July End-of-Month Report

Hmm--not the world's best month in terms of debt reduction. My total indebtedness is down by $703.39, which sounds good. Unfortunately, most of that is mortgage reduction. If I just stick to my consumer debt, I'm only down $132.71.

Still, down is the right direction. If only I were moving at a faster speed!

A Calculating Look at Retirement

I am such a sucker for calculators that purport to tell me if I'm going to have a comfortable retirement.

Or not.

It would be nice if the calculators agreed among themselves.

They don't.

Andrea Coombes at the Wall Street Journal reports on Calculating Your Retirement Nest Egg . She runs one scenario through several different calculators and comes up with several different results.

JLP at All Matters Financial goes her one better and lists a number of additional calculators.

I, of course, tried them all. My favorite is is the Nationwide Calculator which says I'm well on my way to a comfortable retirement, while the AARP Calculator thinks I'll fall short by several hundred thousand dollars.

Maybe I should do less calculating and more saving!

The Grown-Up Kid Conundrum

JW, on Need to be Debtfree (scroll down to the beginning of the July posts), has been dealing with financial issues caused by his desire to help out his adult daughter and her family. Ultimately, I think, (with a strong shove from his wife!) he reached the right decision as to where to draw the line on how much help he was willing to give.

But a lot of the comments focused on the issue of "enabling," and were fairly harsh in terms of suggesting that JW not give any help while his immediate family is still struggling with financial issues. Those kinds of comments are why I started this blog, by a middle-aged person facing middle aged issues. However kindly meant, I don't think childless posters, or posters with young children quite get the issues facing those of us with adult children, especially adult children in need.

And I think memories are short!

The truth is, my parents, when they were alive (my father died 18 years ago, my mother 16 years ago) helped me out financially. This was true even when I was making more money than they were. From the money they sent me while I was in college to the family meals at a local restaurant to the occasional $20 bill slipped into my purse to the down payment on my car when it was totaled but I was upside down on the financing, my parents gave me money with no strings attached. It is a testament to their ability to manage their money (not a trait that is apparently inherited) that they could do so without damage to their own financial stability.

My children are 39, 31, 25, 22 and 17. The 25 year old is living with me temporarily in order to save money to get her own apartment. She's been here four months and will (please, God!) be moving out in September. The financial impact is minimal--I provide some food and the bedroom, but that's it. She pays "rent" by cleaning my house once a week--actually a terrific service that I will miss when she leaves.

In the past, I have paid for Montessori pre-school for certain grandchildren; I have paid to have the lights turned back on when one of my kids got behind in her utility payments; I have covered auto insurance when it appeared to me that one of my daughters didn't understand just how important it was to be insured.

Right now, the big issue is my oldest grandchild. She is enrolling in college this fall. This granddaughter is the child of my oldest adopted daughter. That daughter is a wonder--she came to me at age 11, diagnosed with attachment issues and Fetal Alcohol Effects. From an angry, disturbed teenager, she evolved into a hardworking, conscientious adult and a good mother. But her limited intellect means that her earning capacity has reached the ceiling at about $30,000 a year. She is in no position to provide college funds for her child.

Enter grandma.

Enabling? Maybe. Can I afford it? Maybe not--but I don't think I can afford not to assist. I know my parents would have done it for me, and for my children.

More, later, on exactly how I intend to do this.

Assumptions, ASSumptions

Money Magazine has an article telling readers how to tell if you're
On Track for Retirement. It's a good article but personally I'm put off by the tone of Part I.

The author, Walter Updegrave, says "A 401(k) gives you the biggest bang for every buck you save, so if you are not making maximum use of yours, you're not really serious about retirement."

I agree with the first half of that statement, but I think the second part is both untrue and unduly harsh. Some of us who are "serious about retirement" are also serious about rearing our children, serious about paying off debt, serious about meeting our medical needs and seriously underpaid. Actually, I don't count myself as being underpaid, but I don't have the financial wherewithal right now to max out my 401 (k) contributions. For the majority of Americans who make even less than I do, being serious about today is every bit as important as being serious about tomorrow.

