Too Funny and Maybe Even True!

Analise, over at Financially Free to Be Me tells this story about credit cards. I thought it was pretty funny. Based on some inane conversations I've had with credit card companies, it even sounded plausible.

Check out the rest of Analise's blog--having saved well, she's now retired, traveling, and loving it.

Monthly and Quarterly Updates

One scary benefit of the new credit card laws is that every monthly statement now shows me how long it will take to pay off that particular card if I just make minimum payments: 22 years; 26 years; 7 years; etc.

NOT a pretty sight.

But I think having this brought home to me each month when I open the envelope will help keep me on track to get rid of my credit card debt.

In March, I reduced my debt by $866.22--not as much as I'd hoped because I pretty much only made minimum payments. My debt snowball added a mere $12 to my lowest credit card.

My quarterly net-worth went down by $1642.72. I'm less worried there, because my retirement funds are up nearly $20,000. What brings the total down is my real property. Houses held onto their value for longer in the Pacific NW than in many other parts of the country, but have started to drop over the last year. According to local reports, I can expect another 5% drop in value by December. However, given that I purchased my two homes in 1975 and 1993, and paid nowhere near their current values, I really can't complain. The rental property was paid off years ago. My current home will be paid off in exactly four years.

So, Grace is solvent. YAY! But I really, really need to reduce the debt. [Have you heard me say that before?]

Getting In Sync With HTML

OK!

With a flurry of e-mails and a whole lot of patient instruction from The Frugal Zeitgeist , I think I have made my links visible to everyone.

At least I hope so.

If you've been using Google Chrome or Firefox as a browser, try reading that last post again, and tell me if the links finally show up.

GAK! I don't think I have it in me to become a computer nerd!

Life In The Non-Profit Lane

Thanks to Frugal Zeitgeist for pointing out this article in the New York times. It's about a program geared to retirees who miss the workplace but NOT their prior jobs. I'm intrigued that it pays--not much, but $25,000 year, which would be a handy supplement to one's retirement funds.

It really isn't for me, since I've spent my working life with non-profits.

But I wonder if my banker-sister would like it? She's retiring this year after thirty years in the upper echelons of the banking world. She isn't sure what she wants to do after she retires. Volunteering appeals to her, but she would like to use skills other than her financial ones, which are of course, the particular skills everyone wants from her. She's thinking about teaching. Or religious study. Or something.

I plan to send this article her way, if she hasn't already read it.

Birthday on the Cheap

Yesterday, I turned 61.

It's a corner of sorts--I can no longer think of myself as being halfway through my life.

But I have to say that I don't particularly feel old. My parents seemed old to me while they were still in their fifties. But now that I've arrived in my sixth decade, I feel surprisingly young.

Altogether, I had a good, and frugal birthday. I took the day off from work--we get three mental health days a year, and this was one of mine.

The frugality started with my Entertainment Book. I had purchased it in January through My Points at $15 off the $35 purchase price plus free shipping plus 1500 My Points. If one eats at chains or fast food places, the Entertainment Book pays for itself quickly. I have grandkids, therefore I am a regular at McDonald's, Taco Bell, etc. I try to time my purchase through My Points to pay the least for the book while getting maximum points. This year, I should have waited because two weeks after I made my purchase, the same deal was offered with 1750 points. Oh Well. I immediately traded the My Points for a $10 Starbucks card.

One of the Entertainment coupons was for a free movie at a local chain on my birthday. I chose to go see Avatar in 3D. Another coupon was for free popcorn with the purchase of an outrageously priced soft drink. But altogether I got $15 worth of admission, 3D glasses, and treats for $5.75.

Earlier that morning, I used a coupon that Starbucks sent me for a free coffee drink on my birthday.

Then a friend treated me to a late lunch at a very nice middle eastern restaurant.

And my kids did the whole dinner/cake/small presents routine, which I enjoyed immensely in the evening.

Speaking of cheap, today (Tuesday) is "free pastry day" at Starbuck's, and "free cone day" at Ben & Jerry's. I've already taken advantage of the former, and plan to chase down the latter this afternoon.

Happy birthday, indeed!

Will I Need More or Less During Retirement

Some of my most interesting thoughts about finances come in response to reader's comments.

Master Po, the author of The Po File left a comment on my last post wherein he takes issue with my expectation that my financial needs will be less after I retire.

I will resist all my inclinations to make "grasshopper" jokes (though anyone setting themselves up as "Master Po" has certainly heard more than a few!) but I would respectfully disagree with his position.

I admit to being influenced by Jonathan Pond, particularly his book, "You Can Do It: The Boomer's Guide to a Great Retirement."

It is Pond's theory that all those charts showing that we're going to be eating catfood once we reach age 70 are self-serving statistics twisted by various financial institutions who want us to invest with them.

If all our dreams are of fancy beachhouses in Bermuda, then most of us are bound to be disappointed in retirement. But if we're looking for a moderate level of comfort and security, perhaps on along the lines our parents enjoyed, then we are likely to get there. And that is true even for those of us with late-life debt and nearly-but-not-quite-enough savings.

My personal plans are to have $50,000 a year from a combination of Social Security and investments in retirement. But as I've said before, I actually think I could live well on $36,000 a year.

Why do I think that?

