Many financial institutions are experiencing very high credit losses from making subprime or "exotic" mortgages (often referred to as "negative amortization" or "Alt A" mortgages). We have never offered those products, which we believe aren’t the right solutions for our members and have contributed to high losses at other institutions. Additionally, we, like all credit unions, are significantly restricted to the types of investments that can be purchased and the financial transactions we can enter. We know it is our members’ money we are investing—and we proceed with the utmost caution in every case.

Over 90% of the deposits that are held here are dispersed as loans to members—the true purpose of a credit union. Our responsible and sound lending guidelines allow us to remain in a healthy position and continue to offer highly competitive deposit and loan rates.

I guess my conservative financial perspective is a good fit for a credit union like mine.  I can’t say enough good things about credit unions.  Given the choice, why would you want to put your money in an institution who’s main goal is to generate profit for it’s shareholders?  I’d much rather put my money somewhere that is solely in existence to create value for it’s members.  I’m getting top rates for my deposits and have access to some of the most competitive loan rates if I need a loan.  On top of that, the fees that my credit union charge me (I’ve actually never been charged a fee from them) are much lower than commercial banks.  For my family, a credit union is the right choice.  With more recent laws, pretty much anyone can join a credit union.  If you have one in your area, it might be worth a look.

A couple years ago I started to notice I wasn’t tolerating bread and wheat very well.  I’ll spare you the details but after a visit to the doctor, it was found that I am allergic to wheat (as well as darned near everything else on the planet).  After the initial shock of not being able to eat wheat any longer I started looking around.  Luckily for me there are a lot of other people in the same boat, although they have a much more serious condition known as celiac disease.  In their case, they REALLY can’t eat wheat or it could end up killing them in the long run.  The numbers of people with celiac are actually quite high and are getting higher all the time as more and more people are getting tested.  This has caused a much higher demand for alternatives to wheat and gluten.  There is a company called "Bob’s Red Mill" based in Oregon that makes alternative flours made from bean flour, tapioca flour, rice flour etc.  They actually have a bread mix that we have started buying to make our own gluten free bread.  That old bread machine has finally come out of retirement and is getting a ton of use now.  It went from being a "mistake" purchase to being one of the most used appliances we have.  While I’m not a big fan of keeping "stuff" around indefinitely, in this case, it turned out to be a very good decision.

Have you ever kept anything for years only to find that you started using it on a regular basis at some point?

I had been contemplating joining Weight Watchers because I figured that would motivate me to lose the weight.  Weighing in every week in front of people I don’t really know would probably be a pretty decent motivator.  The cheapskate in me just can’t bring myself to spend the money.  Basically I’d be giving away money because I lack the discipline to drop the weight on my own.  My relatives have been doing the Weight Watchers thing for years and have been pretty successful with it.  I’ve learned a lot from them and am able to calculate the point values for various foods which made it even tougher for me to justify paying just to weigh in once a week.

Just when I was about to join, I got another idea.  My brother in law is also trying to drop a little weight and is actually on the Weight Watchers program.  I called him up and asked him if he was interested in having a little competition.  The plan was to weigh in once a week at his house (he only lives a couple blocks away) and track our progress.  I built a spreadsheet and we enter the weight in weekly.  We also agreed that the target would be to drop one pound a week for 17 weeks.  If either of us weighs more than we did the previous week, we have to pay the other person $10.  At the end of 17 weeks we each have to pay the other $10 for every pound that we miss our goal.  So, I need to weigh 190 at the end and if I weigh 195, I have to pay my brother in law $50.

So far this competition has been working great.  We intentionally set the weigh in date for Monday so that we would have to eat better on the weekend (which is when we both have the toughest time eating well).  It’s been two weeks and I’m down almost 5 pounds.  My brother in law is too.  It’s funny how a little bit of money at stake can alter my behavior so much.  If I was intelligent, I’d look at all the other benefits for losing weight, such as living longer, being healthier, being more comfortable and having higher self esteem.  Instead all it takes is a measly $10 risk every week to keep me on track.  Pathetic but it’s working!!

The other thing that probably made me feel a bit caged up is that we agreed ahead of the weekend that we wouldn’t mindlessly spend any money.  (Shouldn’t this always be the goal?)  We did spend a little money on groceries but we steered clear of Costco, where we are always at risk of spending too much.  The one free thing that we did this weekend was we drove down to the north end of Boeing field in Seattle and watched all the airplanes, including the Blue Angels, take off over our heads for the Seafair air show.  It was very cool to watch fighter jets take off right over our heads and feel the rumble of their massive engines.

