April 28, 2007

Good Prospective Car Buyer


I have been trying to sell my car for awhile now in an effort to reduce our monthly expenses and increase our net worth. Currently, we pay $883 a month in car payments for our two vehicles.

I spoke to a lady today who seems very interested. She called twice and sent me two emails within a 24 hour period. After a long discussion with her on the phone, we made a tentative plan to meet on Wednesday for her to see the car. She actually owned the same vehicle, but just totaled it in an accident. The good news is that her insurance company gave her a check to get a new vehicle.

Of all of the prospective buyers I've had, this one seems the most determined and able. In fact, she told me if someone makes me an offer before we meet on Wednesday, that I should call her. I am selling the car for $18,000 and plan to purchase a vehicle (with similar mileage) that costs $11,000-$12,000. This should reduce my monthly payments by roughly $150 and also reduce my insurance costs. Wish me luck!

April 27, 2007

What’s In Your Wallet?

I love Capital One’s "What’s in your wallet?" ad campaing; they’re consistantly funny. While I’m not going to sign up for their credit card just because I enjoy the commercials, they do ask a good question. So, here’s what’s in my wallet:

Driver’s license – Of course.
Picture of wife – Gotta have it.
$10.00 bill – I prefer to pay using my cash back credit card, so I don’t carry much cash.
Post-it note with Travelocity vocher code – Vocher code was given to me when Travelocity made a mistake on a trip. I keep forgeting to use this; I don’t even know if it is still valid.
Jambacard - Jamba Juice gift card that probably has $0.73 left on it. I love smoothies!
Blockbuster Membership Card – Gets us movies.
Blockbuster Online E-Coupon for a free movie – We receive these monthly as part of our Total Access membership
PetsMart PetPerks Card – Gets us discounts on all of the stuff we buy for our puppy.
VonsClub Card – I never do the grocery shopping, so I don’t know why I have this.
Passport Service Information Card – In case I lose my passport.
AAA Roadside Assitance Card – In case I have car trouble.
500 minute PrePaid Phone Card – In case I don’t have cell phone service or change to make a phone call.
Health Net Insurance Card – Needed for doctor visits.
Optometrist’s business card – I must have grabbed this during my last visit.
Citi Dividend MasterCard – Cash back rewards card used for household expenses.
HSBC Platinum MasterCard – Cash back rewards card used for business expenses.
Mellon Commerical Visa Card – Company credit card, rarely used since I prefer to place charges on my cash back credit card and get reimbursed.
San Diego County Credit Union Visa Card – I do not use, but has a $10,000 credit limit and long payment history.
San Diego County Credit Union ATM Card - Used to access our joint savings account.
Washington Mutual Gold Debit Card – Used to access our joint checking account.
Bank of America Platinum Check Card – Used to access my personal checking account.


What have I learned from this exercise? That I have too many cards! I am ditching the following:
San Diego County Credit Union ATM Card - we only have $50 in the account to keep it open so that we can have access to the credit union for future auto loans.
Optometrist’s business card – the phone number is already programmed into my cell phone.
VonsClub Card - I don’t use it.

Picture me holding a 4” thick wallet, with a funny expression on my face, as I throw these 3 cards into the trash can, and say in a grumpy voice, “What’s in your wallet?”

April 26, 2007

RSS Feed

1MansMoney now has an RSS feed! I just learned about RSS feeds and love the convenience they provide. Inside of visiting your favorite blogs each day to see if there is new content, you can subscribe (for free) to your favorite blogs and visit one website to see updated content from all of them.

To subscribe to 1MansMoney’s RSS feed, click on the icon in the upper right hand corner of this webpage. You will be prompted to choose a reader (I use Google Reader) and create a user id and password. Then, whenever you want to see if there is new content from 1MansMoney and other blogs you subscribe to, you just log onto Google Reader. What a time-saver.

April 25, 2007

Real Emergency Fund

I think it’s great to have an emergency fund for unexpected events, such as sickness or job loss. However, if there were ever an emergency that took out the power for a long period of time, such as a major earthquake, it is likely that we would be unable to access our saving accounts or use our credit cards.

