Today we’re bringing you another round of He Said/She Said.  These posts are really your chance as readers to hear how discussions (and sometimes disagreements) play out when managing our lives with each other.  For a look at some of the past He Said/She Said discussions – check ‘em [...]]]>

PoP turns 1 this week!

Today we’re bringing you another round of He Said/She Said.  These posts are really your chance as readers to hear how discussions (and sometimes disagreements) play out when managing our lives with each other.  For a look at some of the past He Said/She Said discussions – check ‘em out here.

The Background on Today’s Conversation

It was just over 1 year ago that we started blogging about our finances here at Planting Our Pennies.  Somewhat appropriately, our very first post was a mid-May Balance Sheet, so let’s look at a quick balance sheet comparison from then to now.

That’s a boat load of financial progress in the last 12 months, and boy does it feel good.  But the thing is, we’re not sure we really would have done it had we not started this project here on the blog.  Who knows what our “Money, Happiness, and Kittens” situation would have looked like if we hadn’t started down this road?

• Would we have been so gosh-darned determined to hit financial goals?
• Would we be looking for ways to continue to increase our happiness and enjoyment in life?
• Would Kitty PoP be as adorable as ever?  (Okay, I think that one’s a no-brainer.)

Blogging together as a couple has served several purposes in our lives over the past 12 months, and we’ve learned some valuable lessons along the way.  Here are just a few of them…

He Said

Mrs. PoP and I learned early on that we work best as a couple when we are working together on something. In years past that has been projects at our University, buying and rehabbing our house and rental properties, or trying to purchase a small business. For the past year our project has been this blog, and it may have been one of our best yet.

We should start by saying that the money we make on PoP covers our hosting expenses and nothing more (we’re talking about $15 /month), so as an income stream this thing is a dud. That’s not to say that having this site, and being a part of the personal finance community, hasn’t had a positive effect on us personally, and added significantly to our bottom line.

Before we started blogging we were already pretty frugal, but still quarreled sometimes over spending, and didn’t really have a goal in mind. If you had asked us what our net worth was, we had a general idea, but we had no idea how much we needed to be financially independent. By keeping track of our balance sheet and income statements, and most importantly opensourcing the information to our readers, we have been able to build our wealth much more quickly than otherwise, and we are much more on the same page when it comes to money.

The results speak for themselves, below are some highlights from the past year:

• 65% (over $200K!) increase in net worth
• $55.8K (23%) of liabilities paid off, with another $50K due to be killed on August 1
• 13% YOY increase in market value for our real estate holdings
• Between Mr Market’s crazy ride up the mountain and continued deposits into our 401Ks and Roth IRAs, stock accounts are up another 60% as well

She Said

Mr. PoP made the suggestion of starting a personal finance blog to me via a text message while we were vacationing about 13 months ago.  I’d be lying if I didn’t say I agreed to it initially with the assumption that we would quickly grow tired of it and at least the low barrier to entry of a blog meant we wouldn’t be wasting a whole lot of money on the endeavor when we quit after a few months.

But it’s worked out surprisingly well, and I think there are a few reasons behind that.

1.  It gives us each an outlet that’s different from our day jobs.  I spend most of my days staring at numbers and writing code, and Mr. PoP is on the phone with clients.  In blogging together, we’ve found that I’m the one who enjoys the bulk of the writing and “reader facing” duties, and Mr. PoP enjoys the behind the scenes site maintenance, SEO, and fiddling with wordpress.

2.  It’s changed the dynamic of our conversations on our finances.  Prior to blogging, we scheduled regular discussions on our spending and savings habits, but they were scheduled.  And though not adversarial, because they felt a little more formal and forced, we probably each came to those discussions each with our own agendas.  Now, we don’t really have to schedule discussions because it’s turned into an ongoing conversation.  We’re really on the same page more than ever and that’s such a great feeling.

