I don't like bonds. I never have.
While I am not much of a risk-taker, I just don't understand why I should settle for the low returns of a bond fund when, by waiting awhile, I can ensure a greater return sticking with stock funds. Jonathan, at My Money Blog attempts to show me why. He uses plenty of eyecatching charts and graphs, which I can almost understand.
But then, along comes Consumer Reports, one of the more reliable sources of information. Consumer Reports does not allow access to its site without a subscription, but issues are widely available at the public library. Check out February.
One article talks about common money mistakes made in retirement. And there, as # 1, is putting too much (not to mention, any) retirement money into bonds or bond funds.
Consumer Reports analyzed a range of stock-and-bond portfolios to see how they would have performed from 1940 through 2006. In one hypothetical, they assumed a 65 year old retiree would have $500,000 to invest; in the other scenario, they reduced the retirement funds to $250,000. They also assumed a withdrawal rate of 3% per year, and adjusted returns for inflation. Finally they assumed both a 20 year and a 35 year retirement.
What they found was that an all-stock portfolio provided $750,000 more than an all-bond one over the course of retirement. For the retiree who had saved less, the all-stock portfolio returned about $360,000 more.
Their final recommendation was to weight one's asset mix as heavily toward stocks as one's comfort level allows, certainly no more than 30% in bonds ever.
While I recognize that there will always be periods when my stock funds lose money (like, say, NOW!)it still makes sense to me to avoid bonds.
Monday, January 7, 2008
Saturday, January 5, 2008
There's More to Life Than Money
Easy to read that title and say "I know that." Harder to really KNOW that. And hardest of all to have to figure it out on a downhill slide.
Welcome to the life of Michael Gates Gill, author of How Starbucks Saved My Life. The book is subtitled "A Son of Privilege Learns to Live Like Everyone Else."
Michael, reared in New York City with summers abroad or at estates in upstate New York, is the son of celebrated New Yorker writer, Brendan Gill. His mother, who also came from wealth, was so determined to put an optimistic spin on everything that she didn't bother to tell her son that his father had died until Michael called her, and then she spent the first part of the conversation telling him what a wonderful Christmas the family had just had.
On the strength of his family connections, Michael went to Yale, almost graduated, then went straight into advertising with J. Walter Thompson, a topflight New York advertising agency. When we talk about life being handed to someone on a silver platter, Michael is the epitome of that largesse. He spent the next 25+ years as the quintessential Corporate Man , earning good money, competing compulsively to outperform his colleagues, ignoring his wife and three children (to the point of leaving his family on Christmas Day to fly to Detroit to massage the ego of an automobile manufacturer), and generally assuming that his life was all mapped out ahead of him.
Michael was neither a good nor a bad person. Yes, he dismissively sabotaged the career of a young black woman who wanted to be a copywriter, but he also championed a female account executive in what was a male-dominated industry. Ironically, it was this same woman who, many years later, fired him. By then he was 53, an expensive employee, and easily replaced by someone faster, younger and a whole lot cheaper.
For the next ten years, he tried to maintain his lifestyle, while acting as a consultant. It worked initially but over time his client base evaporated. To massage his own ego, he had an affair that resulted in a fourth child. His long-suffering wife decided NOT to suffer through this indignity so he wound up divorced.
Just when things could not get any worse, he was diagnosed with a slow-growing brain tumor. This was the author's first encounter with real life--getting older, looking for a job, having no health insurance.
Enter Starbucks.
It's not quite accurate to say that Starbucks saved his life, but certainly a number of Starbucks' employees jointly acted to save Michael, mostly by acting graciously while this now 63 year old boy grew up.
The book is not a finance book, but it is a good look at how one's financial class colors one's outlook on other people.
Michael is not necessarily a fast learner, either in the coffee business or regarding his own finances. His accountant has to tell him that earning $10.50 an hour, he can no longer afford to charge dinners at the Oyster Bar.
But learn he does--about co-workers, about teamwork, about the absolute necessity of health insurance, and most of all, about his own hubris.
The book is a fast read. The author's copywriting roots show--great literature, this is not. But it is an interesting account of a man who is not brought down by drugs, alcohol or mental illness. Rather, the simple act of growing older made him a less valued employee. His upbringing closed his eyes to the necessity of paying attention to his finances during his prime working years.
By the end, the author has regained his equilibrium, and as this NY Times article shows, is still happily working at Starbucks. It bothered me that he lost most of his prior friends from his more high-flying days, but then, why not? When he WAS them, he never noticed the person pulling his espresso, either.
Welcome to the life of Michael Gates Gill, author of How Starbucks Saved My Life. The book is subtitled "A Son of Privilege Learns to Live Like Everyone Else."
Michael, reared in New York City with summers abroad or at estates in upstate New York, is the son of celebrated New Yorker writer, Brendan Gill. His mother, who also came from wealth, was so determined to put an optimistic spin on everything that she didn't bother to tell her son that his father had died until Michael called her, and then she spent the first part of the conversation telling him what a wonderful Christmas the family had just had.
On the strength of his family connections, Michael went to Yale, almost graduated, then went straight into advertising with J. Walter Thompson, a topflight New York advertising agency. When we talk about life being handed to someone on a silver platter, Michael is the epitome of that largesse. He spent the next 25+ years as the quintessential Corporate Man , earning good money, competing compulsively to outperform his colleagues, ignoring his wife and three children (to the point of leaving his family on Christmas Day to fly to Detroit to massage the ego of an automobile manufacturer), and generally assuming that his life was all mapped out ahead of him.
Michael was neither a good nor a bad person. Yes, he dismissively sabotaged the career of a young black woman who wanted to be a copywriter, but he also championed a female account executive in what was a male-dominated industry. Ironically, it was this same woman who, many years later, fired him. By then he was 53, an expensive employee, and easily replaced by someone faster, younger and a whole lot cheaper.
