didn't have to have braces for like 7 years (like I did!), I guess I won't complain. I hear it is a lot easier these days. LEss painful and less ugly. Still, poor kid. It's kind of a bummer.

The short answer is that I keep most of my cash in one account. I keep a $1k cushion in my credit union savings account - which I can withdraw or transfer (to my checking) immediately if I needed it. I keep some cash in my ROTHs (will explain below). I do keep most of it in one Online Money Market Account. For the long run I will probably invest in CDs. For now, there is really no reason to (low interest rates, etc.).

I do keep my cash readily accessible (I can write checks from my money market savings) BUT it's not something that tempts me. I don't personally need to "hide it" so I don't spend it.

I do prefer to keep at least $5k cash readily accessible, for emergency. I think my $5k is like Dave Ramsey's version of the $1k mini-emergency fund. I don't think I have ever had less than $5k cash in a savings account, in my adult life.

Right now I am all in money market cash, so to speak, because we have been "low" on cash and I haven't felt comfortable tying any of it up. As the balance grows to my goals, we will need to ladder some CDs, etc. We may even look at some bond funds - I just haven't gotten to that point yet.

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But, let me go back to the beginning. I've said before, our parents were wonderful financial mentors, but taught neither of us about investing. So WHEN we had $50k+ cash in the past, we were really stupid. IT was sitting in our low-interest savings accounts. Our worst financial mistake ever.

I also had an IRA sitting in cash. No one ever advised me to invest it. !

It was around 2006 and more difficult financial times that we decided to earn some interest on our money. Which was ironic since we had blown through most of it by then. But we opened a couple of high-yield money market accounts since then, and that is where most our savings has sat, since. (We had some CDs when we did some credit card arbitrage - CD interest rates were "high" then).

I was also going to invest my pathetic IRA cash, BUT in 2006 interest rates were higher than I had ever seen them as an adult, AND the writing was on the wall with the economy. We were knee deep in the housing bubble and it didn't look good (just as we had been knee deep in the tech bubble a few years before - we lived in the tech capital and my spouse worked in tech). The writing was on the wall so I took a gamble and converted my IRA into a ROTH and then stuck it in a 5.5% CD for 3 years. Turned out to be a good move. IT matures in 2 months and I will probably be able to invest it at much lower stock prices than I would have been able to in 2006. That's the story on that.

Anyway, as we tried to rebuild our cash reserves, from our $5k low in 2006, we didn't have a lot of money to go around. But I Received a $5k gift a couple of years back and was able to max out our ROTHs that year. I was very intent on building up our cash, but I felt comfortable with this because I knew I could access the ROTH in extreme emergency. So I actually currently have about $7k cash in my ROTH which is designated for emergency. The thing is, for me, maxing out the ROTHs right now is like putting away 23% of my gross income to retirement. Far more than we NEED to put away. But I will do it if I can access the cash in extreme emergency. I don't recommend this strategy if your retirement savings contribution is only 1% - 15% of your income, say. Or if your idea of an emergency is a car repair or a vet bill. I think hell will freeze over before I actually tap my ROTH for cash, honestly. My idea of emergency is prolonged job loss or loss of home (i.e. natural disaster).

Ideally, we will probably keep $10k cash in our ROTH, of our $15k total Efund. Keep $5k accessible cash for mini-efund. So, we may max out our ROTHs this year, with that philosophy.

The ROTH cash is in that CD I mentioned, and in MMFFs. I'll be able to invest a portion of the CD though. We have more cash than I prefer in our ROTHs, simply because my prediction on the recession. (It isn't much - nothing that will make us rich. Like $10k? )

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That's the long and the short of it.

The short answer is that all our money is in Money Market accounts, earning as much interest as possible. When we reach our $30k goal we will probably start shopping CDs and developing more of a long-term cash savings plan. Will probably be $10k in ROTH, $1k in Credit Union, $19k in Online Savings. Anything above that can be tied up in CDs. We will start formulating a long-term plan when we get there. I am a "one thing at a time" type gal.

Investing cash well is not an area I have a lot of experience in though. I have some learning to do.

I changed our retirement contributions around.