3.  It’s changed the topics of our conversations on our finances.  More than ever, we’re focused on maximizing the amount of happiness we can squeeze out of life.  Not in a crazy YOLO way, but in maximizing our happiness over the long haul.  And that’s a pretty awesome feeling.

I’m not a fortune teller, so have no way of telling if the next year of blogging is going to show quite the same dramatic results in our lives and in our finances (up $200K in a year… as my cousin would say, that’s cray-cray!), but I’m more than willing to keep blogging to try and find out.

Is there anything more you’d like to see from PoP as we continue forward into our next year of blogging?  For readers that are bloggers, how have your experiences blogging matched up with ours?  

That most people care about the details of your life.

This [...]]]> There seems to be a false premise that many people in the United States operate under.  It’s a dangerous one that when you construct your world view around it can lead to a very difficult and stressful lifestyle.  What is this premise?

That most people care about the details of your life.

This isn’t a pessimistic statement.  This isn’t an “oh my god i’m so alone in the world” idea.  It’s good news.  I swear!

This is what Mr. PoP thinks of anytime someone says, “Good News!”

Though the professor from Futurama is hilarious, there’s someone who communicated this point even better many many years ago, Eleanor Roosevelt, one of my favorite quotables of all.

“You wouldn’t worry so much about what others think of you if you realized how seldom they do.” ― Eleanor Roosevelt

Think About The Last Time You Reflected Negatively Upon Others

Search back in your head and really try and find a time where you said to yourself, “Man that girl is really ugly without makeup” or “Wow, that guy needs to get a new car!” or even “Poor girl, her engagement ring diamond is so small.”

When was it?  Can you even remember?  I can’t.

That’s the thing.  Most people are nice, and a little self-absorbed  Seriously – they are!  And they’re overwhelmingly positive, too.  But even more than that, when we have precious limited brain capacity (which is fairly true given our own busy schedules and lives), we really don’t waste it thinking poorly of others!  It’s just not worth the time and effort.

Worrying About What Others’ Think Is Wasted Mental Energy

Once we release ourselves from this assumption that others spend THEIR time and mental energy worrying about the details of OUR lives, it’s incredibly freeing.  All of the sudden instead of wasting YOUR mental energy worrying about what THEY think of YOU (see – you’re self absorbed too!) you find yourself with a lot more time and energy to think about things that are probably a lot more important to you than other people’s opinions.

Do you think Warren Buffet ever cared if people thought his house was too small or too old?  Think Mark Zuckerberg cares what people say about his hoodie?  And look what they’ve been able to do with their mental energy.

Many of the most brilliant people that I’ve ever met don’t care a fig what other people think about the way they walk, talk, dress, or act.  I’ve joked in the past that they are smart enough to have the luxury not to care, but as I age, I’m starting to wonder if it’s not the opposite.  Perhaps they seem to have had far more mental energy than most because they don’t waste that precious brain power worrying about other peoples’ opinions.

Let’s See If We Can’t Dispel Some Common Myths

“People will think I have gotten a DUI if I take public transit or bike to work.”

Do you have a problem with public drunkenness?  So why on earth would people jump to this conclusion?  Unless your office is quite small like mine, it would be unlikely that anyone would notice the absence of your car from the parking lot.  And even if they did notice a missing car or a bike helmet that you’d taken to setting on your desk during the day and ask about your new habit, an easy response is:  ”I’m trying to see if I can work some more exercise into my day and this seemed like a good way to multi-task.  No biggie.”

“My friends think I’m poor when I tell them I can’t afford to do XYZ.”

Let’s re-examine that statement for a second.  “Can’t afford” is a pretty subjectively defined.  More than likely you’re choosing not to spend money on XYZ because you’ve already allocated it to another priority (be it savings or fast food).  Since they didn’t tell you what they prioritized over XYZ, or under XYZ for that matter, why do you feel the need to share the details of your priorities?  How about?  “Oh. That’s next Tuesday night?  Sorry, I have other plans!”

