Monthly Archives: July 2007

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Ben FranklinTomorrow, when I post the monthly net worth update, it will be the second consecutive month with a considerable drop.

Obviously, when your net worth drops, there’s usually a cash flow problem at the root of it. And this month, that’s exactly what the problem is.

I brought in $5883 this month. That includes my regular paycheck, my side business income, interest income, and 401k gains (and this month, more accurately, losses). Sounds pretty good, right? Not my best month, but certainly not my worst one either. There’s no denying that that’s a lot of money.

Problem is, I spent a whopping $11771. Ouch.

Almost to the dollar, I spent double what I brought in. That’s never good.

Even if the markets hadn’t bombed last week, that still wouldn’t cover the $5888 I overspent, not even close, so I can’t use that excuse.

But looking closer at the $11771 dollars, and where it all went, I don’t really feel like I’m hemorrhaging money. In fact, I almost feel like I did a good job last month keeping my expenses down.

Eight thousand dollars went towards the home improvement last month. Removing that cuts the outgoing dollar amount to $3771 and, in turn, makes my cash flow positive again. That’s really good news for August! It basically means that (when I’m not doing major renovations) I’m bringing in nearly one and a half times as much as I’m spending — always a good recipe for debt repayment.

Then, taking into account the mortgage, the car payment, and the rest of the regular monthly bills and we’re under $2000/month spent.

But wait… That’s a problem. That’s a lot of money to be spending on, well, stuff!? Where is *that* $2k going?

Sadly, I’m not 100% sure. A couple of weeks ago in my “Credit Card Debt: Plan of Attack“, I mentioned that there was a rogue outgoing $811/month that was unaccounted for. I never did get to the bottom of that one either — and I have a feeling that it’s just a subset of this $2k.

Right now I’m thinking it must just be a bunch of small expenses adding up, but still, $2k is far too much. I *will* figure that out in August.

In the end, it’s always good to know that there is still room for improvement. I see so many PF bloggers mentioning ways to cut costs and nine times out of ten, I’m already doing what they suggest so it doesn’t help my bottom line at all.

So, if I figure out what I’m (still) blowing so much money on, and I’m not too ashamed to admit it, I’ll share it with you!

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Allstate LogoYesterday afternoon I received my auto insurance renewal from Allstate in the mail.

With the accident back in May, that resulted in a repair bill that indicated that they probably should have totalled the car, I wasn’t expecting good news.

But it was good news.

It doesn’t appear that my rates have gone up — and having been with Allstate for years, I was never ushered in to the “Accident Forgiveness” plan that they advertise so heavily — so I really expected them to jump (or have them drop me entirely like they did with my homeowners insurance.)

Total bill is still an outrageous $1071 for six months.

Is it just me, or is that really high for a 30 year old married male with no tickets and just this one accident on his record?

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Oh, the humanity!I don’t have the solid numbers for July just yet, but as we close in on the end of the month, it’s looking like my net worth will take a second consecutive 12% monthly drop.

Sounds bad, but I’m not really looking at it that way.

The biggest expense, again, this month was the siding project. It’s still not done yet, but I’ve written the final check just to pretend the money is gone and to keep it off of August’s tally sheet.

The next biggest hit came in the form of losses in my 401k account. You couldn’t really realistically expect the market to keep going up at the rate it has been for, well, the entire year so far. Just last week, the balance dropped over $3k and as of this morning, it’s about where it was 3 months ago.

Big expenses and market downturns never help the asset side of things.

But on the bright side, I’ve still managed to chip away at all of my debts at an accelerated pace. The weekly $25 to the mortgage is making a sizeable difference, my auto loan is so far ahead that a payment isn’t due until 2008, and the credit card balances continue to fall — with the highest rate card falling the fastest.

As long as the debts continue to fall, the assets will take care of themselves in time.

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They Might Be Giants - July 28, 2007 at the Mohegan SunSo, last night, my wife and I headed over to the Mohegan Sun casino in Connecticut for a free show by my favorite band of all time, They Might Be Giants.

They did a free show there last year and, while we had to stand in a line for 4 hours, it was good enough to have us head back again this year.

We stood in line for a good two and a half hours this time and had seats almost as good as last. In fact, the nice couple from Providence we shared a table with actually made the seats seem even better than last year.

While standing in line before the show, John Flansburgh (one of the two band members) quickly walked down the line handing out free stickers — and upon reaching me said, “Hey, nice t-shirt!” in regards to the 15 year old concert t-shirt I was wearing from their 1992 tour. I ‘sort of’ had a conversation with him. By ‘sort of’, I mean I just said “thank you” in response, but like I said, he was moving quickly and I wasn’t about to slow him down.

