Boston Gal's Open Wallet

The $200,000-a-Year Mine Worker

2011-11-16T07:55:00.003-05:00

The Wall Street Journal article The $200,000-a-Year Mine Worker reports that those willing to work in dangerous, isolated, and difficult conditions can earn large amounts of money in Australia. The article profiles James Dinnison who is enjoying the lifestyle his hefty paychecks purchase but does not see much need to save for tomorrow.

One of the fastest-growing costs in the global mining industry are workers like James Dinnison: the 25-year-old high-school dropout from Western Australia makes $200,000 a year running drills in underground mines to extract gold and other minerals.

The heavily tattooed Mr. Dinnison, who started in the mines seven years ago earning $100,000, owns a sky-blue 2009 Chevy Ute, which cost $55,000 before a $16,000 engine enhancement, and a $44,000 custom motorcycle. The price tag on his chihuahua, Dexter, which yaps at his feet: $1,200.

[...]

"It's a historical shortage," says Sigurd Mareels, director of global mining for research firm McKinsey & Co. Not just in Australia, but around the world. In Canada, example, the Mining Industry Council foresees a shortfall of 60,000 to 90,000 workers by 2017. Peru must find 40,000 new miners by the end of the decade.

Behind this need for mine workers is a construction boom in China and other emerging economies that has ramped up the demand for iron ore, used to make steel, and other metals used in construction, such as copper, typically used for wiring buildings.

[...]

Mr. Dinnison went into mining solely for the pay. While in high school, he said, he broke somebody's skull and teeth "in a bar fight that I deeply regret and have never repeated". He said the judge in his case told him that he could spend a year in prison or pay a $10,000 fine plus $16,000 compensation for the victim. "I needed the money, so I went to the mines," he said.

[...]

Despite having earned roughly US$1 million since he started, he has no savings and doesn't apologize. "The mines are so dull, that when you get back here, everything is stimulation and excitement," he said. "The money I spend supports other businesses because of the [stuff] I blow it on."

Mr. Dinnison proudly calls himself a Cub—a Cashed-up Bogan, a bogan referring to Australian slang for an uneducated blue-collar worker. Books and documentaries are coming out about this group, exploring the country's unease with the thought that conspicuous consumption by undereducated people is what is helping to keep the country afloat.

[...]

Mr. Dinnison hopes to be promoted to another underground job paying $1,400 a day, up from $800 a day. Lina Mitchell, his 28-year-old fiancée, said she is committed to teaching Mr. Dinnison how to manage his money. "The miners will spend the money on cars, bikes, parties," she said. Mr. Dinnison, meanwhile, said he is committed to mining. "I'm qualified enough now that I'll always have a job," he said. "Without mining, I'd be an auto mechanic making $600 a week. I love mining, mate."

Ah to be young and never having heard of commodity boom and bust cycles...

New York Times: How a Financial Pro Lost His House

2011-11-09T07:59:00.002-05:00

The New York Times article: How a Financial Pro Lost His House has another New York Times financial reporter confessing to his personal finance failures. Interesting that two years after the Edmund L. Andrews fiasco, the New York Times is trying this again. I guess it is good to know that the whole "write a book to help dig myself out of my financial mess and get free publicity for it from my employer" playbook is still working. Carl Richards book - The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money, as the article makes sure to mention, is due out in January.

What would be a nice follow-up would be if the Times could convince one of their other reporters who perhaps got themselves into financial trouble but managed to resolve it by not walking away from their mortgage or getting the bank to forgive hundreds of thousands worth of debt - to tell us their story. But then, I doubt that person has a book deal...

WSJ: Knitting for a living?

2011-11-01T08:37:00.003-04:00

The Wall Street Journal Article: As Jobs Vanish, Sticking to Knitting profiles recent University of California Berkley graduate Shelby Stofle (24 years old) of Suisun City, California who has been unable to find steady work (let alone something that utilizes her degree).

"It wasn't what everybody tells you is going to happen when you graduate," said Ms. Stofle, who studied abroad in Ghana while in college, raises chickens in her backyard and dyes wool as a hobby.

Discouraged, she shifted gears and signed up in January for a free state-run training program near Suisun City. Over several months, she learned how to install solar panels and other skills, but nothing translated into a job.

In March, Ms. Stofle was hired to tend and sell plants for a nursery. But her hours have been cut and she now works part-time, taking home about $1,200 a month after taxes.

"You hear you're going to get into a career, and it's going to start paying a lot—that's why you go to school," she said. "But I make as much now as my 17-year-old co-worker. I took the time and spent the money to go to school. Did it mean anything?"

Her husband, Greg King, a 29-year-old student at California State University at Sacramento, brings in $700 after taxes each month as a part-time food clerk and bookkeeper at grocery chain Safeway.

That leaves the couple scraping to pay their monthly bills, including $525 in rent, a $300 car payment, and Ms. Stofle's student-loan payment of $110. Their expenses will increase when Mr. King graduates in December with $30,000 in student loans.