We also didn’t spend any money at restaurants this weekend.  As part of our "watch what you spend" weekend, we opted to cook steaks from the freezer on the barbeque and we enjoyed fresh vegetables from our local fruit and vegetable stand.  A nice steak with corn on the cob and baked beans really hit the spot and was a LOT cheaper than buying a comparable meal at a restaurant.  The total cost of the meal was around $6.00 for all three of us to eat.  I have to admit, I think it tasted a little bit better knowing that it was a $6.00 meal instead of a $50 meal.

Our emergency fund is starting to build back up.  For every thousand dollars that it increases I think my financial stress level goes down two notches.  Don’t get me wrong, I’m not a walking stress ball about it but I do like the security that a pile of money in the bank brings.  Other than that, not too much going on for us.  We, like many others, are watching the economy and the price of gas.  All the indicators point to some tough times ahead.  Gas is coming down but the overall economy doesn’t look too rosy.  If we can both keep our jobs through all of the drama, I’ll be a happy camper.

We won’t see a full $800 per month increase in our budget because we have opted to put our daughter in the "all day" kindergarten program which costs us $225 per month.  Additionally we will also have to pay a daycare near the elementary school for a couple hours a day.  Total cost will be about $400 per month for both kindergarten and daycare.

So, we’ll be saving a full $400 per month in our budget which we’ll use to increase our daughter’s 529 monthly contributions as well as increase our ROTH ira contributions.  It didn’t seem to make a lot of sense to us to just pull that money back in to the budget and leave it unaccounted for.  If we don’t align it to investments or savings we’ll be much more likely to spend it.

CONGRATULATIONS!!

I also hope to pay off our mortgage but I’m doing it a little bit differently.  I chose to buy a second property and built a house on it.  By paying a good price up front, doing a lot of the work myself, and paying cash as we went, I have built up a sizeable amount of equity in it.  If all goes well, within 5 years I should be able to sell it and use the cash to pay off our primary mortgage.  That would mean we will have paid this mortgage off in 10 years, which isn’t quite as impressive as the Frugal Zeitgeist, but since this isn’t a competition, I guess it really doesn’t matter. 

Do you want to pay off your mortgage early?

(Thanks to MadameX for pointing me to the blog)

Along those same lines, I saw an article in the New York Times today that profiles a woman in Philadelphia (Diane Mcleod).  She’s pretty much at the end of her debt run and is about to lose her house.  Even after all of her defaulting, she still receives credit card offers.  The last one she received could easily be called a predatory offer.  It’s for a $300 limit credit card and $150 of that goes to the bank each year in fees.

Check out the article

http://articles.moneycentral.msn.com/Investing/Extra/HowMuchOilItdTakeToBuyTheUS.aspx

If only oil wasn’t such a valuable natural resource and we had other alternatives.  Oh, and then there is the whole issue of how broke the US is……..

1. I don’t have a job

Yeah, this is a pretty darned good excuse.  If you aren’t working, you really can’t save.  The only thing you can really do in this situation is look hard for employment.  Network with people you know.  Ask them if they know of any jobs, or know someone that might.  Talk to recruiting agencies.  If things are getting desperate, consider doing day laboring to start getting some money in the door while you work to find a job that is right for you.  The bottom line is you need to actively search for positions.  Submitting resumes is really not enough these days.  It takes a lot of perseverance and you should exploit every possible angle.

2. I don’t have any money

Why don’t you have any money?  Are you earning income?  If so, you have money, you are just having to make choices about where that money goes.  In many cases you might have more bills than you have income.  Take a long hard look at those bills.  (See number 3).

3. My bills are higher than my income

So, you aren’t bringing in enough money to pay all of your bills.  It’s time to start making some sacrifices.  Take all of your bills and categorize them by "fixed", "variable" and "optional".  Your fixed bills are the things you can’t change easily.  Your mortgage, your health insurance etc.  While they appear to be non-negotiable, you do have choices.  Can you get a better mortgage at a lower rate with a smaller payment?  Should you move?  Can you shop for cheaper health insurance?  Should you change your deductibles?  You get the point.  Variable expenses are much more fluid.  Do you absolutely need these things every month?  Variable expenses might be things like cable tv, high speed internet, home phone service, cellular phone service etc.  This is where you can usually make some improvements.  Can you opt for a less expensive cable tv package?  How about just getting the very basic channels?  Is there a slower internet service in your area that is cheaper?  Have you called your internet company to see if they’ll lower your price when you threaten to leave?  Do you need both home phone service and cellular service?  Consider dropping one.  Do you need a cel phone?  Maybe not.  The point here is that while they seem like "must haves" there is often alternatives, or you might be able to do without.  That brings me to the "optional" bills.  Things like this are Tivo, Netflix, dining out, newspapers etc.  If you lived in a third world country, you wouldn’t even have access to most of these optional type expenses.  Can you live without them?  You bet you can.  The trick here is to be very honest with yourself about what you absolutely need.  This doesn’t have to be permanent.  Get rid of these until you get caught up and start saving for your future and then bring them back one at a time as you can afford them.

