M is for Money

Homeownership: A Never-ending Expensive Adventure

2010-06-17T12:50:00.000-07:00

Most people have a rosy view of homeownership – the pride of having a place to call your own or the freedom to create your own unique space. But there is a huge downside you don’t see in the glossy magazine spreads, how much it costs to keep and maintain your property. Here is my latest saga in the non-stop expense adventure known as home ownership.

After spending $15,000 on a few necessary repairs this winter my home improvement budget is beyond overdrawn, unfortunately that doesn’t mean new expenses won’t turn up. Two weeks ago I came home to a notice from the city, we’d been caught and it was time to clean up our act or face some fines. Let me explain.

I live on a hillside near downtown Los Angeles. Even though I’m in the heart of the city, my neighborhood is designated as a high wildfire area. The city imposes extra restrictions on me and my neighbors and how we maintain our properties. This means no grass and weeds higher than 4 inches, trees must be thinned and bushes cut down, amongst other requirements. While this has been the policy for years, we’ve never gotten in trouble before. Mr. M and I grabbed our pruners and went to work, but after a few days we came to realize the task was more than we could handle.

My house is one of the oldest in the neighborhood being built back in the 1920’s. That means we have more trees, bushes and brush than our “younger” neighbors. Cutting down the branches and brush is not a problem, but hauling it to the top of the rugged and steep hillside definitely is! There are some trees too high for us to trim and taking all of our debris to the dump would be impossible for us, so I broke down and hired someone to do the work. For $1400 they will clear the whole hillside, remove the rotted remnants of an old deck and haul everything away. We’re also having them do some work to the front yard, simply because it will cost more to have them come back later. I don’t like how much this is going to cost, but I’m hoping this will keep the city off of our backs for a few years. Plus now I can go back to watching TV and surfing the internet, clearing a brushy hillside is no fun for a pasty, lazy office worker like me!

There Goes the Neighborhood

2010-06-15T06:23:00.000-07:00

Just as I was starting to get over my hatred of my neighborhood, along comes a fresh annoyance to amp up my drive to move. The owners of the large house to our left moved out about two months ago. It turns out they bought a new place with the intention of renting out the old one. This weekend was move-in day for their first tenants and I can already tell there will be trouble.

The new residents are a loud, raucous group of 20-somethings. I haven’t figured out who exactly lives there, and who is just crashing there, since there were so many people coming and going all weekend. Unfortunately since it is a very large house, they might all live there! The very first night found Mr. M outside at 1 am, yelling at them to quiet down. Then they all have muscle cars which rattle the house like an earthquake, causing the dogs to go crazy barking whenever one of them comes or goes (about every 10 minutes). Oh, and I believe I’ve mentioned the neighborhood’s parking problems before. I have no idea where a bunch of new residents, each with cars, are going to fit into an already crowded neighborhood.

A few weeks ago I talked about my desire to move, and how unbelievably stuck we are since we are underwater. I crunched the numbers and gave up on the dream, even with forgoing all of our other goals our desired neighborhood is out of reach. Of course this latest turn of events will have me questioning those numbers, maybe I can make it work! Hopefully it won’t be as bad as I fear cause right now, I have no way out.

A Recession Embarrassment

2010-06-09T06:11:00.000-07:00

Earlier this week I had after work plans for dinner and drinks with a friend. I suggested a nearby Mexican restaurant that has the most amazing potato tacos along with some pretty good happy hour specials. Imagine my embarrassment when we show up to the eatery only to discover that it had gone out of business!

I swear the place was open only a few weeks ago, they must have closed sometime in May. We ended up going to another nearby Mexican place that cost 3 times as much and tasted one tenth as good. Sometimes it’s hard to fathom why one eatery survives while another one fails.

Unfortunately I’ve seen an uptick in the number of businesses closing the last few months, primarily restaurants and bars around my work. It might be a saturation problem, a few years ago downtown was a dining wasteland. Now there are more great places to eat than there is time, some close down before I’ve even had a chance to try them Of course restaurants tend to come and go even in the best of times, but the continued recession (local unemployment is well above the national average) is making a tough business even more difficult. Next time I have plans to dine out, I’ll call first just to make sure they are still in business!

Bye Bye FNBO Direct, Hello Everbank

2010-06-08T06:17:00.000-07:00

I finally pulled the plug on our FNBO Direct savings account. I joined the bank several years ago when they offered an unheard of 6% promo rate, but oh how times have changed. After years as a rate leader FNBO has slowly fallen back in with the crowd, recently they lowered their rate once again- it now stands at a paltry 1.1%. This puts them on par with ING, who still has a better website and interface. So my money is off to greener pastures – Everbank.

Unfortunately there are no great places to stash your cash these days, even 5 year CDs only pay 3%. There is no sense in locking up money for years at those rates, so I was looking specifically for a short term home for our savings. Currently, most online banks are paying between 1% and 1.3% for high yield savings accounts. Everbank’s rate on their Yield Pledge Money Market falls within that range, but they also offer a promotional rate for new customers. For the first 3 months, new customers receive 2.25%. The rate then falls to 1.5% for the next 9 months before reverting to their standard MMA rates (1.25% currently). This gives Everbank an edge over the competition in the short term, but no long term benefit. Since this is a Money Market, as opposed to a CD, I can pull out my money at any time if I find a better offer.

