Excited about bills!

We’re back from vacation, and waiting on the kitchen table were about 20 pieces of mail. It took a bit of time to work our way through the mail, sorting the junk from the bills and paychecks. There were quite a few bills in there, including… our annual homeowners insurance bill!

I can’t tell you how excited I was to see this bill.  I know, I’m weird. But my husband and I are just so proud to have bought a house, and this bill marks our first year as homeowners!  Our actual closing date was August 24, so we’re really only celebrating 11 months. Still, time really does fly.

Trent at The Simple Dollar recently discussed the problem of homeowners walking away from their mortgage. I guess our family still considers home ownership a part of the American Dream, and we’re working very hard to stay comfortable in our home while still saving for other goals. I do feel sad for those who cannot afford their dreams, or who chose to be so short-sighted as to walk away from their home.

On a positive note, our annual insurance premium went down by $120.  I think it’s a combination of our age (?), a year without insurance claims, and the fact that we added a life insurance policy with the same company. In any case, that’s $10 a month left in our pockets!

On the road…

As you read this, we’re on the road headed for vacation.  Have a great weekend, and stop back early next week for some fresh posts!

Gifts ect.

My in-laws just came back from vacation with a car full of gifts for us. T-shirts, key chains, souvenir postcards and photographs, you name it.

The problem is, we can’t really use any of this stuff. We have too many nick-knacks as it is, and we’re really trying to cut back on “stuff.” The t-shirts don’t fit.  We have our own photographs from the vacation site, having already visited it ourselves.

To make matters worse, they left the price tags on everything.  Now we know that they spent $14 on a pink vase (a vase from the beach?), $20 each per shirt that doesn’t fit, $7 each for two key chains, and $10 for the photographs. It really bothers me that they waste money on us.  I don’t mean to be ungrateful, but I would much rather have an hour of quality time with them, or one great gift that we can use, rather than $80 worth of stuff.  I’ve tried to explain this already, that we’re really minimalists, but they just don’t get it.  They like stuff, so we must like getting stuff, right?

They also buy food for us, and invite us out to eat 2-3 times per week. I’m a planner, and like to schedule meals for the week.  (They’ll bring over a rotisserie chicken, just as I’m finishing up supper.  Thanks, guys.) They think we can’t afford food, because they’ve seen me clipping coupons and writing out a grocery list. I COULD spend $100 per week on food…  but then we couldn’t contribute to our retirement funds, or prepay the mortgage, or set money aside for our “fun” expenses like vacation. We choose to make sacrifices in our daily expenses, in order to have a better lifestyle in the long run.

I’m really concerned about what will happen when we have children.  My family is very frugal and thoughtful – we will search for weeks to find the “right” gift, and give just one or two well thought-out gifts per person. His family prefers an all-out gluttony of gifts, most of which wind up back in our “re-gifting” closet for the next holiday, because we just can’t use them.

I can already see our children being spoiled by gifts…  and I don’t want that to happen.  I grew up learning to appreciate what we had, because it wasn’t much.  I don’t want our children to struggle or feel deprived, but I also don’t want them to think that money comes from credit cards and the ATM.  Please spoil our children with love, not money.

Does anyone else have this problem?  Do your family and friends respect your lifestyle?  Have you be able to come up with a compromise that makes both families happy?

Asking for discounts

We’ll be leaving on vacation in a few days for our annual “antique tractor” exhibit.  It’s like a car cruise, only it lasts four days.

We always get a hotel room for this setup.  It’s hot, in the woods, with no running water. But hotel rooms are expensive – about $60 per night.  We usually bring a tent along and sleep in the tent the first nights. It’s the best of both worlds - camping is free, but we also have access to a shower at least once a day.

We’ve been doing really well with our finances lately. We spend our money thoughtfully and frugally, and set aside at least 10 percent for retirement, plus extra payments on the mortgage and student loan.  We’ve been scrimping for 10 months now, with lots to show for our efforts.

I’ll make it clear: I’m tired of being frugal on vacations, and I do not want to sleep in a tent again. So I did the next best thing to free camping – I called the hotel and asked for a discount.  I explained that we already had reservations, and were considering adding a night or two to our stay. Could he give us a reduced rate on those extra nights?

