In a move that is likely to thrill Living Almost Large who harasses me every time I mention my all-stock retirement portfolio, I have decided to invest 50% of my future contributions into a bond index fund.
Why the change of heart?
Well, first, my 403 (b) funds hit their lowest mark ever last Friday. I use Financial Engines to help me gauge whether I'm on track for retirement. That site gave me just a 48% chance of succeeding with my current mix of investments.
Second, the March issue of "Money" magazine talks about the comparative risks between an all-stock portfolio and a 40% mix of bonds to 60% stocks. According to that article:
"T. Rowe ran the numbers for a 55-year-old with
a $100,000 salary and just $150,000 in savings
who ratcheted up his stock allocation from 40%
to 80% to help his portfolio recover. After
running 10,000 market scenarios, the researchers
found that while the portfolio invested 40% in
stocks replaced an average of 27% of the
investor's salary in retirement, the
80%-stock allocation replaced only
28% - virtually no difference. That's because
while stocks have historically delivered higher
returns over very long periods, over any
10-year period you're more likely to suffer
a few losing years, and there simply isn't
enough time for your gains to compound."
I've always agreed with David Ramsey that bonds might be safe, but they aren't helpful in one's retirement accounts. In my heart-of-hearts, I still believe that, but the volatility of this market is causing me too much distress. Maybe it's my age catching up to me, but I've decided to tone things down a bit. I won't stop contibuting every month, but by moving partway into bonds, at least on a temporary basis, maybe I can stop some of the stomach churning.
I will continue to contribute $1225 a month (plus I get a additional 6% of salary contribution from my employer) but I'm going to put half of that into a bond index fund for the time being. The other half will continue to go to a mix of stock mutual funds. I am not going to reallocate the balances; I'm just adding a bond component.
Monday, March 9, 2009
Tuesday, March 3, 2009
It Ain't Murphy; it's Real Life
I was just about to write another "Murphy visits Grace" post when it struck me that I write these kind of posts all the time. I took a brief ramble through my 2008 posts, and, sure enough, every single month I was hit with some unexpected expense. Sometimes it was the car; sometimes it was one of my kids; more than once it was a medical or dental expense; and don't get me started on appliance breakdowns.
But I am finally starting to realize that I have to stop blaming Murphy and start budgeting for real life. Real life, at least in Grace's world, includes at least one monthly unbudgeted expense. Over the course of 2008, this averaged out to an additional $260 a month.
For March, 2009, it will be an unexpected $533 insurance expense.
Yep! More fallout from my garage fire.
My broker had already warned me that when my homeowner's insurance was canceled, it would cost more. She thought she had placed it with a company that charged me almost double my previous payment. Yesterday, it turned out that a computer had accepted my application, but the human adjuster had not. Never mind that I already have my rental house covered by the same company--they do NOT want my business on my residence. My broker finally did get me placed, but now the price has tripled. Hence the check for an additional $533.
Arrgh!
But I am finally starting to realize that I have to stop blaming Murphy and start budgeting for real life. Real life, at least in Grace's world, includes at least one monthly unbudgeted expense. Over the course of 2008, this averaged out to an additional $260 a month.
For March, 2009, it will be an unexpected $533 insurance expense.
Yep! More fallout from my garage fire.
My broker had already warned me that when my homeowner's insurance was canceled, it would cost more. She thought she had placed it with a company that charged me almost double my previous payment. Yesterday, it turned out that a computer had accepted my application, but the human adjuster had not. Never mind that I already have my rental house covered by the same company--they do NOT want my business on my residence. My broker finally did get me placed, but now the price has tripled. Hence the check for an additional $533.
Arrgh!
Sunday, March 1, 2009
Housing Rant
I don't know about you, but I am getting tired of the smug, "blame the stupid/crooked/greedy consumer" attitude floating around too many financial blogs. Therefore I was glad to read Syd's recent post on her blog, Retirement: A Fulltime Job. I particularly like Syd's candid admission that her housing success was more a matter of good luck and great timing than any special financial gifts that she possessed.
I don't excuse the outright liars and cons out there, but running a mortgage scam takes more than one crook--it takes greedy banks that don't check out the information they are given; it takes mortgage brokers willing to make up jobs, income and assets they know don't exist; and it takes a buyer willing to commit fraud to get the house, the money or both.
So let's realize that the folks running cons will always be with us. Let's understand that the only way we can control fraud is to strengthen the controls, increase the number of investigators and provide stronger sanctions.
But that still leaves the "stupid" homebuyers or the "greedy" mortgage-holders.
Just how culpable are they?
In general, I work with people mired in poverty. Lately, many of my clients are new to the ranks of the poverty-stricken. Unlike my more usual clientele, these folks come with real property or have recently walked away from real property.
So far, I've not found greed to be a motivation. Stupidity? More like ignorance. More like feeling middle-class pressure to be a homeowner. And much, much more like being one job or a spouse away from financial disaster.
Consider one woman I deal with.
She and her husband both had full-time jobs. Three years ago, they bought a home in an up and coming neighborhood for a reasonable price with monthly payments that were just under 25% of their combined incomes. They and their two teenagers lived a solid, if not expansive, middle-class life.
Then the mother was diagnosed with cancer.
And then the father turned out not to have paid attention to the "in sickness and in health" part of his marital vows. He bailed out. He quit his job and he left the state. Needless to say, he has not contributed to the mortgage payments.