Of course there are some drawbacks to Everbank compared to an ING or FNBO, namely their balance requirements. Most online banks pride themselves on having no minimum balance along with no or low fees. Everbank, on the other hand, has a $1500 minimum initial investment and a $5000 minimum balance to avoid their $9 per month account fee. On the other side of the spectrum, their bonus rates are only available on the first $50,000 you invest, so high rollers are out of luck. I don’t think Everbank’s MMA is the right account for everyone at all times, but I think it’s the right account for us right now.

Maybe it’s Your Major?

2010-06-04T06:11:00.000-07:00

The explosion of student loan debt in this country is becoming a big financial concern, so it comes as no surprise that pundits are eager to cast blame for this disaster in the making - “Placing the blame as students are buried in debt”. To humanize this tale, the writer picks one young woman to represent the woes of student debt laden Americans. Over the course of the article the author points fingers at everyone from parents to financial loan officers, but leaves out a critical detail about our heroine until the end.

Ms. Munna

The protagonist of this tale is young Ms Munna, 26 years old and currently living in San Francisco. She is in denial, via deferral, about her nearly $100,000 student loan debt. The total sounds impressively high, until you learn that comes from 4 years at NYU. It’s a pricey private school in the most expensive city in America, I’m amazed she didn’t emerge further in the red. But her choice of school only paints part of the picture, the reason why she has so much debt. It doesn’t explain her inability to repay the loan, those details are buried further in the story.

The Numbers are Frightening

The growing burden of student debt is a real problem, many young Americans are leaving school with mortgage sized loans to pay off. This debt is practically inescapable, it can’t be discharged via bankruptcy and can follow you into retirement. The weight of this debt will hold back young Americans trying to establish careers and families. This debt will limit their options for careers, their ability to take out loans for things like houses and cars and will crimp the consumer spending which drives the economy. But the amount of debt is only part of this story.

Maybe It’s Your Major

The field of study is relevant to any discussion of student loan debt, after all the ability to pay back that loan is dependent on the student’s future earnings. For example, doctors have been taking on enormous student loans for years without anyone being concerned. Their prospect of a high income and steady employment means taking on those loans is less of a gamble. But what about taking on med school sized loans for a degree with low earning potential?

Apparently for $100,000 Ms. Munna emerged with a degree in Interdisciplinary Studies, I have no idea what that even means. Her two focus subjects, religion and women’s studies, have value, but not one that translates into high earning power. With a degree like hers you can expect employment in social work or at a non-profit, where the average salary is rather low. It is unreasonable to expect to pay back $100,000 in student loans with her choice of majors. As a quick rule of thumb, you should never take on more debt than you expect to earn in your first year of employment. That means Ms. Munna should have limited herself to a more reasonable $30k-$40k of debt or switched to a more lucrative major like finance or engineering.

A Degree at Any Cost

Too many people have come to believe that a degree is worth any price and that it will ultimately pay for itself. But student loan debt isn’t that simple, you have to weigh the cost of the degree against the income potential of that degree. You still have the freedom to pursue whatever field of study interests you, as long as you are mindful of the cost. There are always cheaper options, like public schools, for careers that are more personally fulfilling than potentially lucrative. Unfortunately the choice to spotlight Ms. Munna, whose own choices created her precarious situation, detracts from the issue the author is trying to highlight. There are many people out there who are struggling with student loan debt despite making sensible choices. Ms. Munna’s is a cautionary tale, not an example of a systemic problem with our educational system.

$100 Home Improvement

2010-06-03T12:49:00.001-07:00

When you think home improvement what comes to mind, is it a new gourmet kitchen or relaxing master suite? Last winter we spent over $15,000 replacing the electrical and plumbing systems in our house, however home improvement projects don’t have to cost big bucks. Right now I’m focusing on a series of small projects that will improve the aesthetics and function of our home, all on a $100 a month budget.

This long holiday weekend we undertook the first task, updating the entrance to our home. The stairs to our front porch are flanked by two potted trees, unfortunately their green plastic pots had degraded in the sun and were starting to fall apart. I needed to find two new pots that would stand the tests of time, weather and three dogs as well as fit my $100 budget. After considering a pair of half whiskey barrels I settled on two huge, beautifully glazed clay pots from Costco, they were $40 a piece. We then spent $20 for irrigation fittings to put the trees and their front yard brethren on drippers. For $100 we have an attractive front entry and I no longer have to water those trees. Even better the pots I bought will last forever, unlike the plastic.

I already have a few other projects planned for the coming months, like installing shelving in one of the closets and adding garden tool storage to the front yard. Improving the storage in your home usually costs very little and you can enjoy the benefits immediately. There are a whole lot of other small home improvements in the $100 range, you can buy some colorful flowers to update your landscaping or replace an ugly light fixture. A gallon of paint will quickly transform a room at little cost, or you can focus on the details like new wall plates for your switches and outlets.

