Easy Change

I found this post recently and I thought it was quite interesting to look back and see how reasonable and accurate it was since about 2 years have passed since it was written. So, I leave the full post here for you to read and my ideas/comments are at the end. To say that this month has been difficult with the spending would be a huge understatement. Just this past weekend I went overboard on the spending with clothes and christmas shopping. What's more, the car needed new brakes this weekend--420 dollars! Yikes! Yes, Christmas shopping. I know that it is early, but I still intend to be prepared and get it out of the way. That said, there are huge cutbacks this year. I'm hoping this update with help me get some perspective. First off, in our own families, we are keeping the gifts much smaller. Even though I normally give bonds to my nephews and neices I have decided to not do that this year. The bonds are normally quite small and we need to make sure we're being mo...

To say that this month has been difficult with the spending would be a huge understatement. Just this past weekend I went overboard on the spending with clothes and christmas shopping. What's more, the car needed new brakes this weekend--420 dollars! Yikes! Yes, Christmas shopping. I know that it is early, but I still intend to be prepared and get it out of the way. That said, there are huge cutbacks this year. I'm hoping this update with help me get some perspective. First off, in our own families, we are keeping the gifts much smaller. Even though I normally give bonds to my nephews and neices I have decided to not do that this year. The bonds are normally quite small and we need to make sure we're being more careful with our money in this economy. No one knows what the future holds. While the stock market has bounced back, it certainly seems like we cannot feel certain about anything. Volitility seems to be quite high over the past few years, so who knows what will happe...

This week I finally did a calculation that I had not done in some time: worst case scenario. This is a calculation that I do in order to give me some confidence that things are in a good state if the worst case scenario that I am interested in protecting against happened. Simply put, if there was no income because of a job loss, how long could the household be operated without any additional income. In this scenario, my goal is to determine this kind of scenario under realistic conditions. Put simply, I wouldn't be accelerating my debt repayments, continuing my savings plans, or doing anything other than the base payments on all of my fixed expenses. Given these parameters, without additional income, we have over 12 months of running room. This is a good feeling and is the first time that there have been that kind of savings. It is a really nice feeling. Does anyone else track this kind of figure, I wonder? Personally, after net worth and saving's rates, this is one of the bigg...

The past few weeks I have been watching the mini series "the pacific" on HBO. There are a couple of things that strike me abot this as I was talking to a co worker about this that I thought might be very interesting in terms of personal finance. The amount of television you watch certainly seems to impact your situation in terms of personal finance. I notice that I watch more tv now than I probably did a year or two ago. I think that some of this is because I haven't played as much poker which I think saves money but I also think that I would be stupid to not consider the productivity aspects of it. The other aspect of it was simply how easy it is to get caught up in worrying about things that in comparison to soldiers worrying every minute on a battlefield just seem a bit trivial. I hope I can maintain that perspective. A nice thing that I found out about today was that I have recalculated my household liquid cash and it has now reached the 1 year mark. With additional f...

So I will admit that over the past several years I have been quite fortunate in the sense that the money was not a huge worry for me; I always knew that I had enough money to buy my next meal. And while I don't think that I am ungrateful for my situation, I definitely think that the availability of food has made me a bit more complacent than I'd like to be. That said, I decided that I could accomplish some real goals with regard to money if I changed my habits toward food: 1. I want to stop eating out of convenience so much. This will require planning. 2. I want to reduce the amount of food that I waste. A recent trip through my canned goods revealed nearly 20 dollars of completely wasted food. The picture here is just a sample! 3. I want to start eating healthier foods. I think that in the end, this will force me to eat more vegetables which should actually reduce the costs of my lunches (see goal 1). My plan is not to commit to any specific goals, but simply to try to chew on...

This week Wealthtrack's Consuelo Mack had a sit-down with PIMCO's co-CIO Bill Gross. This was part of a new series of interviews with great investors. It was an interesting episode where Consuelo Mack pointed out some of the clear and present dangers for the United States of America: 1. An increasing reluctance on the part of large foreign nations to take on more treasury debt due to the lack of good real returns and the lack of strong returns on the US investments. 2. Increasing debt levels of the United States being rather sticky since the only way to really combat them is to re-inflate the economy and then pay down the debts with cheaper dollars. Interestingly, Bill was asked the question whether or not there were any investments that he was excited about long term and he answered with a resounding "No." When the conversation drifted into why that was the case, it seemed that the "mean" return for investments long term would be in the 6-8 percent/5-7 perc...

Well, like everyone right now, things are a little scary in this economy. So I'll take this opportunity to focus on some good things that are going on with my personal finances. In a huge feat, I've paid off the car loan (a year early). This reduces monthly outflow by 450 dollars (even though I was paying 600/month). Given the current climate of the job market and the situation with the politics in this country and throughout the world, it seems to me that the safest thing I can do with my money is to pay off debt and give myself more options and mobility. As for the net worth, that has finally come back a little bit with some big contributions for the 401k and the tax returns. Finally, after many months, its finally starting to come back. I'd encourage anyone who is worried about what to do with your money right now that looking at debt as a place to "store" your money is worth considering if you have a fully funded emergency fund (as I do). With these changes, t...