I made my last 2008 contribution on Monday. We maxed out 2007 due to a windfall but didn't even bother trying in 2008. But I always put as much as I can into the prior year. So if we were to have another windfall, or dh were to return to work, we don't let go of ROTH contributions foolishly.

Anyway, since January I have been contributing $350 per month to MY ROTH simply because it was the only financial institution I Could figure out how to make 2008 contributions to automatically, during 2009.

Dh and I view our retirement (As everything else) merely as "one." That being said, he does not work and I have a pretty awesome retirement plan at work. The only downside, and it is a big one, is that if something happens to me, dh only gets something like 50%. I didn't even necessarily realize this until rather recently when I updated my paperwork to add my children as secondary beneficiaries.

Anyway, so between those 2 factors, I think it is a priority to plump up his ROTH. I will probably get $8k in my work plan this year. We will probably only put $4k-$5k into the ROTHs. Seems fair that it should go to him. (In the meantime, life insurance makes up for this unfortunate fact).

That being said, my boss will retire in a few years and I can roll my work retirement into an IRA. So this is certainly not the situation forever.

I am contributing $50/month, going forward, to my ROTH. Just to keep it rolling. I am contributing $300/month to dh's ROTH starting in May. I just set it all up for automatic contributions. Since the last couple of years we have only been contributing around $100/month max, we have stuck to the "retirement funds" and "Total stock indexes." As I changed things around my $50 continues to go to a "retirement fund" and dh's contributions are 50% total stock index/ 25% international index / 25% balanced fund. We haven't bought much international since the market dropped, so it's good to jump back in at lower prices.

I read something the other day like those Retirement funds are risky. Some are down 50%! Well, sure, if you just contributed once, at the peak, and never looked back. Dollar cost averaging significantly smooths those bumps. My "retirement fund" is down 20% today. I have contributed every month since mid 2007. I became a fan of dollar cost averaging when I had my 401k at my last job. It REALLY helps when the market slides anyway. We've unfortunately contributed most of our retirement monies in 2000-2001 and 2007-2008. Great! Right before the busts. But the dollar cost averaging makes it manageable. The losses are significantly muted. Being able to continue to contribute while the market is in the toilet, does pay off in the long run. WE are literally about breakeven - the balance in our retirement today reflect the initial contributions we have put in the last decade. Which kind of sucks that we don't have gains - but happy to say we truly have not "lost" much.

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This year has been good to us. We met our 15% gross to retirement and 10% gross to cash savings goals in one fell swoop. I was hoping to meet these goals when LM garduated preschool. Our home refinance and his unplanned switch to a much cheaper school has made these possible about 18 months of schedule.

So I have been stepping back and looking at our startegy. My goals are clear. The best way to achieve them are not.

Maxing out the ROTH (basically, maxing out a second one) is clearly a priority. WE are still in a virtually zero tax bracket and we would be crazy not to take advantage.

Other goals are to save for college and to pay down the mortgage ahead of schedule. I will put up with a mortgage that is reasonable and cheaper than renting, in the short term. In the long run we are extremely debt adverse and want it paid off well before retirement.

I am worried about affording our health care, as usual. But besides those types of expected expense increases there is not a lot on the horizon. WE are very content with our "Wants" spending at present. I know dh wants more gadgets and we talk about more grand vacations when the children are older. But those things can wait for a second income or a big raise. In the meantime we are quite content. The nice thing for our wants wish list is most of them are one time expenses. Nothing we necessarily need a permanently increased income for.

I have personally been tempted to stop or greatly reduce ROTH contributions just long enough to get our cash savings up to snuff. It is TEMPTING!!!!!! IF we had $30k in the bank I think our current $5k annual cash contributions would suffice. But with the market in such a tizzy, dh and I decided to continue the ROTH contributions as is. We are instead nearing $20k in the bank, and so have a decent amount of cathing up to do. But for now we are optimistic we can max out one ROTH and get our savings up to snuff in the next year or 2.

As far as maxing out the second ROTH? If we can avoid using our medical deductible, we can max out a second ROTH, maybe in 2010. We could contribute that money to a HSA but I like HSAs about as much as 529s. Lots of fees and little flexibility. Which leaves me of the opinion that HSAs and 529s will be our friend when my spouse returns to work and we have more savings than we know what to do with (& when our income tax rates are higher). In the meantime? Not ready to contribute to a HSA or a 529. They make little sense for people in our situation.