My wife and I rarely have more than $20 in cash on us, because we try to charge most of our expenses to our cash back credit cards. This puts us in a tough position if we needed to buy water or gas during an emergency. That being said, we decided to take $150 out of our savings so that we have cash available at home. We requested small denominations ($100 in one dollar bills and $50 in five dollar bills) so that we do not have to worry about getting change.

The money will be hidden in our condo and hopefully never used. We plan to buy a safe within the next year for my wife’s jewelry, important documents, and this emergency cash.

April 24, 2007

Gotta Love Easy Money

I just received confirmation from HBSC that our $25 cash back redemption request has been received, and our check will arrive within 15 business days. Not a big sum of money, but the only thing I had to do to earn it was charge my business trip expenses to my HBSC rewards Mastercard (which my company immediately reimburses me for).

My wife and I also have a Citi Dividend Platinum Select MasterCard that we use for most of our household expenses. The card is paid off monthly and earns us up to 5% cash back. In fact, we should be able to request a $50 reward from the Citi MasterCard next month. Easy money.

April 23, 2007

Financial Websites

I really enjoy searching the web for high quality financial websites that I can learn from. It's amazing how much information is available online. Below is a list of sites that I visit frequently.

Early Retirement Forum
Finding this site started it all for me

2million
My favorite personal finance blog

Morningstar
More finance information that you can ever read

Bloomberg Calculators
Many useful financial calculators

Vanguard
Offers a wealth of resources and low expense Roth IRA choices

April 20, 2007

Why Don’t We Talk About Money?

Other than my family, I only have a couple of friends that I talk with about money. Even then, our conversations are usually limited to vague references, and not actual numbers. I can see pros and cons to keeping money matters private.

Pros



  • Less chance of jealousy if your financial situation is better than another person's


  • Less possibility of embarrassment if your financial situation is worse off than another person's


  • Less likelihood that someone will hit you up for a loan / try to steal from you


Cons




  • Lack of mutual learning thru discussion


  • Could promote “looking wealthy” rather than “being wealthy”


  • May contribute to a ignoring, or not giving enough attention to, financial issues



  • As you can see, I can argue both sides, however, I lean more towards wanting to talk about money - this blog, although anonymous, is a great example.

    One exception for me when it comes to talking about money is discussing compensation with co-workers. I don’t do it and wouldn’t recommend it.

    April 18, 2007

    Net Worth Milestones

    To achieve our net worth goal of $1.5M in 20 years, we need a plan. Below are our net worth goals for each year (click on spreadsheet to enlarge). This plan assumes an average annual return of 8%, and our ability to increase our investments as our careers develop.

    As you can see, if we are able to hit our targets, we are still almost $300K short of our $1.5M goal. I guess that’s why they call them "stretch" goals.


    April 17, 2007

    Roth IRA vs 401(k)


    We currently have $12,688.05 invested in my company's 401(k) plan and $630.00 saved up to begin funding Roth IRA’s for my wife (minimum required to open a Vanguard Roth IRA is $3,000).

    The 401(k) money was accumulated (no company match) over the past 5 years of off and on investing without a plan or a goal. Now that we do have a plan and a goal, we have decided to focus on fully funding our Roth IRA’s this year, while still contributing a small amount (2% of my salary) to my company's 401(k) plan. The Roth IRA money will be invested in the Vanguard 500 Index Fund.

    The main reasons we choose to focus on the Roth IRA’s are:



    • The average expense ratio of Vanguard 500 Index Fund is just 0.18%, while the average expense ratio of our 401(k) investments is 1.48%

    • The Roth IRA principal can be withdrawn penalty-free, while the 401(k) has limited loan availability

    • The Roth IRA has no mandatory withdrawals, while the 401(k) withdrawals must start at 70-1/2

    Since Roth IRA contributions are limited to $4,000 in 2007 (increases to $5K in 2008) we will be investing a total of $8,000 for my wife and I this year.


    April 16, 2007

    Northern California Coast Trip

    We just returned last night from a friend’s wedding in Northern California. It was a great time, but we spent almost $400 for the 2-1/2 day trip. Our portion of the cabin was $160, our share of the gasoline (we drove) was $115, and meals totaled roughly $100.