I took the little "savings quiz" on the Money site, and learned that I should be saving 30% of my salary in order to retire. I currently save 16% and my employer contributes another 6% of my salary. But then I read this: "Savings percentages are rounded figures. Assumes retirement age of 65, annual inflation of 2.5%, that Social Security and savings will replace 80% of pre-retirement salary after deducting annual amount saved and that savings are invested in a portfolio that gradually shifts from 91% stocks, 9% bonds to 46% stocks, 54% bonds by retirement date. At retirement, funds are invested in an inflation-adjusted lifetime immediate annuity."

Well, there ya go! My assumptions are very different from Money's assumptions.

I won't be retiring at age 65. I'd like to retire at 67 but age 69 is also OK by me.

I won't be needing 80% of my pre-retirement salary. My home will be paid for, and I have a second home that can be sold to meet extraordinary expenses, should they occur after retirement.

Most of all, I will definitely NOT be investing in a portfolio of 46% stock and 54% bonds during retirement. I've never understood this rush into bonds--which, over time, lower returns without providing the kind of safety they advertise. I don't intend to be fully vested in stocks as I am now, but the majority of my post-retirement funds will stay in them.

I may or may not invest in an inflation-adjusted lifetime immediate annuity, though I know this author greatly favors them. So far, I see them as too expensive for the benefit they provide. They may change, or I may change my mind about annuitites by the time I retire but right now, this is another assumption I don't make.

As always, one-size-fits-all calculators and assumptions don't fit me.

Bring on the Carnivals!

I'm in three carnivals this week, though one, for some reason is missing in action. You've already read my post (I hope), but check out the many others in the Carnival of Personal Finance at 109th Carnival of Personal Finance.


Then Moneywalks hosts the Festival of Frugality.

Finally, Terry at Thoughts and Opinions from the Unknown is supposed to be hosting the Carnival of Debt Reduction . It hasn't shown up yet this week, but when it does, my post will be in there.

I love these weekly aggregations of financial posts and find good information as well as new blogs to read all the time.

Free, Really Free, Credit Scores

So maybe everyone but me already knows this? I've had a My Points VISA card through Washington Mutual for two years. I originally got it because it had a 12 month "0% on balance transers" option which I used to pay down my credit card balances more quickly. I have used the card only occasionally since, and then just to earn My Points (www.mypoints.com). Whenever I have a balance on the card now, I pay it off within 30 days.

All of which means, I don't give much attention to the monthly statement from VISA. I do go online to pay the bill when there is one. I've seen the link for "Credit Score" but always assumed it was going to forward me to some kind of expensive service to check my credit score. Since I am not in the market for more credit, my credit score is not high on my financial radar.

However, I was listening to Clark Howard's radio show (www.ClarkHoward.com) this week-end, and he mentioned that those of us with credit cards through Washington Mutual, have free access to our monthly-updated credit scores.

Who knew?

I immediately went online to check it out. Sure enough--my online statement not only shows my current credit score but also the scores for the past six months. My score has been rising slowly but steadily and now stands at 748.

This is not a service for which I'd ever pay. But I certainly don't object to getting a free look at my credit score.

The Pudding Index? Mine Hasn't Quite Jelled Yet!

Boston Gal (see her link to the right under "Personal Finance Blogs I Read") refers today's readers to something called "The Pudding Index." Apparently it measures where you are financially with where you should be, in terms of retirement savings. The idea is to score around 100.

Boston Gal's score is 104.

Mine is 43.

Hmm--definitely something wrong with this picture!

Try it out for yourself at http://www.puddingindex.com/pudding-calculator.php

I'm Makin' a List & Checkin' it Twice

I'm making several lists, actually.

These are my "road to debt reduction" lists: (1) Things to eliminate forever; (2) Things to eliminate until I can really afford them; and (3) Things that are not crucial but will make my life miserable if I don't have.