My client and her children continue to live in the home but it is in foreclosure and it is doubtful that any of the proposed governmental programs will help her. She is upside down in terms of what is owed on the mortgage compared to her existing equity.
Greed? I don't think so.
Stupidity? Well, fifteen years ago, the deadbeat dad probably looked better than he does now, but maybe the marriage was stupid. Buying the house? At the time, it seemed like a great plan, with a good buy, the ability to make the payments with relative ease, and an expectation that if the day came when they couldn't make the payment, they could always sell and live for awhile on the equity.
How about plain bad luck? How about horrible timing?
I'm with Syd on this one.
I don't excuse the outright liars and cons out there, but running a mortgage scam takes more than one crook--it takes greedy banks that don't check out the information they are given; it takes mortgage brokers willing to make up jobs, income and assets they know don't exist; and it takes a buyer willing to commit fraud to get the house, the money or both.
So let's realize that the folks running cons will always be with us. Let's understand that the only way we can control fraud is to strengthen the controls, increase the number of investigators and provide stronger sanctions.
But that still leaves the "stupid" homebuyers or the "greedy" mortgage-holders.
Just how culpable are they?
In general, I work with people mired in poverty. Lately, many of my clients are new to the ranks of the poverty-stricken. Unlike my more usual clientele, these folks come with real property or have recently walked away from real property.
So far, I've not found greed to be a motivation. Stupidity? More like ignorance. More like feeling middle-class pressure to be a homeowner. And much, much more like being one job or a spouse away from financial disaster.
Consider one woman I deal with.
She and her husband both had full-time jobs. Three years ago, they bought a home in an up and coming neighborhood for a reasonable price with monthly payments that were just under 25% of their combined incomes. They and their two teenagers lived a solid, if not expansive, middle-class life.
Then the mother was diagnosed with cancer.
And then the father turned out not to have paid attention to the "in sickness and in health" part of his marital vows. He bailed out. He quit his job and he left the state. Needless to say, he has not contributed to the mortgage payments.
My client and her children continue to live in the home but it is in foreclosure and it is doubtful that any of the proposed governmental programs will help her. She is upside down in terms of what is owed on the mortgage compared to her existing equity.
Greed? I don't think so.
Stupidity? Well, fifteen years ago, the deadbeat dad probably looked better than he does now, but maybe the marriage was stupid. Buying the house? At the time, it seemed like a great plan, with a good buy, the ability to make the payments with relative ease, and an expectation that if the day came when they couldn't make the payment, they could always sell and live for awhile on the equity.
How about plain bad luck? How about horrible timing?
I'm with Syd on this one.
Thursday, February 26, 2009
February Financial Update
Thanks to my income tax refund, my total debt (including my mortgage) is now under $100,000. It's $98,525.51 to be precise. Of that, $21, 374.22 is credit card/personal loan debt and $28,833.14 is my HELOCC. My mortgage has $48,268.15 to go and will be fully paid off on my 65th birthday--a mere five years and one month away.
The numbers are not as important as the fact that the indebtedness is finally going down at a faster rate than my usual sluggish pace.
The numbers are not as important as the fact that the indebtedness is finally going down at a faster rate than my usual sluggish pace.
Monday, February 23, 2009
For Grace It's Good; For The Economy, Not So Much
I just cannot get my mind around the thesis of this article from Sunday's New York times. Thrift has been an economic disaster for Japan? And the only reason the US will avoid Japan's fate is because our citizens will never practice thrift on the level the Japanese do?
I'm not much of an economist (that's what I get for being a liberal arts major!) and I don't pretend to fully understand the global downturn we're all in. But if, for my personal financial security (not to mention, sanity), I must cut back expenses, pay off debt and save for my retirement, it is disturbing to think that all of these things might lead to disaster for this country.
Am I being unpatriotic? Do I "owe" it to my country to save less? Spend more?
How could pauperizing myself be a good thing? Why would it be acceptable if I wind up depending upon state support in my old age rather than Social Security and my 401(K)? And since when is paying off my credit cards a BAD thing?
We live in interesting times, to be sure. I think I mean this in the Chinese curse sense!
I'm not much of an economist (that's what I get for being a liberal arts major!) and I don't pretend to fully understand the global downturn we're all in. But if, for my personal financial security (not to mention, sanity), I must cut back expenses, pay off debt and save for my retirement, it is disturbing to think that all of these things might lead to disaster for this country.
Am I being unpatriotic? Do I "owe" it to my country to save less? Spend more?
How could pauperizing myself be a good thing? Why would it be acceptable if I wind up depending upon state support in my old age rather than Social Security and my 401(K)? And since when is paying off my credit cards a BAD thing?
We live in interesting times, to be sure. I think I mean this in the Chinese curse sense!
Saturday, February 21, 2009
One Down, Five To Go
I love it when money comes even sooner than I expect.
According to the Where's My Refund link at the IRS website, my refund would arrive by March 3rd. Sooner is better--and it came much sooner. The refund landed in my bank account yesterday, a week and a half early and only two and a half weeks after I filed.
So-o-o, I used the money for the things I'd already planned and then used what was left over to pay off my smallest debt.
Amazing how good it feels to see a credit card zeroed out--never mind that the balance was just under a thousand dollars, and it wasn't even my highest-interest card. That's $50 a month I can put to much better use.
I am definitely getting a rush from the payoff. It's psychological, not intellectual. But it's a darn good feeling, just the same.