Well, for starters, that's what I live on now. I make more, but I'm putting a third of each paycheck into my 401(k). And I currently have a mortgage. But in 4.5 years, the mortgage will be gone. I'll still have homeowner's insurance and property taxes to pay, but that's a far cry from my current $1334 a month.

For another thing, by delaying retirement to age 69, I'll get a maximum social security payment, and I will be eligible for Medicare. I'm just not one of those folks who believes that social security is going down the tubes and won't be available when I retire.

And finally, there is always my hope that my family's needs will lessen over time as they become more adult in terms of their finances. I certainly do not expect to have children or grandchildren still living with me when I retire.

While I do want to do some traveling during retirement, most of my desires for retirement living have to do with reading, sleeping in, volunteering, and other things that do not take much in the way of money.

I do recognize that inflation is a factor, and that it must be accounted for. Hence, my desire to have $50,000 per year available to me.

While I value Master Po's input, I still think he's wrong. But if it turns out he's right, I'll put away my catfood and head over to his house for dinner!

Lifestyles Vary, As Do Goals

A lot of bloggers, particularly the more seasoned ones (Ahem! That would be the OLDER bloggers!) are talking about frugality, lifestyle changes and altered goals in the face of our current economic situation. Morrison at "All Doors Considered" has addressed this issue in several posts, as has Syd from "Retirement: A Fulltime Job".

One of my anonymous commenters took issue with Syd's lifestyle, quite as though everyone has the same goals and wants the same lifestyle when retired. Syd chose to retire earlier than most folks--that means some careful conservation of financial resources that those of us who retire later won't have.

It was a choice. She made hers and she's enjoying living with her choice.

Tony from "My Road to Freedom" says he's fine, living on $13,600 a
year. He lives in an RV by choice, doesn't stint on his hobbies, one of which is gun-collecting, and clearly has savings because he's in the market for land on which to park the RV. His lifestyle is a far cry from what I want in my retirement, but it obviously suits him, which is the point.

Another of my anonymous commenters (why don't these folks ever put their name to their rants?) has nothing good to say about today's "forced frugality," insinuating that those who say they've learned from this crisis are deluding themselves.

I don't know if he/she is right, but I hope not.

With all the money in the world, I'd probably live in a McMansion. But to be comfortable, I can make do with much less than that.

Watching every penny for the rest of my life would be a depressing prospect. But paying closer attention for the next eight years, so that my retirement years will be adequately funded doesn't seem all that bad.

It's becoming clearer to me that practicing a moderate level of frugality both now and in retirement will allow me to live out my life in comfort if not excess.

Passing a Milestone

What d'ya know!

My retirement funds have finally caught up and passed their prior high mark of $174,518, set in October, 2007.

Mathmatically, of course, this isn't quite true, since I have been faithfully depositing over $1000 a month into the account ever since.

BUT, psychologically, it feels like I've turned a corner in my accounts and that my retirement is, once again, back on track.

As of yesterday, I now have $175,089 in the 401(k) and 403(b) plans.

According to Financial Engines, I have an 83% chance of retiring on $50,000 a year, provided I keep saving at the same rate.

Since I honestly think I can live pretty easily on $36,000 a year once my debts and house are paid off, I'm ecstatic!

A Raise For Grace--Kinda, Sorta

Collective bargaining at work has concluded. We've signed a three year contract, so now I know what my income will be through 2012.

Nothing to write home about!

In order to keep my 19 year old daughter insured, I'll be paying an additional $45 a month through May, 2011 (when she turns 21 and can no longer be covered under my plan).

I'll get an immediate $1000 annual raise.

Do the math--$1000 minus $540 for insurance equals an astounding $460. Divided over 24 paychecks, I can look forward to an additional $19 per pay period.

Hmm--guess I won't be spending it all in one place!

For 2011 and 2012, my pay will stay the same but I'll get an extra $800 as a lump sum.

That is probably better than the extra $19 a paycheck.

I'm at the top of our pay scale--that's what I get for staying in this field for 38 years and this employer for the past 20 years.

However, I DO have a secure job and I DO make in excess of $75,000 a year.

Nothing to sneeze at in these tough economic times.

How Does Grace Compare With Everyone Else in Debt?

Liz Pulliam Weston's latest column at MSN Money has me comparing myself to others in my age group and income bracket.

As Liz points out, sometimes we kid ourselves that if we're making all our minimum payments each month, we must be doing fine. It helps to run some calculations to see if that's really true. She provides four ways to measure.

Grace's results were not surprising but they were disappointing.

For example, my Leverage Ratio of 14% was pretty good for my income group. For my age? Not so much. But it makes sense that I'd be about ten years behind my age group given that I started saving so much later.

Then I checked out my Debt to Income ratio--talk about depressing. Mine is 36% which is right on the edge of disaster. According to Weston, disaster comes at 40%--and I'm way too close to that point.

But it's when I check out my Bad Debt to Income Ratio that things get really bad!

32%!

Note that this does NOT mean that all my debt is bad--but my so-called toxic debt (credit cards, loans, etc.) equal 32% of my annual income. NOT a good plan! And not good compared to others in my age and income brackets.

OK, Liz now has me worried! The hope is that these calculations will spur me on to reduce the debt.