My lists are personal and highly subjective. There are things on that third list that others will look at and say "You're kidding! You can live without that!" I could, but I don't intend to. On the other hand, the second list is my most important one--the things I can give up for the short term in order to get my finances in line.

The trick is to make sure that the first and second lists are longer and include more money than the third list. It does me no good if I think I must have everything right now or if I find that I can't cut any items.

So what's on my list? Cable TV, for one thing. The premium channels are on List #1. I can get the movies just as easily from Netflix or Blockbuster or my local library. But the next two tiers of "digital classic" channels through Comcast are on List #2. As I whined in an earlier post, I've given up Bravo channel for the sake of my debt reduction. But I'm letting "Project Runway" and "Top Chef" back into my life just as soon as I get my credit cards paid off!

Same with house cleaning, a major List #2 item. I used to pay $30 twice a month for a cleaner. That's gone for the time being, but it will be one of the first things I put back into the budget when my debts are history.

Still, my lawn and garden service, at $40 per month is on List #3. A luxury? Sure. Something I could do for myself? Maybe, though I'd have to buy equipment first. Something I don't want to do without? You bet. I want my home to look presentable. I want my neighbors to be happy. And I know myself well enough to know that even with the right equipment, the chances of me edging and mowing my lawn on a regular basis and keeping the flower beds weeded are not high.

I gave up my health club membership easily. It's a List #1 item for me. But I have friends that would sooner give up one of their children than their daily work-out. My thought is that I can exercise at home. My friends point out that I don't. They're right. And that's why gym membership belongs on their List #3.

It helps me to put most of my budget cuts on List #2--I can cut back on most things for a finite period, so long as I don't see myself deprived forever.

If, along the way, I find that I don't need some of items on List #2 after all, so much the better. My List #1 will get bigger.

I can live with that.

Frugality, Morality & Harry Potter

Being a Harry Potter fan from the first book, I will be one of those readers who gets a copy of Harry Potter and the Deathly Hallows on the first day it comes out. It's even a line item in my July budget for the full price of $34.99.

So how did Harry get to be an ethical dilemma?

Well, it turns out that the very cheapest place I can buy the book is Wal-Mart. In fact, Wal-Mart, at $17.87, beats out Amazon by 12 cents.

For $24.99, I could support the large but independent bookseller in my town. Or, for full price, I could support the local feminist bookstore that I've loved for years (though, oddly, I seldom actually purchase books there--I tend not to purchase new books at all, preferring my city's excellent local libraries and garage sales).

What to do? What to do?

I know that Wal-Mart exploits its employees. I've watched the lawsuits regarding discrimination against women and African-Americans, with interest. I deplore Wal-Mart's anti-union stance. Yet, in the name of all that's frugal, how do I get around the fact that for many of the every day items I use, Wal-Mart is the cheapest place in town?

At least this time around, the decision is a bit easier. For a 12 cent savings, do I really want to support Wal-Mart? Ok, that's a pretty simple "No."

Amazon? Nothing particularly wrong with them, but shouldn't I be supporting the local folks? My city is home to one of the world's largest independent bookstores--a place I and every one else loves to go and hang out, the first stop for many visitors to our fair city. If everyone shopped Amazon, where would this store be? Don't I owe them something? Besides, I'd still save $10.00 off the full price.

But then there's the feminist bookstore--going into its fourth decade, run collectively, and always on a shoestring. I admire the women who run it, I support their politics, why not cough up the full price for them?

When I shop at Wal-Mart, I do so in spite of what I see as the immorality of its business. It's not like I think it would be immoral to buy from Amazon.

But would it be the RIGHT thing to do?

I'm still working on that one.