    The Northern California coast is absolutely beautiful – lush green countryside, quaint cabins, and dramatic ocean views. The small town they had the wedding in was so remote that our cell phones did not work, internet access was via dial-up, and our cabin did not have a TV. Not having these distractions really helped us better enjoy the beautiful scenery. Of course, the first thing I did when I got home was turn on my computer and check on our financial accounts. Old habits die hard. . .

    April 12, 2007

    Nice Commission


    My wife just got word today that the commission she is expecting on 4/20 will be more than we thought. She’s getting $1,599.68 ($1,147.24 after taxes)!

    We have earmarked the money for the following:

    $656 to pay off American Express
    $200 to Emigrant Direct emergency fund
    $171 to church
    $120 to buy wife new jeans (she earned it)

    What a blessing!

    April 11, 2007

    Prosper.com Update

    I posted last month about how we were gambling with some play money in Prosper.com. We currently have $100 spread over two $50 loans and an average return of 12.21%. Both borrowers are current with their payments.

    Loan 1: https://www.prosper.com/lend/listing.aspx?listingID=109590

    Loan 2: https://www.prosper.com/lend/listing.aspx?listingID=112548

    That all sounds pretty good, but one drawback of the system is that you do NOT earn interest on money in your prosper account (where the borrower’s payments are deposited) and CANNOT withdraw less than $25 at a time. So, unless we choose to invest more money in Prosper so that we can make another loan (also a $25 minimum), our money is stuck in a non-interest bearing account. Add to that the risk eliment of a borrower defaulting and I’m starting to think it is not really worth it.

    April 10, 2007

    $25 For Opening An ING Direct Savings Account


    One of the simplest ways to get your money working harder for you is to open a high yield online savings account. We use Emigrant Direct and ING Direct because I have read many good things about both banks in online forums, and have been very happy thus far. These banks are FDIC-insured and pay a much higher interest rate that your typical brick and mortar bank.

    If you would like to receive $25 for opening a high yield ING Direct savings account, send me an email and I will forward a referral link to you.

    Full disclosure:


    • You have to fund the account with an initial deposit of at least $250.

    • I will get a $10 thank you bonus for referring you.

    • To qualify for the $25, you must use the link in the email.

    April 9, 2007

    Counting Easter Egg Before It Hatches

    My wife just did some back of the napkin calculations for her commission check this month. If all of her orders go thru as expected, she should receive a $1,033 commission check (less taxes) on 4/20. This would be a sizeable boost to our net worth for April. Go wife and thank God! We’ll use the money to immediately pay off our American Express credit card, leaving us with just one credit card balance of roughly $1,800.

    I love counting our eggs before they hatch. Happy Easter!

    April 6, 2007

    Stong Financial Foundation


    Simple ideas for a strong financial foundation:

    Live below your means
    I believe this is one of the most important steps to a strong financial foundation and, for me, one of the hardest. If you try to keep up with your rich looking friends and associates, you may end up like most of them: lots of nice stuff, but a low net worth. Every dollar that you save is worth more than an extra dollar earned because the extra dollar earned is taxed.

    Start an emergency fund
    Job loss, health issues, and expenisve repairs are financial blows that can affect us all. Open a high yeild savings account (Emigrant Direct, ING, etc.) and start saving for the unexpected.

    Aviod credit card debt
    Credit card debt is the path to financial ruin. Been there, done that. Believe me when I tell you that digging the hole is very, very easy and climbing out is often a long, hard fought battle. The only thing we use credit cards for now are monthly bills because we get cash back from our Citi credit card. Don’t do this if can’t pay off the balance in full each month.

    Track spending / create a budget
    It’s easy to overspend if you don’t know what you’re spending. Track spending for a few months and use this information to create a budget. The budget will help keep you on track and hopefully help you find areas where you can reduce spending.

    Learn all you can about investing
    Most financial planners are more interested in their commission, rather than what is in your best interest. If you educate yourself, you can save A LOT of money and probably do just as good a job, if not better.

