Sunday, August 30, 2009

Grandma Goes In Debt

More (depressing!) food for thought in USA Today's story "Credit Card Debt Rises Faster for Those 65 and older."

The great bugaboos of old age--medical bills and adult children--appear to be the culprits.

The rate of increase in debt among seniors is breathtaking. The study quoted in the article shows that low- and middle-income consumers 65 and older carried $10,235 in average card debt last year, up a whopping 26% from 2005. Compare this to credit card debt for all borrowers surveyed which rose 3% during that time, to $9,827.

Much of the increase is attributed to the cost of living, combined with reductions in available retirement funds.

According to an associate director of Demos, the organization that conducted the study, "The frivolous spending idea, that's not what's driving families into crazy debt. The expense that most affects families is the cost of living."

I dunno about you, but these statistics worry me even more than the increasing debt load being accrued by young adults in college--at least our younger citizens have another forty plus years to earn money and tame the debt.

Not helping matters was the survey's finding that older folks are not only borrowing more, but they are paying higher interest rates for the privilege.

It's stories like this that make me more determined than ever to get rid of my debts BEFORE I head into retirement.

Friday, August 28, 2009

Just a Typo Away From Retirement

I was trying to figure out what Sharon from "Musings of a Midlife Mom" was talking about when she commented on my last post.

What? Me retire at age 59? How does that work when I'm already 60 years old?

OK, so I made a typo. After sixty years on this planet, I'm entitled to a typo or two. Or five.

69 years old, NOT 59! 69!

That's the current plan, God and my health willing. Of course, I'd be happy to retire sooner.

Maybe I could win the lottery?

God, are you paying attention?

I wonder if I have to buy a ticket first?

Thursday, August 27, 2009

August Update

August turned out much better than I anticipated, helped along by the fact that neither my TV purchase nor my van repairs (the second set) have yet registered. I reduced my total indebtedness by $737.06. Not exactly an amazing amount, but I'm just grateful it is headed in the right direction.

In the meantime, it's getting exciting watching my 401(k) recover. I now have $8000 more in my retirement savings than I had last month, and only $1025 of that comes from new contributions. According to Financial Engines (my favorite website when it comes to figuring out what I need for retirement and how I currently stand in my effort to get there), I have a 72% chance of retiring at age 59 with an income of at least $43,000. (My retirement goal is to have at least $40,000 per year, but preferably $50,000.)

So August turned out OK, if not spectacular.

On the other hand, with September comes school clothes and tuition for the grandkids.

I'm going to follow AA's example, and just take it one day and one month at a time.

Monday, August 24, 2009

Tweaking My Bloglist

I went through my bloglist and checked that all the links work. I also removed anyone who hadn't posted to their blog in the last six months. And, since I'm always finding new personal finance blogs to read, I added a few new ones to my mix.

If you think I missed a good blog, or you want to know where YOUR blog is, leave a comment.

Sunday, August 23, 2009

The Van Lives!

What do you know!

Apparently my van's transmission is nothing to write home about, but neither does it need to be rebuilt. A $220 repair, and I'll be good to go tomorrow.

You have no idea how relieved I am, even though I have been reading the auto ads and fantasizing about a new car. I haven't had a car payment in five years, and I'm really not in a financial place to have one now.

Murphy, of course, watched my adventures in auto mechanics, and finding only disappointment there, decided to move on to my ten-year-old TV set.

Poof! One minute I'm watching it and the next, the picture is gone.

Some would point out that this might be a good time to learn to live without a TV, but that ain't gonna happen. (Um, yeah, Ole Grace is a video addict.)

But, hey! I'd just dodged an $6000 bullet, so what's $206 for a 22 inch flat screen TV, right?

Did I read Consumer Reports? Did I check for the most quality at best price? Or did I run out in a panic and buy the first reasonably priced TV set I saw? (No prizes for figuring out the answer to that one!)

This is NOT going to be one of my better months for debt reduction.

But dang! I still have my not-so-trusty Dodge Caravan, and a brand new TV. Color Grace happy!

Friday, August 21, 2009

Bi-Polar Finances

With apologies to those truly suffering from Bi-Polar Disorder (a mental illness I wouldn't wish on anyone), I sometimes wonder if I'm financially bi-polar. Keep in mind that in the rest of my life, I am a pretty steady, optimistic person. But when it comes to money, particularly MY MONEY, my emotions go all over the map--not always rationally.

Take today. For several weeks, I've been waiting for a $75 check to come through my account. I dutifully subtract it from my balance each time I view my account online. Then the bank notifies me that they made an error, and that the check was actually cashed back in June, and that it has been subtracted from the account already.

Which means I have $75 more than I thought.

Which means I'm ecstatic.

Over $75?