Social Insecurity

There is an interesting article in the Boston Globe by John Wasik, a reporter who has just turned 50. Read it at http://www.boston.com/business/personalfinance/articles/2007/07/04/some_things_slow_down_at_50_but_its_crucial_to_save_money_faster/
Like so many of us in this generation, he still has children at home. (I'm 58, with a 17 year old, the youngest of five daughters, still in high school.) He says that the average American at age 50 has less than $100,000 in retirement savings--a disheartening statistic, if true. Unfortunately, that certainly would have included me at age 50. Even now, I only have $167,000 in my 401 (k). I currently save 16% of my income plus my employer pays another 6%. But this is a very new development.

How much easier it would have been, and how much more money I would have now if I'd been saving regularly since my twenties, even if it had been only 2 or 3% of my income.

My 25 year old daughter (with a big push from her mother) has started her 401 (k). She saves just enough to get a complete employer match--3%. As a theatre manager who works less than 40 hours per week, we're talking about savings of around $40 per month plus the employer match of another $12. But time is on her side, an advantage I no longer have.

I do have to say that I found Mr. Wasik far too pessimistic when it comes to Social Security. He seems convinced that it will no longer be around by the time he retires. I don't buy that for a minute. There are too many sensible ways to fund Social Security that have yet to be tried. One example would be to remove the limitation on withholding Social Security only for wages under $100,000. Frankly, the political ramifications of letting the Social Security system go under are so huge that I cannot see any public body allowing that to happen.

But in the meantime, I keep (albeit belatedly!) saving, saving, saving.

Another Day, Another Carnival

The Festival of Frugality is up at http://tightfistedmiser.com/2007/07/03/festival-of-frugality-81/

Lots of good ideas for saving money (including my post on grandchildren) and spending carefully.

Net Worth--2nd Quarter, 2007

My net worth is up $1,462.28 from last quarter. That's pretty good considering that the value of my home (for which I use www.Zillow.com to get a ballpark figure) is down, as is the value of my 1999 Dodge Caravan. While my retirement funds have been going down the past couple of weeks, they are up by $10,000 over last quarter, only $4000 of which is due to my contributions.

The rest of the increase is due to debt reduction--and that's where I am the most proud.

As I've said before, much of my net worth is only on paper. It looks good to say that I've got a net worth of $555,447.20 but much too much of that is tied up in my two houses.

Carnival of Personal Finance is Up

The latest Carnival of Personal Finance is up at Blogging Away Debt. I'm there, along with 70 others. See it at: http://www.bloggingawaydebt.com/2007/07/welcome-to-the-107th-carnival-of-personal-finance/

Senior Money Pit aka Grandchildren

My six grandkids are my pride and joy. But make no mistake about it--they are an expensive joy. They all live at least two hours from my home, and each expects to spend a week with Grandma this summer, where they expect to be wined and dined and entertained. Fortunately, apple juice and picnics qualify as wining and dining. Entertainment takes more thought, and this year, I am determined to keep the costs of entertainment down.

I take my grandkids in pairs. First to come will be the 4 year old grandson and his 5 year old sister. The following week, they will return home and I'll have their two older sisters, ages 9 and 10. The third week, I'll have my 14 year old grandson. He has an 18 year old sister who is headed for college and considers herself too old to come with him, though she will probably come for one week-end while her brother is here.

I've been exploring what is available for free in and around my city. It helps that this is the major urban area in the state.

Back in March, when I got my tax return, I invested $250 in a family + grandchildren pass at both the local science museum and the local zoo. While I got the passes to use with my grandkids, I've already recovered the value of each just for myself and my daughter along with various visitors I've had the last few months.

The great thing about a pass is that I don't feel guilty spending only an hour or two at the museum or the zoo because I know I can always come back without spending more money.

For my youngest grandchildren, the local library promises to be a major resource. All the branches have twice-weekly readings and storytelling for toddlers. They also have arts & crafts on Saturday mornings.

The city parks department has free children's programs plus lunch on weekdays. I live within walking distance of two different city parks featuring these programs. One of the parks has a sophisticated, monitored waterworks that will be particularly useful if, as I suspect it will be, it is hot outdoors. I can use the city parks programs not only for the toddlers, but for the two older girls as well.

