Tuesday, April 29, 2008

April Financial Update

I am so glad to finally be getting April behind me! I have felt financially strapped and oppressed all month.

So, it comes as something of a surprise to find that I am still making a small amount of progress in reducing my indebtedness.

Best of all, I have (once again!) gotten my total debt (which includes my mortgage) down to under $100,000. Overall, I reduced my indebtedness by $881.14. I now owe $99,804.54.

If I remove my mortgage from the equation, I reduced my debt by $446.60. Not exactly a giant step, but at least it's moving in the right direction.

May has got to be more promising, right? Never mind the high school graduation expenses for my youngest child, right?

Monday, April 21, 2008

More on Grown Up Kids

If you haven't been been reading The Simple Dollar (and why not? I ask, since it is a wonderful blog!), you may have missed Trent's observations and questions about his grandmother who allows her adult son to live with her. The comments are just as thought-provoking as the original post, and yes, Grace added her two cents to the discussion.

Interestingly, when I submitted my post on The Grown-Up Kid Conundrum--Part Deux to this week's Carnival of Personal Finance, it was rejected as not being on-topic.

My guess is that it was just too personal a topic for the host--too much about emotions and not enough about money.

But nowhere do finances and emotions come together more clearly (or sometimes, more devastatingly) than when one is dealing with other family members.

Friday, April 18, 2008

All Things Come to Those Who Wait

OK, so this is not quite up there with world peace and curing AIDS, but some of you may recall that the reason it took me so long to cut back on my TV cable bill was that Bravo channel was not available in the basic cable package. Bravo is the home of two of my favorite programs, "Top Chef" and "Project Runway."

Reluctantly and resentfully, I did eventually cave in to the financial pressure and scale back to a basic cable service.

But hey! The Gods are smiling on Grace.

Beginning in November, "Project Runway" is moving to Lifetime, which, fortunately for moi, IS part of the basic cable line-up.

Yaayy! Now, if they will just move "Top Chef," I'll have all my favorite programs back.

Thursday, April 17, 2008

Medical Expenses in Retirement

Liz Pulliam Weston, at MSN Money has a new post: Will Medical Bills Ruin Retirement?

This is scary stuff to those of us within ten years of retirement.

It is clear that medical expenses will be THE BIG EXPENSE for me. Including private coverage, Medicare, and long-term care insurance, there goes all the money I will save each month by no longer having a mortgage. Then again, that is the point of getting my mortgage out of the way--so I WILL have dollars available for whatever happens to me medically.

My parents did not leave me with an encouraging genetic history. Strokes, type II diabetes and heart disease run rampant in the family tree on both sides. Fortunately for my peace of mind, there's no cancer to speak of, but who knows what environmental factors play into the onset of cancer, anyway.

I've been a non-insulin-dependent diabetic for the last ten years. I assume I will live longer than my parents because I aggressively treat my high blood pressure and high cholesteral, both of which are, with medication, within normal limits. Unless there is chocolate in the immediate vicinity, I also manage my diabetes pretty well. But there's no getting around the fact that I will have medical issues in retirement and that they may well be significant.

Weston's analysis is interesting though a bit flawed. She seems to assume that retirees have not considered increased medical costs during retirement and will need additonal funds to meet those costs. Speaking for myself, I have tried to factor those in while determining just how much I'll need to maintain my desired standard of living.

The biggest issue I see for my situation is getting long-term care insurance. I should be looking for it now, but realistically, it will be a couple more years before I've got my debts reduced to the point that I can afford it (at which time, it will be even MORE expensive--one of those moving targets I can never quite reach!)

Weston is looking for a political answer. So am I, but the track record in the US when it comes to health policies has never been a good one.

Wednesday, April 16, 2008

The Grown-Up Kid Conundrum--Part Deux

The "baby bloggers," meaning all those unmarried, childless twenty-somethings whose blogs I love to read, go on and on about humongous student loans. Their thirty and forty-ish partners-in-blogging are more apt to discuss the extreme expenses of child rearing.

So what does 59 year old Grace have to whine about?

Why, children, of course.

Grown up children.

Grown up children who have moved back home, with husbands and children in tow.

Trust me, this was NOT in the plan. And trust me again, this is NOT a good plan, either emotionally or financially.