You’re not going to transform an entire house for $100, start by focusing on just one room or one area of your home. Over a year you could completely transform your yard or replace all of your light fixtures on a $100 a month home improvement budget. Throw in some elbow grease and you’re on your way to creating the home you want to live in along with a budget you can live with.

I’m a Lending Club Failure

2010-06-01T06:20:00.000-07:00

Given my experience with Lending Club it is probably time to pull out my money and run far, far away. According to their own stats, I have one of the lowest returns of any investor, around 3%. Some of my low return can be explained in positive terms, several borrowers repaid their loans ahead of schedule. But the biggest drag on my investment has been defaults, borrowers not repaying their loans.

So far I’ve had two loans get charged off , neither had repaid much at the time they skipped town. Now a third borrower is struggling, again after only a few months. In all three cases, these borrowers had good credit according to Lending Club. The two charge offs were “B” rated borrowers, the one now struggling is an “A” loan. According to Lending Club data on defaults, this shouldn’t be happening! The default rates I am experiencing are much higher than they report. So am I extraordinarily bad in choosing my borrowers or is the actual rate of default higher than Lending Club will admit?

I’ve been less than satisfied with my Lending Club experience for awhile now. Once a few borrowers started missing payments, I stopped adding new money to my account. I haven’t withdrawn my money yet, but if the situation doesn’t improve soon I will. I can earn a similar return in savings bonds, with zero risk. I think the more personal nature of Lending Club (since lenders pick and choose their borrowers) makes defaults personal as well. It makes me angry that right now, someone out there is enjoying my hard earned money. And when a borrower does default, Lending Club’s collection efforts seem limited to asking the borrower “pretty please” to pay back the money. I wish there was a way for them to be more vigorous in their efforts, emails and voicemails don’t seem to have much effect. I know many people have had great success with peer to peer lending, but it appears that I am a Lending Club failure.

Blue Cash from American Express

2010-05-26T06:20:00.000-07:00

Credit cards, like any financial tool, need to mesh with your lifestyle and goals. Late last year we chose the Amex Starwood Preferred Guest (SPG) card to earn points towards our honeymoon. A travel rewards card in general does not fit well with our lifestyle and spending habits, but we had a specific goal in mind that the card could help us achieve. Now that the honeymoon is booked the card has outlived its usefulness, making it time once again to go credit card shopping.

For years the Chase Freedom card has served as my primary credit card. In short time I accumulated over $1000 in cash back thanks to their generous reward system. Unfortunately they decided to gut the program recently, killing the card’s competitive advantage. This leaves me in need of both an Amex card to replace the Starwood one and a cash back reward card to replace the Freedom card – enter Blue Cash from American Express.

There are many cash back reward credit cards and a huge variety of reward programs. Many offer different levels of reward based on categories of spending, say 1% on all purchases but 3% on gasoline and groceries. Other cards emphasize dining out or travel related purchases instead. The first step in finding the right card is to determine your normal spending habits, how much do you spend and where?

There are a couple of general traits that define our spending, one we don’t eat out often. We prefer to prepare our own meals, so a card that emphasizes grocery store purchases, rather than restaurants, makes sense for us. Two we don’t travel often, so a card that rewards you for travel won’t do us much good. Three we have relatively short commutes, so gasoline is not a big part of our budget. Finally, we tend to spend a lot! We racked up $23,000 in 6 months on the SPG card, though that was unusual due to some home improvement spending. With the wedding and honeymoon coming up I expect our spending to remain high through the rest of the year.

Based on our spending characteristics I decided on the Blue Cash card from American Express. It has a tiered rewards system, once you hit $6500 in annual spending the reward level jumps to one of the highest in the industry. They also have a higher reward level for purchases at grocery stores, gas stations and drugstores, which fits well with our spending patterns. The basic cash back is 0.5% at all stores and 1.25% at grocery, gas and drug stores. Once you reach the $6500 level, the reward jumps to 1.0% at all stores and 5% at grocery, gas and drug stores. Best of all, there are no annual fees with Blue Cash, unlike the SPG card. I wish Chase would bring back the old Freedom Card rewards program, but the Blue Cash Amex looks like my next best choice.

Closed to New Investors

2010-05-24T09:07:00.000-07:00

I rarely talk about the investments I hold beyond mentioning which fund families I invest in like Vanguard or T Rowe Price. I am no expert on investing and I certainly don’t want to lead readers down the wrong path. But occasionally the actual fund I am invested in becomes part of a relevant story about money and finance.

Recently I saw a headline that made my heart skip a beat, a mutual fund I hold is being dropped from the Kiplinger 25, a list of recommended funds. While my mind immediately raced to poor performance or bad prospects, the reason was much more mundane. The fund is closing to new investors on May 28 and the magazine will not recommend funds that people cannot buy. The fund in question is T Rowe Price’s Mid Cap Growth, which I’ve been investing in since 2003.