Her plan at this point? "With many employment options exhausted, she said she feels her best shot is to set up her own business, selling her hand-made scarves at craft fairs and farmers' markets."http://www.blogger.com/img/blank.gif

My advice? For what it is worth - explore all of your entrepreneurial options with knitting, but focus on where the best profit potential lies. Is spending your time knitting scarfs and then manning fair booths selling them the best way to profit or is setting up a web site or Etsy store and bulk selling your hand dyed wool? Maybe it is spinning raw wool and selling that to others who want to hand dye but don't live in a rural area with access to farms. Perhaps it is a combination of all of the above. The important thing is to try to figure out how to produce enough income throughout the year to consider this a viable career.

- Berkley article about Shelby

The anemic interest rate CD options are getting me down

2011-10-16T08:15:00.004-04:00

My ING Direct CD is nearing its maturity date and I spent some time this morning looking into my options for a roll-over. The options are not looking very good at all. As you can see below, right now if I allow my CD to roll-over for another 12 month period my interest rate will drop from 1.40% down to 0.60%. This is utter craziness when you consider the regular online savings account at ING is paying 1% (higher rate than most of their CDs!)

Looking around, the better rates for CDs seem to be found on the Ally Bank website. As always, the longer you are willing to lock your money away, the better the interest rate. But Ally adds the wrinkle of providing a 2 & 4 year "Raise your rate" options. This at least provides some peace of mind that if rates do miraculously start climbing again, that you can adjust your rate once or twice (depending on if you go for the 2 or 4 year option) upward.

But picking among these options/rates is still depressing. I feel like I am fishing around in the bottom of a chip bag hunting for the biggest crumb. No matter which large crumb I eventually uncover, it is still a crumb and not a whole chip. How the heck can I grow my cash savings with these crumby interest rate offerings?!?

For now, I have set my ING CD to close when it matures later this month and that money will automatically migrate over to my regular ING Savings account which is at least earning the 1% interest rate. I have a couple of weeks to decide which Ally Bank CD option I will go for.

I went back to the land to feed my family

2011-10-09T11:13:00.002-04:00

The New York Times article: Back to the Land, Reluctantly has author and freelance writer Susan Gregory Thomas recounting the many frugal chores she performs to keep her husband and three children fed on her unpredictable salary.

As a 42-year-old Brooklyn mother of three, what I care about is lunch, and feeding my family on a tenuous and unpredictable income. And so I have 20 fresh-egg-producing hens and a little garden that yields everything from blackberries to butternut squash to burdock root.

My turn with spade and hoe started a few years ago when I found myself divorced and flat broke. My livelihood as a freelance writer went out the window when the economy tanked. I literally could afford beans, the dried kind, which I’d thought were for school art projects or teaching elementary math. And I didn’t know how to cook.

Luckily, my late father had hammered into me that grit was more important than talent. So, when I couldn’t afford fancy food — never mind paraben-free shampoo — for my babies, I figured, if peasants in 11th-century Sicily did all this, how hard could it be?

[...]

Bread wasn’t hard either; it was just a drawn-out procedure. Yeast, water, a little honey, salt, whole wheat flour, and assorted seeds. Mix; wait for rising; knead; wait; knead; wait; bake. I made batches and froze them. So long, Eli Zabar’s 10-buck Health Loaf. Hi there, homemade loaf for less than $1. I soon realized that it’s not necessary to follow every recipe to a T, particularly if it calls for expensive items. For example, if a recipe called for red wine, I used diluted balsamic vinegar, or even apple cider vinegar and a wee bit of honey mixed with water. If the recipe called for saffron I used turmeric, which is cheap in bulk at Patel Brothers in Jackson Heights, Queens. And I always added twice as much garlic to everything.

[...]

I had to be sold on the chicken idea, two years later. It seemed like a lot of work, flies and yucky upkeep. But an out-of-work antiques restorer (who later became my boyfriend and is now my husband) persuaded me to do it. We ordered 2-day-old peeping chicks for $2.75 apiece by mail and kept them under heat lamps in a Pack ’n Play in my daughters’ room for about a month, and they became the coolest pets and science lesson ever. Five months later, we had a coop and four hens.

Today, we eat a mostly vegetarian diet, with plenty of protein. My cleaning products are distilled white vinegar for wiping and baking soda for scouring (and also for tooth brushing). Our soap and shampoo is Castile mixed with olive oil. We live this way for $100 a week. And I’m still the sole breadwinner.

Admirable, but as she notes, time consuming. That peasant in 11th century Sicily may not have had Ms. Thomas' Columbia education, but then they, like Ms. Thomas, did not have to commute and work a regular 9-5 job. That always seems to be the secret when you read about people growing their own produce section or raising their own protein - they don't have jobs. Two adults with only one "breadwinner" but that one working from home and not full-time - makes producing your own $1 home baked bread loaves possible. But it is this section of the article I find a bit disingenuous

IT is a lot of work. You have to be organized and able to improvise on your feet. But, frankly, it’s awesome. Before we embarked on this Waldenesque life, the only thing I had ever used my hands for was picking up a book or typing on my keyboard; today, my family and I are living our own scrappy take on President Obama’s promise of “Yes, we can!”

Even if things turn around financially, I don’t think I could stomach going to Whole Foods (except maybe for olive oil) because my biggest revelation in terms of self-sufficiency is this: It is no big deal. You can tell yourself anything is too difficult, or you can just do it. And you do not need to reconstruct your worldview or take issue with others.

