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Archive for January, 2011

Is it time to dump the emergency fund?

January 25th, 2011 at 06:47 pm

Not that I have ever had money designated as the "emergency fund", but I have kept money in savings (much in online savings) and checking accounts just because I liked to be flexible. Usually that meant I needed to pay for something large (read: car repair) with a credit card, and then I quickly paid it off (read: No interest). In the past days I have read a few blog posts where the issue of keeping or not the emergency fund has been discussed. Good arguments are made to not have one, as long as you have credit cards you can use in an emergency, and you have other less than 100% liquid funds you can access in a short amount of time. (CDs and brokerage accounts)

The above seems to describe me to a "T", and I have already been considering doing something like this. Plus I overdid paying taxes at the end of last year, so now I should be getting a refund of over $1,500.

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What follows is a train of thought going on as I mull this over. (oh, btw, I *was* a math major in college, so I love these type of math puzzles)

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After this month's mortgage payment my savings will be over half my outstanding mortgage, and unless my car dies I'm not going to have any emergency needs, at least nothing my credit card can't easily handle. Soooooooo... I have been putting $2,000 a month for a few months on the mortgage and it hasn't killed me. Maybe I should up that amount? I have a CD maturing in August. I have another one I could break - its only earning 2.3%. Those two CDs would give me another $2,500. Add that to the tax refund of $1,500, and that's $4,000. I have savings of $11,000. Together its $15,000, and I only need $19,000. If I go for a last payment at the beginning of September, that makes 7 more payments. Let's see, $2,800/mo. would just about do it. And doing this would save me another few hundred in interest payments. Oh man, I'm tempted. Soooooo tempted.

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When the mortgage payment is made for the begining of March, I will have to come back and indicate what I did Smile

Is this a sign of the times?

January 22nd, 2011 at 08:23 pm

Maybe this is common, but if so I must live an isolated life (could be - I don't go out shopping much at all).

Tonight I stopped at an intersection and a neon light in a store window across the street caught my eye. I thought it said "gold". I looked again. Sure enough it was "Sell your gold here". Odd, I don't remember a pawn shop there. The light turned green and the truck next to me moved out of the way and I see I was right - its the laundromat that has always been there. Laundromats are now buying gold? Are people really taking gold to a place like that to get money? ????

Of course the real solution is to not waste money on stuff like gold when you could have more pressing needs, but really, why would you sell your valuables there? I guess thats where the economy is today though. Ugh.

Starting the year out right.

January 11th, 2011 at 02:00 pm

People make resolutions every year it seems. I can't say I have anything I would call a resolution, just areas I want to work on. One is cutting down the few bills I still have (and getting extra money whenever possible). Towards that end I already have done a couple tasks these first two weeks of the year.

First I was going to cut down my newpaper bill. I think it was coming in at $3.50 or so a week. I really didn't need anything but the Sunday paper, but I had let this ride for at least half a year (boooo), and today I finally dealt with it. I called, and of course they tried to convince me to keep my service for 7 days a week. After I couldn't be convinced, all of a sudden they had a great sign-up offer that they would let me in on. Now, my last payment which was only good for 2 months (into March), now has me paid until mid-July (6 months)! Of course I'll have to go through this again, but at least I got the lower price now for just making a phone call. Savings of about $25 a month.

Next I signed up for a $25 from a Bank of America credit card I got in the mail. I need to spend $250 in the coming 3 months to get it. I then paid my online phone and cable bills, as well as made two online purchases of my nutrition drinks. That combined to over $200, so not much to go. I will keep track of the purchases, writing them on the paper offer that was sent to me, then when I have enough, off the CC goes back into storage.

Next I started with the install with MagicJack, a replacement phone service over IP. If this works well, I will cut off my land line service saving $25 / mo. If I need emergency service, I can use my pay as you go cell phone for that use.

And last night I went and bought 20 lbs of chicken leg quarters for $10 yesterday (nice sale price) and spent the evening removing skin/fat (yuck) and freezing them. Now I have enough meat (and high in protein) for my after workout lunches for a few months at least!

And as a final goal for the year (no, not a resolution), its a big one. I am trying to pay off my mortgage by the end of the year. This means taking about 60% of the money I take home after taxes, health insurance, and deferred compensation and paying that amount monthly. I don't know if I will be able to keep up this pace or not. The remaining money will cover my other expected expenses without a lot extra left over. This is going to be a challenge. 2010 taxes are the first year where I don't get any benefit from having a mortgage, so now is the time to put the pedal to the metal and get it over with.

So here's to 2011. Financial freedom is in sight (Total zero debts). Its going to be hard to make it to the finish line this year, but whenever I get there (this year or next) its going to be strange having extra money.

I have a tiger in my tank

January 3rd, 2011 at 06:04 pm

Wasn't that the Exxon marketing pitch way back to show how great their gas was? 1980s or 90s???