Mutual funds need to keep control of the money flowing into and out of the fund as part of proper management. One way they can do that is by opening or closing the fund to new investors, people or institutions already invested in the fund at the time of closing can add to their holdings, but no new investors are allowed in. This helps keep popular funds from growing too large to effectively manage. Recently I started investing in a fund that reopened to new investors after being closed for many years. In general, the market crash caused many people to pull their money out of stocks and some mutual funds reopened in search of new cash. Mid Cap Growth’s closing seems to run opposite of current trends.

This news won’t change my investing strategy, I plan to continue adding to my holdings every month like I have been. If you’re interested in investing in Mid-Cap Growth you have a few more days before the door closes. Like all T Rowe Price funds you can start with $0 initial investment as long as you sign up for $50 monthly investments through Automatic Asset Builder.

How Do You Divide Your Financial Goals?

2010-05-21T07:07:00.000-07:00

If you are anything like me, you have a lot of financial goals to juggle. Beyond the whole get out of debt problem, you have to save for an emergency, a down payment and an education. On top of that there is the biggest challenge of all - preparing for retirement. So how do you approach these goals, do you focus on one or tackle them all?

I have always taken the tackle it all approach, even if it’s not the best financial decision. When I had mountains of credit card debt, I still saved money in my 401k and mutual funds. Currently I’m splitting our savings between the wedding, emergency fund, down payment for a new home and our many early retirement goals. I take this approach mainly for emotional reasons, it makes me happy to know that we are working towards these goals even though they are many years away. It may be decades before we can retire and sail off into the sunset, still I save $100 each month towards that retirement boat. Knowing that I am preparing for the future satisfies me today. Also, many financial goals are easier to achieve when time is on your side. This explains why you have to start saving for retirement in your 20’s, even though it will conflict with more immediate goals like buying a house. But is tackling all your goals at once the best approach?

There are definite drawbacks to trying to accomplish everything. By dividing your resources, it is more difficult to achieve any one goal. It also takes longer to achieve those goals. Tackling everything may not make the most financial sense either, sometimes giving priority to one goal above the others (like paying off debt) will be best for your bottom line.

Lately I’ve been wondering if I should change my approach. It will be very difficult to save up a down payment for a new house while still tackling our other goals. We could eliminate our retirement savings, our monthly investments and such in order to set aside more towards a house. It would get us into that new home faster, but I worry about making up for lost time with the other goals. For now I will split the difference by putting more emphasis on the down payment while scaling back, but not cutting completely, our other investments. How would you approach the situation? Do you prefer to focus on one goal at a time or do you try to do it all at once?

I Want to Move

2010-05-19T06:25:00.000-07:00

I’m tired of our neighborhood. I’m tired of the parking wars, the drive-bys and the police helicopter circling my house every night. I never thought we’d live here for more than a few years, it’s a starter home in a sketchy neighborhood. But we recently passed the 5 year mark with no end in sight because like every other underwater homeowner, moving isn’t easy.

I want a home in a safe, quiet neighborhood with good schools for the future munchkins. In fact I know just the place, one town over, but it’s out of our price range. Prices have come down in the last few years, meaning a crummy starter home is no longer a million dollars, it’s a mere $800,000! I’m really hoping prices there continue to fall to a more reasonable $500,000 - $600,000. Then at least we’d have a hope and a prayer of buying there. In the meanwhile I have started planning for a new home and adjusting our budget to meet new goals.

A $150,000 Down Payment

Last year our financial goals centered on paying off debt, merging our money and starting a nest egg. The plan for this year, and for every year hereafter, was to focus on early retirement. Our early retirement goals are a combination of savings, taxable investments, retirement funds and real estate, all of which we’re working on simultaneously. But my overwhelming desire to get the hell out of our current neighborhood has me questioning priorities. I’ve started playing with a budget that increases our savings for a down payment, while reducing the monthly savings and investments earmarked for retirement. Unfortunately, to live in the area we want we will need a lot of money for a down payment, at least $150,000. Since we don’t have any equity in our house to draw from, we will need to save up every dime.

Like many of my goals, it is unlikely we will achieve this one in my preferred timeframe. We spent much of our savings repairing our house this winter, so we are starting from zero. The size of our goal makes it difficult as well, in many parts of the country $150,000 would buy an entire house, not just the downpayment! But the difficulty of the task won’t stop me from trying, we will save as much as we can and keep an eye out for opportunities. With a little luck, we can make it out of the ghetto before I hit 40!

Why Aren’t You Retired?

2010-05-13T06:22:00.001-07:00

I work in one of those fields where it is possible to have a long career. In fact judging by some of my more weathered colleagues, it’s possible to have a very long career. On both current and previous projects I have worked with people well past normal retirement age. For some, it’s obvious they enjoy the mental stimulation and challenge of working. In their case, it appears that working past retirement is a choice they have made without financial consideration. But others I fear are working through their golden years because they have no other option. It’s their stories I wonder about the most.

Many years ago I worked with a sweet old gentleman, he was the perfect kindly grandfather figure. My office friend happened to be updating personnel files and was shocked to see his age – almost 80. The saddest part of the story was the fact that in order to work, he lived apart from his family. His wife lived in Washington State while he made a living in LA. I know his decision to work was not a choice, but I don’t know why.