I have to get out more!

But just a week ago, I was depressed because I may well have to get a new (to me) car. The vehicle issue has not resolved, so I should still be depressed, right? But, no--I've got $75 that is new money to me!

It bothers me that I can be so thoughtful, so rational, in other aspects of my life, but not with my finances. I flow emotionally in whatever direction the financial wind is blowing.

Yesterday was down. Today is up. God only knows how I'll feel tomorrow.

Tuesday, August 18, 2009

More than I Financially Wanted to Know

Only once in my life have I cared enough about a photograph to check out who took the picture.

It was a photograph in Rolling Stone many years ago. It was, of course, by Annie Leibovitz.

Since that time, I've attended exhibitions of her photos in New York City, Paris and Seattle. And I always look for her work in Vanity Fair.

I marvel at how she looks at people. And how she gets them to look back at us.

But great artists are not always great at managing their money. Instead, greatness brings its own issues, including in Annie's case, addiction, perfectionism, and no one to put the brakes on when necessary.

New York Magazine takes a long look at Annie Leibovitz's finances and gives us a scary portrait of a sixty year old artist just past her zenith as well as an older parent of an eight year old daughter and four year old twins, who is now near bankruptcy.

It saddens me to see the real life warts on people whose art I admire. Not that I don't think Leibovitz brought her financial ills upon herself--clearly she did. But it gives me no joy to see her brought down financially.

Friday, August 14, 2009

Snarky Television

I have a new favorite TV show--HGTV's "Real Estate Intervention."

It features totally deluded homeowners who have yet to face the fact that their homes are not worth what they want for them in what is decidely a buyer's market.

Mike Aubrey is the host. While he is a hulk-like presence (complete with bald head and Hitlerish moustache), he is gentle with these idiots as he takes them around to comparable homes that have sold for or are listed at many thousands less than the featured homeowners expect to get for their own houses.

In one case, he takes his charges to a home that is an exact duplicate of their house, except that it has a fireplace, which theirs does not. He points out the much lower selling price, at which point, they tell him, with straight faces, "Well, we think some buyers won't like the fireplace and will pay more not to have one."

Say what? Are they kidding? Personally, I never use my fireplace and wouldn't care if my home didn't have one, but even so, I'm aware that having the fireplace increases the value.

Some of the homeowners are just in sad situations fostered by a foundering economy. One older woman is selling her Georgetown home (which actually is NOT in Georgetown--something she keeps forgetting) because she lost her job and hasn't been able to find a new one. Unlike most of the featured sellers, she does wind up making about $100,000 on her eventual sale--I, for one, was happy that she did.

Which brings up another point. Several of the homeowners seemed to have been using their houses as their personal piggy bank. One family purchased their home for $120,000 but now owed over $200,000.

I purchased my home in 1993 for $95,300--a 1929 barn of a house in an iffy but thriving neighborhood. In 1999, I refinanced the home at a lower interest rate, reduced the term of the mortgage to 15 years, and pulled out $20,000 for some much-needed deferred maintainance. In 2006, I took out a second mortgage through my credit union in the amount of $30,000 to put on a new roof and add a basement waterproofing system (also much-needed in that each winter my basement doubled as a murky swimming pool!). Today, I owe a little over $45,000 on my mortgage and $28,000 on the second. The first mortgage will be fully paid off in 4.5 years. The second in 10 years, though my plan is to throw the first mortgage payments at it once I have those funds available, so it should be paid in 6 years.

The most important steps are the ones I didn't take--I did not get upside down with regard to my home. It is currently worth at least $300,000. So if push ever comes to shove, and I had to sell, I would make a considerable amount of money from the sale.

Oddly enough, since Zillow once valued my home at over $400,000 a couple of years ago, I often still feel as though I've LOST money on my house--one's personal feelings and reality are not always the same!

Reality is what most of the homeowners on "Real Estate Intervention" don't want to face. Sadly, by the end of each show, most of them are still hanging onto their dreams and refusing to price their homes in line with the market. In their minds, their homes are worth more, never mind that the comparable homes sold for less, have more amenities, more space, and better lay-outs. By the end of each show, most have failed to sell their homes, or have taken them off the market entirely.

Which, of course, allows viewers like Grace to write snarky posts like this one!

Wednesday, August 12, 2009

Singing the No Vehicle Blues

Remember when I paid (OK, charged!) $500+ to put in a new water pump and timing belt in my 1999 Dodge Caravan a couple of weeks ago?

Well, shortly thereafter, the van started to make weird squealing noises. I took it back to Firestone to see if they had done something wrong but they told me it sounded like a transmission problem and suggested I take it to a shop that specialized in transmissions.