In the latest net worth post I made, I found, unsurprisingly, that my household net worth continues to decline. This in the face of a painfully slow economy, a housing slump, and a languishing stock market. Here's the link to the details: https://www.networthiq.com/people/easychange In short, this month marks a nearly 3.5% decrease in overall net worth. However, all that being said, I feel richer and more secure than I have in a long time. So, what does that tell you? I've made two interesting observations from this: 1. People are aware of the behavioral finance concepts now...especially those who are really 'in tune' with personal finance. That is, if me and my neighbor each has 100k, I feel worse than if I have 50k and he has 10k. The idea being that it is not simply enough to have lots of money, you need to have more than your neighbors to feel good. On some level, it feels a little sad to me, but alas, this is how most people feel/think...and I confess, I am not ver...

Lately, there has been a huge change in lifestyle for me. My side work has declined in volume (largely by choice). As a result, I have the tradeoff of less money and more free time. The realization of this new lifestyle came to a head this past week when I was on vacation at home. So, I thought that this would be a great time to find some things that needed to be done around the house that I had not gotten to lately. I fixed up the front garden and was able to also work on my back deck and get it stained. I am also looking at ways to improve and make even more out of what I have. Lately I've become seriously addicted to rolling change. Saving change is a great way to save money without noticing it. In my house I have a 5 gallon water jug that gets all the extra change and occasionally a dollar bill. But, the problem for me now is that I know that this money is money that is not "earning" anything. If you find yourself having extra time on your hands, consider getting your...

Lately I've been somewhat discouraged. In short, I hurt my back while exercising so my exercise routine is down the drain and while I tried to 'work around' the problem, I'm convinced that I am making it worse, so I have decided to stop exercising until I feel better. Yesterday, I was out for lunch with an old college classmate. It was a great time and we were able to catch up about friends and people we knew etc. But after a little bit of time, we talked about finances. During the lunch I discovered that despite how well I was doing with paying off my debt, I was apparently quite behind. He did an amazing job of paying off his college loans right after college. I had mixed emotions at that point. I was happy for him, but irritated that I hadn't done the same thing. I guess this is why it ranks as one of the biggest financial mistakes I've made. It is also why I crusade against student loan debt and work very hard to talk to people I meet about their college deb...

As many people in PF blog land have already discovered, having a freedom fund ( a separate savings account for 'expected' expenses ) earmarked for big future purchases can really be a life saver. Since it has been about 18 months since my last vacation, I have finally decided to take the plunge, as it were and book a trip. Of course, there is not really an easy way to pay for a trip like this using cash when booking over the internet. But, since I had money stashed in the Freedom Fund, I was easily able to book the trip. I have now transferred money from my freedom fund over at ING Direct and paid the credit card bill for the trip all well in advance of the arrival of said statement. In the end I will likely pay a few dollars of interest, but that sure beats the regular amount that I would pay if I kept a running balance for the trip over many months like I used to do. The positive steps that I have taken with my debt have given the monthly budget a lot more wiggle room this ye...

Not long ago I was riding the commuter train home from work. And while I was on the train I remember someone discussing their retirement account that had about 70k in it. This seemed amazing, if not impossible since I knew that I was only able to contribute a mere fraction of that. I felt discouraged as I went home. All of this despite the fact that this was a guy that was at least 10 years older than I was. But here I was thinking that I should have much much more in my account and that there was no way for someone like me to achieve this. If you're looking for a great ending, stop now. There isn't one. I don't have that kind of money....yet. But I have learned to let go of this fear, this resentment toward people with nice and fat net worths. It seems all too easy for people to give up or become resentful against the rich since they think, hey, I can't even do that if I wanted to. Laura Rowley takes this attitude on with an amazing column on Yahoo Finance this week. h...

So one big question I have now is about the Freedom Fund. Suddenly, it doesn't feel so free. Not "free" in either sense. Not free as in free beer because I am "spending" money each month on this Freedom Fund. And not free as in liberty because I feel like I often times finding myself foregoing things that I probably could just get and not even have to pay on credit for them. I have been using the idea of a freedom fund for months now in budgetting for big, but predictable expenses. The idea of the freedom fund is that you can set aside a small amount of money for these expenses each month in advance of the cost actually coming up. Then when that big car repair bill comes or that "surprise" of your dishwasher breaking happens, you have money saved for it already and it doesn't blow your budget. Since the money is presumably in a high-yield account, it is also making some interest income. Taking a Vacation from the Freedom Fund I guess the current de...