Spare me the "just say no" lectures. I did say no. As my daughter's family was getting evicted from the home they shared with another family, they asked if they could move in with me for the short term. I said no, and they made other plans. Unfortunately, two days before the sheriff was set to show up at their front door, those other plans fell through. Had it been only the adults, I would have stuck to my "no." But there was a nine year old, a six year old and a four year old involved. So, reluctantly, knowing full well that this was going to be a disaster, I agreed to house the family temporarily.

It's been three weeks. So far, they've run my oil tank dry, broken the power supply to my computer, used up all the laundry detergent, clogged the toilets--yep, BOTH of them, and messed up my TIVO programming, not to mention eating every single bit of food in the house including the bag of Trader Joe's asparagus risotto that has resided in my freezer for the past two years.

That's just the financial end. Because this daughter has severe emotional issues of her own (she is fully disabled and receives SSI), the social atmosphere at home has been chaotic to say the least. I find myself staying longer at work, while my 17 year old prefers to hang out with friends, both of us doing our best to avoid being home.

April is another tough month in terms of my budget, in the best of times. With the addition of five more people, the poor budget is overwhelmed and I'm struggling to NOT add more debt to my credit cards.

My adult daughter is both smart and resourceful. She's no happier than I am with the current arrangement. She has now lined up money from two different agencies to get her family into an apartment if she can just find one that will rent to them. She says she should have it done in another two weeks.

I hope so. I've got my fingers crossed.

Monday, April 14, 2008

Friday, April 11, 2008

Time for a Book Report

The folks at Sphinx Publishing, who put out a number of self-help books on various legal subjects asked me to take a look at their Social Security Answer Book by attorney Stanley A. Tomkiel III.

In general, I don't favor "do it yourself" law handbooks because most legal issues are very state-specific. This means that any book that purports to cover a broad legal subject, say divorce for example, is necessarily shallow.

But Social Security is a federal program that is the same for recipients, no matter where they reside.

Tomkiel's book is chatty, easily read, and surprisingly helpful. It presents its material in a Question and Answer format, but rather than state a principle just once, the author conveys the same information in several different ways, fashioned as responses to the questions of "regular folks."

As one of those "regular folks," this worked well for me.

I turned first to the Retirement section since that is what is always on my mind. Tomkiel's answers confirmed what I already partly knew--it will be simpler and I'll get more money if I do not take retirement at age 62, but wait until my "full retirement age" of 66 or beyond. The rules are more complex for those who wish to retire at age 62, but the author does a good job of clarifying the issues surrounding this choice.

The remainder of the book covers disability, spouses' benefits, children's benefits, and instructions on how and when to apply for benefits. The rules for divorced spouses are complicated but the Question and Answer format was quite useful as a tool to understand exactly what needed to happen in order to be eligible.

I found the short chapter on Medicare to be especially helpful. Tomkiel is careful to sort out the differences between Medicare and Medicaid, which many people lump together even though they are very different programs.

The book does NOT cover Supplemental Security Income which is the federal program covering disabled persons who do not have the necessary 40 quarters of work that would enable them to get Social Security benefits.

So, do I recommend the book? Yes.

But cheapskate that I am, I'd probably suggest to my local library that THEY buy it and let me check it out!

Thursday, April 10, 2008

New Calculators, New Worries

Liz Pulliam Weston, at MSN Money, has a column regarding a new way to determine the magic number--that is, the amount one needs to have saved for retirement. Actually, this new method supposedly calculates the percentage of current pay that must be saved in order to reach one's retirement goals.

Umm--I hope NOT!

Because if this calculator is accurate, I'm in a lot of trouble.

I currently save 16% of my gross pay in my 401 K. My employer contributes 6% of my income into the same 401 K. So I thought I was doing pretty well with a total 22% contribution. But, NO! According to MSN, I need to contribute 37% to reach my goals.

That, of course, leads me to poke holes in this new calculation. My annual income is $73,500. The calculator asks me to choose either $60,000 or $80,000, neither figure particularly close to what I actually make. The calculation assumes I will need 80% of my net income in retirement and that I'd retire at age 65. It's nice that it uses a net figure rather than gross (a mistake a lot of other calculators make) but I've never thought I'd need my entire salary or even 80% of it when I finally leave work. Also, I plan to retire at 69, not 65. My house will have been paid off four years before I retire. I intend to use that additional savings for my last automobile purchase and my "retirement-gallivanting" fund. While long-term care insurance and additional health expenses may occur, I don't know that they would equal the $1400 per month I currently pay on my mortgage.

I fare better using MSN's calculator so that's where I'm looking, at least for the time being.