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Friday, July 21, 2017

Monthly Archives: February 2012

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This is a repost from April 26, 2007. Yeah, almost 5 years ago… Seems history is repeating… Already.

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Headlines all over the place are touting yesterday’s surge that put the DJIA over 13,000. And then, just a few lines into the articles, every one of them taken from the AP wire, they drop the line, “But appearances can be deceiving, and there may be more reason to worry than rejoice about Wall Street’s latest accomplishment.”

I disagree. While it is odd that it’s taken less than 7 months to go from 12k to 13k (it took like 7 years to go from 11k to 12k), I don’t think it’s realistic to call this a repeat of the dot com era.

Last night, CNBC was essentially calling this bittersweet, dropping in references to the rising energy costs (I still think gas is very affordable), the slumping housing market (it’s not slumping, people are just overpricing their homes), and the sub-prime mortgage issues in the news lately. On those, hey, if you fell for a 5-1 ARM mortgage, it’s not like you didn’t see the day coming when the rate would go up. You gambled and you lost. I like to think the number of people out there with this problem are greatly exaggerated in the media.

I’m also not one to get excited because the Dow hit a nice round number. Honestly, 13k is no more exciting than 12.5k for me. I love how they drop stats like it was the “35th record close since the start of October.” Talk about meaningless filler!? Did you know I just reached a new record for breaths taken since birth? Yep, I just raised it again. One more. And again.

Don’t get me wrong, any day that has a 1% gain is huge — my net worth for next month, should the pattern hold steady, will show that. The number 13k, though, is meaningless. Love it — a meaningless headline.

My real point though is that this is *nothing* like the dot com era. I made a lot of money before it came tumbling down, but I lost my shirt on stocks like Pets.com (what was I thinking?). The past 6 months or so of gains haven’t come from the Amazons, Googles, or Yahoos. It’s been the staples, Boeing, Pepsi, Corning, etc… That’s a big difference. Those aren’t volatile stocks.

And this talk of the economy tanking just doesn’t hold any weight in my wallet. Things are cruising along just fine. And no, the price of gas hasn’t changed the way I live my life. Not one bit.

Neither has this latest milestone.

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Land Rover Discovery IIIt’s been a year now since I bought the Land Rover that’s been sucking down gas each and every month.

The main reason for the purchase was because we’d be becoming a family of four within weeks and we needed another car that we could all fit in for a family vacation…and I’d always wanted one.

Was it worth it?

Well, it has certainly lived up to Land Rover’s well documented reputation as an often-in-the-shop money pit.

There was that $1100 “incident” in March followed by the $1200 accident in June.

And how could I forget that $1675 oil change in August!?

Wow…

That’s a lot of maintenance in a six month period…

But time heals all wounds and, thankfully (or surprisingly), it’s been smooth sailing every since.

So, while I don’t feel as if it was a wise investment yet — I never expected it to run forever — I’m still glad that I bought it.

It’s just eclipsed the 60k mile mark so it “should” have some life left and if I get another 20-40k out of it with minimal maintenance, well, it’ll have been a steal!

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I’m pretty sure that I’ve said this before and, if not, I’ve certainly thought it — I can’t stand it when people just generally assume that “things are going up”.

Sure, it might seem like they are but… for the most part, they’re not.

Or are they?

In the past, I’ve found that a nice constant to use for this sort of analysis is a utility bill — any utility bill.

I moved into my current home late in October of 2002 but, for simplicity sake, I’ll just pretend that I moved in on January 1, 2003.

Here’s what the my natural gas bill has looked like from 2003 through 2011.

2003 – $329.67
2004 – $988.97 (I switched to a natural gas furnace)
2005 – $1733.93
2006 – $1545.59
2007 – $1666.98
2008 – $1892.21 (Coldest year ever?)
2009 – $1633.42
2010 – $1599.13
2011 – $1512.82

As you can see, I peaked in 2008 and have been on a steady decline ever since.

What happened?

Gas prices do flucuate, yes, but my heating habits certainly haven’t. I like to wear shorts in the house — even in February.