At my current office there are two gentlemen well into their retirement years, and frankly everyone in the office wishes they would hurry up and leave! Their mental acuity has slowed with age and they are suspicious of current technology. One is sweet and kind, but the amount of hand-holding he requires is a burden for his co-workers. The other has grown arrogant with age, making him difficult to work with. Both have significant health issues that keep them away from work for periods of time, but neither has made any indication that retirement is in their future.

So why do people keep working well into their golden years? In my field we make a good income, so saving for retirement should not be difficult. Was it poor planning, the unexpected or a choice which led them here? Unfortunately I am not close enough to these colleagues to feel comfortable asking them about their situation, they probably have great insight into how you get derailed on the road to retirement.

My Apparel Price Points

2010-05-11T06:21:00.000-07:00

This past weekend I went clothes shopping with an old friend. It was time to freshen my work wardrobe; I was getting tired of the same old rotation of shirts and slacks. But before trying on any piece I would take a peek at the price tag, no sense in trying on something I would never buy. Still my friend kept urging me to try on things regardless of price. I had to explain to her that no matter how much I make, there is a limit to what I’ll pay for things.

As I’ve gotten older, and more frugal, that price limit has gone down. At the same time my income has gone up, I think this confused my friend who has witnessed the transition. But it is exactly this type of change that has helped us to save more than we spend and build our nest egg. I think my price limits fall somewhere in the middle range of people’s spending, cheap to some and extravagant to others. What do you think:

Shirts: $30
I might go a little higher for a nice dress shirt, but I can usually find those on the sale rack within my budget.

Pants: $40-$50
I’ve probably paid $80 for a pair of jeans, but that’s it. I’m hard on my clothes so buying expensive pants doesn’t make sense.

Sweaters: $50
The only reason I buy sweaters in LA is for work, they crank down that AC some days. We’re not talking bulky winter in Michigan sweaters, just light cardigans or wraps for the office.

Jackets: $60
Honestly, my favorite jacket only cost me $15 off the sale rack. I wish I bought two!

Winter Coats: $120
At least in LA a winter coat can last you forever, it’s not like it gets much use. I probably paid $130 for my current coat…5 years ago.

Skirts: $50
I remember when I was 20 and broke and thought nothing of paying $100 or more for a skirt. My how things change!

Dresses: $60
I don’t wear dresses too often and it’s been forever since I’ve bought one. How much do they cost these days?

Shoes: $40 - $60
I’m tough on shoes, I’m guaranteed to scratch or scuff them the very first time I wear them. It hurts a lot less to mess up an inexpensive pair of shoes.

My Weekend Haul

These are my upper limits for spending, but I prefer to spend a whole lot less! This weekend I was pretty successful in scoring deals off the sales rack. I bought two pairs of shoes, one $25 and the other $40. I got a handful of shirts ranging from $10 up to a whopping $25. Finally I bought two sweaters, for $27 and $40. Not bad considering most of that shopping was at Nordstroms. What are your apparel price points, the most you’ll spend on various pieces of clothing?

Five Free Nights Thanks to Starwood Amex

2010-05-06T06:45:00.000-07:00

It’s been about 6 months since I first got the Starwood Preferred Guest (SPG) card from American Express. My plan was to use the card for home improvement and wedding expenses and cash in the points for hotel stays during our honeymoon. I’m happy to say my mission was a success, I’ve booked 5 nights at the Westin on Kauai, all paid for with points.

Unfortunately it takes a lot of points to stay at any Starwood hotel in Hawaii and this one didn’t come cheap either. Those five free nights required 48,000 points, which is a lot of points if you consider one dollar spent equals one point! Fortunately, we didn’t have to fork over that much in cash. Thanks to new cardholder incentives we accrued 25,000 bonus points, the other 23,000 came from our spending on the house, wedding and also everyday items like food and gas. As far as credit card rewards go, I think we did really well.

Most cash-back cards pay around 1%, so $23,000 in spending would result in a $230 check. Since I am paying for a 6th night at the Westin, I know the value of those free nights - $188 each. $940 in free hotel rooms on $23,000 worth of spending is a little over 4% in rewards, much higher than a cash back card and better than the other hotel rewards cards.

But, now that our honeymoon is booked I have no more use for the SPG card. I plan to cancel it once we return from our trip, there is an annual fee after the first year and we don’t travel enough to justify keeping it. I’m now shopping for a new Amex card to take its place, probably a cash back card since they are a better fit for our lifestyle. The SPG card was perfect for our purpose and well worth using.

I Don’t Miss Dating

2010-04-29T07:11:00.000-07:00

This week I helped a friend pick out a special outfit to impress the new man in her life. He invited her to a Kentucky Derby party this weekend and she needed the obligatory springtime dress and oversized hat to go with the theme. She tried on easily a dozen dresses before selecting the most flattering one, but when she asked me to check the price my heart sank. This plain little dress was $250 and she still needed a hat, shoes and accessories to go with it. In total she spent nearly $600 on an outfit for just one date!

