Tuesday, March 31, 2009

Quarterly and Monthly Updates

My net worth, which I figure quarterly, is down 7% to $482,715. No big surprises, there.

On the other hand, I reduced my indebtedness by $828.60 this month.

Focusing on debt-reduction is obviously the way to go these days.

Sunday, March 22, 2009

Do As I Say---

I read Trent's "A Simple Dollar" regularly but unlike his legions of admirers, I don't necessarily assume that he all the answers all the time. I also susupect that, from time to time, he is driven by financial hubris, as are most of us.

But Saturday's columm regarding his family purchase of a new 2009 Toyota Prius via financing is a revelation--partly of the lengths Trent will go to deny that he hasn't made the most financially sound decision and partly the reprobation of his fans who seem unwilling to cut any slack for a less-than-stellar but hardly devastating purchase.

I worry about bloggers like Trent and JD at Get Rich Slowly who have been set up the role models. I continue to read them because I have so much to learn before I even get where they are. Yet, learning from people who have to be perfect takes a toll from all of us.

Can I just fess up now that I have learned at least as much from MP Dunleavey and the Women in Red? I shake my head at some of her financial machinations because I see my younger self in her actions. But I do rejoice when I see her learn her financial lessons so much sooner than I did.

Give it up, Trent! You WANTED the Prius! You did NOT want to put all of your savings toward the car, so you financed it. Revisit that decision occasionally and tell us how it's working for you. And do it honestly. If it's a mistake but one you're glad you made, so be it. If it is something you have to pay off sooner just to get back to financial peace, admit it and move on. It it turns out to be a disaster, well, let us in on that one, too.

We're all big kids here--we can handle it.

Friday, March 20, 2009

Grace is BAAACK!

One thing you have to admit--medical care in the US is quite the modern miracle. This is apart from all the "soclialized medicine" debates. Where else can one go in to surgery one day, and come out four days later with Frankensteinian staples, four cleaned out arteries (or valves, or SOMETHING!) and not that much pain.

But hey! Step away from the Percocet!

I have lots to say about the financial end of all this, but not a lot of energy.

Be assured that I came through the surgery well and my doctors are pleased with my rate of recovery.

More, later.

Thursday, March 12, 2009

Life Whaps Grace Upside the Head

Aging is about more than finances. It's about life's little (and not-so-little) surprises.

While it is my intent to concentrate on finances in this blog, there are times when real life trumps even the money.

Consider Tuesday.

There I was, sitting in a hospital room in one of those ridiculous open-backed gowns, looking at pastel watercolors of a human heart and listening to my cardiologist explain all the ways in which Grace's heart did NOT look like the pretty pictures.

If I'd had any warning, any pain, ANY sign at all that I was in trouble, I might have been more prepared. As it was, I'd come in for an angiogram because a routine stress test had shown "ambiguous" results. That, along with some seriously lousy genetics (mom, dad, grandparents on both sides all had heart conditions) led to the angiogram.

Long story short, I'm undergoing open heart surgery on Saturday. Triple by-pass time.

Funny how finances don't play into situations like this. I didn't even ask about my insurance coverage. I still haven't. I just assume it will mostly cover what I need, and if it doesn't--well, like Scarlett O'Hara in a different context, I'll think about it tomorrow.

Thank God I HAVE health insurance. And a job. And my family. Two of my daughters are professional caregivers, so I'll be in good hands.

I expect to be off the computer for a few days.

After that, I'll explore the finances of aging with much more attention to the details.

Monday, March 9, 2009

Grace Gets With Bonds (Finally!)

In a move that is likely to thrill Living Almost Large who harasses me every time I mention my all-stock retirement portfolio, I have decided to invest 50% of my future contributions into a bond index fund.

Why the change of heart?

Well, first, my 403 (b) funds hit their lowest mark ever last Friday. I use Financial Engines to help me gauge whether I'm on track for retirement. That site gave me just a 48% chance of succeeding with my current mix of investments.

Second, the March issue of "Money" magazine talks about the comparative risks between an all-stock portfolio and a 40% mix of bonds to 60% stocks. According to that article:

"T. Rowe ran the numbers for a 55-year-old with
a $100,000 salary and just $150,000 in savings
who ratcheted up his stock allocation from 40%
to 80% to help his portfolio recover. After
running 10,000 market scenarios, the researchers
found that while the portfolio invested 40% in
stocks replaced an average of 27% of the
investor's salary in retirement, the
80%-stock allocation replaced only
28% - virtually no difference. That's because
while stocks have historically delivered higher
returns over very long periods, over any
10-year period you're more likely to suffer
a few losing years, and there simply isn't
enough time for your gains to compound."