Which leads me to thoughts on college. No one in my family has spent much on college, and prices are still quite reasonable in California. In fact, my parents did not save a dime of money for me for college and since dh's parents are huge college money gifters, my kids have about as much money as my entire college education cost (a whopping $10k) at age 3 & 5. IT's not something I particularly sweat, and is another reason I would not save TONS in a 529. BEcause you get penalized on the money that is not used for college.

I have been thinking about it and maxing out our ROTH would put us about 25% contributions to retirement. Clearly more than necessary (we have always put away 10% - 15%, since we graduated college). As long as we are in this position I have decided not to contribute more money to the kids. The one exception is I may contribute a little more so I Can diversify their funds a bit more. (Since every fund needs a certain minimum). Aside from that, the ROTHs will become triple purposed. They hold some of our cash emergency fund, they hold a decent amount of our true retirement funds, and now they will hold a decent amount of investments for college in the offchance our kids "must" go to Stanford or something along those lines. In the meantime, truth is, their college will probably be paid for by the grandparents anyway. So even if dh returned to work, not sure we would go the 529 route... I view it more as contributing to retirement, but I can still sleep well at night if I am REALLY wrong about the whole college thing.

Which means simply, after thinking about it, the only true goal we have once our retirement vehicles are maxed, is to pay off the house.

Dh's income literally went about 100% to our house when he worked (down payment). & I think we will resume this plan when/if he returns to work. Literally, take his paycheck and pay down the house. It's amazing to me what a huge difference a mere $5k a year in income could make. That would be quite a dent. But yes, I think we have come full circle.

I tend to be extremely idealistic so we shall see. One thing at a time...

I just wanted to share my thinking with my current goals. They always seem to be evolving as circumstances change.

I just moved $3k cash into the market.

IT was money I have in a CD to plow back into the market at a later time (cash from 2006 - I could smell this coming and my gut told me not to invest it).

Anyway, today the gut says, "INVEST!!!!!" It was whispering this to me yesterday and I thought, "Eh, too much trouble."

But today my gut is screaming at me.

IT's extremely complicated, but since my catastrophic efund (about half of it anyway) is sitting in MMMFs (Cash) in our ROTHs, I was able to execute a buy this mornings. VG Total Stock Index, wherever it lands at the end of the day. (No lower price since I have been an investing adult, just about. I don't expect much from the market today. The DOW is not going to jump to 12k anyway).

Now, after this buy, a chunk of my efund is sitting in a CD elsewhere (ROTH), but I don't have to break it right now. Essentially, that's what I did. I still have my efund - it is now in a CD that matures next year.

The IRS rules are so convoluted though, if I do need it due to emergency, I will have to roll it over to my Fidelity account, and then withdraw it, to be tax free. Which could take weeks. Simply because the CD is a rollover and I can not take it out tax-free. But my ROTH at Fidelity has enough direct contributions to withdraw tax-free monies from.

Gotta love it...

I am okay with this. I am happy I do not have to break the dang CD right now.

Just a whole lot of tax complicated shuffling...

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Because of my gut I Was more 75/25 stock/cash before all this mess and today I Am at about 80/20 which is pretty much my comfort level. All I really did was rebalance. I would have waited it out a bit otherwise. Well, I don't know, I may have rebalanced anyway today, with all these lows. Selling off some bonds and cash...

What a rebalance it was!

$3k may not seem much, but it's all I got. I am not compromising my efund as a whole, or my long-term investment plan. & anyway, $3k is a decent chunk of my portfolio. So it is a lot to me. A good opportunity. I would consider buying in another $1k if things get lower.

The annoying thing about mutual funds is I won't know my price until around 3pm here (west coast). I guess the plus side is I don't have to wait so long, being on the west coast.

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I also dropped my VG MMMF to below the initial minimum ($3k). Does it matter? A lot of my funds have dropped below minimums due to the market. Most of them are no fees. (Like Vanguard - no fees for electronic statements - a while since I read all that fine print). So I don't know what that means. I've never dropped below for selling a chunk. I have just about $1k left. I may invest it too. We'll see...