When it comes to the cost of dating, people often think of the price of dinner and a movie or tickets to a concert. But women tend to spend a lot of money just getting ready for the date, on outfits and shoes or on make-up and trips to the salon. My friend’s $600 outfit isn’t the only cost of her weekend date, the dress still needs to be pressed and she is planning to hit the tanning salon too. Add in all the personal maintenance and upkeep to stay “date ready” and you are looking at a lot of money.

I shared in her excitement about the new man and possible new relationship, but I didn’t envy the expense! I remember the constant pull to look my best, including new clothes for each special occasion. Dating may be fun and exciting, but it isn’t cheap and I don’t miss it.

Crocs Rock

2010-04-27T08:30:00.000-07:00

I’ve never been a fashionista but even I know that certain items of apparel, like Crocs, are an ugly abomination. They’re clunky and rubbery and no matter what color you chose, they are not flattering. But under all that ugliness lies one comfortable piece of footwear. I have a pair or two, mainly for around the house or for working in the garden. I wouldn’t think of leaving the house in them, except under extraordinary circumstances, like this past weekend.

My birthday came around last week and I only asked for one thing, a trip to the San Diego Zoo. We don’t have the room for any more stuff and an experience would last a lot longer anyway. The one drawback to my grand plan – 8 hours on my feet. I sit at a desk all day long so spending even a few hours walking is sure to cause aches and pains. But I thought with a pair of Crocs I might, just might, make it through the day. Amazingly enough, the shoes were so comfortable I wasn’t even a bit tired by the time we left, I could have kept going until dark! So yes they might be ugly, but if you’ve got a long day on your feet planned, Crocs rock.

We Made A Last Minute Tax Saving Move

2010-04-23T07:26:00.000-07:00

April 15th came around last week, the last day to file and pay your 2009 taxes. We knew that Mr. M was going to owe money because he didn’t have enough withheld throughout the year. But there are a few ways to reduce your tax bill, even after 2009 has ended. I decided to take advantage of one such method in order to eliminate the looming tax bill – we opened a traditional IRA for Mr. M.

Traditional IRAs are typically tax deductible and in order to encourage saving, the government allows you to open and contribute to one as late as April 15th of the following year. It’s one of the few ways you can reduce your tax bite after year’s end. In our case, I waited until the last minute and opened up the IRA with only a few days to spare. Mr. M doesn’t have any retirement funds in his name, thus far our retirement planning has consisted of 401k’s through my work. Opening an IRA for him allows us to divert more money to retirement than I can alone, and in this case it also eliminated what he owed in income taxes.

Opening the IRA didn’t change our net worth, I took $3000 from savings and transferred it to the retirement account. Due to Mr. M’s tax bracket and income, this saved almost $700 that we would have owed in taxes. Even better that money will be invested and allowed to grow tax free for decades to come. Unfortunately I still owed for both federal and state taxes and because of my salary and 401k, I can’t deduct IRA contributions. But for many people, a deductible IRA is a great way to save for retirement while limiting what you owe to Uncle Sam.

A Better than Expected Raise

2010-04-20T07:06:00.000-07:00

A few months back I lamented about a change in company policy that amounted to a delay in my annual raise. Instead of receiving reviews and raises on the anniversary of our hire, the entire company would go through this annual rite of passage at the same time. According to the notice our raises would be prorated to reflect the changeover, higher for those who had to wait longer for a raise and lower for those receiving two raises in one year. I wasn’t expecting much of an increase since I had heard grumblings from co-workers dissatisfied with their raises just prior to the change, so I was pleasantly surprised to see a 4.4% increase from before.

Not long ago my company started to lay off some excess staff, which makes my above average raise even more surprising. While the deadwood definitely needed to go, I question why the company chose to lay them off now after holding on to them for so very long. The lay-off news caused many employees to question their future with the firm, but the bigger raises will clearly change some people’s minds. It is certainly a mixed message the company is sending!

Personally, I am keeping my options open. In addition to the one opportunity on the table (to go work for my current client) I have another offer I am pursuing as well – to start my own firm. I met this week with my occasional business partner to discuss an upcoming full-time project and I am starting to think that working for myself will bring me greater satisfaction (but less job security). Even if these opportunities don’t pan out, at least I still have a job where I’m at!

What to Do About the Wedding

2010-04-15T06:05:00.000-07:00

As I hinted in an earlier post, there have been some big changes in my life lately. I am sure some may have speculated about the state of my impending marriage. Well Mr. M and I are still together, but another major relationship in my life has ended – the one I had with my parents.

I’ve always had a tumultuous relationship with my folks, for whatever reason our personalities are very different and they have a hard time accepting me for who I am. When I turned 18 I moved as far away as possible, 3000 miles to the opposite side of the country. Everything was going fine until my folks divorced two years ago, suddenly my mom decides to move to my neck of the woods. My initial instinct was to run, far far away. Distance was the only way I could deal with them. But we stuck it out (since we’re stuck with our house) and attempted to have a normal relationship with my mom. Unfortunately, that all blew up a few weeks ago when Mr. M was a little too honest with her.