So, after a week and a half without a vehicle (I was afraid to drive it), I took it into a neighborhood transmission shop yesterday. Apparently, it will either be something easy to fix or it will need a rebuilt transmission, which will run $1400. No way am I going to have the latter--my whole vehicle is only worth $1600 according to Kelly Blue Book. I'm awaiting a phone call from the shop as I type.


Not only will I have wasted the $500 (which it looks like I will be able to pay off before incurring any interest), but I will have to get another vehicle about a year earlier than I intended to.

More debt.

More monthly payments.

And a budget that can stand neither.

Grace is NOT a happy camper!

And here's the kicker! I checked out the eligibility guidelines for the "Cash for Clunkers" program. Apparently a 1999 Dodge Caravan got 19 mpg in city and highway driving when new, which puts it one mile OVER the guidelines. So no help there when it comes to purchasing a new (to me) vehicle.

Honestly, I feel like crying. I know this will all work itself out, but the thought of having to shop for another car and to incur even more debt puts me in a very whiney mood.

I do know that this time around I want a small, high-mileage car, preferably under $12,000. Beyond that? Who knows?

Thursday, August 6, 2009

And I thought I Was Starting Late. . .

Just when I was thinking that I was one of the the worst of the late-bloomers (that's what I get for reading all those wonderful blogs out there by twenty-somethings who are already saving up for retirement--not to mention for weddings, homes, and kids), along comes Sarah.

Sarah was profiled on Monday's Dallas News. (Thanks to Boston Gal for pointing me toward Sarah's story.)

Sarah is 57 and has NO retirement savings. Never mind that her employer would match up to 6% of her salary (meaning, she has left substantial dollars on the table every year) or that in addition to her base salary of $58,000, she apparently makes good money from a family oil well lease.

The article is a tad cagey about just what her annual income is, at one time saying that the amount of oil-well income varies, and at another, quoting the financial advisor as saying that her total income is "very respectable." I can't tell if she's making about the same $75,000 a year I make, or not.

One comment that I don't understand is her financial planner's concern that she may wind up in bankruptcy if the oil money goes away--overall, her debt doesn't seem to me to be that substantial. She owes around $26,000. Maybe it's because I owe about $21,000 so her debt doesn't seem so far off from mine. I've never considered bankruptcy, and wouldn't unless I owed far more than I do. (I do realize that Sarah has fewer concerns about assets, which I would have to consider--she doesn't have much equity in her home.)

The article doesn't mention prior marriages, so I'm assuming that Sarah, like myself, has always been single.

What IS she thinking????

Is she planning to inherit from her parents? I know of several people whose retirements are based largely on what they expect to get from their parents' estates.

Sarah says she is an optimist and has always believed it will all work out. I understand this; I think of myself as optimistic as well.

But late as I am to the world of retirement saving or planning, at least I got there before age 58!

Tuesday, August 4, 2009

Festival of Frugality

Every Tuesday brings a new Festival of Frugality. This week, it is hosted by "Modern Tightwad" and Grace's post on her (accidentally) frugal week-end is among the offerings.

And, yes, I really did get through the entire week-end for a measly three bucks!

Sunday, August 2, 2009

Freebie Weekend

It started accidentally.

First, I stopped at the library after work and picked up the two movies I'd reserved ("Charlie's War" and "Angels and Insects") for free weekend viewing.

Then Friday evening, a neighbor who was headed out to a local park for a free blues concert, invited me to share a picnic dinner with her family. I'd won a free six-pack of "Mike's Hard Lemonade" in a grocery store drawing earlier in the week, so I brought that along as my contribution, along with a bag of potato chips that had remained miraculously unopened. The weather was warm, the music cool, and the company, great.

On Saturday, a friend and I used our Bank of America debit cards for free entry to a local historical mansion and our local art museum. This is a program available on the first Saturday and Sunday of each month, wherein any proof of a Bank of America account will get one into various city attractions. It's too bad I live nowhere near New York City, because the Bronz Zoo is on the list.

Lunch was another picnic, this time on the grounds of the mansion, with a terrific view of my city, including the mountains in the background. Salami sandwiches and leftover hummus never tasted so good. Then we went to an IMAX movie with the two free tickets I'd gotten a couple of months ago when the projector ate the film I'd gone to see. (I'd only purchased one ticket, but the theatre gave out two tickets to each of us as compensation for the inconvenience.)

Today I went to an office brunch to honor our summer interns.

So here it is, not quite noon on Sunday, and I've spent exactly $3.00 for the entire week-end. (If you must know where the $3 went, consider that Grace NEVER watches a movie without popcorn!)

Now that I see what a cheap weekend it has been, I think I will deliberately not spend anything for the rest of the day just so I can say I had a $3 weekend! And I didn't skimp on a thing!