For the next ten years, he tried to maintain his lifestyle, while acting as a consultant. It worked initially but over time his client base evaporated. To massage his own ego, he had an affair that resulted in a fourth child. His long-suffering wife decided NOT to suffer through this indignity so he wound up divorced.
Just when things could not get any worse, he was diagnosed with a slow-growing brain tumor. This was the author's first encounter with real life--getting older, looking for a job, having no health insurance.
Enter Starbucks.
It's not quite accurate to say that Starbucks saved his life, but certainly a number of Starbucks' employees jointly acted to save Michael, mostly by acting graciously while this now 63 year old boy grew up.
The book is not a finance book, but it is a good look at how one's financial class colors one's outlook on other people.
Michael is not necessarily a fast learner, either in the coffee business or regarding his own finances. His accountant has to tell him that earning $10.50 an hour, he can no longer afford to charge dinners at the Oyster Bar.
But learn he does--about co-workers, about teamwork, about the absolute necessity of health insurance, and most of all, about his own hubris.
The book is a fast read. The author's copywriting roots show--great literature, this is not. But it is an interesting account of a man who is not brought down by drugs, alcohol or mental illness. Rather, the simple act of growing older made him a less valued employee. His upbringing closed his eyes to the necessity of paying attention to his finances during his prime working years.
By the end, the author has regained his equilibrium, and as this NY Times article shows, is still happily working at Starbucks. It bothered me that he lost most of his prior friends from his more high-flying days, but then, why not? When he WAS them, he never noticed the person pulling his espresso, either.
Wednesday, January 2, 2008
Retirement? On Track. Current Bills? Not So Much.
I compulsively read articles about women approximately my age (give or take a decade) to see how my finances compare. The Kansas City Star ran an interesting one on Mary Petrosky, a 51 year old Kansas production worker, part-time supermarket clerk and single mom to college age kids.
Mary has $256,385 in retirement funds. That's good.
But she grosses only $34,100 a year while she spends more like $41,000 over the same period. She owes, among other debts, nearly $76,000 in parental loans for her oldest son in college.
I'm assuming she was awarded some of those retirement funds in her divorce. If not, she's done a terrific job of saving for her own future. But $76,000 for her son's undergraduate degree? Didn't he take out any student loans in his own name? Apparently, he is going to help her pay them off, but personally, and much as I do want my children and grandchildren to attend college, I would have to think long and hard before I would go into that kind of debt for them.
And what of her two younger sons? From the article, it appears that they have enlisted in the military, intending to use GI benefeits for college afterwards. I don't begrudge anyone who chooses a military life, but I don't think I'd want my sons (if I had any) facing death in Iraq or Afghanistan just to get a subsidized college education.
I also wonder about some of the advice she's being given, particularly when the financial planners suggest boosting her bond portfolio to more than 30% of her 401 (k). I just have never seen the point of bonds. I understand that they are intended to soften the blow if stocks lose their luster, but stocks always come back around, something bonds never really do. I may change my mind on this as retirement looms but at Mary's age, I would never have considered that advice. Come to think of it, at Grace's more advanced age, I still don't.
Mary has $256,385 in retirement funds. That's good.
But she grosses only $34,100 a year while she spends more like $41,000 over the same period. She owes, among other debts, nearly $76,000 in parental loans for her oldest son in college.
I'm assuming she was awarded some of those retirement funds in her divorce. If not, she's done a terrific job of saving for her own future. But $76,000 for her son's undergraduate degree? Didn't he take out any student loans in his own name? Apparently, he is going to help her pay them off, but personally, and much as I do want my children and grandchildren to attend college, I would have to think long and hard before I would go into that kind of debt for them.
And what of her two younger sons? From the article, it appears that they have enlisted in the military, intending to use GI benefeits for college afterwards. I don't begrudge anyone who chooses a military life, but I don't think I'd want my sons (if I had any) facing death in Iraq or Afghanistan just to get a subsidized college education.
I also wonder about some of the advice she's being given, particularly when the financial planners suggest boosting her bond portfolio to more than 30% of her 401 (k). I just have never seen the point of bonds. I understand that they are intended to soften the blow if stocks lose their luster, but stocks always come back around, something bonds never really do. I may change my mind on this as retirement looms but at Mary's age, I would never have considered that advice. Come to think of it, at Grace's more advanced age, I still don't.
Tuesday, January 1, 2008
2007 Wrap-up, Quarterly Net Worth & 2008 goals
OK, the wall-street meltdown notwithstanding, my quarterly worth is up more than $24,000 from September. This is due entirely to increased equity and value in my home and the house I own on the coast (no, NOT a beach house--a 900 square foot, two bedroom home in a dying mill town). Despite everything I hear about the real estate market, it is holding its own in the Pacific NW, particularly for homes worth less than $500,000.
My 401(k) funds are down $9,000 for the quarter, but up $17,000 for the year.
My total indebtedness has actually increased by $56 over the course of 2007. What the figures don't show is that I spent some $7,000 on repairs to my rental house which then became part of my HELOCC, which is now counted as part of my debt. So I did a lot of running in place during 2007.
My net worth at the beginning of 2007 was $536,825. It is now $584,097.
My goals for 2008 are as follows:
1. Reduce non-mortgage debt by $6000;
2. Do not increase credit card or loan debt;
3. Add at least $12,300 to 401(k).
Happy New Year and best wishes for a financially sound future to one and all.
My 401(k) funds are down $9,000 for the quarter, but up $17,000 for the year.
My total indebtedness has actually increased by $56 over the course of 2007. What the figures don't show is that I spent some $7,000 on repairs to my rental house which then became part of my HELOCC, which is now counted as part of my debt. So I did a lot of running in place during 2007.