My parents have never liked Mr. M and this was their chance to make their feelings known. I could understand their anger but when they announced they would no longer support our wedding or even attend, they crossed the line. Much of my life energy has been consumed trying to make them happy, trying to win their approval. I should have accepted that it is a hopeless cause, I make them unhappy just by being me. So for my own peace, and probably theirs as well, it is best we no longer have contact.

As if reliving all manner of childhood trauma weren’t enough to deal with, I also need to make a decision about the wedding. If you recall I wanted to elope, just Mr. M and I. But I thought eloping would break my parents’ hearts, so I planned a traditional wedding just to please them. We set a date, picked a location and put down deposits, all for people who are no longer coming! Now I need to decide, do we go forward with what we’ve planned, or scrap it all and elope. Scrapping our plan means losing thousands of dollars of deposits, going forward with our plan will require shelling out thousands of dollars we hadn’t planned to spend. It’s a lose-lose proposition and both choices are causing me nothing but grief, ironic for what is supposed to be the happiest day of your life. For now I’ve decided to put off the decision, there is no reason for me to make up my mind this minute. My emotions are too raw and my thinking too cloudy. Of course there is a lesson in this story, if you try to please everyone, you will end up pleasing no one.

Saved by the Calendar

2010-04-13T07:00:00.000-07:00

I’ve been distracted lately and haven’t been keeping an eye on my finances like I normally do. I’ve managed to pay the regular bills on time, but I forgot one very important bill that only comes due twice a year – property taxes. It would have cost me hundreds of dollars in late penalties if I hadn’t been saved by the calendar.

Our annual property tax bill is broken up into two installments, the first due in December and the second in April. The bill itself arrives in late summer or early fall, so it’s on you to remember to pay it months later. I set aside money each month to cover property taxes, so coming up with the cash at tax time is never a problem. But obviously, remembering to pay it on time is still an issue. In this case I remembered on Monday, April 12th that taxes were due two days earlier on the 10th! I started to freaked out, I’ve never been late on the taxes before. I found the tax bill in my bag and my heart immediately sank, according to the paperwork it would cost me $200 more because I hadn’t paid on time. Stupid stupid stupid! I immediately headed online to pay the bill, hoping to find some mercy.

I was pleasantly surprised to see the online version of the bill said it would be past due if not paid by April 12th, the same day that I remembered to pay it. I can only figure the two day grace period was given because the 10th fell on a Saturday this year. I got lucky, very lucky. Of course there are things you can do to prevent this sort of slip-up:

-Don’t wait until the last minute
-Set up a reminder system
-Automate payments when you can

I think it’s time I developed a better system of keeping track of such things, relying on memory alone is prone to failure. In this case I was saved by the calendar, in the future I might not be so lucky.

Personal Upheaval

2010-04-11T21:48:00.000-07:00

I apologize for the lack of posts lately. My life has taken a sudden, unexpected turn, and it's all I can do to hold on and figure out my next steps. I'm finally starting to feel normal again and I'm hoping to get back to life and the blog in the coming weeks. Of course there are financial aspects to any major life event and I'll be detailing those in posts to come.

A Benefit of the Market Crash

2010-04-01T07:04:00.000-07:00

Despite the stock market recovery which started in March of 2009, some vestiges of the crash remain. I discovered one example recently while reviewing my taxable investments. In this case, the market crash has created an opportunity that did not exist a few years ago.

Closed Funds

There are generally few restrictions on who can invest in taxable mutual funds, but occasionally funds are closed off to new investors. This is meant to keep the fund to a manageable size if/when it becomes popular. Those who previously invested in the fund can still add to their holdings, but the door is closed to new investors wanting in. Well when the market crashed many investors pulled out their investments, leaving a void in their wake. To fill the void, some previously closed funds have opened themselves up to new investors and new money.

Reviewing my Funds

I noticed this as I was checking the performance of the mutual funds I currently hold. I wanted to confirm I was holding the best mix of funds for my goals and was researching what other options are available. Suddenly I realized that fund ‘A,’ a previously closed fund, was now open. Years ago when I was picking my investments, fund ‘A’ is one I really wanted to hold, but couldn’t. The fund I chose instead has been a bit of a dud, but without better options I stuck with it. Now, there are new opportunities on the table and it’s time to take advantage of them. I just changed my investment selection dropping the dud in favor of fund ‘A’ for the near future. I still need to call the fund company and move over the old fund’s balance to the new fund.

Opportunity Knocks

While the crash itself did great harm to portfolios everywhere, it also created new opportunities for investors like me. It opened the door to popular, previously closed funds. Now is a great time to review your investment choices to take advantage of these newly opened funds, it’s an opportunity that may not last.

Mr. M’s Mom

2010-03-30T07:05:00.000-07:00

I don’t know how much I’ve written about Mr. M’s mom, after all in our seven years together I’ve never met the woman. He severed the relationship a few years before we started dating, and if you need any explanation why, check out my story From Riches to Rags. She has done some pretty awful things to him. Even worse in my mind, she’s never tried to repair the relationship or make contact. We’re not hard to find and she has the means to search. It’s been years and years of silence, until a few weeks ago.