Onward to the other five debts (not to mention my HELOCC and my mortgage).
According to the Where's My Refund link at the IRS website, my refund would arrive by March 3rd. Sooner is better--and it came much sooner. The refund landed in my bank account yesterday, a week and a half early and only two and a half weeks after I filed.
So-o-o, I used the money for the things I'd already planned and then used what was left over to pay off my smallest debt.
Amazing how good it feels to see a credit card zeroed out--never mind that the balance was just under a thousand dollars, and it wasn't even my highest-interest card. That's $50 a month I can put to much better use.
I am definitely getting a rush from the payoff. It's psychological, not intellectual. But it's a darn good feeling, just the same.
Onward to the other five debts (not to mention my HELOCC and my mortgage).
Sunday, February 15, 2009
Retired But Employed
Saturday's Wall Street Journal article There Goes Retirement profiles a number of retirees whose loss of assets has sent them back into the workplace. None were able to go back to their former positions, none were able to work from home, and none make anything close to the incomes they earned during their "real" working lives. But for most, that isn't the bad news. Whether it's true of everyone or just those who agreed to be interviewed for the article, most seemed happy to have the structure that part-time employment provided, as well as the additional income.
They learned some important lessons that might not be immediately apparent:
(1) Be careful of what you put on your resume when you're applying for an entry-level job. You don't want to scare off a potential employer by appearing over-qualified. (I'm thinking that an accurate resume with a carefully worded cover letter would be the answer here.)
(2) Be careful where you live--a move to a retirement community puts you into heavy competition for limited positions.
(3) Ratchet down your salary expectations. The good news is that you are not supporting yourself on your earnings, you are supplementing a depreciating portfolio. You still have your Social Security and, if you're really fortunate, your pension. $600 a month makes a genuine difference without requiring you to give up all of your free time in retirement.
(4) Don't cut all your ties to your employers and friends in the working world--they can be a good source of "small" or temporary job referrals.
Of course, what is not mentioned is that all of the retirees profiled are still in good health and are physically capable of working. Then again, most of these retirees COULD live comfortably, if not well, on their Social Security and their 401(k)'s. What they did not have was money for the extras--travel, meals out, golf, etc. They also were losing their peace of mind that they would not outlive their assets.
The "I'm retired and I'm leaving the work world behind me" attitude looks to be in for some major readjustments.
They learned some important lessons that might not be immediately apparent:
(1) Be careful of what you put on your resume when you're applying for an entry-level job. You don't want to scare off a potential employer by appearing over-qualified. (I'm thinking that an accurate resume with a carefully worded cover letter would be the answer here.)
(2) Be careful where you live--a move to a retirement community puts you into heavy competition for limited positions.
(3) Ratchet down your salary expectations. The good news is that you are not supporting yourself on your earnings, you are supplementing a depreciating portfolio. You still have your Social Security and, if you're really fortunate, your pension. $600 a month makes a genuine difference without requiring you to give up all of your free time in retirement.
(4) Don't cut all your ties to your employers and friends in the working world--they can be a good source of "small" or temporary job referrals.
Of course, what is not mentioned is that all of the retirees profiled are still in good health and are physically capable of working. Then again, most of these retirees COULD live comfortably, if not well, on their Social Security and their 401(k)'s. What they did not have was money for the extras--travel, meals out, golf, etc. They also were losing their peace of mind that they would not outlive their assets.
The "I'm retired and I'm leaving the work world behind me" attitude looks to be in for some major readjustments.
Monday, February 9, 2009
Saving That Gas Money
Liz Pulliam Weston has a great suggestion this week in her MSN money column: Pay Yourself $2 a Gallon. Everyone is saving money now that gasoline has come down in price, so she suggests putting the money no longer being used to drive, into savings.
I budget $80 every two weeks for gas. When gas was at its peak, that wasn't quite enough. But these days, I usally get by for $50 or less over 15 days.
I don't put the excess into savings, but each month, I take what is left in the envelope marked "gas money" and I snowflake it to my smallest debt.
My mortgage payment, which fluctuates due to the inclusion of insurance and property taxes, goes down $17 beginning in March. I'm planning to snowflake that one as well.
I budget $80 every two weeks for gas. When gas was at its peak, that wasn't quite enough. But these days, I usally get by for $50 or less over 15 days.
I don't put the excess into savings, but each month, I take what is left in the envelope marked "gas money" and I snowflake it to my smallest debt.
My mortgage payment, which fluctuates due to the inclusion of insurance and property taxes, goes down $17 beginning in March. I'm planning to snowflake that one as well.
Thursday, February 5, 2009
Errata, Part Deux
More tidbits too small, too insignificant or too embarrassing to have a post all by themselves:
1. So, with reference to my whining post below, I wound up with a blocked line to my oil tank and a repair guy who was booked for the next week, but, at 1.5 times the usual rate was willing to come out that same evening. Exit $178.
2. My sister agreed go halves with me on a used vehicle for my granddaughter. Together, we told her we wouldn't pay more than $2500 total so she found one for $2400. Fortunately, one of her good buddies is a mechanic, who examined the car and pronounced it to be in decent shape for commuting. So, I'm down $1250 rather than the $3000 I feared. I did pay attention to the comments made when I first posted about this, but I ultimately decided that it is important for my granddaughter's future that she stays in college, and it is going to take a car for her to do that. She does have a part-time job and does contribute to her own keep. She will eventually have to get loans, but I want to help her put that off as far as possible.