My net worth at the beginning of 2007 was $536,825. It is now $584,097.
My goals for 2008 are as follows:
1. Reduce non-mortgage debt by $6000;
2. Do not increase credit card or loan debt;
3. Add at least $12,300 to 401(k).
Happy New Year and best wishes for a financially sound future to one and all.
Sunday, December 30, 2007
Why I'm Sticking with a Traditional 401 (k)
This is the time of year to set up my 401 (k) for 2008.
During 2007, I had a pre-tax $1000 per month going into it. My plan was to raise that by the amount of whatever raise I got for 2008. Well, surprise! No raise. Nonetheless, in the spirit of good financial management, I'm going to increase my contribution by $25 a month.
The bigger question is whether to put my contributions into a Roth IRA or the pre-tax 401 (k). For the first time, my employer is offering both options. My employer does not match my contributions, but does contribute an amount equal to 6% of my income into my 401 (k)--no choice there--it cannot go into a Roth. The dollars I contribute can go into either.
After looking at all the numbers, as well as making some predictions about my future plans to retire in 11 years, I've decided to stick with my current 401 (k).
Why?
Well, first of all, I need available cash to pay down debts. Given my short time line to retirement, I have to both fund that retirement AND get rid of my indebtedness. Funding a 401 (k) with pre-tax dollars gives me a stronger immediate cash flow which allows me to do both.
But is that at the cost of less money during retirement? I'm betting not.
Right now, I'm in the 25% federal tax bracket, creeping up toward the 28% bracket. But when I retire, I will most likely be in the 15% tax bracket. My house will be paid off, leaving me only with taxes and insurance to pay each year. I live in a city with a great transit system, so will not need a vehicle. My retirement date is well after Medicare kicks in, which will help with my insurance needs. Even with the anticipated expense of supplementary health insurance and long-term care insurance, I expect to need $3000 a month, maybe less. Social Security will make up around $1600 of that, based upon current projections. The remainder will come from retirement savings, but will be less than the $32,550 line dividing those in the 15% bracket from their brethren (sisteren?) in the 25% bracket.
When I help my friends analyze whether they should use pre-tax or after-tax dollars for their retirement funds, I find that in most cases, the Roth is the better choice.
But there's always an exception. That would be Grace.
During 2007, I had a pre-tax $1000 per month going into it. My plan was to raise that by the amount of whatever raise I got for 2008. Well, surprise! No raise. Nonetheless, in the spirit of good financial management, I'm going to increase my contribution by $25 a month.
The bigger question is whether to put my contributions into a Roth IRA or the pre-tax 401 (k). For the first time, my employer is offering both options. My employer does not match my contributions, but does contribute an amount equal to 6% of my income into my 401 (k)--no choice there--it cannot go into a Roth. The dollars I contribute can go into either.
After looking at all the numbers, as well as making some predictions about my future plans to retire in 11 years, I've decided to stick with my current 401 (k).
Why?
Well, first of all, I need available cash to pay down debts. Given my short time line to retirement, I have to both fund that retirement AND get rid of my indebtedness. Funding a 401 (k) with pre-tax dollars gives me a stronger immediate cash flow which allows me to do both.
But is that at the cost of less money during retirement? I'm betting not.
Right now, I'm in the 25% federal tax bracket, creeping up toward the 28% bracket. But when I retire, I will most likely be in the 15% tax bracket. My house will be paid off, leaving me only with taxes and insurance to pay each year. I live in a city with a great transit system, so will not need a vehicle. My retirement date is well after Medicare kicks in, which will help with my insurance needs. Even with the anticipated expense of supplementary health insurance and long-term care insurance, I expect to need $3000 a month, maybe less. Social Security will make up around $1600 of that, based upon current projections. The remainder will come from retirement savings, but will be less than the $32,550 line dividing those in the 15% bracket from their brethren (sisteren?) in the 25% bracket.
When I help my friends analyze whether they should use pre-tax or after-tax dollars for their retirement funds, I find that in most cases, the Roth is the better choice.
But there's always an exception. That would be Grace.
Thursday, December 27, 2007
Reading, Writing and (I Hope) Arithmetic
I'm working on my New Year's Resolutions.
Some are the same every year.
One of those is to write and market my science fiction short stories. I've always listed it as a personal goal, but this year, I'm putting it under my financial goals. And I'm making it public. We'll see if it makes a difference.
It's no secret that unless you're Norman Mailer (in which case, you're dead), Danielle Steele or J.K. Rowling, you're not going to become wealthy as a writer. On the other hand, there really IS a paying market out there for science fiction and fantasy short fiction, unlike the more literary markets where one is supposed to be satisfied with copies of prestigious but usually non-paying Reviews.
I've been reading science fiction since I was fourteen. I started writing it during graduate school. Occasionally, I've sent out my work to various magazines, and even more occasionally, some of it has been published. With that comes a check, usually somewhere between $200 and $600. NOT enough to give up my day job but a nice little bonus for doing something that I love.
So this year's resolution is to stop being a dilettante and start being a REAL writer. Along with that, I hope, comes some REAL money that can be applied to REAL debts.
And you, Dear Reader? Any hobbies that done with more focus and more energy could help increase the cash flow?
Some are the same every year.
One of those is to write and market my science fiction short stories. I've always listed it as a personal goal, but this year, I'm putting it under my financial goals. And I'm making it public. We'll see if it makes a difference.
It's no secret that unless you're Norman Mailer (in which case, you're dead), Danielle Steele or J.K. Rowling, you're not going to become wealthy as a writer. On the other hand, there really IS a paying market out there for science fiction and fantasy short fiction, unlike the more literary markets where one is supposed to be satisfied with copies of prestigious but usually non-paying Reviews.