Thanks to global warming (or something), it was a balmy 58 degrees in Connecticut on Wednesday.

So I’ll blame that “inconvenient truth” — and applaud it. Hey, it’s saving me money!

Seriously, though, last time I heard, gas prices have been on the rise since 2008… and are still going higher… yet, my bill is shrinking…

The weather hasn’t been “that” crazy…

What gives?

Ordinarily I’d just flat out say something like, “Things aren’t really going up now, are they?” and end the post there…

But not today…

Could it be that the new siding and that insanely small amount of styrofoam insulation behind it that we had installed in the summer of 2007 got the ball rolling?

And what about the “real” insulation that we put in behind the walls during our 2010 interior renovation?

Could those “investments” be paying for themselves via my natural gas bill?

Apparently.

And I thought that part of the sales pitch was totaly hooey…

Okay, so my gas bill has dropped, what about the others?

Well, here are the stats for the rest of my utilities (exlcuding water/sewer cause it’s pretty static no matter what):

Utility Graph

Electricity and Cable went up, phone dropped like rock.

Explanation?

Well, I’m going to attribute the recent electricity increase to laundry for a family of four (starting in 2011) and a power sucking plasma television (which debuted late in November of 2010).

And the cable bill relates directly to the new television — we upgraded to HD service.

The dates coincide with the additional expenses.

As for the phone, in 2010, we got fed up and went with MagicJack.

I can’t stress how great this thing is.

For those interested in all of the actual numbers, click here.

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Eli TerryThis post isn’t about Eli Manning or the Giants winning the Super Bowl. If I’d cared about that, I have written about it two weeks ago.

This is about a house that I drive by a couple of times per week.

It was built in 1748.

Yeah, 264 years ago.

It was once the homestead of a Eli Terry, a famous inventor and clockmaker in the late 1700’s. So famous, in fact, that he even has a Wikipedia entry.

Hey, you know you’re pretty famous when you’ve been dead for 160 years and still end up on the internet.

Anyway, the big house sat on the corner of two pretty busy roads on a large wooded hillside lot…until 2006…when the local Historical Society sold the property to a developer.

I guess the agreement was that they could develop the property on the condition that the home was “restored”.

I know a land grab when I see one and this…was defintely a land grab.

So the the house was quickly lifted from it’s foundation and up onto a device resembling the crawler tank thing that used to move the space shuttle and launch pad around.

Eli Terry Homestead

And then the blasting began.

Hillside? What hillside?

Trees? Yeah, not any more.

In a matter of weeks, the hillside looked a lot like what I’d imagine some areas of Beirut still look like — except for the big white colonial sitting on top of a tank.

The home slowly crept farther and farther from its original foundation as the developer clear cut and leveled more and more of the lot.

Then a new foundation was poured.

No, not for the home, silly, for a… wait for it… wait for it… a CVS Pharmacy!

What town doesn’t need a CVS Pharmacy?

This area has five of them — yes, five CVS’s.

Three Walgreens, at least two Rite Aids, and a handful of other more region-specific chains too.

Now I don’t know about you, but the hardship of trying to find a full scale 24-hour Pharmacy this day in age is akin to…well, encountering a stop sign during your travels in search of one.

Can you say saturated market?

Soon, even before the CVS could open (because there weren’t any pharmacists available to staff all of the pharmacies dotting the landscape), another foundation was poured.

Could it be… a Walgreen’s?

Amazingly, nope.

They built a bank.

Now, the only thing easier to find in New England besides Dunkin’ Donuts and competing Walgreen’s and CVS pharmacies on adjacent lots are banks.

As this second building went up, I’d notice each week as the the old house inched farther and farther back — like so far back that it had no where else to go…

And then this week, maybe four or five years after the “development” started, it was announced that the “historic” Eli Terry homestead would be demolished.

I saw that coming the day they lifted it off of its foundation.