Gasp!  You’re Encouraging Lying?

As much as American culture seems to celebrate being an individual, we’re still not really socialized to completely ignore how others might perceive us.  So starting down this road can be tough.  For some of us, it might even require cognitive behavioral therapy to more fully release yourself from what you perceive to be the expectations of others.  And that’s okay.

To ease the transition, what’s the harm in a couple of little white lies in the name of balance.  All you’re doing is quieting that person’s mind so they’ll spend less time thinking about you than if you shared more information than you needed to.

Staying true to yourself in terms of your actions and behavior is too powerful a force to be degraded by a couple of harmless fibs to ease some social tension and slide frictionless through another person’s conscious mind.  If anything, once you free yourself from worrying about what other people think, it’s even easier to be true to yourself.  Your own goals and priorities can seem more clearly defined and achievable without worrying about the noise of social norms.

And The Truth?

What if you said the truth every time?  Is that really the end of the world?  What if you said:

“I’m [not] doing ABC because I want to (pick one) decrease my debt load / reach financial independence / /retire before I’m 40/[insert your own goal].”

In all likelihood, the first time you said it, you’d probably have a conversation like Mr. PoP recently had with a good friend where he shook his head in disbelief for a few minutes and then said, “Good luck on that, bro!”  And that’s that.  It hasn’t come up again.

Getting yourself to realize that other people don’t care much about the details of your life isn’t easy and it may be a continual challenge, but it is incredibly powerful.  And I highly recommend it.

Have you ever wasted time and mental energy worrying about what other people think of you?  Of your clothes?  Of your hair?  Has it held you back?  

On last month’s income statement, I alluded to a couple of big checks that we were expecting to come in April, but didn’t quite make the cut. One of them dropped on May 1st. It’s a check for almost $7,000 from a car accident settlement that finally resolves a car accident that I [...]]]>

On last month’s income statement, I alluded to a couple of big checks that we were expecting to come in April, but didn’t quite make the cut. One of them dropped on May 1st. It’s a check for almost $7,000 from a car accident settlement that finally resolves a car accident that I was in about 2.5 years ago.

Recap On Accident And Injuries

Not the car that hit me, but I always thought these jaguars seemed about to pounce!

The accident was pretty straightforward. I stopped at a red light. The car behind me didn’t.  It didn’t end particularly well.  I had whiplash on the day of the accident, but have two lingering lower back issues that are going to stay with me for a very long time (perhaps indefinitely – which plays a roll in why I’m a bit afraid of the idea of pregnancy).

FWIW, we ended up using a personal injury lawyer to help settle the claim, despite our apprehensions about consulting a lawyer for real estate matters, and feel like we came out ahead for doing so.

Goals For Our Settlement Dough

We didn’t look at the accident as a way to get rich. But since the accident was not my fault (a fact that was never in question since the accident was so clear cut), we wanted help paying for expenses that my injuries were going to cost us in the future considering we had a good idea how much they cost (A LOT!) when they were acute.

After 2 years, my car insurance was tapped out on paying medical bills associated with the accident as there had been over $15,000 of them. Can I say that again? $15,000+ in medical bills. Tests on your back are freaking expensive. And don’t get me started on how much my brief ambulance ride cost the insurance company. Getting the car fixed cost the insurance company another ~$7,000. Nice reminder to have car insurance, right?

With that in mind, here are our current goals for the settlement money:

• Set it aside for future health care expenditures
• Since Mrs. PoP has good health insurance now, have it somewhere that it can grow in the meantime to keep up with (and perhaps surpass?) health cost inflation
• Protect said growth from taxes as much as is feasible

We’ve got an idea of how we want to do this, but wanted to run it by some of our very smart readers (in particular Average Joe!) to see if this makes sense.

Our Current Idea

Use Mr. PoP’s HSA as a tax exempt savings/investment vehicle for this money.