You just need to be hungry.

By "turn around financially" does she mean money will somehow appear that will not mean her hands will now be spending more time typing? Self-sufficiency is awesome - but it can also be a full-time job. She is fortunate that her income covers rent, taxes, utilities, transportation, and the $100 per week she mentions in the article for feeding her household. If work starts flowing in again and she does get busy typing again, why would her only choice be heading to Whole Foods rather than her backyard to pick-up dinner? This is the part I found troublesome. Is there no middle road that can work for someone who does not have time to do it all?

- Susan Gregory Thomas Books

Real Estate Appraisals now recognize value of green improvements

2011-10-08T12:37:00.004-04:00

According to this Washing Post article: Appraisers get guidelines for setting the value of energy-saving home improvements the next time my home needs to be appraised it should reflect the value add of my solar panels.

Here’s some good news for homeowners who have gone green and installed energy-saving features but haven’t been sure whether appraisers will credit them with higher valuations: Thanks to a new industry-issued appraisal addendum, the odds have improved that they’ll get the market value they’re due.

The Appraisal Institute, the country’s largest and most influential association in its field, published the long-awaited addendum Sept. 29. It’s designed to be attached to any standard appraisal report covering a property with significant green features. Owners, sellers, buyers, refinancers and real estate agents don’t have to wait for an appraiser to use it. They can download it at no cost and ashttp://www.blogger.com/img/blank.gifk that it be made part of the appraisal submitted to the lender.

The addendum won’t guarantee that the appraiser will raise your property value by the tens of thousands of dollars you spent on your solar panel array, high-efficiency windows or geothermal system. But it should guarantee at a minimum that he or she will take notice of those energy improvements and seek a value adjustment consistent with your local market conditions.

Ah, the tyranny of a standardized form. If a tick box next to solar panel does not exist - how can it be appraised? Glad to know the form is getting a bit longer and now includes these green features.

It is nice to see that the form includes both low-cost and high-cost improvements (solar shades to panel arrays). The location section includes the ability to value for "walk score" and access to public transportation. Pretty cool and well worth reviewing the form (below) to see how this might capture additional value for your home.

Residential Green Energy Addendum [PDF]

Hong Kong: Family of four living in 150 sq ft

2011-07-22T11:42:00.000-04:00

The Wall Street Journal video embedded below interviews a Hong Kong housewife who lives with her husband and two children in a 150 sq ft apartment. She pays 3,730 HKD (about $479) in rent (soon to be raised to $577).

My small house feels palatial in comparison. The poor woman appears to be depressed - who wouldn't be? I assume her husband and children spend most of their time away at work and school while as a housewife she spends the majority of her time in the small space.

Last day to get in on the $25 a month unlimited data Virgin Mobile Smartphone Plan

2011-07-19T07:48:00.003-04:00

Back in March I posted Finally committed to a smart phone and explained the benefits of my new Virgin Mobile LG V Android phone and its no-contract $25 a month unlimited 3G data and 300 talk minutes plan (wow - try saying that run on sentence 5 times fast!)

If you had been thinking about getting in on the deal - today is the last day at the $25 price point (you pay $149.00 for the phone itself). The rate goes up to $35 a month starting tomorrow - July 20. You can read the details on the Virgin Mobile USA website. Those who sign up before July 20, 2011 are grandfathered in at the $25 rate according to this Q&A found on the Virgin Mobile USA website:

Q: When are the new plan prices going into effect?
A: Wednesday, July 20, 2011
Q: Who will be impacted by these new offers?
A: New Virgin Mobile Beyond Talk customers as of July 20, 2011 -- new customers will be activated on the new rate plans while existing Beyond Talk customers [those who sign on before midnight July 19] will be grandfathered on their current plans.

Back in March I purchased my phone and plan at a Radio Shack. Save yourself some time and call ahead to ensure they have a phone in stock and can activate you today.

I love my phone and now that I have had a smart phone for a few months I can't imagine going back to not having one. The Virgin Mobile USA service is the same as Sprint. People in the Boston area swear by Verizon service, but I have been happy with my service and the 3G network throughput has worked well for me.

Good Luck if you decide to jump on this today!

Update from Boston Gal's HQ

2011-06-08T21:21:00.005-04:00

I have been busy at work and around the house and have not had a lot of time to write posts for my blog. I thought it was high time I provided an update:

When I purchased my home in 2004 I was not thrilled with the old wallpaper or window treatments. But after the expense of purchasing the home, I spent money on projects that made the most financial sense and deferred cosmetic changes. After living with the prior owners taste for seven years, I am finally ready to start tackling some decorating projects.

The first project is underway - removing the wallpaper in my bathroom, dining room and living room. My dining and living rooms are open to each other and span the south facing front of my home. The wallpaper in those rooms was not horrible - it is a two toned white with vertical stripes. But when I removed a staircase in 2004 to separate the basement level from the main level, some walls came down which resulted in my now open living/dining room. When the walls came down, so did sections of wallpaper. While I patched the wood floors, I held off on dealing with the walls since I eventually hoped to remodel my kitchen (and remove the wall between the dining room and kitchen, further opening up the floor plan of my small house. I am still not ready to tackle the kitchen remodel, but I do think it is past time I dealt with the walls.