4. I want to enjoy life while I’m young

Who doesn’t want to enjoy life while they are young?  It’s important to set some personal boundaries about what fun means.  Maybe you have evolved your taste so much that fun to you means extravagant purchases at the department store and $200 meals in restaurants.  The measurable difference between a $200 meal and a $40 meal is very small, if it’s even measurable.  $300 pants do not bring you 10 times more enjoyment than the $30 pair.  The strategy here is to start being honest with yourself.  If you believe you must hemorrhage money while you are young to enjoy life, then you are missing out on some pretty basic human satisfactions.  The key on this is moderation.  Just like the motto of this website, the goal is to live life for today while planning for tomorrow.  You can do both.  It’s not that hard.

5. Why save for a day that may never come?

You’re right.  You might not even make it to retirement.  Are you married?  Do you have kids?  The chances of none of you making it to an old age are slim.  Shouldn’t you plan a bit for them?  What if you make it to an age where you can’t retire, but your life might be eased by having a nest egg to draw on in a crisis?  You aren’t saving everything until you are sitting in a rocking chair.  A huge reason to save is to begin to have your money working for you, instead of just working for your money.  That old saying that "It takes money to make money" is pretty darned true.  Look at it this way, if you are able to amass $100,000 in 20 years, at the end of that time you could supplement your income by $8000 per year by getting 8% interest on it.  That’s a pretty decent raise.  By the time you reach $100,000, I think you’ll find it makes even more sense to roll that interest back in and generate even more of a nest egg.  The fact of the matter is that amassing wealth gives you options.  Not amassing any wealth and spending for the day robs you of options.

6. I don’t make enough money

Fair enough.  There are a ton of people in our country that aren’t making enough money.  The only person that can change this is you.  Have you looked at finding a new job?  If you don’t have the skills, can you find any training opportunities in your area to improve your skills?  Look around you.  Are the people that do make more than you doing work that you could do?  Talk to them.  Ask them how you can get in to their line of work.  The better you are at building relationships, the easier it will be to find help in this area.

7. I’m really busy.  I’ll get around to it later

Tomorrow is coming a lot faster than you think.  There will never be an optimum time to start.  You have to take a few minutes to start drafting a plan.  Are you saving through your job?  If not, this is the easiest way to start saving.  Call your HR rep, or your manager and ask them how to start.  It’s usually just a phone call away.  Call your bank, or even better, find a credit union, and ask how you can set up an automatic transfer from your main acct to a savings acct.  Go to Etrade.com or schwab.com, or any number of online brokerage companies and see what it takes to open an acct.  Worst case scenario, just call their 800 number and talk to a representative.  They’ll help you get started.

8. I deserve to have some luxuries in life

Don’t we all deserve a few luxuries in life.  Rather than look at luxuries as a god given right, how about looking at them as rewards.  As you start improving your financial situation, consider using a small percentage of your income to reward yourself.  The key here is that your rewards should be much smaller than your accomplishments.  If you save $1000, go out to a nice dinner.  If you save $10,000, maybe you can decide to get a new TV.  The key here is not to deprive yourself of all luxuries, but instead think of luxuries as a reward for meeting other goals.

9. I’ll count on someone else to take care of this

No one else will take care of this.  I suppose if your helicopter mom is going to stay alongside you through your entire life, maybe you can count on someone else.  She can plan your saving, and investing.  She can make all of your financial decisions for you.  If you are like the other 99.9% of the population, you need to do it yourself.  I kid you not.  No one else is going to make sure your future self is well taken care of.  It just doesn’t happen very often.

10. I spend money on things that give me immediate returns

Sure, hookers give you an immediate return (Besides the obvious STD’s), but I guarantee they won’t help your future self.  Lots of things give you an immediate "return" but what does that mean, anyway?  I struggle to think of any purchase you can make today, in lieu of saving, that will make you better off later.  I suppose the one exception would be finding a Picasso at a garage sale.

