Friday, October 29, 2010

October Update--It's Halloween and It's Scary

This should be my last month of increased indebtedness, now that the final payment on the rental's new roof has been made. That's assuming that I don't borrow any money for Christmas.

Well, heck, let's assume that, OK?

My total indebtedness increased in October by $1044,85.

That means my year-to-date decrease in debt is a mere $1158.

Basically, I scrambled to pay off debt for 8 months, spent like crazy for two months, and here I am!

But I have slashed my Christmas budget (remember, I'm the major buyer of gifts for 12 folks!) and I'm thinking I'll get through the holidays without using credit cards, lines of credit or any other form of debt.

After that? A whole new year with new frugal resolutions!

Monday, October 25, 2010

Groovin' on Groupon

I love it when great minds get in the same groove! Witness Donna Freedman at Surviving and Thriving. She and I are both having great experiences with Groupon.

I've been a member of Groupon for awhile now, but haven't actually used one of their coupons until last week, when all of a sudden there were two coupons that would save me money for things I'd buy anyway. One was to a local restaurant that my soon-to-be 26 year old daughter already told me was her choice for her birthday dinner. (This is my Halloween baby--it was so great when she was growing up--I never did have to decorate for her birthday!) The other was today's coupon for The Body Shoppe, where I do a fair amount of my Christmas shopping. In both cases, I paid $20 for a $40 coupon. In both cases, I saved 50% on items I was already going to buy, even at full price.

The point of Groupon is to get folks to try new places and new services. From a frugal point of view, this is not always good. It can be hard to resist a bargain on something I didn't know I wanted until the coupon became available. At least in my city, many of the trendiest salons and restaurants are featured. It would be easy to overspend on things I was interested in trying were my finances not an issue.

I'm excited to see what other groupons may be available between now and Christmas.

Friday, October 22, 2010

Cheers for Happy Hour

I'm a bit late to this party.

But late or not, I've become a huge fan of happy hours.

I remember when the only folks dining before 6:30 p.m. were seniors and families with young children. It was a sure sign that one lacked culinary sophistication if one showed up earlier. And if it was a buffet? Well, never mind, but keep on wearing that polyester leisure suit!

There's been a lot of employee turnover in my office recently, which has resulted in many new, younger hires. One of the side benefits has been a lot more interest in happy hours at local bars. No, this isn't the local buffet--much trendier than that! I live in a city that prides itself on its food options, so virtually every 'happening' restaurant has a bar, with a happy hour that mostly runs from 5 p.m. to 6:30 or 7:00 p.m. (Often, another happy hour kicks in around 10:00 p.m. but by then, this senior is in her jammies, parked in front of the television set.)

I've been amazed at the food and drink options as well as the prices. Yesterday evening, for example, seven of us went out. Cocktails were $5. Wine was $4. Beer was even less. The food prices topped out at $6 for the calamari. I had Phad Thai ($3) and french fries ($2) plus a drink (OK, so neither the diet police nor the nutrition monitors were around!) for a grand total of $12 including the tip. I sneaked a peak at the dinner menu where the same order would have cost me over $20. As long as the food and drinks were served before the end of the happy hour, we could hang out as long as we liked.

Going with a group is part of the fun and saves one from the singles' "are you dating material or not" action at the bar. (Of course, if you're into that, there's another reason to go!)

If, like me, you find going out to eat to be one of life's special pleasures, happy hours are an especially frugal way to do it.

Thursday, October 21, 2010

Roadblocks to a Successful Retirement

I always enjoy reading Liz Pulliam West's financial columns, but this one hit nearly everything one must consider when retiring, and all in one post!

Liz covers the 5 ways to wreck retirement:

(1) Think only about the financial side. Certainly saving for retirement is a preoccupation of mine, but Liz is right--it is important to consider one's health, one's relationships with friends and family, and the hobbies or activities one wants to continue or newly develop in retirment. It would be a shame if I finally get to my retirement with sufficient money but lack the health or brain cells to enjoy it.

(2) Fail to get a second opinion. Mea Culpa! Before I get to retirement, I have to remind myself to set a date with a fee-based financial planner. I'm pretty sure I'll do this. BUT will I follow the advice I'm given? For someone who has never been good with numbers, I still trust myself to manage my finances--I need to consider that this may NOT be a good thing.

(3) Fail to understand Social Security spousal benefits. OK, not everything Liz says is relevant to Grace! No spouse, no issue for me here.