So far the most progress has been made in my vintage 50s pink and black bathroom. At some point in the 80s the prior owner wallpapered the room with the following print: It is a bit hard to see in the photo, but what was once a white background with pink flowers had faded over time into a dingy white with washed out and faded flowers. This is my only bathroom on my level and after living with this everyday for years I had come to hate those little splotchy flowers.

Then I found out what those little flowers were covering up. Right now the walls of my bathroom look like the photo below and I have to admit I now miss the stupid little flowers. While I am a fan of Mad Men and generally admire much about that periods design (how I wish my home came with a 50s porcelain gas stove - but no such luck, the prior owner remodeled the kitchen in the 70s and that is the vintage of my current range) black wallpaper with silver, blue, and pink fish is just wrong. At one point someone tried to remove the old wallpaper, but gave up and just wallpapered over. Hours of scraping has removed some of the stubborn paper, but most is still clinging to the plaster. Chemicals and brute force was not going to cut it.

Thankfully, when I arrived home this evening, I was greeted by an Amazon.com box containing the Wagner Wallpaper Steamer. Hopefully this will do the trick and I can eradicate the black ocean and multi-colored fish from my bathroom walls!

------

In April I linked to the CNN Money story Tycoon in the making: Malynda & John Williams. Malynda Williams found my post and commented with an update. It is always nice when the subjects of these articles finds me and provides additional details!

The candwich...

2011-05-29T20:13:00.002-04:00

Twelve dollars for a four pack of the candwich or tops $6 for a pack of hot dog rolls, a jar of peanut butter and a jar of jelly...

Some recent articles that caught my eye...

2011-05-26T08:08:00.002-04:00

Below are some articles that have caught my eye. The story of the little boy raising funds for his local children's hospital is too cute for words. If you have the time, check out the video - guaranteed to put a smile on your face. The second story should be of interest to anyone who is interested in blogging and earning money from it. As for the third story - the size of the book advance shocked me. Also, I ran across three separate articles in the New York Times about this man. Really? A self described professional party boy memoir is worth such a huge advance and generates that much free publicity from the times? Something just seems wrong with that - but maybe I just don't get it. I can't fathom that many people wanting to buy this book to make back that money. What do you think?

BBC News: Six-year-old artist raises money for sick children (Video news story). Jack Henderson from East Lothian in Scotland set up a website (with help from his web designer father) to raise money for a local children's hospital where his younger brother visits frequently due to respiratory problems. For a donation, you can request a picture and Jack will draw it for you. According to this article, Jack now has a book deal and his drawings have raised about $34,000 for the hospital. Jack Draws Anyting website

New York Times: My Blog Is Also Paying My Bills

While most of these self-publishers don’t attract the attention of anyone other than indulgent family and friends, there are those who find wider recognition and some income. What the successful have in common is a passion for their subject and a near-compulsion to share what they know. Advertising, merchandising, offline events, book deals, donations and sometimes sheer luck also play a part.

“My advice is to choose a topic you’ll never get tired of,” said Stephanie Nelson, 47, of Atlanta, a homemaker who founded CouponMom.com in 2001 to share tips on saving money by using coupons. “The first three years I made no money at all, so I had to love what I was doing to keep going.”

Ms. Nelson said her Web site now has more than 3.8 million visitors a month, and the income it generates supports her family of four — allowing her husband to retire early from his corporate job five years ago. “I’m still not tired of it,” Ms. Nelson said.

NPR: A Party Boy Reflects On Life, Lip Gloss

He describes himself, during one of many fallow periods, as waiting "for something magical to happen." And, in a twist that doesn't make it into these pages, something magical did happen: He was paid a reported $700,000 to write this very book. You won't begrudge Goulian that advance; in fact, you'll almost certainly enjoy The Man in the Gray Flannel Skirt, especially if you treat it less like a memoir and more like a collection of well-honed cocktail-party stories from the guest around whom everyone naturally gathers. Like party chatter, Goulian's book is daring but not revealing, sparkling with wit but never quite believable. He may be a real character, but he's not a real character.

Net Worth Update May 2011

2011-05-08T21:04:00.003-04:00

Another month is racing past and once again market gains are helping my net worth climb. I am still maxing out my 401(k) contribution and I did fund my Roth IRA for the year.

I am still looking into alternate investment opportunities for my cash savings. Real estate is definitely a possibility. But no decisions to report.

$700 a month for 90 square foot apartment

2011-05-04T20:21:00.003-04:00

While I am a fan of living in a small home with just enough space, this apartment is undersized. Only in New York City would a woman paying $700 a month to live in a space the size of a walk-in closet be considered "getting a deal". The narrow space just makes me think of a prison cell.

By choosing a studio that measures just 12 feet by 7 feet, Felice Cohen can afford to live in Manhattan's Upper West Side where apartments rent for an average of $3,600 per month. She pays just over $700 for her 90-square-foot microstudio. After a bit of adjustment she now loves living smaller, simpler and cozier.