I’ve never done this before, and my heart was pounding the entire time. Would the manager think I was cheap?  (Well, I am.)  Would he be stingy? (They usually are.)  But we both knew what he was thinking: We had already locked into the room for Friday and Saturday night. If we don’t sleep there on Thursday, the room will stay empty. Nobody rents a hotel room on Thursday night in this area.

After a long pause, he asked if 20 percent off would work – 20 percent off the entire weekend.  That would be wonderful, I said; book us for the third night.  I got the third night for just $24!  I did a little victory dance after I hung up the phone.

It never hurts to ask!

Air conditioning and the electric bill

We got our electric bill today.  I was very hesitant to open it…  we’ve had the AC in our bedroom turned on almost every night this month.  It’s been really muggy in Pennsylvania, with no relief from the heat and humidity at night.

We got a great surprise: The bill was only $4 higher than last month.  We used an average of 17 KWH per day, up from 15-16 KWH per day. I can live with that.

We have been making a real effort to reduce our energy consumption, and it’s starting to pay off.  We’ve been making one small change a month to see how it affects the electricity bill.

Yes, we used the AC for about 8 hours each day.  But we set the AC to 72 degrees, which was just cool enough to let us sleep. Cost this month: +$4

We’ve also started hanging our clothes up in the basement.  I still machine dry socks and underwear, mainly because my time is more valuable than hanging and matching a few dozen socks.  But we’ve been line drying jeans, towels, sheets and t-shirts.  Savings: $5

We’ve also been using the grill, which cuts out the electric oven and stove. We don’t have central air, but it sure is nice to not heat up the entire house with dinner. Unknown savings, but a nice, cool house.

Finally, we made one simple, silly change to our routine: We turned off the heated dry cycle on the dishwasher. I didn’t even realize this was an option when we moved in last year, because this is my first dishwasher. Duh!  We do the dishes every 2-3 days, so a family that runs the dishwasher more often could save even more. Savings: $10 per month.

We’ve now trimmed our electricity bill from $75-80 per month to $55-60. In my book, that $15-20 savings is well worth the minimal effort. We’re saving money and the planet at the same time!  I’ll admit that I no longer snowflake these savings – I just budget the $60 now, and have an extra $20 to put towards our retirement funds.

Other things we’ve tried, which made a much smaller difference: Switching to CFL bulbs, unplugging the TV and VCR when not in use (we don’t have cable, use them only for movies), and turning off the computer most nights. Together, these three changes may have saved us a dollar or two…  but these things do add up.

Market confusion

Is it any wonder today’s investors are confused?  These two headlines ran on MSN/Yahoo within 12 hours of each other:

Dow off 237 as financial stocks crumble
Stocks head for higher open

Okay, I can understand that. Financial stocks are weakening, but there was some optimism as the market opened this morning. Optimism is good – our country literally runs on optimism.

Later today, these two Yahoo news pieces ran 5 minutes apart:
Dow, S&P turn negative on oil, financials
Stocks higher despite worries about financials

Can you see the short term investors pulling their hair out? What is it – higher or lower?  Red ink or black?

I just wanted to point out the insanity of today’s marketplace. If we try to overanalyse the situation, we might just catch ourselves selling valuable stocks on a bad tip or media lead.

At the age of 23, this is my portfolio’s first true bear market. It’s scary, and I don’t like it.  I’ve lost more than $1,000 in the past six months – about 15 percent of my retirement portfolio.  My financial adviser’s advice?  Sit tight. It hurts, but there are no bulls without bears.

Until that bull comes charging back into our stock market, I just tell myself that I’m buying lots of stocks on sale. I like sales, right?  I’ll stick to my large-mid-small cap indexes, and hopefully ride out this mess with a profit in the end.

In the meantime, I think I’ll just stop reading the daily stock updates. How much value can they hold for a long-term investor?  Not much.

Continuing education

I’ve been trying to get a part time job with our local newspaper, copy editing the paper.  I do some freelance work for them, and they like my writing style.  I enjoy the atmosphere – it’s friendly and welcoming.

The managing editor is very eager to get a copy editor on board, even if it’s only part time.  (I’m not ready to give up my freelance gigs – the tax benefits are great, and I love the flexibility.)  But while he is in charge of hiring/firing, he needs the go-ahead from upper management to create a new position. Surprise – they’re not hiring right now due to economic conditions.