(4) Skip formulating a Plan B. Hard as it is to imagine, I agree that one must have a back-up plan for contingencies. Can I count on my health being stable? I've already had major heart surgery--what if I need more? What if my job goes away? It could happen since I work for a non-profit that is dependent upon public funding. What if the need to provide a home for my grandchildren requires that I cut back on my work hours, and therefore my earnings? Too many possibilities to be safely ignored. And

(5) Gut your nest egg early on. This is a warning that too many failed to heed in the first days of our recession. My plan is to try to maintain my lifestyle on what I get from Social Security--something that may be doable when I get my home paid off and erase all of my debts. That way, my 401(k) withdrawals will be largely for the extras like travel. But I also have to realize that it is in the earliest days of my retirement that I will be most likely to travel or pursue more expensive activities. So, at the exact time I should NOT be withdrawing funds, I'm going to want to. Definitely something to think about.

Saturday, October 16, 2010

The "Am I Ever Going To Get Out Of Debt" Blues

How many times have I read bloggers who make statements about how their life is going, and say they're fine with it, when anyone can read between the lines and easily see that they are not fine at all?

Time to count Grace in that crowd.

I took a look at where I was financially when I started this blog in June, 2007. I then compared it to where I am now.

The picture is NOT pretty!

It is, in fact, worse than I expected.

On the savings side, things are the brightest. I had $167,166 in my 401(k)when I started. That fund now stands at $195,871, an increase of $28,705.

But debt?

I kinda thought that paying attention to my debt, becoming frugal and entering a learning curve regarding smart financial practices would put me on the right path. If so, there have been a lot of potholes on that path!

My total debt HAS gone down in the past 3.3 years--a whopping $1034!

Longtime readers know that's not the whole story--I HAVE been paying down my debts, but along the way was the van that dropped dead, a rental that needed first a new furnace and then a new roof, children that needed various bail-outs, not to mention a wonderful but not exactly frugal trip to Japan.

But what am I telling myself?

That I'm OK, that I would have been in even worse shape had I NOT paid close attention to my spending, that once my mortgage is paid off (in 4 years) I'll be able to throw that entire monthly payment at my debts and have them cleared out by the time I retire.

It's not a great plan, but at the moment, it's all I've got.

Tuesday, October 12, 2010

Annuities? From Never to Maybe

There are various ways to grow financially.

And not all of them are actually financial!

Sometimes, there's emotional grow as well, a matter of changing one's mind.

I'm getting there when it comes to annuities.

I know that we old fogies are supposed to be set in our ways but life has a habit of changing things. Witness my previous, long-held aversion to bonds. Nothing like a recession to rearrange one's priorities! I'm now upping my bond quotient, which, at my age (Ahem! Umm--61) is probably long overdue, though it has taken me some time to come to that conclusion.

Now I'm rethinking another aversion--to annuities.

This article, by Money Magazine's Walter Updegrave, not only mentions my major concern (that annuities are too expensive for the benefits they grant, particularly if I exit this mortal coil sooner than expected) but has some solutions that provide safety while not tying up all one's funds.

I expect to retire with around $400,000 in my 401(k), which, with my Social Security, should provide me with about $50,000 a year. Since I calculate that I really only need about $36,000 after taxes to live comfortably in retirement, I could afford to put at least $100,000 into a guaranteed annuity. Unfortunately, there is no pension in Grace's future.

I haven't made any final decisions, and don't intend to for a few more years. I figure the payouts can only get better, given how low they currently are.

But unlike past decisions to never consider annuities, these days I'm listening. And reading. And, yes, considering them.

Sunday, October 3, 2010

When Two Wrongs Turn out Right

This story from the Sunday Oregonian caught my eye today. It contains so many financial lessons about rebates, how our minds work when it comes to using rebates, and the power of polite preseverance even when we're in the wrong.

I am a rebate-queen. While I understand that some corporations count on buyer inertia to keep many from applying for their rebates, they won't make money off Grace. I read the rebate forms carefully, cut out all the necessary UPC codes (Yes, my darling children, that explains the holes in the boxes of your birthday gifts!) and mail everything the day I make the purchase. I even xerox the forms and attachments before I put the rebate in the mail. Then I track the rebate online.

But at least once, I fell into Brent's trap of not using the rebate card when it came in the mail. Checks are different--I deposit those immediately. Why? I couldn't tell you. It's the perverse way my mind works--checks are meant to be deposited; Gift cards? Sure, I should use them right away. But I don't always, and I sometimes lose money when I delay.

What I haven't done in the past (but will, I hope, do in the future) is ask for the gift card to be credited anyway. It just never occurred to me, but Brent is right--what is there to lose by asking?

Several good lessons to be learned here.