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P.S. Not attempting to time the bottom. I have a 30-year+ investment horizon and this is simply a great deal...

P.S.S. My efund is now $5k liquid cash, $4k ROTH MMMFs, and $3k ROTH CD. There is another $3k in that CD which makes up a cash part of my actual retirement portfolio (sans efund monies). Oy vey. I haven't decided how to keep track of all this... It's getting too complicated for my tastes. I guess it's all moot when the CD matures. One more year.

Switching to Cash May Feel Safe, but Risks Remain

http://www.nytimes.com/2008/10/09/business/yourmoney/09money...

Most interestingly, and something I was already well aware of:

"From 1963 to 2004, the index of American stocks he tested gained 10.84 percent annually in a geometric average, which avoided overstating the true performance. For people who missed the 90 biggest-gaining days in that period, however, the annual return fell to just 3.2 percent. Less than 1 percent of the trading days accounted for 96 percent of the market gains. "

"Selling now and moving to cash could mean guaranteeing a lower standard of living for the rest of your life, because you’d be locking in your losses. "

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I mentioned earlier that dh's parents took ALL their money out of stocks Monday.

I deleted the post because it had a lot of personal info. But I did want to share.

But yeah, this is why I Cringe for them.

They told dh they will buy back in when things are better. Yeouch.

You could argue we put too many of our eggs in the house bucket in our 20s, but I have no regrets. Doing so, for one, means we aren't in the mess most of our fellow young Californians are in. (We put a lot of cash down but refused to pay $600k for a home, all the same).

But even as housing tumbles and rents are rocky, we still pay far less for our home than it would be to rent something comparable (always have).

So there is a large measure of method to our madness.

BUT, I am pleased to report that I was glancing at my net worth schedule, and as of July we have only $1k more in cash equity in our house than we have in cash and investments.

!!

Which means, by the end of the year, we should have more cash/investments that cash paid on our home.

I think that is an interesting milestone. For the longest time it seemed most of our assets went to our home... We saved dh's salary for years, to pay off as much as we have.

It runs something like $91k in investments and $92k cash paid on home. Today.

For the long run, I expect our investments to blow the mortgage out of the water. I am only 30. (TIME is most definitely on our side).

You could argue if we should have paid down more aggressively, or invested more instead, but I am VERY happy with this balance. I think we did the right amount of both.

I am also pretty darn close to hitting six figures in my savings and retirement, which is another neat milestone.

But anyway, though we felt it was important to load up the house basket while we were young, I am glad to move past that. I didn't want all my net worth made up of equity, forever. Though there is little I can do as far as equity equity. If it wants to stay super high, I won't stress that my investments are less. Worse problems to have. (We still probably have a solid $150k of equity in our home, today. But for measuring purposes I am more concerned what we paid on the home, particularly since there is a risk the value of our home will fall significantly more).

P.S. I do look REALLY forward to when my mortgage balance is LESS than my investments. Have a ways to go on that one...

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July is VERY spendy!!!! Ugh...

$85 to school for supplies/field trips
$100 on uniforms/backpack/start up costs
$105 Indian cooking lessons
$110 Swim Lessons
$75 new cell phone (rebate to come)
$30 Hands free head set (new law)
$200 Birthday Party
$100 Car Repair
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$805

These are all under the Misc. category which I usually budget something like $150 for.

The rest would be covered under short-term savings (birthdays, car repairs and such) but it seems like I have been pulling more out than I have been putting in lately.

All this would be fine, for one month, but I have some potential, very unexpected, dental bills for BM. Ugh!

So I am feeling the pinch this month.

I was really looking forward to saving $200 this month - portion of preschool savings. But I have decided to put that savings off one more month. For Kindergarten start up costs. (I did divert $100/month to the short-term fund for this kind of stuff, so will be prepared next year. Just not prepared coming immediately off pricey preschool/daycare).

I keep telling myself that the extra $3600/year will help. I just have to give it some time to build. (No plans but to save it all).