The nearby wetlands park has a free parent/child guided walk every Friday morning.

The neighborhood association sponsers Friday evening concerts. I wonder if two picnics a day will be overkill?

Entertainment for the 14 year old may be tougher, since his taste runs more toward video arcades and first-run movies. But I now have a secret weapon for the movies--one of my daughters is a manager at a local mall multi-plex. I may still have to buy price-inflated popcorn, but admission will be free. And another daughter lives in a complex with a swimming pool, which I think my grandson will enjoy.

While there will be a cost to having my grandkids this summer, I am surprised at the number of ways I should be able to hold down expense without cutting down on their fun.

TV or Not TV

Cutting back on cable TV--or getting rid of it altogether--should be an easy choice, right? After all, TV is a mind-sucking, time-draining evil that no right-thinking, left-leaning senior citizen should be using, right? And then to actually pay a cable company for the privilege? Better to just throw the dang set out the nearest window!


Well, it would take a stronger person than me to give up TV altogether. But I am going to cut back on my cable expenses. Right now I pay Comcast $72 a month for "Digital Classic" which includes everything except the premium channels (HBO, Showtime, Cinemax).


I can easily cut $4 a month by dropping back one catagory, and will do that. But I could save an additional $14 a month by cutting back two catagories. As it happens, if I do that, I will lose Bravo channel. If Bravo goes, so do two of my favorite reality shows, "Project Runway" and "Top Chef."


On one hand, $168 a year is way too much to be paying for two shows that run 8 weeks each. On the other hand, I REALLY LIKE these shows!

For those who think that any TV is a mindless distraction, please note in my defense that, in addition to TV, I am an avid reader. I also spend considerable time on the internet. I long ago stopped apologizing for my use of television as a tool of relaxation. But I don't always admit what shows I watch regularly. (Can we say "Scrubs" or "The 440?"--and don't ask about those reality shows!)

I want to save money. I want to pay down my debts. I have better places for that $18 to go each month than to the cable company for two limited-duration series.

OK--I know what I have to do. But bear with me while I whine a little first.

Personal Stats for June, 07

Things are going down.

This is not so great for my mutual fund holdings, which have lost about $5000 in the last two weeks.

On the other hand, my debts are going down, too, so all is not lost. My credit card and student loan debts are now $853.56 less than last month. My mortgage has been reduced by $627.37.

This means my total indebtednes is (finally!) under $100,000.

I calculate my net worth quarterly but it fluctuates with the real estate market and the stock market. Right now, I try to keep my eye on the ball, the ball being all that debt that will, please God, keep going down.

The Best Laid Budget Meets the Occasional Roadblock

So here I am, with my carefully worked out summer budget which includes a quarterly payment in July for my daughter's 2007-2008 private school tuition, and all is financially doable. When, to my shock and dismay, I get a letter from the school telling me that there will be no financial aid award to my daughter for her senior year. Say what? All of a sudden, I have a $6000 budget problem!

First, let me say that I am a fan of public schools, and they are relatively good in my city. But my daughter was adopted at age 8. She has a myriad of social, emotional and organic issues that the public schools adequately addressed in the third and fourth grades but completely mishandled after that. I worked my way unsuccessfully through special education hearings for a year, then gave up and placed my child in a private middle school for learning disabled children. It was a great success, so much so that I was unwilling to place her back into the public school system and possibly lose ground. So, on she went to a private high school for learning disabled children, where she continues to experience success.

The school is expensive. From the beginning, I received $5000 to $10,000 in annual financial aid awards. This was due to the very high incomes of the other families who had children at the school.

Two things, both good, have led to the loss of the scholarships. One is that my income increased this past year after being frozen for the previous two years. The other is that the school is trying to increase its racial diversity which means that they have more students with families whose income and resources are substantially lower than mine.

Now what? This is not something that can be handled out of my $1000 emergency fund.

Fortunately, this story will have a happy ending.