Anyway, for quite a few years I have been brand agnostic when it comes to gas for my vehicles. I have kept track of my MPGs and I never really saw a difference in MPG I couldn't attribute to some effect (long distance driving, cold weather, or some such). That is until this past month. I ended up buying gas at a regional convenince mart / gas location that I hadn't gone by in years (I just happened to be in the area). The gas cost about 8% less than other stations in the area, so I quickly filled up. After that fill up I noticed the fuel guage going down quicker than usual. I was concerned I had a problem with the car, but then I remembered I had bought gas at an unusual location.

After the next fill up at a brand name location, I checked the MPG from the prior fillup, and saw the MPGs had dropped 10%. After using up this next full tank, the MPGs went back up to where they had been previously. And have held steady since.

I guess this shows gas is not a universal commodity, there is some difference to the brands, and getting cheaper gas may not be the deal you think it is.

Goals 2011

January 2nd, 2011 at 07:40 am

Hmmm, a new year - and maybe a new set of goals based on my prior year's goals? I'm going to list mine for this year, then a review of what I wrote last year and how I did.

First for the upcoming year (2011):

Financial:

•Fund Roth IRA fully. No date this year as I will be having some competing expenses I didn't have this past year. It may take all year to complete this.
•Continue max contributions to 457 plan (a 401k plan for gov't types) so that I max out contributions by end of September. I'm keeping this from last year.
•Be happy with spending once in a while (yeah, not frugal, but I need to have a life - so to speak). This is another good one I want to keep.
•Sell more books and other junk to help free up space at home (and make money!). I did well this year and I should be able to keep it up.

Personal:
•Finish cleaning the house - Part way there, I should be able to finish this year (Yeah, I'm slow, but I'll do it - honest!)
•Try the online dating again - I can't quit, can I?
•Continue to volunteer and donate blood. At work there is supposed to be some new program for volunteering - I will need to see what thats all about.
•Start / finish repairs & tasks about the house. - I already started one project today - if only I can keep it up.
•Continue my exercise routine at home. - hopefully the nagging ailments will subside.
•See if I can finish paying my mortgage by year end. This will be tough. I have CDs maturing Jan 2012, so if nothing else I will be able to finish the mortgage by then.
•Get a new (to me) car. - This is going to hurt my finances, but it can't be helped.

Long Term (Post 2011):
•Get my retirement savings to $250K by my 50th birthday (late 2012). My (401k, 457, Roth IRAs) are at $197,000 now so if I can put in $16,500 in the 457 and $5,000 in the Roth each year, this could happen.

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And now lets see how the goals worked out last year (2010) This should be interesting...

Financial:

•Fund Roth IRA fully by June 30 - I met this goal - finished by mid May
•Continue max contributions to 457 plan (a 401k plan for gov't types) so that I max out contributions by end of September. - Another one that worked out, I maxed out in mid September.
•Be happy with spending once in a while - hmmm... hard to say - I did get some great items at yard sales, and I didn't stress over the prices (much). So I'll give this one an ok.
•Sell more books and other junk to help free up space at home (and make money!). If I can get this year to at least be a wash it would be tremendous. - I don't have exact numbers, but I believe my ebay/half.com sales paid for all my ebay/yard sales purchases this year. If not it was close. And I have cleared out some room. So I count this as a success.

Personal:
•Finish cleaning the house - I did ok, but still have a ways to go.
•Try the online dating again, of course trying to keep more of a zen philosophy while doing it. - Ugh. At least I tried for the Zen. The rest - total failure.
•Continue to volunteer and donate blood. - Kept up the blood donations anyway.
•Start / finish repairs & tasks about the house. - Did some - so-so results.
•Re-start my exercise routine at home. - I did workouts at home, usually one or two nights a week - still not as good as I would like - but I see the changes - my body looks close to my high school years now.
•Look into applying for the team lead position opening at work at the end of the year. - That didn't fly - oh well I tried.

Long Term (Post 2010):
•Get my retirement savings to $250K by my 50th birthday. It was around ~$150,000 at the beginning of the year (401k, 457, and a Roth IRA). - I ended the year with my accounts totalling $197,000 - A very solid increase from last year. Barring a market downturn again, this looks like it may happen.
•Determine within 3 years if I want to finish my working career at my current job, and if so find a house to live in closer to work. - no change
•Finish paying off of current mortgage by 50th birthday. - I've upped the payment amount, now I hope to finish January 2012, possibly earlier.
•After the mortgage is paid, buy a new (new to me) car. My current one is getting long in the tooth, hopefully it can last to 2012. - The car had a bad year, its still running but I don't know how long, but I already have a replacement car in the wings that should be available by this spring. Hopefully it no major repairs will happen between now and then.

Whew. Sorry, that was a lot of stuff to read. I know its a lot, but if I can do that, I'll be pretty well set. But isn't that was being frugal is all about? Having a life you can enjoy without worries?