Sunday, March 30, 2008

Quarterly Net Worth--Surprisingly Up

I wasn't looking forward to calculating my quarterly net worth, but now that I have, I find that it's up $7497 and is a comfortable $591,595.

Of course, a considerable amount is equity tied up in my home and my rental. The rental dropped over $10,000 in value, and my 401(K), likewise, is down $10,000 from last quarter. But my residence has not only held its value but actually (according to Zillow) increased in value by another $34,000.

This makes me feel a lot better than when I look just at my monthly financial statements. My consumer debt is decreasing at a snail's pace. For the month of March, my total debt reduction is a mere $672.86 and my debt snowball is still frozen solidly in place.

Unfortunately, April is not looking more upbeat.

My intentions are good but life keeps intervening. Two major events are about to occur (about which, more, later) which will bring even more financial pressure.

Right now, my plan is to NOT acquire more debt, and to keep up at least the minimum reduction in debt while meeting life's demands out of my monthly pay.

Overall, this is a cash flow issue more than anything else. My finances should get better (in that there will be fewer demands on my paycheck), during the second half of the year. But it's the "meantime" that is a bummer.

Wednesday, March 26, 2008

The View from Elsewhere


My blog post "Waiting for the Test to be Over" was picked up by Karen Datko, a correspondent at MSN's Smart Spending, and then designated as an "Editor's Pick."

Not only did this boost my Sitemeter numbers skyhigh, but it also resulted in a number of comments about my view of the economy and whether or not I should be worried about my retirement. At least one of the comments was more than a little strange, and another one misread me to say that I was saving $12,000 a month--to which I can only say "I WISH!"

At any rate, you can check out the responses here.

Tuesday, March 25, 2008

Retirement v. College--No Easy Ways Out

Money Magazine profiles the Wilkes family of Danville, California in the current issue.

With three children, ages 13 to 17, all of them college material, the Wilkes will be looking at retirement just as the youngest child finishes his higher education. Bruce Wilkes, age 52, supports the family and stay-at-home mom, Lorri, age 48, on $100,000 a year. Given the pricey Bay Area locale, that's not a lot of income. On the other hand, that same locale means that they now have significant equity in their home, notwithstanding the leveling-out of housing prices in California. The Wilkes owe $144,000 on a house valued at 1.2 million.

What I found interesting was how the Wilkes seem to have done everything right, financially. They have over $500,000 in retirement funds and regularly contribute an additional $600 a month. They have put aside funds (apparently around $16,000 per child) for their children's higher education. They intend that their children pay at least half of their own college costs. Their children appear to be headed to state institutions.

Still, there's no cheap and easy solution to their looming budget crisis.

The advice given looked pretty good to me. Though I did wonder why no one suggested the obvious boost to the Wilkes' income that would come if Lorri would get even a part-time job.

Monday, March 24, 2008

Grace, at 59

I successfully turned 59 on Saturday. I celebrated with tickets to Cirque du Soleil's "Corteo", courtesy of my sister. I intended to go as a gift to myself, but to do so, I would have had to raid my income tax refund which would have been difficult, given that it has already been spent.

Fortunately, my sister paid attention to the hints I dropped and gave me two tickets as my birthday present. To quote my 17-year old: "SWEET!" The show was amazing, well worth the big bucks I didn't personally spend.

I did spring for dinner out at Todai with four of my five daughters (one lives too far away). It's a pricey seafood and sushi buffet, but the quality is a cut above most buffets. Dinners are free on one's birthday, and the many food choices kept the picky eaters happy. All in all, my 59th birthday was a good one.

But here's the rub.

I've been paying close attention to my finances for the past ten months. I've cut back in several areas (cable TV, subscriptions, clothing, etc.). I've kept up my contributions to my 401 (K). I am definitely "smarter" about my savings and my spending that I have been at any other point in my life.

So why doesn't it feel better? Why don't I feel ennobled by all this effort? Where's the smug satisfaction that should be my due?

More to the point, why was I happier when I was blithely charging up my credit cards and not worrying?

Whoever said "Ignorance is bliss" might have been talking about me.

It feels weird to be at the peak of my personal earning powers, to be doing work that I love, to have "empty nest" coming my way in just a couple of years, and to be unable to shake this sense of financial doom.

As I say this, or write it down, I realize that I don't feel doomed as to my retirement, which is pretty much on track. It's the day-to-day finances that are getting to me.