I let the school know that I might have to take my daughter out. Since she is a senior with a three-year track record, this is the last thing I want to do. As it happens, the school doesn't want to lose her either, especially since they can take so much of the credit for the growth she has shown during the past three years. We wound up agreeing that I will pay her tuition over two years rather than one year. This works for me because this is her last year of high school and any post-high school expenses will be at the lcoal community college. It works for the school because--well, I don't know why it works for the school, but I am grateful we reached a resolution.

Emergency Funds--How, When, and How Much?

Solitary Dancer, at Bare Bones Living (See the link under "Personal Finance Blogs I read") is trying to figure out whether to pay off debt first or put money into retirement. See her comment regarding my prior posts on the subject here: http://barebonesliving.wordpress.com/2007/06/22/grace-made-me-do-it/

Consider this a case of the blind leading the blind, but what I notice is that Solitary Dancer is actually doing (or trying to do) three things at the same time--pay off debt, establish a long-term emergency fund, and save for retirement. Like me, she is in her 50's and getting a late start. My advice would be to hang onto a very basic emergency fund of $1000 and put the rest of her contribution either toward the debt or into a retirement fund. Of course, I don't know the stability of her employment situation or her health, so there might well be other reasons why it is important for her to get a long-term emergency fund (usually defined as three to six months of living expenses) set up.

For myself, I know that my position at work is relatively safe and that it is likely I can stay there until retirement. There may be times in the future, as there have been in the past, where my salary will be frozen or my time cut back, but I am not overly worried about being laid off. Fortunately, my employer also provides disability insurance which kicks in after sixty days, should my health take a bad turn. Since I have at least that much in unused sick time, I don't have to worry about using my emergency fund to support myself.

So a $1000 basic emergency fund suits me. Everything else I get, after basic (and, I hope, more frugal) family living expenses, goes to the debt and to the retirement fund.

$12--It's only $12--but. . .

Granted I'm not talking about a lot of money here. In fact, I'm only talking about $12--the "Fastpay" fee that Chase charges to make a same-day payment on one of their mortgages. But it's those niggling amounts that often get me the most annoyed.

My mortgage is due the first of each month. So long as payment is made by the 16th of each month, I'm not late. Being late would cost me $44.50 in additional fees, not to mention the effect on my credit score.

I get paid on the first and 15th of each month. Most of my bills are paid out of my first paycheck, while the second paycheck is reserved for the mortgage and 15 days' worth of daily expenses.

If I pay online, which is my preference, it takes two to three days for the withdrawal and the payment on the mortgage to be made. Therein lies my dilemma. If I don't get the timing exactly right, I wind up with bank charges--either the money comes out too early which causes my overdraft protection to kick in (which costs $10 plus a cash advance charge from my linked credit card) or the payment is made a day or so late, which has Chase charging me that $44.50 late fee.

Timing becomes even more complicated when the 16th falls on a Friday, Saturday or Sunday.

So the end result is that I often just call and use the Fastpay system on the 15th or 16th of each month--hence that $12.00 charge.

One solution would be to keep an extra $1400 in my checking account--which would be nice if I had an extra $1400. But the account, which I get for free as a "senior ," pays no interest. And there's the fact that even my emergency account, which does get 5% interest right now, has only $1000 in it.

Revamping my budget to pay the mortgage out of the first paycheck of the month is another possible solution, but that would require a major reworking of the pay dates on all my bills, which might or might not be feasible.

Sigh. Until I get better at the timing issue, it looks like I should just budget in that annoying $12!

Carnival of Personal Finance--Greatest Hits Edition

JD, at "Get Rich Slowly" (see his link on the right-hand side of this blog) hosted a "Best Of" Carnival of Personal finance that asked us to show him our best posts from the past two years. Given that I've only been posting for two weeks, I had it easier than most! See my post and all the rest at:
http://www.getrichslowly.org/blog/2007/06/18/carnival-of-personal-finance-greatest-hits-edition/