For those not familiar, an HSA is a Health Savings Account that is tax advantaged savings account available to people in the US with high deductible health insurance plans (like Mr PoP) because those plans don’t have first dollar coverage. The HSA lets you stow away a certain amount of money each year (currently $3,250 for self-only HDHP coverage like Mr PoP has) and invest it to be used later for health care expenses. It’s above-the-line tax deductible when we deposit the money (great because we can’t itemize our tax deductions), and exempt from taxes when we take it out later as long as the money is spent on qualified health expenditures. For more details on HSA, check out the IRS’s HSA page here.

With the yearly limits on contributions, it’ll take us at least a couple years to get the money fully invested. But the plan right now is to put the money into a low cost SP500 ETF and let the money grow to hopefully beat the high rates of inflation that the health care sector is known for. This source cites that long term health care inflation rate at about 5.54%, so that’s the number we’re aiming to meet/beat.

Is It Too Risky To Put It All In Stocks?

Maybe. But we don’t expect to need to look at that money for at least 5 years. As long as I’m working this job I have good (maybe 8/10?) first dollar coverage that includes care for chiropractic and neurologic needs that arise. Now that my car insurance is exhausted from paying these bills, my health insurer is picking up the slack when my back hurts like the dickens and all we cover are $25 copays, which we pay for using pre-tax dollars from my FSA (flex savings account).

But it’s also this job that aggravates the pain in my back since sitting upright for long periods (compressing my lower back) is what hurts the most. So there’s also the hope that after I no longer sit for 9+ hours per day at a desk that I need fewer chiropractic and neurologic interventions to help with the pain. So I’m really hoping that this money lasts a while covering a few chiropractic sessions per year and the fairly expensive topical NSAID that seems to be the only non-narcotic pain reliever that helps. (Vicodin also helps, and I was in a GREAT mood when on it, but getting addicted to narcotics seems like a bad long term plan.)

We’ve run this by our tax guy (answers to questions and long term planning like this are part of the service we’re glad we pay him for), and he thinks it’s a pretty good plan to reach our stated goals for the funds.

But what do you guys think? If you had an injury settlement what did you do with the money? Does anyone have another suggestion on a plan that might meet (or exceed) the goals for this ~$7,000?

At one point, we had a nice repairman out to our house an he suggested trying [...]]]> So the last few weeks have been rough in the PoP household.  We were having problems with our internet connection, and went back and forth with our ISP multiple times because we kept losing our connection.  (Tragedy!  Absolute Tragedy!)

At one point, we had a nice repairman out to our house an he suggested trying out a new modem.  Here’s how the interaction went:

Repairman: (trying to figure out if the replacement DSL modem in his truck would suit us) How many devices do you guys connect to your router with?

Me: Regularly?  8? 9 if you count the printer that’s connected to enable wireless printing.

Repairman: (eyes bogging out of head) What?

Me: We each have a work laptop, a personal laptop, a tablet, and a wifi enabled smartphone.  This is normal right?

Repairman:  (says with slight disgust while shaking his head) Young people.  Jeez.

Someone tell me we’re totally normal for having that many devices.  Right?  Totally normal?

Anyhow, we’ve now had 48+ hours of solid connection, and are knocking on every piece of wood we pass to keep the connection lasting indefinitely.

Love From Others

Because of our cruddy internet connection, we weren’t around the pf blogosphere and sharing as much as we would have liked to be, but some great bloggers were sharing our posts and we owe them tons of thanks.

