Archive for the ‘savings’ Category

Financial and Blogging Goals for May

Friday, May 2nd, 2008

Yesterday I ran the budget numbers and blogged about how things are getting cut as gasoline and food rises.  Today I got a reminder over twitter that I haven’t blogged about goals yet (thanks squawkfox LOL)

Lots of “weirdness” going on right now for us.  I upped food and gas in the budget, but I am not sure what gas prices will do.  I just finished the semester, and have been asking around about a possible daytime job since hubby doesn’t want me working 5-6 nights a week like I did last summer.  Hubby is really wanting to take a vacation in Florida to see his family and friends at the beginning of June.

Financial Goals for May 2008

  • Keep under budget!
  • Find a part-time job for the summer
  • Save up for vacation
  • Have a little extra to stuff in emergency fund
  • Get the brakes checked on the Pizza Taxi (it’s been almost a year)

Now, how did I do with my April goal?  I wanted to stuff $1350 into the emergency fund, but hadn’t planned on the trip to Missouri for my cousin’s funeral.  Right now I have $850 to put into the emergency fund account, with probably $200-300 more next week after all the bills clear.

Not too bad, considering the unexpected trip.  AND I have officially passed my organic chemistry class (with a D but hey I’ll take it!)

Blogging Goals for May 2008

The successful PF bloggers set blogging goals for themselves, and I think I will start that.  So, here are a few blogging goals:

  • Increase subscribers to 650 (if you aren’t already subscribed, you can sign up by RSS or email!)
  • Write an ebook by the end of the month (still taking opinions on what topic y’all want to read)
  • Do more research on the “stagflation survival” series (started this morning)
  • Participate in at least 3 blog carnivals weekly

I think I can do these :)  and y’all can help out on a couple of them.  Share posts you like on the social media sites (buttons at the bottom of each post) and through email.  Also, if you survived the 1970s stagflation here in the U.S., hit me with your tips!  I am just not finding much at all on Google for the subject, so I will need to go to direct interviews of people who lived it.

How Big an Emergency Fund to Save Up?

Thursday, April 3rd, 2008

This morning’s post was a bit scattered, and I also realized I didn’t clearly state my goal for the big emergency fund or how I reached that number.  It may have been too much coffee, or just too much excitement at being able to double the amount of the emergency fund with one deposit LOL but I had the thought after rereading it just now I should do some clarifying.

My Emergency Fund GOAL:

My goal for the big honkin emergency fund total is $11,000 worth of principal.  It’s a nice round number, and better yet it’s five figures :)  That’s my target, and right now as of this morning we have saved up just shy of $3,000!  I want to get the next $8,000 put into the emergency fund by August 3rd, 2008 or sooner.  I typed the goal and it is now public, so I feel obligated to make it!

Deciding How Big the Emergency Fund Will Be:

That figure for the big honkin emergency fund is two things: three months’ worth of household expenses and enough money to replace my antique furnace/AC unit.

  • Why only three months’ worth of household expense?  Well, hubby is active duty Army, and is talking with re-enlistment about signing another three or four year contract.  With two wars going on, I highly doubt he’ll get laid off any time soon.  If he does become injured to a point of disability, I already know how long it takes to get a medical discharge and how to work with VA disability claims (and appeals).  If that does happen (I HOPE NOT!!!) we will have plenty of time to stop whatever money project we have going and save up for a protracted battle with VA if needed.  One month household expenses is approximately $2200, so three months would be about $6600.
  • The furnace/AC unit is at least old enough to buy alcohol in all 50 states since it takes parts made between 1982 and 1987, so it’s a matter of “when” we need to replace it, not “if” it needs replaced.  About a year ago I got an estimate of $4500 to replace the unit and fix the out-of-specs ductwork.  Since I deal with the owner of the heating and air company, I think I could work out a cash discount when that time comes.

There’s my publicly stated goal, a target date to achieve that goal, and the reasoning behind how I got the amount I feel I need for my big emergency fund.  Of course I will be tracking my progress right here on the blog :) so y’all can follow along and bust my chops when you feel I am getting lazy LOL  And there is one more thing to cover:

Potential Obstacles to the Goal

Simply put, my potential obstacles to this goal both live here in the house with me: hubby and son!  Hubby is itching to “do stuff for the house” now that we are out of debt.  He also wants to take a vacation in the early summer since his unit is scheduled to deploy to Afghanistan in the fall.  Son wants a membership at the Y, a larger weekly pay for chores, and of course a larger food budget.

All of those items are currently under negotiation at present.  Of course, I could end up writing a whole ‘nuther post just about the negotiation and compromises when the family is not as “pedal to the metal” driven as the nerd of the house … but I’ll save that for another day.

