Sunday, June 29, 2008

If I'm So Down, Why is My Net Worth Up?

OK, math was never my strong suit.

But given that my retirement fund is in the toilet (currently at $153,336, down from a high of $174,518 in October, 2007--and never mind the thousand dollars a month I've faithfully contributed since then!), my residence is worth $9000 less this quarter than last, and my debts have increased, how is it that my total net worth for this quarter stands at $599,775? That's $8180 more than it was on March 31, 2008.

Not that I'm complaining! This is the first positive news on my financial front in three months!

Looking more closely, I see that my rental property on the coast actually increased in value by some $11,000. I'm guessing that is because it is a modestly priced home in a good neighborhood. That rise in value offset some of my expenditures this quarter to leave me solidly in the black and on the rise--at least in terms of net worth.

Nice to leave this month on an up moment.

Thursday, June 19, 2008

Interesting New Blog

Over at US News & World Report, Emily Brandon has started a new blog called Planning to Retire , though, so far, the stories are about folks who weren't planning to retire quite so soon as they had to.

This is scary stuff--who among us doesn't worry about getting Alzheimer's or some other debilitating condition during our peak earning years? For those of us just now getting our retirement funds up to speed, but who need another ten years or so to be adequately prepared for retirment, the stories Brandon recounts are cautionary, indeed.

Tuesday, June 17, 2008

Nothing $400 Can't Fix

My minivan thanks you for the prayers.

And I thank you.

Apparently, I have problems with spark plugs, belts, and various other pieces of equipment that keep my car running and the "Check Engine Soon" light off.

What I don't have, are problems with rods, which, according to my mechanic, is a good thing.

I feel like I'm speaking a foreign language here--I don't care about the description. Just tell me you can fix it and that I don't have to get a new engine or a new vehicle.

So, for a mere $400, my long-suffering van will be fine. Or at least drivable for another year.

Sad that I'm so grateful for that, even when I don't actually have the $400. It's going on my Firestone credit card, which accrues no interest provided I pay it off within 90 days. I actually had to go home and dig the card out of the ice-cube tray where I put it so I won't use it!

Monday, June 16, 2008

Pray for Grace's Car

Not that I'm particularly religious (I was reared as an Episcopalian, and still attend church, but only four or five times a year), but my 1999 Dodge Caravan could use some serious prayers.

My minivan has not been pretty for a long while. The first time I drove it off the lot (It was bright and shiny and new!) I went to pick up my daughter at school and scraped the side on those yellow concrete poles intended to keep one away from heat pumps. The poles worked fine. My ability to turn the vehicle tightly worked less well. But notwithstanding some yellow paint smears on the otherwise green van, it has been a workhorse these past 9.5 years--carrying me around for 152,000 miles, hauling furniture and grandkids, taking us on vacations, etc.

For the last five or six years, it's had a slow oil leak. No problem--I buy oil on sale and put it in when necessary. A few months ago, I had to replace the battery--and amazed my mechanic that I was still using the original battery that had come with the car. The brakes went bad after six years, but a neighbor helped put new ones in, so the expense was not outrageous.

Now, however, we may be coming to the end of the road. Over the week-end, my engine started knocking and the "Check Engine Soon" light came on. After putting in two quarts of oil, the knocking subsided and eventually the light went off.

But I have that sinking feeling that all is not well with my baby.

Sigh. The timing leaves a lot to be desired. I cannot add another payment, especially not a large car payment, to my already over-burdened budget. I have been operating without an emergency fund since April.

All I can really do right now is pray for my car to keep running for at least another three or four months. And keep my fingers crossed!

Thursday, June 12, 2008

Just Another Bit of Not-So-Cheery News

Trust the Wall Street Journal to send along another dismal report, this one on spendthrift boomers.


That would, undoubtedly, include Grace, though my sin was less about being a spendthrift and more about not being a saver.

The report says our parents (whom they designate as "the matures,"--I guess you know what that makes us!) were better savers than we, boomers. No surprise there. My parents were in much better financial shape at my age than I am. Of course, they were also smart enough not to have had five children. In addition their world was more financially circumscribed--by the standards of the small town they lived in, the state of their health, and their limited expectations.

The authors of the report list the solutions one would expect: work longer and retire later. These are both options I will be pursuing. The average age at retirement is 62.6. Health considerations aside, I would not consider retirement until age 67. As it is, my current plans are to retire at age 69.

The report does not mention the one resource I don't have, but any number of my boomer contemporaries do--parents who WERE good savers who will leave them sizable inheritances.

Wednesday, June 11, 2008

Not the Entrepreneurial Type

OK--that header says it all.

Can I just come out and say that Grace is NOT ever going to be an entrepreneur?