• Our post on Tax Prep: DIY or Hire A Guy? was included in the Tax Carnival of May 2013 over at Don’t Mess With Taxes.  (I love that blog name!)
• Our series on The Actual Costs of Owning a Pool was included in the Carnival of Personal Finance over at One Cent At A Time, and in the Weekly Wrap Up over at Cash Rebel.
• My post I’m Riding A Bike To Work was pretty popular this week, and it got some love in Mr. CBB‘s PF Weekly Reading List #19, in PT Money‘s Quick Money Tips Life After Retirement Edition, and by Budget And The Beach in her Link Love Week In Review.
• The insight that we gained on our trip – that It’s Too Easy To Buy Stuff – got some love as well, from Money Life and More in Personal Finance Roundup, from Budget and the Beach in Link Love Week In Review, from Eyes on the Dollar in Why I’ll Never Move to FL, and by Funny About Money My Achin’ Back Roundup.
• Sam over at Financial Samurai gave us a shout out in his post on Using Rule 72(t) to Withdraw From IRAs For Early Retirement.
• Over at Budget Blonde‘s Writing Wrap Up, Cat shared Mr. PoP’s post – Get Rich By Sharing Your Stuff.
• Funny About Money was kind enough to share our April 2013 Balance Sheet in her Link o’ Rama First Friday Edition.
• Pauline at Reach Financial Independence is starting a running program and I’m so excited for her.  And thankful that she gave a shout out to our post on The Costs of Running.
• Money Life and More mentioned our post asking Should We Close the HELOC in the Personal Finance Roundup #55.
• And lastly, the Skinny Seahorse got a kick out of the AstroSloth in our latest He Said She Said: On Going To Mars, and included in her Saturday Morning Coffee #11.

Love For Others

• Mr. PoP and I have been talking about developing some kind of “happiness tracking” system, with the idea being that when we track our money, we tend to do much better at having more of it, and maybe this same idea could apply to other areas of our lives that we want to keep boosting – like happiness!  So, when Kathleen over at Frugal Portland posted Chasing Happiness Is A Fool’s Errand, I just had to read.  And you should to.  Kathleen’s come to her own conclusions about where she can find happiness and perhaps what she should be doing instead.  I’m hopeful she’ll have a follow-up on what she’s found later.
• In a somewhat related vein, Nicole and Maggie ponder Man’s Search For Meaning in Part 1 – Which We Do Not Understand.  As usual with Nicole and Maggie, the comments from their great readers are great reading as well, and it warms my little pragmatic GSD heart to know there are more than a few out there like me who cannot fathom the purpose behind “searching for meaning” as a generic need.
• Funny About Money had one of the most amusing community service experiences ever recently when she volunteered to participate in a fake jury trial for the purposes of training new prosecutors.  Read it, you will laugh.
• In a more financial vein, Ross over at Cash Rebel discusses How To Run Marathons On A Budget, and I had to remind him that women runners wear these things called sports bras.  And they’re expensive.  =)  But other than that omission, great post and the message is clear.  Start out with the basics, and don’t go fancy until you’ve really proven you need it to take your running to the next level.
• And lastly, Jen at the Happy Homeowner confesses some of the more Shameful Things She’s Done To Save Money.  Hers are hilarious, but some of the comments are pretty far out there as well.  Read.  Laugh.  Repeat.

That’s all for this week.  Have a great rest of the weekend!

Now imagine watching that (or some other program you might find more entertaining) on a Samsung 50-Inch 1080p HDTV.

If that sounds like something you might be interested in, [...]]]> My newfound love for bike riding is starting to compete with my love for adorable kittens.  Luckily the internet has come through with just the solution.

Now imagine watching that (or some other program you might find more entertaining) on a Samsung 50-Inch 1080p HDTV.

If that sounds like something you might be interested in, then go ahead and enter the giveaway below to enter for a chance.  It’s brought to you by Quote Me A Price, where you can sell annuity payments.  The giveaway lasts through the end of May 2013, and anyone can enter, though only the first $50 in shipping will be covered via the giveaway.

Click away below to enter.  Best of luck to all!

 
a Rafflecopter giveaway

 

Our HELOC (home equity line of credit) is a line of credit that was extended against the value of our investment duplex (which didn’t have any other mortgage liens against it). Having dumped about almost $60K in cash into the duplex over 6 [...]]]>

Mrs. PoP had to tell Mr. PoP how to spell this!