Building the Big Emergency Fund

Thursday, April 3rd, 2008

I usually wait until the first of the month to send out the big honkin’ debt payments.  Since February 26th marked our DEBT FREE (but the mortgage) day, we have now swung our focus to building the big emergency fund.  I didn’t have the chance to do anything on the first of this month … heck I didn’t even get a post up!  Something about six straight hours in the chem lab, then another two hours in lecture for my other class, will just kill any plans for the day.

Yesterday wasn’t much better, except I did get a couple posts put up, then evacuated the house for another two and a half hours of chem lab.  I went to bed at an amazingly early time last night, so woke up at zero-dark-thirty this morning with my dog breathing in my face.  I’ve been up for six hours and am on my fifth cup of coffee, so if this doesn’t make much sense that is why.

Also, I feel a bit excited as I just got back from making our first big payment into the money market account that will eventually hold our big emergency fund!  Just like writing out big honkin’ debt payments felt really good, writing a check to put $1350 into my savings money market account feels absolutely GREAT!  Not to mention how exhilerating it feels to almost double our savings with one huge deposit.

While it’s true I have had that much money in an account before, I’ve never had that much with the intention and ability to KEEP it in an account.  Before this there were always bills to pay, and I knew the balance would be going down as we paid them.  Now, it’s a different story.  Now, that account is its own separate little thing, totally disconnected from the accounts we use to pay bills.  Now, that money isn’t going anywhere :)  The big emergency fund is going to sit there and grow (unless the Fed cuts the rates to 0% but we won’t go there this morning!).

For those of y’all still working to subdue the debt monster: keep on fighting that good fight!  On the other side of that mountain of debt awaits a truly wonderful feeling - the awesome feeling of finally knowing you get to KEEP YOUR MONEY once the debts are gone.  The feeling of security when you start to build up that big emergency fund.  The relaxation deep in your gut when you get more than that first month’s worth of expenses sitting in the account and know down in your bones that life is really turned around financially.


Fed Cuts Rate Again

Tuesday, March 18th, 2008

Well, my open letter to the Fed didn’t have any effect (not that I actually thought it would).  The Fed has cut the interest rate yet again, by 3/4 of a percent (75 basis points) so look for headlines about how the dollar is further weakened.

I truly do not understand this.  Just today, CNN Money says that inflation is the biggest concern regarding the economy in a recent poll of average Americans.  Surely the Fed remembers us average Americans?  You know, the consumers that are supposed to be driving almost 70% of our economy nowadays (a very dangerous number if you ask me).  Funny thing happens when consumers feel there is inflation: they tend to spend less for non-essential (I think the term is “discretionary”) purchases, because most of the money is going to fill the gas tank and refrigerator and pantry.

Then there is this mysterious “consumer confidence” number, and not surprisingly that has been plummeting recently.  What is this consumer confidence, and how do they measure it?  Anyone have a link that explains it in laymans’ terms?  Because this consumer is not feeling very confident right now.  Heck, THIS consumer (me) hasn’t felt confident for over a year now.

I know there will some folks who think this latest Fed rate cut is a good thing.  According to an MSN MoneyCentral article posted today, this latest rate cut won’t help normal people.  Personally, I was shocked to see someone go through the trouble of research to back up my rantings, and even more shocked a mainstream media published it.

So let’s bring the Fed’s latest action to a personal level: My savings interest is going to fall again.  I don’t have credit cards, but those rates don’t seem very affected by what the Fed does anyway.  No personal loans, no more auto loans.  Just a fixed rate mortgage left, so the Fed has basically given the Americans who are trying to be responsible with money the big middle finger.  I might as well quit beating around the bush and call this latest rate cut “downright stupid, because that is how I feel.

Thanks for nothing, Federal Reserve Board and Mr Ben Bernake.  Please allow me to return that one finger salute.

(Note: there is ONE person on the Fed board who has been sounding the inflation alarm: Richard Fischer from Dallas.  My hat’s off to him for fighting the good fight.  Now Charles Plosser from Philadelphia has joined in voting against today’s boneheaded move.)

Are Mortgages Forced Savings?

Tuesday, March 18th, 2008

Fathersez (who has given ME encouragement on parenting) left a question in a comment over the weekend on my post about search phrases that bring people to this blog.  He wrote:

If someone tells me that getting a good debt (say, a mortgage, that still leaves me with a lot of equity) is a way of forced savings, what should I tell him/her?

I am low on ideas and coffee this morning, so I’ll tackle this one since I did say that was a post all unto itself.  I’ll also interpret the question as narrowly as possible so I don’t fly off on too wide a tangent.

Good Debt.”  That phrase gets bandied about in the PF blogosphere quite a bit, but you might have noticed I don’t use it.  I just don’t subscribe to the good debt vs bad debt idea.  Debt is debt, and it all means you owe money.  I’ve learned I really don’t like owing money!