3. I haven't posted my monthly financial update. Now, I'm burying it in the middle of this post because my total indebtedness decreased by a measly $390 during the month of January.
4. Where's JW? I made my usual swath through the regular blogs on my reading list, and suddenly "Need To Be Debt Free" has gone missing. I hope it's not permanent. When they make me God (maybe you shouldn't hold your breath!) I plan to have rules about blogs just disappearing on me.
5. I read Suze Orman's "2009 Action Plan,", having downloaded it for free from Oprah's website. Nothing new in it, but a lot of good, straight talk about the current economy and the likelihood that the recession will last awhile.
6. And finally, some GOOD news! My auto insurance company (the one that also provides my homeowner's coverage, but cut me loose after the garage fire) is rescinding their prior termination of my auto insurance. I have no idea why, but since I'm getting a great rate from them, I'm NOT going to argue. Some days it pays to have a good broker who will go to bat for you.
1. So, with reference to my whining post below, I wound up with a blocked line to my oil tank and a repair guy who was booked for the next week, but, at 1.5 times the usual rate was willing to come out that same evening. Exit $178.
2. My sister agreed go halves with me on a used vehicle for my granddaughter. Together, we told her we wouldn't pay more than $2500 total so she found one for $2400. Fortunately, one of her good buddies is a mechanic, who examined the car and pronounced it to be in decent shape for commuting. So, I'm down $1250 rather than the $3000 I feared. I did pay attention to the comments made when I first posted about this, but I ultimately decided that it is important for my granddaughter's future that she stays in college, and it is going to take a car for her to do that. She does have a part-time job and does contribute to her own keep. She will eventually have to get loans, but I want to help her put that off as far as possible.
3. I haven't posted my monthly financial update. Now, I'm burying it in the middle of this post because my total indebtedness decreased by a measly $390 during the month of January.
4. Where's JW? I made my usual swath through the regular blogs on my reading list, and suddenly "Need To Be Debt Free" has gone missing. I hope it's not permanent. When they make me God (maybe you shouldn't hold your breath!) I plan to have rules about blogs just disappearing on me.
5. I read Suze Orman's "2009 Action Plan,", having downloaded it for free from Oprah's website. Nothing new in it, but a lot of good, straight talk about the current economy and the likelihood that the recession will last awhile.
6. And finally, some GOOD news! My auto insurance company (the one that also provides my homeowner's coverage, but cut me loose after the garage fire) is rescinding their prior termination of my auto insurance. I have no idea why, but since I'm getting a great rate from them, I'm NOT going to argue. Some days it pays to have a good broker who will go to bat for you.
Thursday, January 29, 2009
Whining Season
Do you suppose there's a cosmic accountant lurking in the ether, waiting to see when Grace comes into money, who then pounces with glee? I'm guessing there is. As a prime example, I submit the following:
I mailed my tax forms yesterday. I was mentally counting up the places to put my refund. (Yeah, yeah, don't count your chickens before they hatch and all that!) But that was before I got home. Upon arrival, I discovered that:
1. My oil tank ran dry, never mind the 100 gallons I purchased in December. I guess unexpected snow storms do increase usage. It will cost me $184 for another 100 gallons, but I have my fingers crossed that the lines are not now clogged. If they are, it will cost $90 to get the furnace repair folks out.
2. My upstairs bathtub is leaking into my downstairs kitchen. I wouldn't have known about this except that with all the painting going on downstairs, everyone is showering upstairs. So this means my kitchen ceiling will have to be repaired and repainted AFTER we figure out why I have a leak in the first place. The plumbers are on their way, and I don't expect them to be cheap.
3. My granddaughter called to say that the used car she drives between work and college (in towns 40 miles apart) has 200,000 miles on it and is about to lose its front axel among numerous other problems. For a mere $3000, she could get another, safer, better used car.
So instead of being some $3700 ahead, I'm already behind, and I haven't even gotten the refund checks yet.
ARRGH!
I mailed my tax forms yesterday. I was mentally counting up the places to put my refund. (Yeah, yeah, don't count your chickens before they hatch and all that!) But that was before I got home. Upon arrival, I discovered that:
1. My oil tank ran dry, never mind the 100 gallons I purchased in December. I guess unexpected snow storms do increase usage. It will cost me $184 for another 100 gallons, but I have my fingers crossed that the lines are not now clogged. If they are, it will cost $90 to get the furnace repair folks out.
2. My upstairs bathtub is leaking into my downstairs kitchen. I wouldn't have known about this except that with all the painting going on downstairs, everyone is showering upstairs. So this means my kitchen ceiling will have to be repaired and repainted AFTER we figure out why I have a leak in the first place. The plumbers are on their way, and I don't expect them to be cheap.
3. My granddaughter called to say that the used car she drives between work and college (in towns 40 miles apart) has 200,000 miles on it and is about to lose its front axel among numerous other problems. For a mere $3000, she could get another, safer, better used car.
So instead of being some $3700 ahead, I'm already behind, and I haven't even gotten the refund checks yet.
ARRGH!
Wednesday, January 28, 2009
Taxing Matters
I mailed off my state and federal tax forms this morning!
$3700 will soon be coming my way. I have plenty of places to put it, so it won't last long.