- What Papa Told Me

Tycoon in the making: Malynda & John Williams

2011-04-28T08:09:00.003-04:00

The CNN Money story: Tycoon in the making profiles 40-something Malynda Williams who appears to be building her mini vacation rental empire using the cash proceeds from John's sale of his natural gas facilities building business.

She rents out the homes for short-stays -- weekends, weeks or months. That's more work, because she has to manage the bookings and supervise maintenance and cleaning crews. But it's also more profitable, as long as tourists keep coming.

She set the weekly rates at $900 to $1,500 for the two-bedroom, and the house has been booked about 70% of the time, bringing in $40,000 or so a year. Williams said that's enough to cover all expenses and turn a tidy profit.

That setback has not discouraged Williams. As early as later this year, she plans on adding to her five properties, which includes the old College Station residence, now rented out. She figures she can handle as many as 10.

She paid cash for her three of her acquisitions but she got the cash for the most recent by borrowing against the couple's investment portfolio of stocks and bonds.

That means lower closing costs, and the interest rate on the loan against her portfolio is less than that of a mortgage.

She has also started to manage vacation home rentals for other owners, which only adds lightly to her work, since she's already doing that for her own properties.

This new career will be a perfect retirement fit, she thinks, providing extra income and -- just as important -- fun.

Interesting that the Tycoon in the making series has come back. This series was a regular feature on CNN when house flipping was all the rage.

Money Makeover: Roger & Ericka Covalt

2011-04-26T08:20:00.003-04:00

The San-Diego Union Tribune Money Makeover: Can couple save for retirement and kids' education? profiles Roger (51) and Ericka (42) Covalt who combined earn $59,400.

The couple, who own a home in Poway, say it’s important they teach their children, ages 14 and 8, about the principles of hard work, saving money and living within their means.

They’re also sure to practice what they preach. The Covalts have no debt other than their remaining $47,000 mortgage, save in advance for expected major purchases such as a new car or home appliances and have a sufficient emergency fund tucked away for the unexpected. They also enjoy their jobs — Roger, 51, as a supervising park ranger and Ericka, 42, as an after-school program employee.

Yet despite their solid financial footing, the couple was still looking for some advice on how to balance saving for their retirement and their children’s college education. They also wanted to know if their investments are properly positioned to earn them the greatest rates of return.

“We wanted some help with figuring out our future,” Roger said. “We have two kids, college to think about and retirement to plan for. Since we aren’t making $100,000 like so many other families, I wanted to make sure we’re on the right path.”

Their frugal habits have helped them amass a net worth of $425,330, but most of that is tied up in equity in their primary home. I liked the financial advisers recommendation to save more in a Roth IRA (which could be tapped for college costs if needed).

Poor Jane’s Almanac

2011-04-23T20:50:00.002-04:00

The New York Times opinion piece: Poor Jane’s Almanac tells the tale of Ben Franklin's little sister, Jane Franklin Mecom.

Franklin, who’s on the $100 bill, was the youngest of 10 sons. Nowhere on any legal tender is his sister Jane, the youngest of seven daughters; she never traveled the way to wealth. He was born in 1706, she in 1712. Their father was a Boston candle-maker, scraping by. Massachusetts’ Poor Law required teaching boys to write; the mandate for girls ended at reading. Benny went to school for just two years; Jenny never went at all.

Their lives tell an 18th-century tale of two Americas. Against poverty and ignorance, Franklin prevailed; his sister did not.

At 17, he ran away from home. At 15, she married: she was probably pregnant, as were, at the time, a third of all brides. She and her brother wrote to each other all their lives: they were each other’s dearest friends. (He wrote more letters to her than to anyone.) His letters are learned, warm, funny, delightful; hers are misspelled, fretful and full of sorrow. “Nothing but troble can you her from me,” she warned. It’s extraordinary that she could write at all.

“I have such a Poor Fackulty at making Leters,” she confessed.

He would have none of it. “Is there not a little Affectation in your Apology for the Incorrectness of your Writing?” he teased. “Perhaps it is rather fishing for commendation. You write better, in my Opinion, than most American Women.” He was, sadly, right.

She had one child after another; her husband, a saddler named Edward Mecom, grew ill, and may have lost his mind, as, most certainly, did two of her sons. She struggled, and failed, to keep them out of debtors’ prison, the almshouse, asylums. She took in boarders; she sewed bonnets. She had not a moment’s rest.

And still, she thirsted for knowledge. “I Read as much as I Dare,” she confided to her brother. She once asked him for a copy of “all the Political pieces” he had ever written. “I could as easily make a collection for you of all the past parings of my nails,” he joked. He sent her what he could; she read it all. But there was no way out.

They left very different paper trails. He wrote the story of his life, stirring and wry — the most important autobiography ever written. She wrote 14 pages of what she called her “Book of Ages.” It isn’t an autobiography; it is, instead, a litany of grief, a history, in brief, of a life lived rags to rags.

[...]

That world was changing. In 1789, Boston for the first time, allowed girls to attend public schools. The fertility rate began declining. The American Revolution made possible a new world, a world of fewer obstacles, a world with a promise of equality. That required — and still requires — sympathy.

Benjamin Franklin died in Philadelphia in 1790, at the age of 84. In his will, he left Jane the house in which she lived. And then he made another bequest, more lasting: he gave one hundred pounds to the public schools of Boston.