Anyway, what really stuck me was that *no one* in the line seemed to know who he was!?

Honestly, I’d think that if you’re the type that is willing to stand in line for hours on end to see a band as obscure as TMBG — chances are, you know exactly what John Linnell and John Flansburgh look like. You’d think anyway.

That experience was pretty cool. Not saying it’s one of those moments I’ll never forget in my life, or anything, but it felt pretty good.

Making the night even better, as we were seated, we were each given a signed copy of their newest album, “The Else“, which just came out earlier this month.

This worked out great as I’d not yet purchased the album (that saved me some coin), and the albums were both signed.

I’d always kind of wanted their autographs too, and checked on eBay every now and then for them, but it was never anything I’d consider paying a lot of money for. I’ve just always wanted to collect autographs of the people I liked from my youth. Silly, I know, but now John Linnell and John Flansburgh can join Wayne Gretzky, Gordie Howe, Bobby Hull, and Bill Gates (I think his was done with an auto-pen) in my tiny collection.

The concert wasn’t as good as last year, as it heavily favored the new album full of songs that few people knew. But they played the standards you’d expect like “Istanbul”, “Birdhouse in your Soul”, and “Dr. Worm”. That last one I call a standard, but being an old-timer now, I think of it as a “new” standard.

They threw in a couple of old ones that I’d never seen live before like “Put Your Hand inside the Puppet Head” and “Letterbox” and one that I hadn’t heard since the 1992 tour, when I saw them twice, “Twisting in the Wind.”

Those three got some of the better crowd response. Or, more accurately, I thought so anyway — it was probably just the 30+ crowd that had actually heard those songs before they were re-issued on compilation albums — or owned them before CD’s even existed.

On the way home, we listened to the new album — not sure it’s a great one, but it’s definitely better than the last few they’ve released.

When I was a teenager, they were one of those bands where I could listen to the entire album through and through over and over again. That lasted for, well, I’d say their first 5-6 albums. Essentially, 1986 through 1994.

After that, for the next 6 albums, well, let’s just say I’ve used the fast forward button from time to time. That said, each album definitely has had at least two songs that would have fit seamlessly into their first group of albums, so they keep me coming back for more.

In the end, had I not bought a $25 t-shirt, the night would have cost $5 total. Two $2 sodas and a $1 tip. Not bad for a concert where you get to sit maybe 10 feet from the band and you get two free signed CD’s which just came out in stores at around a $15 each.

Now that’s a bargain Saturday night!

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Happiness bought.From one of MP Dunleavey’s recent columns regarding “Seven Ways to Buy Happiness”, of which I agree with very little, comes the quote:

It’s so easy to drift through life, thinking of money as a merely financial matter — and happiness as an emotional one. The two are connected, and how you spend can change your life for the better.

Today’s posting kind of touches on what I started back in May with my “Can you really separate money from emotions?” post.

The answer to that question, for me, was no.

My answer to today’s question, Can money buy happiness? Absolutely.

I guess, based on both of my answers, that I don’t fall into the “drifting through life” category she refers to when it comes to money and happiness.

But is money to blame for my happiness to this point?

On the financial side, I can’t say I’m blessed with a huge nest egg, a six-figure income, or will I ever be in a position to attempt Timothy Ferriss’ 4-Hour Workweek lifestyle. I also can’t claim that I’m holding out to win Powerball some day. As they say, you can’t win if you don’t play. And I don’t play.

Hmmm… based on my finances, maybe I shouldn’t be happy?

Or maybe happiness and finances aren’t related at all?

I dunno, I still stand by my first impulse — money can buy happiness.

I just haven’t bought it yet.

That said, I still like to think of myself as a generally happy person. I can’t think of a single day in my life that I could consider a bad day. Obviously, some have been better, while some have been worse, but I don’t think I could call any of them “bad”.

Further, the phrase Rush Limbaugh often mentions, “Each year is better than the last,” fits me too. I’d say that’s been true since around 1985 — things have just gotten better, progressively, with each year passing.

Financially, it holds true as well. Thanks to those nifty Social Security progress reports the government sends out to everyone, a quick glimpse shows that my income has increased each year since I started working and contributing to social security. Not a down year year yet.

The income from my side business has followed the same trend at an even more rapid pace.

So I guess I can’t wait for next year! Or the year after.