    Invest at least 10% of your gross income
    The future is coming whether you want it to our not. The magic of compound interest can make your consistent contributions grow into a large nest egg. Take advantage of tax sheltered retirement account such as a 401(k) and/or Roth IRA. If your employer offers a 401(k) with a company match, take advantage of the free money.

    April 5, 2007

    Target Retirement Date


    Our ideal target retirement date is 2027, twenty years from now, when I am 52 and my wife is 43. Realistically, this goal is going to be a stretch, but we have a long enough time frame that I think it is possible under favorable conditions.

    If we believe that we can live on $60,000/year when we retire, then using a 4% Safe Withdrawal Rate (SWR), our nest egg goal is $1.5M. However, with inflation averaging 3.43% annually, our nest egg may need to be substantially larger.

    We will refine and better define our plans/goal as time goes on. Some other challenges in reaching our goal include being able to purchase (and pay off) a home and finding affordable long term health care. Our desire to have children will also affect our saving/investing rate, but won’t stop us from having them.

    I guess if I have to work until 53, I could live with that.

    April 4, 2007

    Frequent Flyer Miles


    I have been traveling for business for 6 years. It took me 5 years to finally bother to sign up for frequent fly miles, even though I have had plenty of co-workers and friends recommend it. I felt like I didn’t want to have to arrange my schedule to fly with a certain airline. That was very, very dumb.

    In the last 12 months, I have accumulated 31,368 miles on Delta SkyMiles and 11,316 on American Airlines Aadvantage. .. . for doing nothing more than enrolling and entering my account number when purchasing tickets. That is enough points for a free flight in the continental U.S., Alaska, Canada, Caribbean, and Mexico on Delta (see chart) and a free upgrade (see chart) on American Airlines. Best of all, since I signed up with Delta and American Airlines, I have not had to bend my schedule to fly on these airlines.

    I’m kicking myself for all of those years that I flew and did not accumulate frequent flyer miles.

    April 3, 2007

    Short Term Financial Goals


    Below are some of our short term financial goals (1-5 years). I have checked off the items we have completed.

    a Pay off 401K loan

    a Pay off credit card debt with rate interest over 0%

    a Save up 2 weeks worth of vacation (in case of job loss / unable to work)

    Pay off 0% interest rate credit card debt

    Open and fully fund Roth IRA for wife

    Open and fully fund Roth IRA for husband

    Sell Car 1

    Pay off Car 2

    10% (of gross income) contribution to 401(k)

    Build emergency fund to $12,000

    We’ll be selling Car 1 and funding Roth IRA’s for my wife and I in the coming months, so more checkmarks will be added soon.

    April 2, 2007

    March 2007 Income Statement

    We had a great net worth increase in March, but did a poor job staying within our budget. We were sadly over budget $775.68 in March (click on spreadsheet below).

    A lot of non-monthly bills hit in March, such as both cars needing servicing, buying a baby shower gift, enrolling wife in new insurance program, and a mini vacation. That's not a good excuse though because we also went over budget for some of our standard monthly bills.

    Time to take back some ground by coming in under budget next month!

    Stay tuned. . .


    April 1, 2007

    March 2007 Net Worth Update (+$6,462.28)

    A lot of progress was made since our February 2007 Net Worth update. We have a positive net worth! Thank God! It’s a great feeling to finally have a positive net worth, even if it is only $3,293.43.

    I can’t believe we were able to post a $6,462.28 change (click on spreadsheet below) to our net worth in one month. Over half of this increase was due to our Federal and State tax refunds ($2,044) and my wife receiving a $1,463 tuition reimbursement.

    Here are the highlights from March:

    • Our 401(k) has recovered pretty well from the $1,000 hit it took during the February stock market plunge
    • We have $100 (starting small) invested in prosper at an average rate of 12.23%.
    • Our emergency fund was given needed attention
    • We made some serious headway on paying down our credit card debt. All of the remaining credit card debt is on 0% interest credit cards
    • My wife’s student loan balance also was hacked down by the tuition reimbursement that she received

    I don’t expect us to be able to keep up this kind of a pacing in the coming months, but we’ll sure try.