Our HELOC (home equity line of credit) is a line of credit that was extended against the value of our investment duplex (which didn’t have any other mortgage liens against it). Having dumped about almost $60K in cash into the duplex over 6 months between buying it and fixing it up, we were looking to have access to some of that capital should the right real estate deal present itself. And the HELOC was the right balance of cost and benefit to provide us with access to that capital when we needed it.

So Here’s The Deal

After extending the full $38K HELOC to help us buy our residential canal lot in November 2011, we paid the entire balance off a few months ago. (We were quite excited that the HELOC was dead!) In a couple of months, we’ll hit the 2nd year anniversary of opening the HELOC, and we’re evaluating if it’s worth it to close the HELOC early and pay the early termination fee or to keep it open and continue to pay the ongoing costs associated with it that we pay on the anniversary of opening it each year.

Our HELOC Terms…

• 10-year interest only at a variable rate (currently 5.99%)
• Minimum Payment: Interest in full every month, no penalty ever to pay toward principal
• Minimum Balance: $0 – no minimum balance requirement
• Cost to Open: ~$400
• Cost to Close: $500 if close within the first 4 years as an early termination fee
• Ongoing Costs: ~$310 in yearly flood insurance premiums

Why Is Flood Insurance A HELOC Cost?

Our duplex is in a neighborhood that was recently reclassified by FEMA as a 100-year storm surge flood zone. Just a couple blocks away is an area that’s basically the same but was not reclassified. Basically, our duplex is in a very borderline in terms of its 100-year flood potential, and before the bank required us to carry a FEMA flood policy for the HELOC we did not. It’s unlikely that we will keep the flood policy in place after the HELOC is closed, which is why we look at it as a cost of the HELOC financing.

The way we see it, now that the HELOC balance is at $0, we have 3 options.

Option 1 – Close the HELOC Now

• Costs $500 out of pocket now

Option 2 – Close the HELOC right at the 4 year mark

• Costs $310 out of pocket this summer, and $310 out of pocket next summer

Option 3 – Keep the HELOC open indefinitely

• Costs ~$310 for the next 8 summers

We’re Leaning Toward Option 2

Even though it’s going to cost us $120 more over the next two years, we’re leaning toward Option 2 right now, and here’s why the big reason why.

We’re probably going to be cash poor pretty soon.

We recently mapped it out, and so long as the poop doesn’t hit the fan, we’ll have just over $50K in cash available to pay Mr. PoP’s parents back IN FULL on August 1 of this year, which we’d like to do. [For new readers - the $50K is a personal loan that Mr. PoP's parents loaned us in order to buy that duplex in the first place. It's the last piece of debt besides our mortgage on the PoP balance sheet.]

We want to keep the bookkeeping on this loan as simple as possible (since it’s family!) and paying in full on the 3rd anniversary of the loan is a good way to do that. Technically the loan isn’t due until August 2015, but we’re pretty eager to get it off the books even if it means leaving us with what we consider a VERY small cash buffer (< $5K).

On a typical month, we throw off about $3K in cash savings, so while we’re rebuilding our cash stash, the HELOC would be a very nice safety net in case we have something big come up (like the duplex’s other AC unit) that we need to address.

Why Not The Other Options?

Option 1 – Seems penny wise and pound foolish. It’ll save us some money, but it feels like we’re taking on enough risk in other areas that I’m not nuts about that idea.

Option 3 – Seems a bit unnecessary. Unless we find some investments that we think are going to net us much better returns than the interest expenses, it seems like we’re paying a pretty high premium to have that capital available. Not to mention that as interest rates rise (which I don’t think the Fed can postpone forever) the variable rate of our HELOC will rise along with it.

What do you guys think? Are there other options that we’re not seeing? What would you do if you were in our shoes?