Also, I am eyeing the medical deductible fund, as far as dental expenses, to ease my financial stress level. Our HMO is terribly slow to bill, and though I am quite sure we will hit our full deductible (murphy's law of course), it isn't set in stone. There may be some extra cash there. In the meantime there is plenty of float. The $1k cash I have should cover the dental.

These are the budget gymnastics I am going through to make July work.

Dh's extra money has helped much though. I don't want to rely on it, but it helps in a crazy month like this.

Extra money to the ROTHs? Yeesh. One of these days...

This was, thankfully, an extraordinarily spendy month. Not the norm! It just feels a little overwhelming.

I am ready for a slow/calm spend month. Here's to August.

I was just updating Quicken and noticed our retirement balance is a solid $75k. For now anyway.

This is actually my gross salary for the year. So one years' saved!

Of course, the interesting thing about measuring your goals in terms of salary, is that I for one, had already met this goal last year (maybe the year before). Likewise, in past years I way exceeded this goal (because my income was much smaller...)

So though $75k is a new milestone for me, I can't say the one year salary saved is a new or exciting milestone... It is turning into an impossible moving target that makes me feel a little at a standstill.

If dh returned to work tomorrow it would be a long road to save up one year of salary.

Which probably illustrates much why I so love the idea of measuring progress against "annual expenses."

I guess this idea particularly makes sense for us.

In school we both made $10k annually. Out of school we made $60k combined, and that quickly climbed to $100k.

But then we slowed down for kids and lived a couple of years on $45k (the years I took maternity leave anyway). But my full salary was a mere $50k when I had my first child. In the meantime, my income has ballooned to $75k rather quickly. Though a good chunk of the last decade we really made less than $60k. So it is hard to measure progress in terms of an ever growing income.

Of course, no complaints on the ever-growing income.

But our expenses, on the other hand, have remained rather steady. Probably a bit of a jump when we bought our first home (okay, a significant jump since we lived on pennies before that). & probably a bit of a jump when we had kids. But overall our expenses have remained rather steady and predictable. So we find that a much better measure of our forward progress.

We generally live on $50k-$60k annually (after taxes) so we are trying to grow our net worth half of that, annually. ($25k-$30k/year). If our income grows astronomically (possible, could double if dh returned to work) and our expenses remain the same (possible) than we really need to work on goals that support our lifestyle, not our income. So this is where a lot of our thinking on expenses comes in. Income means little to us. (Which is the ideal!)

But $75k is a milestone, indeed. Of course, I was wondering, recently, when our cash and retirement would hit $100k. I think we will probably hit it in 2009. Not so sure on 2008. But we'll see. (We have a fair amount of cash, in addition to our retirement investments).

We've also paid a good $90k off our house. So our more liquid assets seem to be neck and neck with how much we have invested in our house.

I expect that to change greatly in the future. Our goal in the nearer future is to put away $10k/year to retirement, in addition to 10% contributed at my job. So ideally our retirement will be growing $18k/year or so, plus investment returns, while we are only paying the minimum on our mortgage, about $4k principal every year.

I think our 20s was our decade of home ownership. & we have accomplished a chunk there. I would like our 30s to be the decade of retirement funding. Which is also why I don't sweat the mortgage prepayment. We worked very hard while young to keep our mortgage costs down (putting a chunk down and paying it off aggressively). That work will save us tens of thousands, if not more, in the long run. So it feels like it is off to the next battle - Retirement!

Likewise, I look forward to do the day our cash/investments far exceed our mortgage.

Well, we're getting there.

Anyway, I don't think we will put $10k to our IRAs anytime REAL soon. My goal is about $1500 this year, and $5k next year. But I think we may make it in 2011, when LM is entirely out of preschool. Working up to it. So though our goal is $10k/year, to IRAs, we got a ways to go.

Of course, in our 20s, retirement was only a mere afterthought, after the token 10% contributions we have always done. So I look forward to what we can do with retirement as the forethought. I expect to zoom ahead rather quickly... In fact, my roundabout goal has been $150k in retirement by age 35... (So doubled in 4 years?). Kind of aggressive, but doable.

Rain??????????