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    Yes… that’s my final answer.Last week, my wife and I were discussing the aspects of falling into a large sum of money while watching one of the ridiculous new prime time game shows that seem to taking over network television. This particular one was on ABC and hosted by Jimmy Kimmel — the name escapes me. Yes, the show really was that forgettable.

    Anyway, the topic was really, “How much would it take to make us happy and change our lives for the better?

    Would something like $10k do it? What would we do if, tomorrow, we received a check for $10k?

    We’d throw it 100% at our credit card debt. Sadly, though, $10k isn’t enough to wipe it out — and realistically, it wouldn’t change our life one way or the other. Not one bit.

    How about $20k?

    Now we’re talking… Right now, $20k would wipe out all of the credit card debt and take a large chunk out of our auto loan. Would that be life altering?

    Honestly?

    Yes! The added savings that would result from not having those debts would accelerate our payments on the mortgage and our contributions to savings greatly.

    A quick $20k boost would, no question, alter our bottom line for the rest of our lives — I’d even go so far as to say it would guarantee us hitting the million dollar mark at a relatively young age.

    Sadly, in today’s society, you can’t walk from one of these game shows on television with a mere $20k without being boo’ed. And to me, it’s scary that many people don’t realize that a sum as small as $20k can be life altering. (I know, I know, this coming from the guy who just said that $10k is essentially nothing.)

    For us, right around the $20k mark (after taxes) is “our” number. For someone else, it just might be the $10k I consider useless. Everyone is different, obviously.

    With that in mind, it’s frightening to see some of folks on these game shows with admittedly modest incomes having ten times that amount coming to them, guaranteed, but they feel the need to risk going home with nothing just for the chance of making it 20 times larger.

    If I were fortunate enough to be on one of these game shows, I’d likely push the stop button, or pull the magic lever, or hang up on the banker once I hit “my” number… but that’s probably why I’m not likely to be invited to be on one of the gameshows… I wouldn’t make for entertaining television.

    “Jimmy, I’m going to take the money and run.”

    “But Brainy, you’ve only answered one question?!”

    Just something to think about — what’s your magic number?

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    Gumby, err, Financial Limbo!So, I went ahead earlier this week and up’ed my 401k contributions to 10% of my gross income (up from just under 5%).

    This will result in a considerable hit to my monthly income, presumably starting with the next paycheck, so I’ve come to the conclusion that it would probably be a good idea to alter my debt repayment strategy in advance to compensate for the smaller amount coming in and so as not to get caught with my pants down next month.

    Currently, I’ve been paying my mortgage payment (obviously my largest debt) one month in advance. I also set up that additional $25/week that goes towards the principle. I’m not going to change that.

    My auto loan is currently 6 months ahead of itself. Next payment due date is January of 2008. Auto loan rates are generally so low, there isn’t a lot of benefit to paying them off early, but with most of my credit card debt sitting on promo rates right now, the rate is actually higher than the total combined average of my credit card accounts. Even so, I plan on cutting this back for the rest of the year to half of what I’ve been paying on a regular basis. Usually I send $350/month… now the plan is to send $175/month at least through December.

    Next come the credit cards. From my deck of plastic, the only cards in play right now are the Bank of America Business MasterCard (9.9% APR), the CitiBank AT&T Universal MasterCard (0% APR until April 2008), and the Chase Bank Visa (4.9% APR). As of today, their balances are $5484, $6200, and $7000, respectively.

    For new readers, the balances are so high because we ended up financing our most recent (and on-going!? argh?!) home renovation by spreading the damage across various credit cards by utilizing creative balance transfer techniques and those annoying convenience checks they include with your monthly statement.

    In regards to those convenience checks, if you’re not one to use a specific credit card but keep the account open, keep an eye on those each month — you may have to wait months or even years, but they do eventually sweeten the deal enough to make it worth your while.

    Anyway, I don’t think my plan of attack will change much from what I laid out a couple of weeks ago:

    I guess the plan is to continue aggressively on the 9.9% card, throw $250 each month at the 4.9% card, and $100 each month at the 0% card (while keeping in mind that it will jump to 13.49% in 8 months).

    The big change, with the smaller paycheck, will be how aggressively the $5484 balance on the 9.9% card comes down. This month, to-date, I’ve sent them $975.65. By months end, the total will be $1125.65 due to a $150/week payment I have automatically set up.

    I’m thinking I’ll continue the $150/week auto-payment, but pull back from writing a check for any additional payments.