I've been reading science fiction since I was fourteen. I started writing it during graduate school. Occasionally, I've sent out my work to various magazines, and even more occasionally, some of it has been published. With that comes a check, usually somewhere between $200 and $600. NOT enough to give up my day job but a nice little bonus for doing something that I love.
So this year's resolution is to stop being a dilettante and start being a REAL writer. Along with that, I hope, comes some REAL money that can be applied to REAL debts.
And you, Dear Reader? Any hobbies that done with more focus and more energy could help increase the cash flow?
Wednesday, December 26, 2007
The Killer Week Before the New Year
Am I the only one who finds the week between Christmas and New Year's Day to be a financial black hole?
The truth is, I spent all my money for Christmas. Christmas is close enough to my next payday (December 31) that I didn't pay close attention to the fact that there are 5--count'em, FIVE--whole days before that paycheck arrives. My daughter still thinks I should feed her during those five days. Actually, since she's on her Christmas break, she's of the opinion I should also cover movies, take her to lunch and otherwise help her occupy her time in ways that financially impinge.
So yes, I stayed within my Christmas budget. But--um--no, I'm not exactly within my monthly budget.
C'mon, 2008! Get here quickly!
The truth is, I spent all my money for Christmas. Christmas is close enough to my next payday (December 31) that I didn't pay close attention to the fact that there are 5--count'em, FIVE--whole days before that paycheck arrives. My daughter still thinks I should feed her during those five days. Actually, since she's on her Christmas break, she's of the opinion I should also cover movies, take her to lunch and otherwise help her occupy her time in ways that financially impinge.
So yes, I stayed within my Christmas budget. But--um--no, I'm not exactly within my monthly budget.
C'mon, 2008! Get here quickly!
Monday, December 24, 2007
Merry Christmas, Happy Holidays, and All That!
What the title says!
If you're still on the computer (and just WHY would you be on the computer on Christmas Eve? A good question that I mean to ask myself later!) take a look at this week's Carnival of Personal Finance, hosted by The Digerati Life. It comes complete with Christmas ornaments.
You'll find a post of mine near the bottom.
If you're still on the computer (and just WHY would you be on the computer on Christmas Eve? A good question that I mean to ask myself later!) take a look at this week's Carnival of Personal Finance, hosted by The Digerati Life. It comes complete with Christmas ornaments.
You'll find a post of mine near the bottom.
Saturday, December 22, 2007
What Small Thing Would Make You Feel Rich?
Forget the manse on the hill or the beemer in the garage. What small thing would make you feel rich?
As I was yelling at my kids to please close all the doors (to the upstairs, to the basement, to the bathroom) before turning on the heat this morning, I realized that being wealthy, to me, would be turning on the heat and neither worrying nor caring if it "got wasted." Given that my two-story 1929 house has an oil furnace, being wealthy would also mean never worrying that the tank would run dry--something that happens to me at least once every year, clogs up the lines, and costs me an extra $90 to put back into operation.
For my long-deceased mother, it would have meant using each teabag only once. As it was, she never got over her depression-era habit of using each teabag at least twice before discarding. I still can't see a saucer with a used teabag sitting on the counter without thinking of her.
My oldest daughter told me that being wealthy would mean that she could fill her car up with gas, rather than getting it $10 at a time; Her husband said he'd know he had it made when he could purchase a woodworking tool without concern that there would not be enough in the bank account to last until the end of the month.
One of my colleagues at work said he'd be wealthy when he could go through the local bookstore and pick up whatever he wanted instead of weighing how much he wanted a particular book against the amount of time he was willing to wait for it to become available at the library.
Another colleague felt that wealth would be hers when she no longer felt compelled to buy generic breakfast cereal and frozen orange juice.
So what about my readers? What minor change would make you feel richer than you are now?
As I was yelling at my kids to please close all the doors (to the upstairs, to the basement, to the bathroom) before turning on the heat this morning, I realized that being wealthy, to me, would be turning on the heat and neither worrying nor caring if it "got wasted." Given that my two-story 1929 house has an oil furnace, being wealthy would also mean never worrying that the tank would run dry--something that happens to me at least once every year, clogs up the lines, and costs me an extra $90 to put back into operation.
For my long-deceased mother, it would have meant using each teabag only once. As it was, she never got over her depression-era habit of using each teabag at least twice before discarding. I still can't see a saucer with a used teabag sitting on the counter without thinking of her.
My oldest daughter told me that being wealthy would mean that she could fill her car up with gas, rather than getting it $10 at a time; Her husband said he'd know he had it made when he could purchase a woodworking tool without concern that there would not be enough in the bank account to last until the end of the month.
One of my colleagues at work said he'd be wealthy when he could go through the local bookstore and pick up whatever he wanted instead of weighing how much he wanted a particular book against the amount of time he was willing to wait for it to become available at the library.
Another colleague felt that wealth would be hers when she no longer felt compelled to buy generic breakfast cereal and frozen orange juice.
So what about my readers? What minor change would make you feel richer than you are now?
Tuesday, December 11, 2007
The Joys of Christmas Shopping
I'm still within my Christmas budget!
This may not sound worthy of an exclamation point, given that my budget is relatively large compared to many of my readers--I have $1845 set aside. That's to cover gifts for 12 people, Christmas dinner, one round trip to a town 5 hours away to deliver gifts to some of the grandkids, one round trip to a town 2 hours north to deliver gifts to other grandkids, the tree, the greens for the house and door, the charitable contributions, and the collection plate at Christmas Mass.
But I don't recall that I've ever gotten within 15 days of Christmas and still not used my credit cards, at least not since I've been an adult.
Although it makes me anxious, I have used Ebay more than usual this Christmas. My largest expenditure was $236 for a Cricut Complete--some kind of scrapbooking device that my oldest daughter wants. I'm paying half and her sisters are contributing to the other half. It hasn't arrived yet, but I tried to keep all the safety measures in mind--paid through Paypal, bought from someone with a longish sales history, checked out the feedback, etc.