I have done my own taxes for years. In fact, I also wind up doing returns for my children, and some of my colleagues as well. I don't use software because I'm too cheap, though, for my kids, I use the free version of TaxAct available through the IRS website.
I wish I could guesstimate better because I do know that getting such a large return means the government got the free use of MY money, but it's surprisingly hard to gauge accurately. I claim three exemptions for my employer. I have decided to stick with that because I won't have any children to claim on my 2009 return. This will bring me closer to the $0 owed mark without (I hope) my having to pay taxes.
At any rate, this is the first time in my working life that I have ever gotten my tax returns filed prior to January 31st. Let's hope the tax refund folks are appreciative and equally fast.
$3700 will soon be coming my way. I have plenty of places to put it, so it won't last long.
I have done my own taxes for years. In fact, I also wind up doing returns for my children, and some of my colleagues as well. I don't use software because I'm too cheap, though, for my kids, I use the free version of TaxAct available through the IRS website.
I wish I could guesstimate better because I do know that getting such a large return means the government got the free use of MY money, but it's surprisingly hard to gauge accurately. I claim three exemptions for my employer. I have decided to stick with that because I won't have any children to claim on my 2009 return. This will bring me closer to the $0 owed mark without (I hope) my having to pay taxes.
At any rate, this is the first time in my working life that I have ever gotten my tax returns filed prior to January 31st. Let's hope the tax refund folks are appreciative and equally fast.
Monday, January 26, 2009
Little Inventions, Big Impact
So I was at a party Saturday evening, (Don't laugh, and don't tell my kids, but yes, Grace does occasionally have a social life!) where the following question was raised: What three "small" inventions have most impacted your life? MY answer was (1) Pantyhose (2) birth control pills, and (3) sticky notes.
The guy I was with thought birth control pills and sticky notes were important, but he traded the pantyhose for "instant replay" (something he would never have done if he'd ever had to master garter belt 101).
My 27 year old daughter chose cell phones, Hot Pockets and IPOD's--what WOULD her generation do without electronics. I thought she would choose computers, which would have been my fourth choice, but she didn't have to--her current cell phone allows her to access the internet.
So what do you think? What inventions that have occurred since your birth have actually helped you the most or had the most impact on your life?
The guy I was with thought birth control pills and sticky notes were important, but he traded the pantyhose for "instant replay" (something he would never have done if he'd ever had to master garter belt 101).
My 27 year old daughter chose cell phones, Hot Pockets and IPOD's--what WOULD her generation do without electronics. I thought she would choose computers, which would have been my fourth choice, but she didn't have to--her current cell phone allows her to access the internet.
So what do you think? What inventions that have occurred since your birth have actually helped you the most or had the most impact on your life?
Friday, January 23, 2009
Fallout From the Fire
The other shoe has finally dropped.
I did know that my house insurance was likely to go up as a result of the garage fire. I even knew that my carrier might drop me altogether, though I hoped not. My experience with the insurance company, which also carries my auto insurance, was, up to now, entirely positive. They handled my claim quickly and satisfactorily.
Apparently, they were NOT so pleased by MY performance.
Not only did they cancel the policy on my home, they have also notified me that they are not going to renew my auto policy.
Say what? How does the fact that I had a garage fire (where my car was NOT parked!) make me a bad risk for auto insurance?
I am fighting the company with regard to the auto insurance. But my broker says there is nothing to be done about the cancellation of my home coverage. So it looks like I'll be paying exactly twice as much in 2009 ($1015 as opposed to $570--OK, not exactly half--math was never my strong suit!) to keep my house insured.
I'm hoping to retain the auto coverage because it will virtually double as well if I have to go elsewhere.
I did know that my house insurance was likely to go up as a result of the garage fire. I even knew that my carrier might drop me altogether, though I hoped not. My experience with the insurance company, which also carries my auto insurance, was, up to now, entirely positive. They handled my claim quickly and satisfactorily.
Apparently, they were NOT so pleased by MY performance.
Not only did they cancel the policy on my home, they have also notified me that they are not going to renew my auto policy.
Say what? How does the fact that I had a garage fire (where my car was NOT parked!) make me a bad risk for auto insurance?
I am fighting the company with regard to the auto insurance. But my broker says there is nothing to be done about the cancellation of my home coverage. So it looks like I'll be paying exactly twice as much in 2009 ($1015 as opposed to $570--OK, not exactly half--math was never my strong suit!) to keep my house insured.
I'm hoping to retain the auto coverage because it will virtually double as well if I have to go elsewhere.
Wednesday, January 14, 2009
'Tis the Season to be Wary
Mrs. Accountability at Out of Debt Again has a post about a co-worker who got scammed on Craigslist.
I paid particular attention to this post because something similar almost happened last month to my 27 year old daughter.
My daughter, who is always looking for extra money, responded to a Craigslist "Help-Wanted" ad for mystery shoppers. My first clue, if not my daughter's, was that the response to her resume, accepting her as a mystery shopper, had a number of spelling errors. Shortly thereafter, a check arrived in the mail for $2900. My daughter was instructed to deposit the check to her bank account, keep $500 for herself, go buy an IPOD and then mail the IPOD and a cashier's check for whatever monies remained to a post office box in Atlanta.
Fortunately, by this time, my daughter's BS detector went off, and she decided to google "mystery shopper scams." It was there she learned that ANY condition that she deposit a check and then "refund" some of the money by wire or by mail meant she was involved in a scam and that the check would eventually be returned to the bank as worthless.