Last night I was talking to my mom and she said tornadoes has obliterated a little town near Denver (my grandma lives in Denver). I guess they were peeved it got little media mention. So I popped in "tornado" in google and saw quite a few stories online BUT then I saw there was rain, snow, AND tornadoes in Southern California. Holy Cow! Glad we came back last week. But yeah, look at that crazy weather.

Fire season has also started (quite a few months early). On our drive to LA, looking at all the dry landscape, we thought to ourselves, "this is not good." Likewise, a number of fires broke out with the hot weather and such. Will be a long summer... Usually the hills dry out in the summer and the fire season starts in the late summer and fall, before the rains come. So May is a tad early - but the vegetation is just so dry this year. & the weather has already been so hot.

Of course, on the plus side, it is raining...

I was quite bummed to hear the rain when I woke up this morning though. We had all sorts of outdoor plans, all weekend. The weather forecast I see is rain rain rain. I was looking forward to more pleasant weather (under 100 degrees) but the rain was a bit of a surprise. Don't expect it to be much to curb the fire danger though.
The 70-degree weather sounds divine though, if it does not rain too much.

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Last night we had artichokes for dinner. I guess Cali is the only state where artichokes are grown commercially (for the most part) so we are lucky to get fresh artichokes. This is another reason it is worth it to live here - all the fresh, local produce.

We have been enjoying a TV show called "Good Eats." They had a special on artichokes (usually focuses on one food every episode - and VERY interesting). So we watched that and the kids were excited when they saw artichokes in the store. They were on sale so dh picked them up, though he had never braved cooking them before.

So we steamed them for dinner and they came out pretty darn yummy!

I am not much of a veggie person, so we need to work more treats like that into our diet.

I have no idea how much they cost in general but they were on sale for $2.50 each (jumbo size). So yes, definitely a bit of a splurge, but we enjoyed.

They were REALLY jumbo. Almost a full meal for me (didn't expect that).

I asked dh to keep an eye out for strawberries on sale. I love fruit smoothies in the summer but seem to remember finding strawberries expensive in the hottest months. There were many on sale on the side of the road last month. I wasn't thinking. I should have stocked up and frozen them...

But yes, not much of a fruit or veggie person so have no grasp on seasons and such. So I thought to have dh keep a look out for strawberries on sale...

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I reviewed our investments yesterday (kind of on automatic pilot of late) and it looks like the asset allocation has changed little in the last 8 months or so. For a while I had to keep selling international because it was so on fire, to keep our asset allocations. We are still heavy on cash and int'l funds. We are just adding to domestic stocks until our allocations even out.

So I peeked at them yesterday as I haven't really set any sort of schedule yet on that. I should. But I was surprised little had changed in many months, as far as asset classes and the percentages I hold in each class.

As of yesterday, we also appear to be down 1% for the year.

Not bad...

Dh's Vanguard account is down by 2.6%. My cash is up 2.6%. (CD). & the rest of our investments (primarily managed funds) are up 0.25%. Average it all together and we are down almost 1%, for the year. The Vanguard account is by far the biggest piece, so explains that.

I am pleased my managed funds are doing their job though. I expect them to perform a little better than the indexes, in the downturn. That is the hope anyway.

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Ugh, I was not prepared for a rainy day... Bummer.

I was fixing up all my spreadsheets for 1/1. My file got corrupted and I lost a lot of my 2007 data. But that's okay. I had a recent enough backup that I didn't have to do much. I am starting over 1/1 on much anyway.

Anyway, I Was glancing at our retirement for the year. & it looks pathetic. It was really a pathetic retirement year. There is more to the story, but firstly I wanted to share because I see lots of talk about fear of the market in the forums. For the young people starting out.

So here it is:



The amazing this is this is how much we have amassed all the years when we had MUCH bigger priorities than retirement. When we were saving $50k for our house. When we were simplifying our income and lifestyle to have kids. Yet we still made decent progress without a lot of effort.

Well, we graduated college in 1999 and I was eligible for a 401k in 2000. I contributed 10% of my income for about 18 months before I left that job. Most of my money was put in 2001. (& latter 1/2 of 2000). It has been far been my best investment. A co-worker helped me pick 3 mutual funds, for a mix of 15% bonds and 85% stocks. I never thought about it since. But the monthly contributions helped lessen the blow when the market "Crashed." & I returned 12-30% each year, the years following. (I recently moved this money to managed funds, which muted my returns this year).

