Monthly Archives: February 2008

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My education cost as much as this Chevy MalibuWhile looking at the stats for PantsInACan.com, I noticed a new blog out there that has me listed in their blogroll. They’re shaping up to be my top referrer this month. I’d never heard of the site, but I’ve been checking it out for the last few weeks.

I’m guessing that we’re roughly the same age; I may be a couple years older. I’m also guessing that we make pretty close to the same amount of money, perhaps I make a little more having been in the workforce a bit longer. We both own comparably priced homes. We both invest aggressively.

Basically, there are a lot of similarities to draw from.

One thing is *very* different though. My total non-mortgage debt is under $10k. Their non-mortgage debt exceeds $200k.

The culprit?

Student loans.

I can’t fathom carrying $200k in debt for something that I can’t even put my hands on. I’m admittedly, very materialistic — hence the BMW and the airplane in my garage.

I’m not real well versed in student loan rates, I’m pretty sure they’re super low, but even still, at just 1 percent, $200k is growing at a rate of $5.50 per day. That works out to over $2000 per year?! And that’s just to keep it level.

Ouch.

That said, I obviously never had student loans. I went to school in Canada where most of your education is paid for through your taxes. Fortunately, my parents also covered my education 100%.

I don’t know the exact numbers my parents paid for me, but the using the 2007-08 school year tuition rates, my time in University cost a grand total of $13526.86. Toss in another $7k or so for food and housing.

Total education cost, for simplicity sake, was around $20000. (Remember though, this number is skewed — I’m sure tuition was significantly lower in the mid 1990’s when I went to school).

My sister, on the other hand, did have student loans as she went to school in the States. Her tuition for just one year, based on 2007-08 numbers, comes right up to the $20k my entire education cost. Multiply by 4, and we’re talking some pretty serious money — more than any average household could ever afford.

For perspective, my education cost the same as a Chevy Malibu. My sister’s education cost the same as a Porsche. My new top referrer’s education cost, well, Ferrari money. More than my house… Actually, more than my house, my BMW, and my plane COMBINED!

So what did we all get out of the deal?

Well, while I don’t know the specifics of my sister’s financial standing, I’m pretty certain that I’m carrying a lot less debt than she is. I know for a fact that I’m carrying a lot less debt than my top referrer.

I’m also pretty certain that neither of them make substantially more money than me, certainly not enough more to justify the disparity in the costs of their education when compared to mine.

As far as I can tell, the only thing they got out of the deal was debt.

That’s a pretty raw deal.

I wonder sometimes if they see it that way… or if it’s a deal they’d make again.

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Al BundyAt the risk of sounding like Al Bundy bragging about days gone by, not to mention scoring 4 touchdowns in 1 game for Polk High, my glory moment in high school was running a mile in 4 minutes and 18 seconds.

I can play it off like I don’t remember the exact circumstances leading up to the personal best, but I actually do remember them. Like I said, it was a glory moment.

The mile, or 1600 meter, wasn’t my best event while running on the track team. I was more of a distance runner, with the 5000 meter being my specialty. Didn’t lose a single race my junior year. Not one.

I wasn’t blessed with blazing speed. In fact, I wasn’t going to out sprint anyone.

What I did have was a rather fast pace and the ability to maintain it lap after lap after lap after lap almost indefinitely.

But now, 15 years have passed…

And there’s that additional 60 pounds around my mid section that’s kinda tough to miss…

But, deep down, I know that I can still do it.

No, I don’t think I’ll ever be able to run a 4:18 mile again.

I think it may even be a stretch to think I could get one mile under 5 minutes these days (though I used to be able to do 3 consecutive miles under 5 mintues).

My goal is to complete a marathon this fall. That’s not such a hard goal to achieve.

The difficult part is that I don’t want to embarass myself.

I’ll have to finish in under 4 hours. That works out to around around a 9 minute mile which, right now, sounds like a walk in the park.

The stretch goal will be under 3 hours, averaging around 7 minutes per mile. That’s a pretty quick pace, but something I think I can work myself up to over the next 5-6 months…

Even if I don’t make it, just being in somewhat better shape will make me feel better all around.

It’s cold out today though, so I think I’ll start working on this next week or, perhaps, the week after that… ;0)

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11 Years at the Same JobToday marks 11 years at my current job.

I think that by today’s standards, for a Generation X’er, that’s really rare.

Most of my friends have had, oh, say 5-6 jobs since we stumbled into the real world. Every two years it seems that they’d start sending out resumes talking up their accomplishments at their current workplace in search of a better job.

At times, it has worked for them. They’d somehow worm their way into a higher paying job with each step using the “fake it ’til you make it” method.