I also bought computer peripherals through Ebay. I purchased an 8 MB memory card that sells for $20+ around town for $11, including shipping. I got a 4G flashdrive for my granddaughter for $28 including shipping, when the cheapest I could find it at Circuit City or Best Buy was $34.
The tree ($20) is sitting on my porch, awaiting trimming which will happen tomorrow. The door swag ($17) is on the door. Many of the dinner supplies have been purchased. For reasons I don't understand, turkeys that sold for 19 cents a pound during Thanksgiving will be closer to 99 cents a pound at Christmas, but Christmas turkeys are a family tradition around my home. It would have been smart to buy two turkeys at Thanksgiving and save one. Unfortunately, my freezer had no room for it.
As I count up what I still have left to buy, it looks like I will actually stay within my budget.
If I can stay on target, that will be Grace's Christmas present to Grace!
This may not sound worthy of an exclamation point, given that my budget is relatively large compared to many of my readers--I have $1845 set aside. That's to cover gifts for 12 people, Christmas dinner, one round trip to a town 5 hours away to deliver gifts to some of the grandkids, one round trip to a town 2 hours north to deliver gifts to other grandkids, the tree, the greens for the house and door, the charitable contributions, and the collection plate at Christmas Mass.
But I don't recall that I've ever gotten within 15 days of Christmas and still not used my credit cards, at least not since I've been an adult.
Although it makes me anxious, I have used Ebay more than usual this Christmas. My largest expenditure was $236 for a Cricut Complete--some kind of scrapbooking device that my oldest daughter wants. I'm paying half and her sisters are contributing to the other half. It hasn't arrived yet, but I tried to keep all the safety measures in mind--paid through Paypal, bought from someone with a longish sales history, checked out the feedback, etc.
I also bought computer peripherals through Ebay. I purchased an 8 MB memory card that sells for $20+ around town for $11, including shipping. I got a 4G flashdrive for my granddaughter for $28 including shipping, when the cheapest I could find it at Circuit City or Best Buy was $34.
The tree ($20) is sitting on my porch, awaiting trimming which will happen tomorrow. The door swag ($17) is on the door. Many of the dinner supplies have been purchased. For reasons I don't understand, turkeys that sold for 19 cents a pound during Thanksgiving will be closer to 99 cents a pound at Christmas, but Christmas turkeys are a family tradition around my home. It would have been smart to buy two turkeys at Thanksgiving and save one. Unfortunately, my freezer had no room for it.
As I count up what I still have left to buy, it looks like I will actually stay within my budget.
If I can stay on target, that will be Grace's Christmas present to Grace!
Sunday, December 2, 2007
Planning for 2008--Part I
The first part of any plan is knowing what one will be making. Since I am a union member, and part of our collective bargaining team, I now know exactly what I'll be making in 2008: precisely the same amount I made in 2007!
However, I will be getting a lump sum in January, 2008. That's the good news. The semi-bad news is that in January, I owe both my daughter's private school tuition and tuition and books for my granddaughter in community college. The lump sum plus another couple of hundred will just about cover both.
Of course, I would owe all that tuition whether or not I get a lump sum, so getting the money is better than not getting it.
But it would have been nice if I could actually see, smell, touch even an extra dollar!
Sadly, it is not to be.
However, I will be getting a lump sum in January, 2008. That's the good news. The semi-bad news is that in January, I owe both my daughter's private school tuition and tuition and books for my granddaughter in community college. The lump sum plus another couple of hundred will just about cover both.
Of course, I would owe all that tuition whether or not I get a lump sum, so getting the money is better than not getting it.
But it would have been nice if I could actually see, smell, touch even an extra dollar!
Sadly, it is not to be.
Friday, November 30, 2007
Miscellaneous?
One of those things Dave Ramsey is always saying is "Give every dollar a name" when budgeting. I'm working on my December budget with this in mind. But a mistake I've made in the past is naming every dollar so minutely that I'm not prepared for unexpected expenses that don't fall into my carefully-crafted catagories.
For example, in November, the following expenses cropped up: (1) My high-school senior needed $13 to go on a class outing to see Beowulf (they couldn't just read the book?); (2) My five year old granddaughter who still wears pull-ups at night left hers at home when she came for Thanksgiving--who knew that the smallest package costs $12?; (3) No one could find the corkscrew for the Thanksgiving wine and none of my neighbors had one--six unbudgeted dollars(and dang if I didn't find my old one when I was putting the turkey roaster away two days later!); (4)There were two baby showers and one retirement party in my office in November--exit $60; and (5) A friend invited me to a cocktail party--I knew she was running for state attorney general but I didn't realize the party was a fundraiser--another $25 gone, though I will recover it when I file my state income taxes.
SO--$116 dollars that had no name but still had to come from somewhere.
That's what I really hate about budgeting. How, exactly, could I have predicted any of those expenses? And none of them qualifies as an emergency expense.
So, I'm now adding a budget entry for miscellaneous. But it's just a guess as to how much to put in it. For December, I'm making it $75 and keeping my fingers crossed.
For example, in November, the following expenses cropped up: (1) My high-school senior needed $13 to go on a class outing to see Beowulf (they couldn't just read the book?); (2) My five year old granddaughter who still wears pull-ups at night left hers at home when she came for Thanksgiving--who knew that the smallest package costs $12?; (3) No one could find the corkscrew for the Thanksgiving wine and none of my neighbors had one--six unbudgeted dollars(and dang if I didn't find my old one when I was putting the turkey roaster away two days later!); (4)There were two baby showers and one retirement party in my office in November--exit $60; and (5) A friend invited me to a cocktail party--I knew she was running for state attorney general but I didn't realize the party was a fundraiser--another $25 gone, though I will recover it when I file my state income taxes.