Some folks believe mortgages and student loans can be classified as “good debt.”  I am cash flowing my college and only going part-time to avoid student loans, so that probably gives you an idea of my opinion there.

As for mortgages, I am very old-fashioned with my notions on those!  A mortgage (which means “death contract” or “death grip” if you translate it from old French) is a means to buy something that would otherwise take you years to save up for.  I still have a mortgage, but look forward to the day it is paid off.  Not too long ago here in America, there used to be mortgage burning parties for when people finally paid off the note on their houses.  It used to be a big deal and a big goal to own your home outright.

A lot of equity.”  I have to ask how “a lot” is defined.  I’m considered hideously conservative when I say I want a 20% down payment to put on a house before I buy next time.  Even as conservative as that may sound, there are areas in America where that still might not leave you with much equity over the next few years as the housing market is plunging in states like California, Nevada, and Florida.

Equity is a slippery eel, as we are finding out.  People who thought they had equity in their homes have woken up to discover they don’t as housing prices fall.  Equity seems to be based not on the mortgage amount paid versus the amount borrowed, but the current appraised value.  If your neighborhood has foreclosures, your appraised value goes down significantly, along with any equity you thought you had.  Until housing prices stabilize, equity has become a mostly fictitious number.

Forced Savings.”  Now we get down the the actual question: is a mortgage a form of forced savings?  I don’t think so.  When I have an actual savings account, I have money in there that earns some interest (of course, that interest is falling lately) and I can withdraw my savings if I need to immediately.  I can’t do that with my mortgage.

Even though I have lived in this house for seven years, a large portion of my monthly mortgage note still goes to paying interest, and absolutely none of it earns interest.  That’s mostly because a mortgage is not an investment, and a house is not a piggy bank.  A house is a home, a place to live.  A mortgage is a “death contract” because with some of these mortgages out there, you’ll be paying it til the day you die.

If I am going to save money, I will put it into an interest-bearing money market account.  Oh wait, that is what I am doing now that the debt is gone!  No forcing necessary.  No one needs to put a gun to my head, because I want to save up money.  Which reminds me: the weakest part to the “forced savings” argument is the fact that if a person wants to pull that imaginary equity out of their home, there are twenty ways from Sunday to do it.  People have been treating their homes like ATM machines, and now the ATM is out of cash.  You can’t forced a person to save.  Either they will because they want to, or they won’t.  A mortgage doesn’t change that.

Saving For Upcoming Tuition Bill

Sunday, March 9th, 2008

Yeah, I stopped and looked at the calendar today.  Which means I realized I will be hit for fall tuition probably next month.  The college is quick to grab our money and slow to process money in our favor, like Pell grants.  They usually credit the Pell grant money two days before “drop day” which is when they drop classes for students who haven’t paid yet.  I guess it keeps us on our toes or something.

I haven’t decided yet if I want to take another summer course or not.  It’s tempting as I make my slow progress towards a chemistry degree.  I’m also toying with the idea of switching majors.  I am just not seeing much opportunity to pay for pharmacy school since no one offers scholarships for the first year (my mom says first year attrition is pretty high).  The idea of going back into debt, even for a high-paying pharmacy degree, turns my stomach.

I’m starting to seriously look at at a med tech degree.  That’s lab work basically LOL and lab is fun … when I don’t blow things up, that is.  I really thought microbiology lab was neat last year, even though my ADD grad student teacher made it hard to get a passing grade.  And the other big plus is I would be able to get into the workforce quicker with a decent wage of approximately $30-40k a year.  It would double our household income.

But I digress (too much coffee and hubby made another pot of it).  I just got done moving $1000 over to my savings account in my credit union to sandbag for whatever nasty tuition hike surprises the college might have in store for the fall semester.  I would have much preferred to sock that money into the money market account where we are building up the fully funded emergency fund, but the college makes it inconvenient to pay by paper check. 

The college wants everyone to pay by “credit card.”  My debit/check card works just as good, but still I just don’t understand the rationale behind this since Visa and Master Card charge some kind of merchant fee for processing.  What ever happened to trying to save students a little money?  Even if it is just to get that money back in tuition or the bookstore?

Oh, speaking of Pell grants … I still have to wade through that nightmare known as the FAFSA form.  As if taxes aren’t painful enough!  Oh well, I do like getting the Pell grant.  And even with the accompanying headache it is a good return on my time.

Beyond Debt Reduction: Onward and Upward

Friday, February 29th, 2008

Sometimes I get a comment that inspires me to toss out whatever I planned to blog about, and instead go off on an unplanned tangent.  Today is one of those days!  LOL  Yesterday Shanti from Antishay left a short and simple comment on my post about what a debt free budget looks like (emphasis mine):

I think it’s great that we get to keep watching you grow up and up even after debt is gone.