11. I save in a 401k

You are saving in a 401k?  GREAT!!!  Is that all you are doing?  Do you have any additional income that you can save in a ROTH IRA?  How about funding a 529 plan for your children?  How about investing in a brokerage account?  There are lots of places to save additional money.  Certainly investing in a 401k is a great first step in your savings plan.

12. I’ll work until I die.  There is no need to save

My mother has always said she’ll work until she drops.  Now that she’s 63 years old, she’s starting to change her tune.  Luckily she has saved some in her 401k and also has real estate to help fund her lifestyle.  My point here is that it’s easy to say you’ll work until you drop when you are young, but your future self may have a change of heart.  Why not plan for a day that you can decide whether you want to stop working or not.

13. I will inherit some money

I’m sure you’ve met someone that doesn’t save at all because they are expecting to inherit some money from a relative some day.  What if that relative loses all their money?  They could be sued, come down with a nasty gambling habit, lose it all in a divorce.  You get the picture.  It’s probably a good idea to have a plan B.  And what if you fall out of their good graces?  Have they told you that you are going to receive X amount of money?  Is it in a will?  Any way you slice it, plan B’s are a great idea.

14. I’ve got plenty of equity in my house

Have you seen the real estate market lately?  You have less equity than you used to.  Even if you still have a significant amount of equity, in order to access that equity you’ll need to move.  Sure there are reverse mortgages, but that isn’t necessarily the optimum financial arrangement.  No matter how much you have tied up in your home equity, you should always have multiple types of investments to ride out the various economic crashes.

15. It’s so cheap to borrow money these days, that you would be a fool not to

I wonder who invented the saying "You’d be a fool not to borrow money when it’s this cheap".  If you have to borrow money to buy a home, or another major purchase, sure it makes sense to borrow the cheapest money you can, but if the interest rate drives your purchases, then you probably have a problem.  If crack cocaine is cheap, should you buy it?  If toilet paper at Costco is half price, should you buy 10,000 rolls?  For the average Joe, it makes the most sense to moderate your behaviors and just chip away at saving, paying down debt, and planning for the future regardless of how cheap money happens to be.

Let me explain.  The community we live in has been around since the 60’s.  Back then a developer came in to a nice wooded tranquil area surrounding a beautiful lake in Washington state and subdivided the area in to 200 lots.  At that time he also dug a community well, installed water towers, and ran water to every lot in the neighborhood.  For over 40 years that water system has provided the community with fantastic drinking water.  I’m sure you can imagine what 40 years can do to anything.  It’s not surprising that the system is in need of some work.  The community has had to dig up the water main in multiple spots as roots have broken through the pipes and leaks have been discovered.  In this day of increased regulations we as a community also face upgraded rules for how to run a water system including things like having larger water mains and having hydrants that support higher gallon per minute flows for fire protection.

Over the last couple years the community board has done research and has received estimates for upgrading the system.  When it’s all said and done, each lot owner is going to have to pay around $3000.  Yeah, ouch.  Will I pay it?  Yes.  Will I complain?  Not so much.  You can imagine, though, how many other people in this rural community might not like the idea of coming up with that amount of money to invest in something that is still coming out of their faucet nice and clear.  If you are a lot owner that has multiple lots, simple math helps you come up with your total bill.  The cost is $3000 per original lot.  For those people that have 2 lots, their total price is $6,000.

Anyone that is faced with paying $3000 to continue to receive water flowing from their faucets is going to cringe a little bit.  Those people that are going to have to pay $6,000, $9,000 or even $36,000 are definitely going to have a bit of the pucker factor.  So I suppose it shouldn’t be too much of a surprise that each person will react in a different way.  My reaction is to suck it up and pay what’s needed.  If you’ve been reading my blog for long you know that I don’t exactly freely wield my checkbook around slaying bills with no consideration of the cost.  The reality is that I am comfortable with the due diligence that has been done and believe we just need to get it done so that we can have a clean solid reliable water system for another 40 years.  It will help me while I own the property and should help the property maintain it’s value in the long run (as opposed to losing our water rights).

Other people don’t have that opinion.  Some of them don’t want to do anything.  They believe there are still a number of years left before the state would force the upgrade and they believe that the community should continue to pay the 10’s of thousands each year to fix the breaks in the system.  There is also the belief that hundreds of thousands of gallons are leaking out of the system each year due to unknown leaks.  That’s okay with these folks too.

In the end, I think we’ll probably see the system replaced this year but it hasn’t been without a lot of stress, anger, frustration and disagreement.  I guess it’s just par for the course whenever a large group of people shares one resource.