SO--$116 dollars that had no name but still had to come from somewhere.
That's what I really hate about budgeting. How, exactly, could I have predicted any of those expenses? And none of them qualifies as an emergency expense.
So, I'm now adding a budget entry for miscellaneous. But it's just a guess as to how much to put in it. For December, I'm making it $75 and keeping my fingers crossed.
Thursday, November 29, 2007
6th Month Anniversary & November wrap-up
Six months of blogging. Feels like it has been longer. I mean that in a good way!
I'll wait until the end of the year to see what my overall financial picture is like but in the meantime, November went relatively well. My indebtedness is down $993.26 counting my mortgage. If I leave the mortgage out, my debt is down $410.12--not a lot, but better than I managed to do in October.
I'll wait until the end of the year to see what my overall financial picture is like but in the meantime, November went relatively well. My indebtedness is down $993.26 counting my mortgage. If I leave the mortgage out, my debt is down $410.12--not a lot, but better than I managed to do in October.
Wednesday, November 28, 2007
Getting Scary Out There
I remember advising, many posts back, that one NOT keep checking one's retirement fund balance, particularly in a market as unstable as we are now experiencing. However, since I don't always take my own advice, I have peeked. Big mistake. My funds are down 10% or $17,000. I am closing my eyes, continuing to contribute, and keeping my fingers crossed that in the eleven years I have left until retirement, this will all work itself out. It had better--I have no good recipes for dogfood casserole
Thursday, November 22, 2007
And a Happy Thanksgiving to All
Thanksgiving is my favorite holiday--kinda like Christmas, without the expense, the hype, or the planning. For Christmas dinner, I invite only family. But Thanksgiving is for everyone--my sister from New York, my best friend of 30+ years, the Russian woman I work with who wants to experience an American Thanksgiving, one daughter's new boyfriend, one daughter's old boyfriend who still shows up every Thanksgiving for reasons no one understands, my grandkids who range from age 19 down to age 4, the neighbor who expected to fly to California but broke her leg and can't travel, and various and sundry others.
I buy and prepare the twenty-two pound turkey. I provide the TV set--two of them, actually. One for the football games and one for the playstation.
Everyone else brings the rest of the food, and my family can generally live on the leftovers for several days.
I catch up on the gossip, my adult children who are scattered up and down the coast come together and compare notes, the grandchildren play hide and seek all over over the house--and at least three people always volunteer to do dishes because "Grace did all that work making the turkey." Lemme tell ya--offering to do the turkey is the biggest scam around. It's the easiest part of a Thanksgiving dinner and barely qualifies as cooking.
For one glorious day, I'm not even thinking about money--I'm thinking how much I enjoy just hanging out with my friends, my family and all those other interesting people who happened to come by for dinner.
D'ya suppose that's why they call it Thanksgiving?
I buy and prepare the twenty-two pound turkey. I provide the TV set--two of them, actually. One for the football games and one for the playstation.
Everyone else brings the rest of the food, and my family can generally live on the leftovers for several days.
I catch up on the gossip, my adult children who are scattered up and down the coast come together and compare notes, the grandchildren play hide and seek all over over the house--and at least three people always volunteer to do dishes because "Grace did all that work making the turkey." Lemme tell ya--offering to do the turkey is the biggest scam around. It's the easiest part of a Thanksgiving dinner and barely qualifies as cooking.
For one glorious day, I'm not even thinking about money--I'm thinking how much I enjoy just hanging out with my friends, my family and all those other interesting people who happened to come by for dinner.
D'ya suppose that's why they call it Thanksgiving?
Sunday, November 18, 2007
Maxed Out is an In Movie
I'm a tad behind the curve on this one. "Maxed out" is a documentary that has been around for awhile. In my usual timely fashion, I finally watched it last night. But in the best frugal condition, I waited until it came out on DVD, and then I reserved it at my local library. So, there was Grace, two of her adult kids, and a gigantic bowl of popcorn.
The movie is laugh out loud funny. But it's the kind of movie that makes me uncomfortable even as I'm laughing. How funny is it, really, to see a 44 year old retarded man who can only write his name when he is copying from printed letters, get a credit card? Do I want to see kids enter college where they get free T-shirts by signing up for credit cards, and where, in two of the saddest cases, they commit suicide over their debt? Why am I laughing when Bush appoints a disgraced banker to head a watchdog agency, when I should be throwing shoes at the television set?
Like many documentaries with a political agenda, "Maxed Out" makes no pretense of fairness--in fact it deliberately juxtaposes scenes and comments to get easy laughs.
But in the end, it is an utterly maddening movie. How dare the credit card and lending industries talk about personal responsibility when they deliberately exploit the most financially vulnerable among us.
The movie ends with the passage of bankruptcy reform and the spectre of possible sub-prime mortgage failures. From the vantage point of another year, we now know that bankruptcy reform did not harm the poor as much as we thought it might, and it did harm the credit card industry far more than they predicted. Some crows come home to roost in exactly the right place!
As for the possibility of subprime mortgage issues? How many ways can one say "Duh?"
The movie is laugh out loud funny. But it's the kind of movie that makes me uncomfortable even as I'm laughing. How funny is it, really, to see a 44 year old retarded man who can only write his name when he is copying from printed letters, get a credit card? Do I want to see kids enter college where they get free T-shirts by signing up for credit cards, and where, in two of the saddest cases, they commit suicide over their debt? Why am I laughing when Bush appoints a disgraced banker to head a watchdog agency, when I should be throwing shoes at the television set?
Like many documentaries with a political agenda, "Maxed Out" makes no pretense of fairness--in fact it deliberately juxtaposes scenes and comments to get easy laughs.
But in the end, it is an utterly maddening movie. How dare the credit card and lending industries talk about personal responsibility when they deliberately exploit the most financially vulnerable among us.