- Private Franklin

- Jill Lepore Books

My three year solarversary!

2011-04-16T18:15:00.000-04:00

Three years ago I had photovoltaic solar panels installed on my primary residence rooftop. While the panels, mounting structure, and installation was expensive, my final cost after rebates was $7,235.28 - see expensive even after discounts! Before investing in the panels, I spent a year tracking my household electric usage.

My home is a modest ranch home with a basement apartment. The utilities for the house are not separated - this is important to point out since I only have control over half of the household usage while paying for the total cost. The second reason I point this out is while my household is small, the two living units mean I have duplicate appliances - for example two kitchens under one roof means two refrigerators, two microwaves, etc.

In the first 12 month (2006-2007) period below, the numbers reflect regular usage. In the next period (2007-2008) I have started taking steps to conserve by replacing all my light bulbs with CFLs, plugging electronics in smart strips, identifying and starting to replace energy hog appliances. As you can see, this helped me conserve and did save me money, but I only saw dramatic savings during the third period (2008-2009) when the solar panels went into production.

2006-2007 - $967.17 - 6052 KWH
2007-2008 - $874.98 - 5350 KWH
2008-2009 - $418.77 - 2063 KWH
2009-2010 - $428.47 - 2589 KWH
2010-2011 - $316.92 - 1950 KWH

My state rebate program restricted the number of panels eligible for rebates. Basically they wanted only 1/2 of my household electric usage to be covered by the panels. This is so those in the program will continue to have an incentive to conserve. The program used my 2006-2007 numbers to size my system. As you can see, my current usage is about 1/3 of those initial numbers - so yeah! to me for continuing to conserve and getting more than expected benefit out of the panels.

The question people always ask is "How long until your current savings pay you back for the cost of the panels?" That is still trending to about a 14 year payback period.

But I choose to look at my solar panel expense is this way - I had the cash to spend on my system. My cash was sitting in a taxable savings account before I "invested" it in the PV system where it was earning about 3% at that time (it would be down to 1% now). My solar panels have saved me $1,511.68 so far which is a 20.89% tax free return.

Net Worth Update April 2011

2011-04-12T07:57:00.003-04:00

My Net Worth has moved upward again this month. I am still contributing the maximum allowable in my 401(k). My company match and market gains have added the rest to my retirement accounts balance.

I am still unclear what to do with current monthly cash savings. For now, it is just flowing into general savings at current dismal interest rates. I would like to explore other income generating investment options. Finding the time to seek out and research is the current problem.

In other news, my taxes are still not yet filed. The deadline approaches which means I must complete that task soon.

- The Future for Investors: Why the Tried and the True Triumph Over the Bold and the New

Money Makeover: Troy & Maryna Welker

2011-04-10T09:04:00.002-04:00

The Seattle Times money makeover: Financial makeover: Young teachers get a lesson in money management profiles teachers Troy (29) and Maryna (26) Welker who combined earn $57,475. They have $46,500 in debt (student loans, car loan, & consolidation loan for past credit card debt). The article does not go into details on their monthly spending, but does make it clear their current salary just covers the basics of rent, utilities, debt payments, & transportation costs (and committed extras like music lessons). Every month they are using the credit cards for monthly expenses which is unsustainable in the long term.

The advice this couple receives from the financial expert was very unexpected. I agree with his advice that the couple needs to rein in their discretionary spending and move closer to work to cut down on their $600 a month gas budget, but this is the bit I was surprised by:

Within a day of meeting McKellar, the Welkers started looking at houses to buy in Snohomish County, and will be meeting with a real-estate agent.

"We're going to move as soon as we find something," she said.

Buying a house now, McKellar said, will actually go a long way toward getting them off on the right foot.

It also makes sense to buy a house now, he said, because Maryna's part-time status allows them to qualify — under lower-income requirements — for a loan with a low interest rate and no down payment offered by the U.S. Department of Agriculture to buy a house in a rural area.

It also makes sense for Troy to start his doctorate program this fall. McKellar said it will pay off greatly in the added income — about $15,000 a year — plus the additional money they can invest and make in their retirement plans over the course of Troy's working career. McKellar calculated all of that as adding up to $670,000.

"It makes the $50,000 cost of that Ph.D. program a very nice investment in their future plan potential," he said.

Obviously Maryna is having a hard time finding full-time work as a teacher in their area (why else is she stringing together tutoring jobs to supplement her part-time position?) They are now going to commit to living in a rural area by buying a house - which they need to rely on a no down payment loan to afford. Will teaching jobs be more plentiful in the rural location? In addition, he advises them to take on the additional expense of more student loans.

I find his logic on the home purchase decision puzzling - it is like he is saying, hey, good news, you guys are so poor you qualify for more debt. Don't delay, this debt is only available to you at these low, low rates for a limited time.

My advice would be to rent closer to Troy's work and focus on minimizing expenses while maximizing income. Is there a college nearby where Troy plans to get his doctorate? Does the college offer free or reduced tuition benefits to employees? Could Maryna focus on getting a job there? If not, how about just agreeing that Maryna has to find a job that pays enough to cover the new tuition expense plus extra to pay down the existing debt. Once that is done, Troy can start taking classes.