So she reported everything to the Federal Trade Commission pursuant to the instructions from Craigslist and resigned herself to NOT making her fortune as a mystery shopper. Still, I can't help wondering if anyone was taken in by this scam, as my daughter almost was.
Just about the time we're congratulating ourselves that we'd never fall for Nigerian e-mails, or mystery shopper scams, or those "buyers" who ripped off Mrs. Accountability's co-worker, along comes a Madoff and makes fools of all of us.
I paid particular attention to this post because something similar almost happened last month to my 27 year old daughter.
My daughter, who is always looking for extra money, responded to a Craigslist "Help-Wanted" ad for mystery shoppers. My first clue, if not my daughter's, was that the response to her resume, accepting her as a mystery shopper, had a number of spelling errors. Shortly thereafter, a check arrived in the mail for $2900. My daughter was instructed to deposit the check to her bank account, keep $500 for herself, go buy an IPOD and then mail the IPOD and a cashier's check for whatever monies remained to a post office box in Atlanta.
Fortunately, by this time, my daughter's BS detector went off, and she decided to google "mystery shopper scams." It was there she learned that ANY condition that she deposit a check and then "refund" some of the money by wire or by mail meant she was involved in a scam and that the check would eventually be returned to the bank as worthless.
So she reported everything to the Federal Trade Commission pursuant to the instructions from Craigslist and resigned herself to NOT making her fortune as a mystery shopper. Still, I can't help wondering if anyone was taken in by this scam, as my daughter almost was.
Just about the time we're congratulating ourselves that we'd never fall for Nigerian e-mails, or mystery shopper scams, or those "buyers" who ripped off Mrs. Accountability's co-worker, along comes a Madoff and makes fools of all of us.
Tuesday, January 13, 2009
Carnival of Money Stories
The "Rich Girl, Poor Girl" discussion is now part of the Carnival of Money Stories, hosted this week by Adam at Your Money Relationship. He's a guy, so, of course, he uses football metaphors. He may also win the award for tackiest trophy ever. Then again, maybe not--there's a lot of tacky to be had in sports.
Sunday, January 11, 2009
Learning from the Mistakes of Others
It's one thing to watch folks make financial mistakes out of greed, stupidity or both. But it is quite another to watch what is happening to some retirees like Jim Kosel who did any number of things right, only to be foiled by what would, in other economic times, be forgivable mistakes.
Kosel is featured in the Portland Oregonian article, What To Do When The Nest Egg Cracks.
Kosel followed most of the rules pre-retirement: He saved on a regular basis; He saved over a long period of time; He planned his retirement in detail; He downsized by moving to a smaller town.
So why is he now driving a school bus and deferring his dreams of taking an RV around the country?
Well, somewhere along the line, just after he sold his urban home and found a smaller one in a rural area, he got the bright idea of NOT paying cash for the new home. Instead, he took out a mortgage, and played the stock market with the proceeds of his original sale. The idea was that he could both pay the mortgage and pocket some extra cash.
But his retirement plans hadn't included a downturn that saw 50% of his retirement funds vanish. Not only did his "extra cash" go away, so did the money for the mortgage. His retirement plans didn't include a mortgage payment. Nor did his plans include his wife losing her job.
So instead of traveling across the country in an RV, he's driving a school bus.
Hindsight being 50-50, it's easy to see where Kosel made his mistakes. No one should have a mortgage in retirement. And he should have purchased and fully paid for the RV he wanted. Economic conditions and gas prices might ground the RV upon occasion, but at least he would have it available to him.
Still, I do feel sorry for him, because I think he set a fine example for his family. If it can go so wrong for him, what about the rest of us?
Kosel is featured in the Portland Oregonian article, What To Do When The Nest Egg Cracks.
Kosel followed most of the rules pre-retirement: He saved on a regular basis; He saved over a long period of time; He planned his retirement in detail; He downsized by moving to a smaller town.
So why is he now driving a school bus and deferring his dreams of taking an RV around the country?
Well, somewhere along the line, just after he sold his urban home and found a smaller one in a rural area, he got the bright idea of NOT paying cash for the new home. Instead, he took out a mortgage, and played the stock market with the proceeds of his original sale. The idea was that he could both pay the mortgage and pocket some extra cash.
But his retirement plans hadn't included a downturn that saw 50% of his retirement funds vanish. Not only did his "extra cash" go away, so did the money for the mortgage. His retirement plans didn't include a mortgage payment. Nor did his plans include his wife losing her job.
So instead of traveling across the country in an RV, he's driving a school bus.
Hindsight being 50-50, it's easy to see where Kosel made his mistakes. No one should have a mortgage in retirement. And he should have purchased and fully paid for the RV he wanted. Economic conditions and gas prices might ground the RV upon occasion, but at least he would have it available to him.
Still, I do feel sorry for him, because I think he set a fine example for his family. If it can go so wrong for him, what about the rest of us?
Friday, January 9, 2009
Born Without a Silver Spoon in My Mouth
There's a fascinating conversation going on across several blogs. Meg at World of Wealth started it all by admitting that she comes from a wealthy family who continue to give her money and to back her financially. In later posts, she explores the effects of growing up wealthy in even more detail. Madame X from My Open Wallet weighs in thoughtfully. The Dog Ate My Finances explores the same issue from a the perspective of a poor girl who's made good, as indeed she has since she's in her mid-20's and earns around $200,000 a year.