The movie ends with the passage of bankruptcy reform and the spectre of possible sub-prime mortgage failures. From the vantage point of another year, we now know that bankruptcy reform did not harm the poor as much as we thought it might, and it did harm the credit card industry far more than they predicted. Some crows come home to roost in exactly the right place!
As for the possibility of subprime mortgage issues? How many ways can one say "Duh?"
Thursday, November 15, 2007
Holidays in GRACEland
I kinda blur everything from Thanksgiving through Christmas altogether--the resulting assault on my finances gives me a whopping headache.
And therein, lies my greatest discontent. How can I enjoy the holidays when I am always worried about its impact on my finances? If the true joy of the holidays is in family warmth, why are my kids and grandkids less than amused if all they get from me is socks and underwear?
Both Thanksgiving and Christmas take place at my home. My kids bring side dishes, but I'm the one buying and preparing the turkey and any other main dishes.
I'm the one who buys the "big" gifts for my children and grandchildren.
I am determined that this year will be different. I am determined to pay attention to my finances and NOT to use my credit cards.
I have a budget for the holidays. It is $1845, with a leeway of $300 due to a check that will come in December 31st.
You'd think that would be enough, but my guess is that it will be close.
Part of the reason is that at least $400 will be earmarked for gifts for my sister. Why my sister, you might well ask? Well, since our parents died, she and I are the only ones who really remember each other's birthdays, and carry on our parent's tradition of lots of nice presents under the Christmas tree. My sister has no children, and a six figure income. I may spend $400 on her, but I know that she will spend over a thousand on me. My lime-green couch, my lifetime Tivo, the sink in the upstairs bathroom are all courtesy of my sister, not to mention the Coach bag that shows up with my name on it every year. I am seriously going to ask her for a dishwasher this year! So, within the framework of my finances, I take good care of my sister at Christmas.
Then, there's my FIVE children (what WAS I thinking?) and their SIX children--ELEVEN folks who are expecting wonderful (read that: expensive) things from mom or grandma.
Plus, there are the hangers on--the boyfriends and spouses who will show up, and for whom there needs to a little something under tree.
Oh, and there's the tree ($20) and the wreath for the door ($17) and something for the Salvation Army bellringers ($20) and. . .
Sigh.
My plan, for the moment, is budget $150 apiece for my adult children, $50 for each of my youngest grandchildren, $75 for the two older grandkids, and $25 for several miscellaneous folks.
I'm curious how this compares to the rest of the world. Too much? Not enough?
And therein, lies my greatest discontent. How can I enjoy the holidays when I am always worried about its impact on my finances? If the true joy of the holidays is in family warmth, why are my kids and grandkids less than amused if all they get from me is socks and underwear?
Both Thanksgiving and Christmas take place at my home. My kids bring side dishes, but I'm the one buying and preparing the turkey and any other main dishes.
I'm the one who buys the "big" gifts for my children and grandchildren.
I am determined that this year will be different. I am determined to pay attention to my finances and NOT to use my credit cards.
I have a budget for the holidays. It is $1845, with a leeway of $300 due to a check that will come in December 31st.
You'd think that would be enough, but my guess is that it will be close.
Part of the reason is that at least $400 will be earmarked for gifts for my sister. Why my sister, you might well ask? Well, since our parents died, she and I are the only ones who really remember each other's birthdays, and carry on our parent's tradition of lots of nice presents under the Christmas tree. My sister has no children, and a six figure income. I may spend $400 on her, but I know that she will spend over a thousand on me. My lime-green couch, my lifetime Tivo, the sink in the upstairs bathroom are all courtesy of my sister, not to mention the Coach bag that shows up with my name on it every year. I am seriously going to ask her for a dishwasher this year! So, within the framework of my finances, I take good care of my sister at Christmas.
Then, there's my FIVE children (what WAS I thinking?) and their SIX children--ELEVEN folks who are expecting wonderful (read that: expensive) things from mom or grandma.
Plus, there are the hangers on--the boyfriends and spouses who will show up, and for whom there needs to a little something under tree.
Oh, and there's the tree ($20) and the wreath for the door ($17) and something for the Salvation Army bellringers ($20) and. . .
Sigh.
My plan, for the moment, is budget $150 apiece for my adult children, $50 for each of my youngest grandchildren, $75 for the two older grandkids, and $25 for several miscellaneous folks.
I'm curious how this compares to the rest of the world. Too much? Not enough?
Sunday, November 11, 2007
Surprising Money Saves
I spent much of this weekend at a local literary festival. I budgeted the $5 per day to get in, counted on getting a lot of free pens, bookmarks and other do-dads, determined not to buy any books, and looked forward to seeing a number of my favorite authors in person.
All of the above happened as planned. I even managed not to buy any books, which--trust me on this one--took some definite intestinal fortitude.
But, big surprise for me, I also saved some money.
The local daily newspaper was one of the exhibitors. They couldn't sell me a subscription since I have been a subscriber for over 30 years. But, by promising to save me $2 per month, they did pursuade me to have the monthly costs taken directly out of my checking account. And to sweeten the deal, they threw in a $5 grocery card at a store I frequent.
I would have enjoyed this festival at any rate, but combine it with the money savings, and what's not to like?
All of the above happened as planned. I even managed not to buy any books, which--trust me on this one--took some definite intestinal fortitude.
But, big surprise for me, I also saved some money.
The local daily newspaper was one of the exhibitors. They couldn't sell me a subscription since I have been a subscriber for over 30 years. But, by promising to save me $2 per month, they did pursuade me to have the monthly costs taken directly out of my checking account. And to sweeten the deal, they threw in a $5 grocery card at a store I frequent.
I would have enjoyed this festival at any rate, but combine it with the money savings, and what's not to like?