What did you think of this money makeover?

Extreme Couponing - TLC April 6

2011-04-05T21:37:00.002-04:00

Reality TV has finally found the coupon shoppers and is following a bunch of them in this new series which premieres Wednesday night on TLC. The preview clips show the lengths some go to for Sunday paper coupon inserts, the stockpiles of goods which will take years for these families to consume, and the check-out shots of them walking out of stores with cartloads of food for a few dollars.

A fraying safety net

2011-04-04T08:17:00.003-04:00

The WSJ article: Fed's Low Interest Rates Crack Retirees' Nest Eggs profiles retirees in Florida who are feeling the pinch of low interest rates.

Mr. Yeager's struggle highlights a nagging dilemma facing Fed Chairman Ben Bernanke. The longer the central bank keeps interest rates low to stimulate the economy, the more money it pulls out of the pockets of millions of savers. Among the most vulnerable are retirees, who have few options to restore lost income on investments built up over entire lifetimes.

In 2009, according to the most recent data available from the Labor Department, average annual investment income for the 24.6 million American households headed by people 65 and older amounted to $2,564. That figure is down 34% from 2007, and is the lowest since 2003.

A recent survey by the Employee Benefit Research Institute indicated that one in three retirees had dipped deeper than planned into their savings to pay for basic expenses in 2010.

Most economists agree that the Fed's interest-rate policies, together with other measures, have helped avert a much deeper economic slump. Still, the situation for savers has become progressively worse since the Fed first lowered its interest-rate target close to zero in late 2008.

As of January, the average interest rate paid on relatively safe vehicles such as short-term savings accounts, time deposits and money-market funds stood at only 0.24%. That's one-tenth the level of late 2007 and the lowest on records dating back to 1959. Such depressed rates don't come close to compensating for inflation, which was running at an annualized rate of 5.6% in the three months ended February.

How are the retirees profiled dealing with the loss of interest income? Cutting back on expenses, spending more principal, putting more money than they are comfortable with in the market, and hoping they don't outlive their savings. None mention going back to work.

Low rates don't just hurt retirees. They also penalize people of any age hoping to build up funds for the future, and discourage rainy-day savings that could make U.S. consumers more resilient to job losses and other financial jolts. Americans' net contributions to their financial assets, such as bank and 401(k) accounts, amounted to 4% of disposable income in 2010, according to the Fed. That's the lowest level since it began maintaining records in 1946—except for 2009, when people actually pulled money out.

Personally, I have benefited from the low interest rates - having recently refinanced my primary home mortgage and reduced the interest rate by 1 point which also reduced my monthly outflow by hundreds of dollars. But I also have been hurt by the rates on my cash savings.

Once again, income diversification seems to be key when planning for future retirement.

Money Makeover: David Moehlman

2011-04-01T19:55:00.005-04:00

The LA Times Money Makeover: A millionaire who never stops worrying about retirement profiles single 44-year-old fourth grade school teacher David Moehlman who has amassed a $1.7 million net worth through his own hard work and frugality.

Moehlman, 44, didn't amass the vast majority of this nest egg through an inheritance or other windfall. He worked hard and made some good investments.

And he took savings to an extreme. For example, he eats breakfast and dinner every day at fast food places where he always orders off the $1 menu, and lunch is usually a 75-cent microwave burrito.

He has a car, but it comes out of the garage only a couple of times a year. Otherwise he rides a motorcycle to save on gas. When the weather turns rainy and cold, he dons a snowsuit for riding.

But he worries constantly about money — especially that he will not have enough for retirement — and has made saving a center of his life.

"If I had $10 million I wouldn't live any differently because spending money doesn't make me happy," said Moehlman, who lives in Moreno Valley. "I don't know where it comes from, but I've always been this way."

Always refreshing to read a man express the "bag lady" financial fear. But his frugal eating habits is not something I could stomach.

"Overall it's refreshing to run into someone without debt on credit cards," Field said. "But there's more to life than money. He could end up like Scrooge."

Moehlman has about $74,000 in checking and savings accounts. And he has nearly $1.2 million in mutual funds, all of which are exclusively invested in U.S. stocks — a major red flag.

Just like Moehlman follows an extreme regimen for saving, he also goes to extremes in his investments.

"With him, it's full pedal to the metal or nothing," Field said.

Although Moehlman had done well lately with his focus on U.S. stocks, Field strongly recommended that he diversify his mutual fund investments. She suggested he put 50% of it in funds that hold U.S. stocks, 13% in international stock funds and 30% in funds that hold bonds.

The remaining 7% would be kept in savings or other cash accounts.

The planner applauded that Moehlman had put about 47% of his mutual fund investments in tax-deferred accounts, which greatly lowered his tax bracket. "It's really a triumph of tax-deferred growth," Field said.

She recommended he continue his practice of putting about $38,000 a year into the tax-deferred accounts.

Moehlman makes about $80,000 a year teaching fourth grade. Much of his additional taxable income comes from rental properties.

His retirement and other investment accounts are truly impressive. I assume the $542,000 in mutual fund retirement accounts is his portion of his retirement savings (like in a 401(k) and not the cash balance of a pension plan).