Somehow it survived being lifted off of its foundation and trucked around all over the place (meandering roughly the length of three football fields or so), having rock blasting occur closer than rock blasting should occur, a snow storm from hell — not to mention 264 years — but suddenly due it its “recent move and storage on stilts, as well as abuse from vandals,” it has deteriorated so greatly that it cannot be restored.

Yeah, okay…    #sarcasm

I dunno, the minute it started moving up what was left of the hill, it was apparent to me that the developer had zero intention of saving the house.

Certainly doesn’t say much for the local Historical Society either. They could say that they were bamboozled but, c’mon… This was clear as day.

Honestly, I’m shocked that it didn’t “mysteriously” go up in flames before the developer even propped it up off of the original foundation — and I wouldn’t be shocked if that happens prior to demolition day anyway.

“Oh, what happened?”

But what really, really ticks me off is that the developer has apparently gotten away with not living up to their end of the agreement.

Dat ain’t right, yo.      #ThatReallyPissesMeOff

But, hey, now the pain med addicts have yet another place to fulfill their bogus prescriptions…

Goodbye, old house.

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CalculatorI seem to have made a habit of having good start to the year — last January was pretty thrifty too.

Christmas spending hangover, perhaps?

$922.22 : Day Care
$498.72 : Mortgage
$225.38 : Auto Insurance
$215.76 : Business Expenses
$206.27 : Gasoline
$193.73 : Natural Gas
$184.38 : Electricity
$140.07 : Hockey Jerseys
$138.12 : Cable/Internet
$120.00 : Cash
$73.31 : Phone
$40.08 : Life Insurance
$36.66 : Finance Charges
$26.04 : T-Shirts
$33.09 : Toys
$8.00 : Car Wash

That all adds up to $3061.83.

As I’ve been doing the past few months, I’ve showcased the “infrequent” or “unusual” expenses in red.

And I’m grateful that there weren’t too many of those unusual expenses to showcase.

Hockey jerseys. What can I say and not sound like I should be on an episode of Intervention? The good news (or bad news) is that this hasn’t appeared on one of these spending reports since September. It’s also good news that I only spent $140.

Seriously, I browse things that cost 10 times that much on a near daily basis…

A phone bill? What? Yep — last time I paid a phone bill was back in March of 2011.

Even better, this is the last phone bill you’ll see in one of these reports until 2017. How about that?

No joke — everyone should switch to MagicJack.

Basically, MagicJack’s rates were slated to increase on January 20th so, since it’s been wicked awesome since we switched to them in 2010, I pre-paid for the next 5 years at the lower rate.

Oh, and I took the car for a car wash.

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February 2012 Net WorthJanuary was a pretty good month for me.

While most of the gain was due to my 401k and 100% based on a swell in the stock market and not anything that I actually did, I’m still pretty proud of the progress I made on the credit card debt.

Cash:
My side income was a bit higher than normal — especially at the end of the month — which definately shows in the category.

Savings:
After taking a few thousand out in December to pay my property taxes, I’m back on the $135 per week deposit plan.

Gov’t Bonds:
The variable rate portion of these is starting to become noticable. Just five bucks? Sheesh… Hey, at least they’re still earning more than the same amount of cash would in a savings account.

401k:
I’m not totally certain but I think my balance here is approaching the highest level that it’s ever been. What recession?

Home:
This drop must be due the cracked piece of sidewalk out front. ;0)

Auto 1, Auto 2, and Auto 3:
The Scion took it on the chin because some jerk-wad dinged the passenger side door. That said, the car is over 6 years old now so it had a pretty good run…

Credit Cards:
Oh yeah… Down $3260 over the last two months. My financial goal for 2012 is quickly coming together.

Auto Loans and Other Loans:
Nothing to report.

Mortgage:
Just another minimum payment.

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I’ve seen a couple of articles over the past couple of weeks on this topic. Essentially they’re just fluff pieces filling space in the business pages but everyone likes fluff pieces…

Anyway, I live in Connecticut so I’m going to focus my attention there.