I guess you know where Grace falls in all this--my background is much like the author of "The Dog Ate My Finances." My dad was a carpenter first, and then a longshoreman. We were solidly working class, living in a solidly working class mill town. With only one elementary school, one junior high and one high school, there wasn't much of a "wrong side of town," though if there had been, we were probably living in it.
I grew up, went to a state college (on scholarship), and then to an ivy league graduate school (on scholarship) on the east coast where I was blown away by the distinctions between rich and poor. It was as though the rich were an alien species--so far removed from my life that I couldn't relate to them but was still intrigued by their lives and delighted to share in that from time to time.
Now I'm in the middle of the middle class or maybe a tad toward the lower middle class when you add in my five kids. While I could use more money and less debt, I'm not unhappy with my position in life. Having friends who are wealthy and politically powerful (though not always both), as well as friends who never made it out of the small town we grew up in, and a few friends who got lost along the way to mental illness, drug abuse or Vietnam, I've also had a chance to compare my life with theirs.
The biggest advantage I can see to having been reared poorer is an enhanced sense of choice. Once I went to college, my parents considered their work done. They had no further aspirations for me (or for my sister--actually, they didn't even expect her to go to college, much less graduate, head into international banking and make a fortune). When my sister went into banking, they were thrilled. But then, they were thrilled when she first wanted to go to nursing school, and if she had succeeded there, they would have been just as satisfied.
I note that many of my friends felt like they HAD to go to certain schools, HAD to make a lot of money, HAD to have certain kinds of jobs, HAD to marry certain types of partners and HAD to leard certain lives. My choices, on the other hand, were wide open. When I made an early decision to work among the poor, my family thought that decision was fine. When my first job paid me $9,000 a year, no one in my family told me it was beneath me.
My parents were both reared during the depression. They were savers but they were also sharers. If I needed money, they gave it to me. The quid pro quo was that I never asked for too much because I knew they didn't have it to give.
The other great advantage is an ability to move between classes with greater comfort. By this, I mean it is easier for me to hang out with wealthy friends than it is for them to be constantly in the company of working class people. I know more about their way of life than they do of mine or, God forbid, my lower class friends. They are never going to be comfortable camping out and drinking beer but I do just fine in fancy restaurants drinking wine that costs more than the dinner.
Poor people know that the wealthy make fun of them, but it never really occurs to wealthy people that they can look ludicrous as well or that poor people notice and mock them in return.
I don't believe that there is anything ennobling about poverty. However, being reared without a lot of extra money in a working class or middle class home often brings with it choices and aspirations that are not limited by the ennui or demands of having too much money.
In my personal view, being born poverty stricken or extremely wealthy are both situations to be financially and emotionally overcome
I guess you know where Grace falls in all this--my background is much like the author of "The Dog Ate My Finances." My dad was a carpenter first, and then a longshoreman. We were solidly working class, living in a solidly working class mill town. With only one elementary school, one junior high and one high school, there wasn't much of a "wrong side of town," though if there had been, we were probably living in it.
I grew up, went to a state college (on scholarship), and then to an ivy league graduate school (on scholarship) on the east coast where I was blown away by the distinctions between rich and poor. It was as though the rich were an alien species--so far removed from my life that I couldn't relate to them but was still intrigued by their lives and delighted to share in that from time to time.
Now I'm in the middle of the middle class or maybe a tad toward the lower middle class when you add in my five kids. While I could use more money and less debt, I'm not unhappy with my position in life. Having friends who are wealthy and politically powerful (though not always both), as well as friends who never made it out of the small town we grew up in, and a few friends who got lost along the way to mental illness, drug abuse or Vietnam, I've also had a chance to compare my life with theirs.
The biggest advantage I can see to having been reared poorer is an enhanced sense of choice. Once I went to college, my parents considered their work done. They had no further aspirations for me (or for my sister--actually, they didn't even expect her to go to college, much less graduate, head into international banking and make a fortune). When my sister went into banking, they were thrilled. But then, they were thrilled when she first wanted to go to nursing school, and if she had succeeded there, they would have been just as satisfied.
I note that many of my friends felt like they HAD to go to certain schools, HAD to make a lot of money, HAD to have certain kinds of jobs, HAD to marry certain types of partners and HAD to leard certain lives. My choices, on the other hand, were wide open. When I made an early decision to work among the poor, my family thought that decision was fine. When my first job paid me $9,000 a year, no one in my family told me it was beneath me.
My parents were both reared during the depression. They were savers but they were also sharers. If I needed money, they gave it to me. The quid pro quo was that I never asked for too much because I knew they didn't have it to give.
The other great advantage is an ability to move between classes with greater comfort. By this, I mean it is easier for me to hang out with wealthy friends than it is for them to be constantly in the company of working class people. I know more about their way of life than they do of mine or, God forbid, my lower class friends. They are never going to be comfortable camping out and drinking beer but I do just fine in fancy restaurants drinking wine that costs more than the dinner.
Poor people know that the wealthy make fun of them, but it never really occurs to wealthy people that they can look ludicrous as well or that poor people notice and mock them in return.
I don't believe that there is anything ennobling about poverty. However, being reared without a lot of extra money in a working class or middle class home often brings with it choices and aspirations that are not limited by the ennui or demands of having too much money.