But more often than not, they’d be exposed as a fraud, or out of their league, within, well, two years or so. And then it would be time to look for another job.

Kind of a revolving door situation.

Me? Fresh out fo school I applied here — started the next day making $6 per hour. Around a year later, I was moved from hourly to salary. The next year, I was invited to join the 401k plan.

Fast forward to 2008… well, as far as I know, I’m making a lot more than any of my friends and I have a much more stable job.

Could I have started throwing resumes out there every so often?

Sure, but as far as I’m concerned, rewards come more consistantly to people who are honest and work hard rather than people who try to “trade up” every chance they get.

I’m comfortable where I am. I didn’t get this job by saying I could do something that I actually couldn’t. I’m good at what I do. I work hard at what I do.

I don’t have to walk into work each day hoping that I’m not asked to do something that I really truly don’t know how to do. That weight isn’t on my shoulders. And for that I’m thankful.

I’m also thankful that tomorrow is pay day. ;0)

Mmm...money...It’s like the line, “it’s not what you make, it’s what you save” quote that’s thrown around so often has finally sunk in.

I used to think that to be “rich” required having a high paying job. But now, I’m realizing that that isn’t necessarily true.

Back in November I stopped working for my highest paying client. The choice was 100% mine and I knew that the lack sudden lack of income could be a problem.

But you know what?

Now nearly 4 months later, it hasn’t been a problem. And it’s not going to be a problem either.

I was always under the impression that my day-to-day finances were what kept things pointed in the right direction but, boy, was I mistaken…

My day-to-day finances are such a tiny percentage of my net worth, and that’s something I never really realized. Investments (and property) are what make up nearly all of the monthly gains (or losses) now..

Most months, the gains in these two categories far exceed my take home pay. By far.

I spend less than I make. That’s the key. And that’s something that I didn’t do in the past (obviously) as I dug myself into $30k worth of credit card debt.

I used to lunch at McDonalds or Burger King every single day during the week. Combined with the change lost in the seats of the car, that was costing me in excess of $40 per week. Now, I don’t eat lunch at all (yes, a problem of it’s own.)

I cancelled my cell phone service with Verizon saving me at least $30/month.

As I’ve watched my monthly finance charges drop from over $400 to under $20 on my credit card debt, I’ve seen the snowball at work — even though I didn’t actually use the snowball method for much of the way. That’s saved me, well, $380/month.

My standard of living hasn’t dropped one bit.

It hasn’t really improved either, now that I think about it, but in the future it will most certainly improve — because I’ll have the money in the bank to do it.

I’d say I was just breaking even when I still had all of those expenses. Now, with just those limited examples, I’ve shaved nearly $600 off of my expenses. That’s HUGE and I hardly even notice it.

Now that the credit card debt is almost eliminated, I’m on the verge of finding myself with that extra $600/month in my pocket! The possibilities?!

It just drives home the point that how much I make isn’t all that important anymore, it’s more about what I do with the amount that I make. Now that I’m doing that wisely, the rest kind of takes care of itself. Kinda like autopilot.

Building wealth is actually a lot easier than I ever expected.

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Well… that was quick!

I filed my taxes on Sunday morning.

Monday was a holiday.

Tuesday was, well, a Tuesday.

By Wednesday, the State had already direct deposited my refund. How about that?

That’s a 1 business day turnaround! Amazing what can be done when it’s 100% online. Mmm…technology…

Now let’s see if the the federal side still takes a few weeks…

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Mortgage the future?Last night my wife set-up online billpay with her bank and is now contributing $25 every two weeks towards the mortgage. This is in addition to the $125 per week I’ve been contributing since the start of the year.

Now, while $25/week may not sound like a lot (and really, it’s not), it DOES make a sizable difference in the speed with which our mortgage is paid off.

Our mortgage was originally set to be paid off in November of 2032. Yes, that’s 24 years and 8 months away.

Through the extra payments I’ve been sending all along, I’ve already knocked 2 years off of that — so sometime in 2030.

The aggressive new $125/week plan started back in December knocked another dozen years off. Payoff date now lines up to be June of 2017.

But now, with my wife’s additional contribution to the effort, we’re up to January of 2017 — just 9 years away.

Putting that in perspective, personally, I’ll still be in my 30’s.

And with the credit card balances finally nearing zero, there will likely be even more additional money available to throw towards the mortgage. The thought that just an additional $50/month can knock off 6 months of payments is motivating.

I know that, financially speaking, a lot of people think it’s a dumb idea in the long run to pay off a mortgage early, but I’m not sure I can put a price tag on the stress that will be lifted off of my shoulders when it’s finally paid off.

It’s the classic choice: less money now versus more money later.

The answer is a no-brainer for me.