Reading his story has me feeling like such a savings slacker!

Living well on modest incomes

2011-03-30T08:32:00.004-04:00

The MSN article: How to live well on $40,000 or less profiles two couples living near major metro areas who are living comfortable lives on less than $40,000 per year.

"Please write an article that shows what a real family living off of $40,000 a year can do," the reader scolded.

So I did. In fact, I'll show you two:

* Tracy and Danny Kofke, an at-home mom and a special-ed teacher, live near Atlanta with their daughters, ages 3 and 6. Adjusted gross income: just over $36,000.
* Amy Halloran and Jack Magai, a freelance writer and an arborist/choreographer, live near Albany, N.Y., with sons ages 7 and 12. Adjusted gross income: about $30,000.

[...]

If you can own a home and raise kids in metro Atlanta on $36,000 a year, as the Kofkes do, you obviously have something to teach. And even though Halloran and Magai lucked out with cheap housing, their annual income is slightly less than the federal minimum wage for two people.

Savvy spending and a certain amount of sacrifice let them live in ways that mirror their personal values -- and they do it debt-free. Here's how the two couples make it on a lot less than some people think you need to survive.

The couple living near Albany, NY purchased a three family for less than many families pay for a family car:

Amy and Jack left expensive Seattle in 1999 and headed east in search of a duplex with some land, figuring that a tenant and a garden would lower their costs. They found an old triplex set on three-eighths of an acre for a scant $38,000 -- and financed only $18,000 thanks to a generous first-time homebuyer grant.

Their original mortgage was $125 a month, far less than the property taxes. That changed recently when the couple took out a home equity line of credit to do major renovations. (See today's home equity rates.) The mortgage is now $900, but two tenants kick in a total of $550.

Inexpensive housing is a must for people with irregular income. It also lets the couple divert one-third of their earnings to retirement accounts.

I am a huge fan of multi-family housing. The first-time homebuyer grant was a huge bonus. They were able to leverage that helping hand into a great income stream.

- Every Landlord's Legal Guide

Update from Boston Gal's HQ

2011-03-23T07:11:00.002-04:00

Since so many have asked: My new smart phone has been working great in the week and a half that I have owned it. While I have not made many outgoing calls on it, when I sent out my new number to family and friends, that did spur some folks to call me. The call clarity has been good. But I purchased this phone primarily for the data features ($25 a month for unlimited text, email, data, & web). For the past week and a half I have been primarily in eastern Massachusetts. Not too far from 128/95, Mass Pike, and downtown Boston. For those not familiar with the area, these are heavily populated and heavily traveled areas. I have been receiving texts & email instantly and my phone seems to stay connected to the 3G service.

When I am home, the phone also seems to stay connected. But when I am in the office and sitting deep in the building, I do notice the phone loses connection. When this happens, I turn it off and then back on and connection is re-established. I have not yet run into any dead zones. Virgin Mobile USA was acquired by Sprint in 2009 - so the network I am using is the Sprint 3G network. If you are familiar with the Sprint coverage in your area, that gives you a good indication of the coverage you can expect. This weekend I am heading to northern New England and am interested in how the phone coverage there fares.

The touch typing is something I am getting used to. I have been carrying a blackberry for work for years, so am familiar with tapping out messages on its little keyboard (I am pretty fast and accurate with it now). The Optimus V lets you touch type or swype type. I have been doing both. Swype is faster, but less accurate (at least so far). I find myself doing a combination of both.

The camera is easy to operate. I made a point of adding photos to all of my contacts on the phone. It was a good exercise to force me to play with the camera. Since I was using the photos on the device, I have not yet played with offloading the images.

There are a lot of free apps available for this android phone. I am ashamed to say that I just started downloading them two days ago. I kept using the internet browser - using the dedicated apps is MUCH EASIER! I even downloaded the free Angry Birds, but have not had a chance to play with it yet. A lot of free apps have ads which is annoying and takes up precious screen space. I need to load some money into my phone to purchase apps and I will try to remember to do that soon. It would be interesting to see if spending a dollar or two makes for a much better experience. I also downloaded the Blogger app last night, but again, have not tried posting with it yet. Maybe this weekend?

If you have specific questions let me know in the comments.

Is a head-start financially now mandatory for achieving middle-class status?

2011-03-22T08:00:00.004-04:00

In the New York Times debate: Rising Wealth Inequality: Should We Care? the last essay - Anger is Growing had this quote:

The global economic changes underway mean the days of succeeding by “working hard” and “playing by the rules” are disappearing. You need education and, increasingly, a head-start financially. In some communities in America those things are readily available. In others, they’re barely visible.

Does this mean if you don't now have that head-start financially you are doomed to only be middle-class through debt (not real wealth) as mentioned in the essay - Living Beyond Your Means:

First, the expansion of consumer credit in the United States has allowed middle class and poor Americans to live beyond their means, masking their lack of wealth by increasing their debt. We might think that people who have "zero net worth” have nothing. But in fact, having zero net worth increasingly means owning a lot (cars, televisions, even houses) – but also owing a lot. As a result people with zero net worth, and even negative net worth, can still feel that they are living the American dream, doing “better” than their parents did while keeping up with the Joneses.