It's been 59 years, and with the exception of one 8-year period in the '80s, I have never run my own business. Those eight years were not a marked financial success. I loved the work itself. But. . . I hated estimated taxes. I hated quarterly healthcare payments for myself, my partners and our staff. I hated billing clients. I hated NOT being able to do everything for clients that needed to be done because they couldn't pay what I needed to charge.

Eighteen years ago, I thankfully jumped ship and moved into the non-profit sector where I could do the same work I'd always been doing, but this time, for a regular paycheck, great medical coverage, a 401K, and the ability to go home at 5:00 p.m. without obsessing over the money I wasn't making.

When I listen to Dave Ramsey or read many of the personal finance blogs, it seems as though everyone believes the road to riches lies only in the direction of being a private entrepreneur. Whether it is advocating the buying of real estate, or owning one's own business, there doesn't seem to be room at the top for folks who work 9 to 5, save part of their money and invest wisely.

So where does that leave folks like me? I'm not management. Except for the higher pay, I have no desire to be in management. I tried running my own business and disliked the experience intensely. I actually do own rental real estate, but that came about by accident, and I've been extraordinarily lucky in my choice of tenants--if I had to do any of my own repairs or I had tenants who didn't pay, I'd unload that house immediately.

Is running one's own business the only way to seriously acquire wealth? At this stage in my life, I'm looking only to acquire a comfortable retirement, but I can't help thinking that with better saving and investing habits, I could have had more than that, WITHOUT being an entrepreneur.

Friday, June 6, 2008

Disturbing New Trend

Thanks to Boston Gal's blog, I came across this article in The Boston Globe: More Dip Early Into Funds for Retirement.

Now that's scary.

Having made just about every other mistake, the one sacrosanct financial given, for me, is "Thou shalt not touch thy 401K until retirement. Ever!"

From time to time, I have considered not putting as much money into my 401K each month, but my plan allows such reductions only at the beginning of each quarter, and then the decision must stand for the next three months. So far, I've been unwilling to take that route.

What disturbed me most were the reasons people gave for taking out money. At least if they were doing it for unanticipated medical expenses or some emergency, I'd get it. But because gas prices are higher or living expenses are tighter? Come on!

The advice to file bankruptcy rather than raid one's 401K may come as a surprise, but it IS an option. IRA and 401K funds are exempt from a bankruptcy, which means it should at least be considered prior to sabotaging future retirement.

Wednesday, June 4, 2008

It's Been a Year Already?

Apparently it has! I blogged my very first post exactly 365 days ago.

I was hoping that I could report a great debt reduction over that time, or some significant increase in pay, or, at least, some noble thoughts on the subject of retirement.

It is not to be.

Mostly, this year has been a learning experience about the ups and downs of real life impacting my financial life. While that situation has been brewing for years, this is the first time I've actually paid attention. My conclusion is that there is something to be said for the maxim "Ignorance is Bliss." Knowing the exact state of my finances has not made for a happier Grace.

Apparently that is true of some bloggers as well. Everyone blogs and gives advice when things are moving in the right financial direction. It is harder to keep posting when we're making mistakes or life has hit us with financial challenges our $1000 baby-step one emergency fund doesn't begin to cover. I miss the King and Queen of Debt whose blog, We're In Debt seems to have gone south. Some of my other favorites, listed in my blogroll, have not posted in months, which I interpret (perhaps incorrectly) as meaning that they are not on target with their financial goals.

Right now, I'm in the middle of a number of financial mistakes. My emergency fund was depleted in April, and now has less than $100 in it. I increased my debt by borrowing on my HELOCC in May. I am locked in for a vacation to Japan in October that I desperately want to take but isn't the brightest financial move. I am convinced that things will get better for me in the next few months, but the waiting is killing me.

Still, there are bright spots.

When I started this blog, I committed to making regular contributions to my 401K, and I have not wavered during the past year. I started out putting in $1000 a month. In January, though I did not receive a pay raise, I increased my contribution to $1025 a month. In spite of the stomach-churning stock market, I am sticking with the plan.

I have also reduced my dependence on credit cards. I got hit with a number of high-cost needs during the past year, including repairs to my rental house, college tuition for my granddaughter (I should have budgeted for that one since I knew it was coming), and my daughter's graduation (ditto). These expenses would have happened whether I was trying to reduce my debts or not. But by being more attentive to my everyday expenses (meals eaten out, gas, utilities, etc.), I am positive the damage to my budget was less than it would have been in past years when, if I wanted anything, I just pulled out the nearest VISA card.

I am reading and thinking more about retirement, and exploring things like long-term care insurance, housing needs and costs, and inheritances for my children.

I feel like this past year has been preparation for the actual work of reducing debt and saving for retirment. I finally have a handle on where I am. Now I need to move forward.