On top of that we shoveled some money into IRAs. $4500 in 2000 when we made good money. The rest are IRA contributions we made over the years. Skipping the years I took maternity leave and we just didn't have the income.

So dissapointingly, 2007 was our worse retirement year since my last 2 maternity leaves. BUT we got our efund back up to snuff. So that is why.

I also vest in my employer plan this year, which I have mostly ignored to date (as I wasn't much vested before). It is a 10% annual contribution and interestingly the balance is about $33k. So makes our retirement exactly 1/2 controlled by us and 1/2 in my employer-controlled plan. But is also why we didn't sweat retirement this year. I received in essence a $10k contribution with my vesting this year.

But that graph just reminds me, slow and steady wins the race.

Our returns were really muted after 2001 because most of dh's IRAs were in a broker who had us in very volatile/risky/expensive investments. He never had much in returns. My IRA was in cash (like 1%). Don't ask why.

We moved everything around last year. My cash now earns almost 6%. & dh is in a bunch of indexes so he has had an awesome return (no fees). My portfolio is a little more experimental and I bought one fund very high, late in the year. So my IRA shows a slight loss for the year. I'm still learning. I like mutual funds and studying them and picking them and playing with them. But the antecdotal evidence in our case is that the indexes kick butt. Little effort, small fees, good returns. Even when you invest a good chunk at the peak...

Which is probably, why, interestingly, I primarily want to invest in dh's IRA and my Target Retirement fund, going forward. It's the simplest and most effective way. I have smaller dollars in my experimental funds. But I don't aim to make those a large part of my portfolio, or to add more. As far as the indexes, we aim to do more dollar cost averaging going forward. We haven't done that since my 401k. We usually just add a chunk every April 15th to save some taxes. But I am currently putting $50/month into a Target Retirement fund and aim to put another $300/month to dh's indexes, come fall. It is my feeling that our investments performed the best when we added a little every month.

The only flaw in my old 401k was I had no exposure to international. Dh has a lazy fund portfolio - Vanguard Star, Vanguard Int'l & Vanguard Total Stock. His portfolio is up 10% for the year. It seems to be working quite well though. I kept his portfolio simple, in case anything every happened to me. & we tend to contribute more to his IRA overall since I have my own employer plan.

As far as my employer plan, I was really disgusted with the returns. But I thought twice about this. My boss does not contribute my contribution until September of the following year (tax deadline). When I look at my balances again, and consider that the money does not get there until the following September. It is actually earning a good 10% annually. So I feel better about that. Phew!!!!!! I look forward to controlling that down the road. But sometimes it is nice to know I have a more conservative portfolio managed by someone else, in case I really screw up or something. Hehe. But yeah, if I quit Jan. 1, the money is mine. Though my boss generally does not contribute it to the last minute. Hey, beggars can't be choosers.

I highly doubt we will make it this year. But my goal overall is once the kids are out of preschool, is to contribute 10% of our income as well. On top of that just save our raises, until we max out. Right now the $10k IRA max, for the 2 of us, is about 15% of my income. So yeah, in 2010, 2011, 2012. I expect to contribute much more than we have been historically. We'll see...

I think the other interesting thing in our case was that we had so much cash saved up when we went down to one income, that our retirement contributions were not really affected until we had our second child. (Our income was halved but we were still contributing in the $5k range annually). But that is when we started living up to our income a little more. & retirement was just never a priority to us. It was a tax savings thing. So it is a different mindset for us now. If that is what we can accomplish without thinking much about it. What can we accomplish with retirement at top of mind? I think that's the exciting thing.

So I share because of that. But don't freak out because the stock market goes down one day. You need to look at that big picture!

I actually made an effort to keep a large cash portion in early 2006 because I thought the market was going to tank. Instead it was our best year bar none (cash and all). So what do I know? But gee am I glad I kept a good chunk in stocks too. That's certainly another lesson I can share. I am not buying the 100% stock portfolio anytime soon. But too much cash can be even worse... I am learning.

ETA: As of today I am up 4.83% for the year. One day can make a BIG difference!!!!