In my personal view, being born poverty stricken or extremely wealthy are both situations to be financially and emotionally overcome
Wednesday, January 7, 2009
Grace and Charity
I know that many people make their charitable donations in December. Whether that's due to Christmas spirit or impending taxes, I don't know. What I do know is that while my intent to donate is good, I actually wind up giving less than I meant to, because I usually have less money left over than I meant to.
This year, I'm trying something new--monthly donations that come directly out of my checking account and are an integral part of my budget.
I chose three charities, two of them for writers, and one to a private middle school for special needs students that my youngest daughter attended. This was a hard decision to make--in harsh economic times, there are far too many places to put one's charitable dollars.
In the end, I was partly pursuaded to make the choices I did because I already work for a non-profit that serves low-income people. Given my wages compared to what others with my education make in the private sector, I figure I've already made one donation.
But in tough economic climates, the arts always take the biggest hit because they are considered expendable. One program I am contributing to conducts writing and journalling workshops among disadvantaged populations--the homeless, addicts in recovery, teen parents, etc. The other provides scholarships to a six-week science fiction writer's workshop that I attended and loved nearly 30 years ago.
I contribute to the private middle school because it saved my daughter's academic life and because, unlike her special needs high school, it does not have an endowment program.
One thing I am curious about is whether it is better for the charity itself to get my money on a monthly basis or as a lump sum. Since personally, doing it by the month ensures that I actually have the money to give to the charity and that they actually get it, I will continue to donate by the month. But is it the best way?
This year, I'm trying something new--monthly donations that come directly out of my checking account and are an integral part of my budget.
I chose three charities, two of them for writers, and one to a private middle school for special needs students that my youngest daughter attended. This was a hard decision to make--in harsh economic times, there are far too many places to put one's charitable dollars.
In the end, I was partly pursuaded to make the choices I did because I already work for a non-profit that serves low-income people. Given my wages compared to what others with my education make in the private sector, I figure I've already made one donation.
But in tough economic climates, the arts always take the biggest hit because they are considered expendable. One program I am contributing to conducts writing and journalling workshops among disadvantaged populations--the homeless, addicts in recovery, teen parents, etc. The other provides scholarships to a six-week science fiction writer's workshop that I attended and loved nearly 30 years ago.
I contribute to the private middle school because it saved my daughter's academic life and because, unlike her special needs high school, it does not have an endowment program.
One thing I am curious about is whether it is better for the charity itself to get my money on a monthly basis or as a lump sum. Since personally, doing it by the month ensures that I actually have the money to give to the charity and that they actually get it, I will continue to donate by the month. But is it the best way?
Friday, January 2, 2009
Fourth Quarter Net Worth
I tally my net worth quarterly, so here's the net for December 31, 2008:
$522,948.
It would feel better if that same total on December 31, 2007 hadn't been:
$584,097.
Having done the math, I know that I've taken a $61,149 loss, or, put another way, my net worth declined nearly 10.5 percent over the course of a year.
In general, my retirement funds took the biggest hit--they are down 31%. My two pieces of real estate held up better, though, they, too, have come down in value. It still intrigues me that my rental home in a dying mill town on the coast has fared the best--I'm guessing that's because it's a good, small starter home in a good neighborhood.
I have to admit, it still feels good to be able to say I'm worth over half a million!
$522,948.
It would feel better if that same total on December 31, 2007 hadn't been:
$584,097.
Having done the math, I know that I've taken a $61,149 loss, or, put another way, my net worth declined nearly 10.5 percent over the course of a year.
In general, my retirement funds took the biggest hit--they are down 31%. My two pieces of real estate held up better, though, they, too, have come down in value. It still intrigues me that my rental home in a dying mill town on the coast has fared the best--I'm guessing that's because it's a good, small starter home in a good neighborhood.
I have to admit, it still feels good to be able to say I'm worth over half a million!
Thursday, January 1, 2009
2009 Goals
Perhaps, before moving on to my 2009 Goals, I should look at my 2008 goals?
Then again, maybe not. Sigh. OK, here they are, direct from my 2007 wrap-up post:
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).
How did I do? Well, the non-mortgage debt was decreased by $2000 so I didn't get even 50% toward my goal. Not increasing credit card or loan debt? Umm--well, if you only look at the end of the year, I met that goal, except that I really didn't since I incurred some increases during the spring and summer that I didn't manage to pay off until this past month.
And that last goal?
Well, Grace did her part! But the economy swallowed it all up!
So,let's try this again for 2009:
1. Pay off at least $6000 in non-mortgage debt.
2. Do not increase debts on credit cards or lines of credit AT ANY TIME during the year.
3. Add $12,300 to my 401(k).
Happy New Year to one and all. If 2009 isn't prosperous, at least let it be frugal.
Then again, maybe not. Sigh. OK, here they are, direct from my 2007 wrap-up post:
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).
How did I do? Well, the non-mortgage debt was decreased by $2000 so I didn't get even 50% toward my goal. Not increasing credit card or loan debt? Umm--well, if you only look at the end of the year, I met that goal, except that I really didn't since I incurred some increases during the spring and summer that I didn't manage to pay off until this past month.
And that last goal?
Well, Grace did her part! But the economy swallowed it all up!
So,let's try this again for 2009:
1. Pay off at least $6000 in non-mortgage debt.
2. Do not increase debts on credit cards or lines of credit AT ANY TIME during the year.
3. Add $12,300 to my 401(k).
Happy New Year to one and all. If 2009 isn't prosperous, at least let it be frugal.
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