    For the ING Savings account, I’ve got it set-up to pull $100 from my checking account bi-weekly to coincide with my pay day. Nothing huge, so I’m going to keep that up as well.

    Hopefully just cutting back the auto payment and the credit card payment will be enough to absorb a roughly $700/month hit on the monthly income we’ve grown accustomed to.

    I know we can do…it will just take some time getting used to.

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    Green 1997 VW Jetta GLBack in 1997, I’d just left University and stepped into what people over 25 call the “real” world. As I’ve mentioned in the past, I landed a job, which I still hold to this day, that paid $6/hour.

    At the time, I didn’t have a car. For the first couple of weeks, I was carpooling with my mother, where I’d drive her to work, drop her off, speed back to my job, work the day, then drive back to her work to pick her up, and then we’d head home.

    Put a lot of miles on the minivan, not that that mattered much…it was just a lot of wasted time, for both of us.

    I think it was my mom’s doing that sent me and my father out to buy a car one weekend. I knew I wanted a VW Jetta and went to the local dealership. We also checked out Honda Civics and even stopped by a Ford dealership, but I never test drove either.

    The Jetta it was. The base model, the Jetta GL, in green with a moon roof. No one in my family had ever had a car with a window on the roof before. It was like I was breaking new ground or something.

    Then we sat down with the obnoxious car salesman, who was probably the same age as I was (not that it’s important, I’m just sayin’), and went through the numbers.

    On $6/hour, and no savings, it became apparent that there was no way I could afford to buy a brand new vehicle. I’m not sure if my Dad knew that going in, or if he wanted me to learn it for myself, but I’m not sure it worked.

    You see, the dealership had HUGE posters all over the place advertising “red carpet leases” on Jettas for $179/month. Now that… I could afford.

    The inexperienced salesman went through the numbers again, this time with it set-up as a 4-year lease. (Crazy, I know, to lease a car for 4 years?!). In the end, he got the payment down to $223/month. Hardly $179, but still do-able.

    Apparently the discrepancy was due to the fact that I wasn’t putting down the money required to get the $179/month payment. Makes sense, as those numbers they advertise in car commercials are always sketchy. I learned that this day.

    Anyway, everything was looking great, they stuck us in the little office of the “Accounting Person” and I filled out the super long piece of paper filled with legalese.

    Turns out, I needed a co-signer to qualify.

    Thinking back, I’m not really sure why. I’d had a credit card for some time, so I must have had some credit history. The few bills I’d had in university were always paid on time. I’m not really sure why I needed a co-signer… Maybe it’s because I’d been in Canada for the past three years?

    Either way, to get this car, and likely ANY car, I needed a co-signer.

    I could tell by the look on my dad’s face that he was hesitant — like I wasn’t going to pay my bills or something. I was offended slightly at the thought, but now I can understand his delay. He did end up signing it, and away I drove in my brand new Jetta.

    My dad never mentioned the co-sign thing to me, or that he was uncomfortable about the whole thing, or putting pressure on me to pay, or whatever, and I appreciated that. Evidently he didn’t see me as a lazy low wage non-bill-paying idiot.

    Later in the year, when I realized the 10k miles per year I was allowed on the car wasn’t going to cut it, I looked into buying it outright rather than continuing to leasing it. Now that my job, through overtime, was bringing in more money, I re-financed it through GE Capital.

    Fast forward two years later… my dad suddenly starts taking advantage of every “FREE” offer he comes across and one of them was for a free credit report.

    The report comes in and he’s going over it and he asks my mom what this “GECAL” debt of $4k is? They can’t figure it out. I’m sitting idly by, thinking nothing of it — and then it hits me, “Hey, that’s about what I have left to pay on my Jetta!”

    It blew my mind, and his, that even when I’d refinanced it in my own name, through the Volkswagen website mind you, that my dad’s name was still attached to it.

    Now I’m not sure if that was a mistake on their part, or if that’s how it always happens, but now I know that I’d be unlikely to co-sign for anyone other than my wife.

    I appreciate that my Dad co-signed for me back then to get me into a new car, but to think, what would have happened if I’d traded that VW in for my BMW — would my dad’s name have been attached to that?

    That would have been a big debt to have ninja’d on to your credit report…and that car took me nearly 7 years to pay for. I’d have felt awful to be responsible for something that would linger on my dad’s credit report for that long.

    So, from my VW experience, I’ve learned not to co-sign a loan with anyone other than my wife OR to ever lease another car.

    Thankfully, no one got burned financially.

    Can You Dig It?

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