OK, enough of this! My financial and emotional goal prior to turning 60 is to find a way to get over this depressive hump.

(Love that last phrase--isn't it the perfect oxymoron?)

Thursday, March 20, 2008

Free is Such a Lovely (and Dangerous) Word

In the current issue of "Money" magazine (Yes, I subscribe. I paid $30 for a three-year subscription on Ebay.) economist Dan Ariely explains why we're all suckers for "free" offers. I'd provide a link to the article, but there isn't one. That's too bad, because we are all at risk for the faulty thinking that leads us to overvalue "free" in almost any context.

Ariely gives several examples, but the funniest was one Halloween when he handed out two Hershey kisses to each trick-or-treater, then offered either a free fun-size Snickers bar or a full-size Snickers bar for the price of one Hershey kiss. No one "bought" the full-size bar, in spite of the fact that it was clearly the better financial and gustatory choice.

I confess that I, too, am a sucker for free stuff. But it pays to read the offers carefully and figure out the actual cost of the "free" items. If it leads me to pay more in the long run, it's not so "free" after all.

On the other hand, I am unapologetic in my love for free samples--a whole other catagory of "free." So long as the sample is something my family can really use and there are absolutely no costs (shipping, subscriptions that have to be cancelled, etc.), count me in. I'm especially fond of Wal-Mart's freebies. Just today, I sent away for lotion and laundry detergent samples, both of which will get good use.

Sunday, March 16, 2008

Waiting For the Test to be Over

I assume this is all a major test.

I don't believe in bonds or bond funds for a person my age or in my particular personal circumstances--I have ten years until retirement and I'm way behind when it comes to fund accrual. Better to keep buying when the market is down because it is bound to come back up and I will be glad I bought my fund shares at historic lows--that's what I tell myself.

I walk my talk--I continue to put $1025 a month into index and growth funds. Right now, I'm invested in Vanguard's S & P 500 fund, Total Stock Index fund, and the European Market Index fund. In addition, I hold funds in Ariel Appreciation, American Century Equity Income and Calvert Social Investment.

Overall, I'm down 17% which, when I allow myself to think about it, scares me to death. I started this blog last July with $176,000 in retirement savings. Now I'm down to $146,000, notwithstanding the money I keep putting in.

For all that I admire Dave Ramsey, he is so wrong about what's happening in the economy. We absolutely ARE in a recession, and I don't get why he can't admit that--I suspect it's due to his conservative/Republican politics.

My mantra is to keep doing what I'm doing--put money in regularly, assume that it will all even out in another couple of years, and DON'T PANIC.

I believe that, but for all my pep talks to myself, it is still darn hard to watch the funds dwindle.

When do I find out if I passed the test?

Friday, March 7, 2008

The Ides are still Marching

Among the many things I hate about not having money is how the thought begins to occupy every waking moment.

I know obsession when I see it, and right now, I am obsessed with finding every stray penny.

Dave Ramsey talks about "gazelle intensity" in paying off debt, but sometimes that kind of intensity winds up being focused on just meeting current bills, never mind reducing the debt beyond the minimum payments.

I don't see anything character-building about these feelings. Quite the opposite. As an exmple, I was actually glad to hear that my granddaughter couldn't go to zoo with me this week-end as we'd planned. Rather than be upset that she was sick or that we wouldn't have a fun day out, I was just relieved that I won't have to spend money on the two of us for the outing.

How pathetic is that?

The Ides of March

Periodically, my finances drive me into a funk.

Now would be one of those periods. I have always had a cash flow problem, some months worse than others.

March has, so far, been the pits. You'd think (well, maybe not YOU, but certainly I'd think) that getting a large tax refund would make March an easy month. But, no! There were far too many places to put that money and I'm getting dinged by expenses I'd forgotten about--such as March is when my Zoo and Science Museum memberships come due. And March is when my daughter's school wants me to buy (or sell, which I refuse to do to my friends) ten $25 raffle tickets. I might feel better about the latter if I'd ever won anything, but, again, no! Then the tire-buying I had planned for June could not be put off one more day, much less two months. And Spring Break is in March, which always means more expense with the kids out of school even if we don't (and this year, for sure, we WON'T) go on a vacation. And it turns out that when one's daughter is graduating in May, all the graduation expenses are supposed to be paid in March. And. . . and . . .

Oh, yeah--And March is when I turn 59.


I want this month OVER.

But more than that--I want a guarantee that April will be better.