Can you can imagine life without a mortgage? In your 30’s?! The freedom that would allow is insane!

The “FU Factor” (because I wouldn’t really need my job) would be my “new” weakness, replacing debt, and really, is that such a bad thing, in a selfish sort of way?

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Gov’t Rebate CheckOkay, so yesterday I mentioned that we filed our taxes over the weekend and we’re due $2643 Federal and $801 State. Not too shabby.

I know, I know… That’s like giving the government an interest free loan.

But we have our reasons.

It’s the patriotic thing to do.

No, actually, the primary reason is that we don’t pay taxes on our income from the side business.

That’s not such a big deal when you’re bringing in a couple thousand dollars per year, but over past 3-4 years, we’ve been bringing in around $5k more per year each year.

Do the math and you can see the tax bill could get pretty ugly in just the span of a few years. And with the income having the potential to be very inconsistent, one year we could bring in $10k, the next we could bring in $30k…

That makes a huge difference when the 1099-misc’s start to roll in during tax season and you realize, oh crap, we didn’t pay taxes on $30k worth of income?!

So to compensate, we increased the amount withheld from our paychecks from our “real” jobs to cover much, if not all, of the difference. Make sense?

For 2006, I didn’t do such a great job on the calculations (or maybe we just had a lot more income than expected) — we owed the state. So for 2007, a slight adjustment on the W-4 resulted in an $801 refund.

That worked out to be $21 dollars more than I’d calculated when I did the math 10 months ago. (As luck would have it, we made almost exactly the same untaxed amount in 2006 as we did in 2007.)

With the math having come out as I’d expected, and the two consecutive tax years being so easy to compare, I now feel I have a pretty good grip on how taxes work and how to make the most of my money.

But now, we’re in the process of shutting down the business, so the untaxed income won’t be anywhere near what it’s been in the past.

So really, we should readjust our tax withholdings — reduce them — but not yet.

And while I’m not really a fan of giving the government an interest free loan, I’m also not opposed to a nice check each February/March.

As for this year’s check? Well, let’s just say that credit card debt that’s been a thorn in my side will be gone sooner than you know it…

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IRS LogoI filed my taxes yesterday. The past few years I’ve flip-flopped back and fourth from TaxCut to Turbotax and back again.

And each year I’m convinced that I’ve made the wrong decision.

The 2007 tax year happened to be a TurboTax year in my house. I like TurboTax.

I like how it has neat little icons.

I don’t like how they make impossible to back out of things.

Now, I don’t live on a farm. But the cute little deduction icon they had was irresistible. It was, I *had* to click on it.

The first question in that part of the interview obviously didn’t apply to me, so I backed out of the section and moved on to more pertinent areas.

Problem was, on the final error check, they’d partially filled out the form that appilied to farmers, so I couldn’t file until I answered how many sheep I had in my backyard and the date I slaughtered them (not the actual questions). Backing out didn’t actually back or blank anything out. The form was incomplete.

A frustrated half hour later, I figured it out, but it’s one of those things that makes me switch products each year — even though both TurboTax and TaxCut have the exact same problems?!

They aren’t simple.

If I weren’t a nerd (and my wife didn’t steer me in the right direction), I’m not sure the average casual computer user could have figured out how to fix this problem — other than by retroactively moving to a farm.

Anyway, the title of this post came from the very of the end of the tax filing process. The “fast” and “convenient” e-filing option they brag about on the box is missing at least one more starburst — and that would be “expensive”.

It came out to $17.95 for federal and $17.95 for state. Eh, whatever… That’s up only a few dollars. I think the first time I ever e-filed it was around $14.95 for each.

But the real kicker was when the screen popped up to pay the fee:

TurboTax: E-Filing Service Fee

Wow — they offer not one, but two options for paying the e-filing fees! Now that’s convenient!

Let’s see, option 1 will cost me… $17.95 + $17.95 + $29.95…

That’s $65.85 assuming they don’t hit you up for the $29.95 service fee once for federal and again for state.

Either way, tack on the price of the software (around $75) and it might have been cheaper to go to an accountant.

My favorite part is how they default the selection at the bottom of the screen to option 1, so if you’re like me and you install programs all the time, you’re accustomed to clicking, “Next, next, next, agree, next, next, finish” in rapid succession.

I didn’t get caught this time.

But the whole thing is just another reason to hold on to a credit card.

I feel bad for those who don’t have the ability to have a credit/debit card (and are usually poor) — it’s just another example of them getting screwed over again.

(Of course, I *could* always print and mail the forms for much less, but that’s too old fashioned for me…)

For the record: $2643 coming back for Federal; $801 coming back for State.
I’ll explain these high numbers later…

Can You Dig It?

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