Sunday, November 4, 2007
Adoption on the Cheap
November is National Adoption month.
Given that this is a personal finance blog, and given that I adopted five daughters without spending a dime for the adoptions, I think it is time to dispense with some of the financial myths surrounding adoption expenses.
The biggest myth is that adoption is prohibitively expensive. It can be, of course. Adopting.Org reports that a private adoption of a healthy, white infant can cost anywhere from $8000 to $30,000. International adoption runs a close second, from $7,000 to $25,000.
But I adopted each of my children from state foster care. Not only did I not pay anything for the adoptions, the state reimbursed me for the travel costs involved in meeting with my children and their social workers, and continues to give me an adoption assistance payment each month. Each child was also covered by Medicaid until age 18. (I put my kids on my own insurance plan when they came into my home, but having them on Medicaid meant I never had co-pays.) Health insurance companies are required to put your adopted children onto the policy as of the date of placement in your home, even if the adoption itself doesn't take place until later. Also, healthcare providers that don't routinely take Medicaid usually will make an exception when your family is already being treated through your employer's policy.
A number of employers (not mine, unfortunately) offer adoption benefits that are much like FLEX plans. Specific adoption expenses come out of pre-tax income. If your employer does not have such a program, it may well be worth your time to check this benefit out and present it to your employer as something they might like to offer. The big selling point is that because the employer will not have to pay FICA on pre-tax income, and because those FICA payments are usually more than what private FLEX firms charge to administer plans, the benefit is revenue-neutral for the employer. If your company already offers FLEX medical and childcare, call the administrator to see if they can handle adoption benefits as well.
There are also substantial tax benefits to adoption. These are available for all adoptions, whether domestic or international, but they are higher and better for anyone adopting out of foster care. Check out the IRS website for Forms and Instructions (Form 8839) to claim the tax credit. For one child, it is currently $10,960. It can be spread over more than one year. If the adoption is international, the credit cannot be claimed until the adoption is finalized. However, for a domestic adoption, there doesn't even have to be an adoption as a final result, provided the expenses were incurred as part of an adoption process.
For the adoption of a special needs child (and keep in mind that a "special need" can be as minor as a child being African-American, or over six years old, or part of a sibling group, or having a family history of mental or inheritable physical illness), one does not even need to have incurred that much in expenses to take the credit.
That's right--at least on the front end, one can actually make a profit on the adoption.
With my usual stellar timing, I adopted for the final time the year before that particular provision of the tax code was passed. So, no profit for Grace, unless you count the addition of five very special girls to my family as a profit.
Come to think of it, I do consider that a profit. And a blessing.
Given that this is a personal finance blog, and given that I adopted five daughters without spending a dime for the adoptions, I think it is time to dispense with some of the financial myths surrounding adoption expenses.
The biggest myth is that adoption is prohibitively expensive. It can be, of course. Adopting.Org reports that a private adoption of a healthy, white infant can cost anywhere from $8000 to $30,000. International adoption runs a close second, from $7,000 to $25,000.
But I adopted each of my children from state foster care. Not only did I not pay anything for the adoptions, the state reimbursed me for the travel costs involved in meeting with my children and their social workers, and continues to give me an adoption assistance payment each month. Each child was also covered by Medicaid until age 18. (I put my kids on my own insurance plan when they came into my home, but having them on Medicaid meant I never had co-pays.) Health insurance companies are required to put your adopted children onto the policy as of the date of placement in your home, even if the adoption itself doesn't take place until later. Also, healthcare providers that don't routinely take Medicaid usually will make an exception when your family is already being treated through your employer's policy.
A number of employers (not mine, unfortunately) offer adoption benefits that are much like FLEX plans. Specific adoption expenses come out of pre-tax income. If your employer does not have such a program, it may well be worth your time to check this benefit out and present it to your employer as something they might like to offer. The big selling point is that because the employer will not have to pay FICA on pre-tax income, and because those FICA payments are usually more than what private FLEX firms charge to administer plans, the benefit is revenue-neutral for the employer. If your company already offers FLEX medical and childcare, call the administrator to see if they can handle adoption benefits as well.
There are also substantial tax benefits to adoption. These are available for all adoptions, whether domestic or international, but they are higher and better for anyone adopting out of foster care. Check out the IRS website for Forms and Instructions (Form 8839) to claim the tax credit. For one child, it is currently $10,960. It can be spread over more than one year. If the adoption is international, the credit cannot be claimed until the adoption is finalized. However, for a domestic adoption, there doesn't even have to be an adoption as a final result, provided the expenses were incurred as part of an adoption process.
For the adoption of a special needs child (and keep in mind that a "special need" can be as minor as a child being African-American, or over six years old, or part of a sibling group, or having a family history of mental or inheritable physical illness), one does not even need to have incurred that much in expenses to take the credit.
That's right--at least on the front end, one can actually make a profit on the adoption.
With my usual stellar timing, I adopted for the final time the year before that particular provision of the tax code was passed. So, no profit for Grace, unless you count the addition of five very special girls to my family as a profit.
Come to think of it, I do consider that a profit. And a blessing.
Thursday, November 1, 2007
Monthly Scorecard
Thank God October is over. Between private school tuition for my 17-year-old (who attends a school for learning disabled students), various crises, getting oil for the winter, and all the niggling little expenses for my grand-daughter in her first year of college, I was barely hanging in there.
My total debt reduction for the month was a miserly $341.73. Still, it's a reduction, for which I am grateful.
And last night, I didn't have as many trick or treaters as I expected, so I have half a bag of miniature Snickers left over. I'm grateful for that, too.
My total debt reduction for the month was a miserly $341.73. Still, it's a reduction, for which I am grateful.
And last night, I didn't have as many trick or treaters as I expected, so I have half a bag of miniature Snickers left over. I'm grateful for that, too.
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