That has been on my mind since last night when I read it after work.  At first I couldn’t pin it down, but this morning as I start my 3rd cup of coffee (yes this blog is 110% fuelled by coffee) it hits me: Beyond the debt is uncharted territory!  Especially for those folks who are where I was last year; that is, grappling with what feels like a mountain of debt.

Back when I was in the Army, there was a saying: “Be able to perform the duties of all ranks below you, but also learn the duties of at least one rank (better yet two ranks) above you.”  In short, always look ahead and be capable of doing something before you get the promotion.  I started unconsciously applying this philosophy in January when I decided it was time to get serious about learning about investing, which is Baby Step Four.

This week I just officially finished Baby Step Two (eliminating all non-mortgage debt).  Now it is time for me to move into Baby Step Three, building up a fully funded cash emergency fund which for me will entail 3 months of expenses plus enough money to replace my almost-antique central heating and air unit.

It’s a very good thing we finished Baby Step Two right now: the Army has finally processed the travel pay overpayment/repayment mess and it hit this pay period.  Hubby got paid a grand total of $192.45 today!  He feels flat broke, and I just spent several minutes pointing out that this is not a big deal anymore.  He only has the cell phone bill coming out of his account, plus filling up his truck.  We can handle this.  It’s no longer a big deal, because we have our necessities covered and will still have money to put into the emergency fund.

Another “whammy” that would have set us back last year is my GI Bill stipend was reduced because my class load was reduced.  There just wasn’t a way for me to arrange a class schedule to get up to 3/4 time, so I am only going half time (organic chemistry is the rock that won’t move, and I just don’t do morning classes … nor will my academic advisor let me after seeing me over the summer dragging in for her 0800 class!).  So my GI Bill payment is about $400 less a month, and hubby’s travel pay repayment is about $400 a month.

And yet even with our income going down about $800 a month, we will still be able to squirrel away money for our emergency fund.  We just won’t be able to zoom through Baby Step Three as fast as I wanted, but it will still be done in a pretty short amount of time.  This is what it looks like on the other side of that mountain of debt, folks … and it’s getting pretty close to that “financial peace” idea Dave Ramsey keeps talking about.

What a Debt Free Budget Looks Like

Thursday, February 28th, 2008

So I completed Baby Step Two this week, and am debt free but the houseSo how does that change my budget for March? (big grin)  Oh I am so glad y’all asked!!

I haven’t put hard numbers up here yet, and I probably won’t for this budget either.  But I will list the categories left standing on my budget to give everyone an idea of just how sweet it really does look on the expenses side!

  • Mortgage payment (same as it’s always been)
  • Gas & Water company (expecting it to be higher thanks to a rate hike and a very cold month)
  • Electric company (no A/C yet LOL so it is holding steady at the winter rate)
  • Groceries (rising slowly but steadily, not to mention I have to feed a teenage boy)
  • Gas for the vehicles (EEEK!  Stupid gas prices have jumped recently! This category got upped … again)
  • Home Phone (stripped down to local line only for the past year)
  • Cable (Mostly just internet, TV is stripped to lowest level possible, but must keep to gt the “good” rate for my internet)
  • Son’s private school tuition (fixed until August)
  • Central Heat/Air maintenance (after last year’s furnace breakdown, a necessity … didn’t know they lasted this long LOL)
  • Cell Phones (paid through hubby’s account)
  • My puny Roth IRA contribution
  • Son’s puny mutual fund contribution (long story)
  • Eating out (gonna bump this one up for March to CELEBRATE!)
  • Household products and clothing

And … that’s it!  Now that the debt is gone, that is all we have left to pay each and every month!  A couple items got raised for March, with the necessities being gas, groceries, and the heat bill.  Without any debt payments, we will be able to absorb these increases without any problem.  I’ll still gripe about the higher expenses mainly because I really want to breeze through Baby Step Three (the big honkin’ fully funded cash emergency fund) so I can get busy on saving for retirement.

The “fun” extra expense is our celebration plans, set to go down next week Friday.  I’ll ask tonight for that day off, then the plan is I get to drive to Nashville area that morning/afternoon to watch the Dave Ramsey radio show live in the lobby, and make my “I’m DEBT FREE!” call from his lobby.  Then when I get back home the plan is we will go out to our favorite German restaurant downtown for dinner and catch a play at the regional theatre.  Friday is the first night of their annual spring Shakespeare play, and this year is Julius Ceasar.  Then back to the little German restaurant for a beer and open mic night entertainment.  Hubby and I haven’t done this since before he went to Korea for a year!