Out of the blue Mr. M’s mom wrote him a message via, of all things, Facebook. Who says old folks aren’t hip to new technology! It took him a few days to even open the message, his immediate reaction was “I don’t care what she has to say”. Of course I was curious, but wasn’t about to go spying. Eventually he read it, it was nothing groundbreaking or earth shattering. Simply I have some news for you about your grandparents (we’re guessing they’ve passed away), are you still living in Los Angeles and I hope you are doing well. He managed a reply that was only slightly snarky, telling her we’re getting married in a few months and if she wants to come she needs to pony up for some of the expense!

Normally this would be a huge etiquette breach, but given their awful relationship and how she’s treated him, I don’t think it matters. She doesn’t deserve to be treated with the respect that normal people are given. She’s made a living, successfully I might add, as a gold digger. It’s a role I can’t understand. She didn’t earn the wealth and privilege she enjoys, she attaches herself to others. First it was Mr. M’s dad, later a wealthy woman with a family fortune. I guess it helps to be a gold digger who swings both ways!

I don’t know what is going to happen from here, perhaps we’ll never hear from her again. I rather like the idea of not having in-laws, it certainly makes my life easier. Or maybe they can begin rebuilding their relationship, though I’m not holding my breath! One thing we can be proud of, we’re building a secure financial future on our own and have absolutely no need for her or her money. I am sure Mr. M finds it liberating to be able to tell his millionaire mommy to go shove it!

I Am a Mercenary

2010-03-26T06:17:00.000-07:00

Last Friday’s luncheon/interview wasn’t what I expected. It didn’t go poorly per se, but I wouldn’t say it went well either. I was expecting to meet with P to get additional information on the job and particularly compensation, since that would be my primary motivation to leave my current position. Instead there was another person thrown into the mix, whose purpose was not immediately clear.

I’ve known P for many years and throughout that period, she worked for herself. She has a long record of success and is one of the highest paid people at my current project. But it seems she is looking to close up shop and go back to being an employee, working for the mystery man’s company. Apparently his employer is looking to break into the LA market and is recruiting local talent to bolster their credentials. Rather than being presented details, I listened to an hour of fluff about building a new corporate culture and being able to direct the future of this company. I have zero interest in climbing the company ladder and Mr. Mystery’s tale of innovation in the area of annual reviews felt like a dark corporate comedy.

When it comes to job offers I want facts and figures, but more importantly I want to hear about the money. I hate corporate BS but I’m willing to put up with it for a price. I had planned to stay at my current company until I was ready to strike out on my own. The scant details presented were mostly a turnoff for me and I don’t think my suitors understood the heart of the matter – that I am a mercenary.

I have made a successful career out of selling my services to the highest bidder. Within my niche I am the best in town and I have the reputation to back it up. I turn down job offers on a regular basis (poaching is a popular past time in my industry). My first job out of college taught me that company loyalty is a waste, after all the company has no loyalty to me. I work for those who are willing to give me the greatest compensation. My biggest goal is early retirement, not a lasting career, and making the most money possible is crucial to my plans.

P and mystery man’s attempt to make me feel warm and fuzzy inside backfired. While their offer may have appealed to someone else, it did not work for me. I knew my current job would be a nightmare when I took it, yet that didn’t hold me back. This job has helped to right my financial ship and any career move I make going forward will be focused on improving my financial situation. Their pitch may have worked, but only if it satisfied my mercenary side as well. So far I haven’t heard anything worth leaving a comfortable, profitable position.

Veggie Garden 2010

2010-03-24T11:26:00.000-07:00

I didn’t get a speck of wedding planning done this weekend because we were too busy planting our garden for another summer season. After last year’s lackluster yields we decided to take action and improve the situation outside. Over the winter we added another layer to our raised beds, doubling their depth. Then we topped them off with bags of potting soil, compost and manure. Finally we covered the beds with a thick layer of mulch and let them rest until spring. But our bed space is limited, so we rely on containers to grow many of our plants. We acquired some larger pots to try this year, though last year our tomatoes had no problem churning out a hundred pounds of produce in the small ones. I doubt we’ll repeat that feat only because this year we’ve gone – heirloom.

This past weekend was the big tomato sale at the Fullerton Arboretum, so we made the trek down Saturday morning to stock up on some rare varieties. We bought tomatoes we’ve never heard of with names like green giant and yellow ping pong. Hey they sounded good and at $3 per plant, it was hard to contain ourselves. We left with a dozen tomato plants in tow along with a handful of pepper plants. After a few obligatory runs to the local gardening center for additional plants, cages, soil and such, we got down to planting this year’s crop. In addition to tomatoes and peppers we planted onions, shallots, eggplant and yellow squash. I still need to trellis and plant peas and beans as well. I’m not sure yet how this year’s garden will turn out, but hopefully our improvements will pay off in a bigger, more bountiful harvest.

What are you planning to plant in 2010?