I've always agreed with David Ramsey that bonds might be safe, but they aren't helpful in one's retirement accounts. In my heart-of-hearts, I still believe that, but the volatility of this market is causing me too much distress. Maybe it's my age catching up to me, but I've decided to tone things down a bit. I won't stop contibuting every month, but by moving partway into bonds, at least on a temporary basis, maybe I can stop some of the stomach churning.

I will continue to contribute $1225 a month (plus I get a additional 6% of salary contribution from my employer) but I'm going to put half of that into a bond index fund for the time being. The other half will continue to go to a mix of stock mutual funds. I am not going to reallocate the balances; I'm just adding a bond component.

Tuesday, March 3, 2009

It Ain't Murphy; it's Real Life

I was just about to write another "Murphy visits Grace" post when it struck me that I write these kind of posts all the time. I took a brief ramble through my 2008 posts, and, sure enough, every single month I was hit with some unexpected expense. Sometimes it was the car; sometimes it was one of my kids; more than once it was a medical or dental expense; and don't get me started on appliance breakdowns.

But I am finally starting to realize that I have to stop blaming Murphy and start budgeting for real life. Real life, at least in Grace's world, includes at least one monthly unbudgeted expense. Over the course of 2008, this averaged out to an additional $260 a month.

For March, 2009, it will be an unexpected $533 insurance expense.

Yep! More fallout from my garage fire.

My broker had already warned me that when my homeowner's insurance was canceled, it would cost more. She thought she had placed it with a company that charged me almost double my previous payment. Yesterday, it turned out that a computer had accepted my application, but the human adjuster had not. Never mind that I already have my rental house covered by the same company--they do NOT want my business on my residence. My broker finally did get me placed, but now the price has tripled. Hence the check for an additional $533.


Sunday, March 1, 2009

Housing Rant

I don't know about you, but I am getting tired of the smug, "blame the stupid/crooked/greedy consumer" attitude floating around too many financial blogs. Therefore I was glad to read Syd's recent post on her blog, Retirement: A Fulltime Job. I particularly like Syd's candid admission that her housing success was more a matter of good luck and great timing than any special financial gifts that she possessed.

I don't excuse the outright liars and cons out there, but running a mortgage scam takes more than one crook--it takes greedy banks that don't check out the information they are given; it takes mortgage brokers willing to make up jobs, income and assets they know don't exist; and it takes a buyer willing to commit fraud to get the house, the money or both.

So let's realize that the folks running cons will always be with us. Let's understand that the only way we can control fraud is to strengthen the controls, increase the number of investigators and provide stronger sanctions.

But that still leaves the "stupid" homebuyers or the "greedy" mortgage-holders.

Just how culpable are they?

In general, I work with people mired in poverty. Lately, many of my clients are new to the ranks of the poverty-stricken. Unlike my more usual clientele, these folks come with real property or have recently walked away from real property.

So far, I've not found greed to be a motivation. Stupidity? More like ignorance. More like feeling middle-class pressure to be a homeowner. And much, much more like being one job or a spouse away from financial disaster.

Consider one woman I deal with.

She and her husband both had full-time jobs. Three years ago, they bought a home in an up and coming neighborhood for a reasonable price with monthly payments that were just under 25% of their combined incomes. They and their two teenagers lived a solid, if not expansive, middle-class life.

Then the mother was diagnosed with cancer.

And then the father turned out not to have paid attention to the "in sickness and in health" part of his marital vows. He bailed out. He quit his job and he left the state. Needless to say, he has not contributed to the mortgage payments.

My client and her children continue to live in the home but it is in foreclosure and it is doubtful that any of the proposed governmental programs will help her. She is upside down in terms of what is owed on the mortgage compared to her existing equity.

Greed? I don't think so.

Stupidity? Well, fifteen years ago, the deadbeat dad probably looked better than he does now, but maybe the marriage was stupid. Buying the house? At the time, it seemed like a great plan, with a good buy, the ability to make the payments with relative ease, and an expectation that if the day came when they couldn't make the payment, they could always sell and live for awhile on the equity.

How about plain bad luck? How about horrible timing?

I'm with Syd on this one.