Huffington Post – January 22, 2012
Credit Card Debt: $7,730 (3rd highest)
Median Household Income:$64,032 (4th highest)
Average Credit Score: 672 (9th highest)
Cost of Living: 4th highest

Connecticut is often recognized as one of the country’s wealthiest states. This is a well-earned reputation. The state has the fourth-highest median household income. The cost of living is also higher than that in all but three states. Residents, therefore, spend more than those in most other states. Average credit card debt is the third highest in the country, but not surprising, their credit scores are also high.

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Hartford Courant — February 2, 2012

Classic example of how you can make numbers say whatever you want them to.

Niether article really listed how they came to these values but I think it’s funny that the largest newspaper in Connecticut came to the conclusion that we’re number one while the Huffington Post (with a more national audience) only put us in third.

All of that aside, where do I stack up?

My current credit card debt totals $6635. Lower than either stat above.

Less than a year ago, it was $28165 which far exceeds them both.

So since I’ve been on both sides, above and below, I think I’m equipped to have a knowledgeable opinion.

Well, not surprisingly, I do.

The Huffington Post puts Connecticut in third place in the nation with an average debt balance of “just” $7730.

No freakin’ way.

First off, I don’t think $7730 is nearly high enough to be third in the country. No way.

How many women between the ages of 18 and 45 do you see walking around with $400 Coach purses with matching $250 rubber boots? They’re all over the place around here.

I don’t have a problem with it (the boots are pretty fugly, though) but I don’t have the income to justify spending that kind of coin on some ugly accessories.

As our household income is considerably higher than the stat listed, I’d pretty comfortable saying that 80% of those Coach accessories were purchased with a Visa, Mastercard, or, heaven forbid, a Discover Card.

And that’s just the tip of the iceberg, I mean, we’re just talkin’ purses and boots here… and, for the guys, I’m pretty sure it’s not cheap to pimp out a Subaru either…

So I’d say the average 24-30 year old in Connecticut is carrying a 5-figure credit card balance. Easily.

And a $20k auto loan too… with an income well shy of $64k per year.

So… I’d say the Hartford Courant’s $15k number is more accurate — but probably not high enough to rank number one.

I mean, Connecticut isn’t New York or California… We’re third.

But combine the two articles and I think you’ve got the accurate result!

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Boehner must live in the Sunniest part of OhioDuring President Obama‘s SOTU address he touched on something about making it easier for people to refinance their mortgages at the current bargain basement prices and today I’ve seen two or three articles about it.

I haven’t researched it (at all) but I’m assuming that this is some kind of after-the-fact reactionary federal government proposed “solution” to the housing crisis of the past few years, you know, an attempt to quell the number of foreclosures that dot the landscape.

But that’s where I lose the connection.

Refinancing at a lower rate (at best, 3 or 4 percent lower which, technically speaking, is nothing) doesn’t solve the foreclosure problem.

For instance, my newest neighbor moved in back in 2006 and paid around $275k for their home.

In general terms, it’s pretty much the same house as mine except that I only paid $141k for mine in 2002.

Following the housing “slump” our homes are currently only worth around $200k.

It’s not rocket science to come to the conclusion that my neighbors are underwater (they owe more than the house is worth) and are likely prime candidates to “walk away”.

The re-finance “solution” won’t ease their pain.

It’s not the interest rate on their mortgage to blame — it’s that they paid too much for their house.

So what’s the point of this government proposal again?

To make it easier for people who can’t afford homes in the first place…again?

It’s too soon for history to repeat itself.

This blog apparently is repeating itself…

Back in 2008 I asked, Are Home Values Important to the Economy?. That post was along the exact same line.

It was a better read, though…

I’ve lost my touch.

No, really…

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Full Disclosure: I freely admit that I benefited from the easy and available money back when I purchased my home with a tiny tiny tiny down payment.

Yes, mortgages were easy to come by and I’m fortunate enough to have rolled the dice, made a “wise” investment with the money loaned to me, and come out the other side a winner with a low rate, a low monthly payment, and a house worth more than double what I still owe.

Can You Dig It?

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