So this weekend I listened to Bob Brinker's Moneytalk radio program and although I was aware of these issues before, I think that there is significant money to be saved and/or made on opportunities for the medium to long term investor when it comes to several major issues that are going to become pressing in the not-too-distant future. Without getting into too much detail in this post, I simply want to list them for you and provide a brief description. Finding opportunities around these issues is, of course, no small task. Additionally, these issues are somewhat speculative. If you are planning for a disaster, you really are just hoping that one doesn't happen. So, I have to say up front that I hope none of these issues really develops into a catastrophe, but I also need to acknowledge that there is a strong likelihood that at least one of them will. Without further ado, I list the issues in my own subjective order: worst to not-so-bad. 1. Medicare - There is a huge, huge pro...

Its my blog, so I figure I should share an early experience I had with money. When I turned fourteen, I started working. I can't even really remember why, but I had this desire to have money. I remember that once in a while I would do chores for money around the house. But it wasn't ever really that much money. Instead I found myself really struggling as a kid to get things that I wanted. I really really enjoyed the gifts that I got when I was younger: a new stereo that was waiting for me when I came home from my dads one weekend, a new bike that I got for Christmas. But none of these gifts compared to something that I contributed to myself: my first computer. My first job was at a local donut shop. I was effectively a janitor after school. The pay was awful and my boss was pretty cheap. Donuts were about 50 cents a piece back then and I was making 4.35/hr. It was basically slave wages. It would be like someone making 6 bucks an hour now. But considering I was happy to have a j...

One of my favorite msn articles talks about the importance of saving early for retirement. The article focuses on starting early so that you can get to 1 million dollars. However, one of the major points of this is that you should be tackling asset allocation with the same aggression that you tackle saving early. The article underscores this point. The article explains that large cap us stocks grew at about 10.7%. However, it contrasts this growth with a later statement: " If you invested in small company stocks, whose long-term annual return clocks in at 12.5 percent annually, you could have much more money." It puts this figure at about 2.4 million. The importance of asset allocation cannot be denied, especially when compounding is considered. Sure, small caps (those stocks which have less value in the stock market) are risky and volitile. The volitility comes from lots of different factors Mutual funds of large caps seem safer and therefore more desirable. However, when ...

One of my accomplishments this year was to get enrolled in the upromise program. My plan is that I hope to amass a little bit of money for my brother so that when he is older he won't have quite so much debt if decides to go to college. If he opts not to, then it will go to someone else who needs it. Since getting enrolled in the program, I've found that I was able to accumulate about 40 cents. I've been enrolled for about 4 months so far and I was shocked to find out that my program was not paying me as much as I thought it would for my grocery purchases. Instead, the majority of my money was getting contributed from gasoline purchases. This is a little ridiculous in my opinion. Nevertheless, I still think that upromise is a good program. The bottom line is that if you are not using these programs, you are leaving money on the table. And with a set-and-forget-it situation like upromise, there is very little that needs to be done by you after the initial setup. Even if i...

I will admit it; I'm a tiny bit obsessive about money and money-related topics. For example, I just read this little blog entry at scottburns.com with statistics about national net worth. And in the comments someone wrote: "I have to confess I love looking at data like this. I know it’s not a race and it’s really pretty much irrelevant where I stand compared to other people but it is very fun to look at. " I love looking at this data also. I'm a data person. But this last statement in a comment to the entry is where I totally disagree. "I know its not a race...," the comment states. Well, I disagree, strongly. It absolutely IS a race. Not What You're Thinking I'm not saying I think we should all get caught up checking out our neighbor's wealth etc. because that is not what I mean. But I do believe that it makes sense to remain above the median net worth if you can. One saying that I've heard and that rings true with me is this: "He who...

One of my major goals for this year was to take all of the information that I had gathered and get my budgetting spreadsheet updated with all of my personal information. The way that I keep myself in check with money is by using a budget. And the way I stick to the budget is by using a simple excel spreadsheet that I created that has my own personal layout that suits me. It also serves to make sure I get my bills paid on time and keep my accounts balanced. New improvements for the 2007 spreadsheet include bill categorization. During 2006, I had all of the bills itemized which is fine and I will continue to do, but I found that I was really interested in keeping the money in categories -- but probably not the ones you are thinking of -- categories of expenses. For me, there are just three categories: recurring, debt, savings. Recurring expenses or (inescapable expenses) as I like to call them refer to expenses that happen every month and generally cannot be avoided. The sum of these ex...

So I've started using NetWorthIQ to track combined net worth. And I like the simplicity of the system but the problem is that there are these categories, that I really like, but it really creates a feeling of "keeping up with the joneses". I click on people who live near me, have the same level of income or type of job and then I find that I am painfully behind them. What does this do other than make me upset and feel "less-than"? Bollox. Anyway, now I am in the process of figuring out what is going to work for me and keep me involved over the long haul. That is my main concern now. I've been able to keep track of the financial stuff via an excel spreadsheet and I think that it is really nice but I don't feel the need to get too much more involved than that. I think that I will never really get to the point that I really need to get into quicken or ms money. It just seems like more work than is necessary for me. Bottom Line: total net worth increased ab...