The local community college is offering an online editing class for $100. The managing editor is encouraging me to take this class, hoping that the extra background will be enough to talk his boss into hiring me. I have an editing background from college, but no formal education outside of a journalism degree.

$100 is a lot of money in our monthly budget.  We do have more than six months expenses in an emergency fund, though.  I’m thinking about borrowing from Peter, hoping that Paul whips out the checkbook and hires me after I finish the class.

It’s been over a year since I finished college, and I’m suddenly itching to take another college course.  At the very least, it’s a business write-off. What would you do in this situation?  Would you fund the class out of your efund?  Would you “find” the money in the budget, scrimping on retirement savings? 

Roth vs Traditional IRAs

Back when I was 16, my father helped me open a Roth IRA. “She’s so young!” our adviser exclaimed. “Think of how much tax money she will save!”

Retirement plans come in both traditional and Roth forms. Roth 401(k)s and IRAs do not offer a tax deduction, but money can be withdrawn tax-free during retirement.

A traditional account lets you take a tax deduction for retirement contributions. If you contribute $1,000 to an IRA or 401(k) in 2008, you can deduct $1,000 from your income for tax purposes. Any money earned through the investment is then taxed when you withdraw the money during retirement.

 My trusty Roth worked well the first few years.  I didn’t earn much income, and my taxes were always low. My employer took out the government’s 10% and that was that.

Move forward a few years. I am now self-employed, and with my husband earn substantially more than we did in high school and college.  Suddenly, we’re being hit with self-employment taxes, a higher tax bracket, etc.

My trusty Roth is continuing to plug along, but is it still the best retirement plan for our situation? We’re in the position right now where we could really use the tax breaks a traditional retirement plan can offer.

I must admit that I don’t trust the government, either. Will they be able to resist taxing Roths in the next 40 years?  Will they be encouraged or forced to tax these otherwise “tax free upon withdrawal” accounts, to make up for the financial mess our country is headed towards?

In my opinion, it can’t hurt to diversify your retirement funds. If we have both a traditional and Roth IRA, we should be able to choose “when” we are taxed in retirement. I’m aiming for an equal mix of Roth, traditional and non-retirement funds to pull from at our discretion.

Note that I mentioned non-retirement funds, such as long-term stock market investments. While there are no tax benefits to saving money outside of IRAs and 401(k)s, etc., you pay taxes on capital gains, not the entire invested amount. Of course, who knows what capital gains will be taxed at in 20 or 40 years?

What I’m really attracted to, in the case of non-retirement funds, is the ability to pull my money before age 59 1/2. We’re hoping to retire young, perhaps between 45 and 50. While the government does allow us to take “substantially equal periodic payments” before age 59 1/2, a 72(t) withdrawal, I’d rather have complete control over how much (or how little) we withdraw in early retirement.

How are you planning for retirement?  Do you have a mix of tax-advantaged accounts?

Our financial vice

FiveCentNickel recently discussed his biggest financial vice (eating out), and encouraged other bloggers to examine their own spending habits.

By far, our biggest vice is beverages. While we prepare meals in our own kitchen most nights, we’re both rather hooked on flavored beverages – soda, juice, iced tea, milk, coffee, you name it.  We probably spend nearly $10 per week, or $500 per year, on beverages alone.  The ocassional bottle of wine doesn’t help much, either.

But that’s not too horrible, you might add.  It’s only $10 per week – that’s less than the cost of a night out. Consider this: Our food budget is only $45 per week. We spend 22% of our budget on drinks. Yikes!   

I really wish we could drink tap water, but we have a sulfur problem and filters don’t completely remove the smell. We can cover the smell with drink mixes, yes, but I just can’t take any icy glass of water and chug it.  Shudder…  it’s like drinking raw eggs.

I have been making some progress.  We’re focusing on sales, and try to drink what’s on sale for the week. The Husband loves Mountain Dew, but will drink the generic brand of soda on occasion. We also stock up on drink mixes, and try to focus on “healthier” mixes that don’t have sugar as their main ingredient.

Finally, I’m experimenting with new water filters. We haven’t hit one yet that works completely, but I’m highly motivated. Aside from financial concerns, I’d love to brush my teeth in sulfur-free water.

Rite Aid rebates

Have I ever mentioned that Sunday is my favorite day of the week?  My husband stays home from work, we usually sleep in, and we get coupons and ads in the paper!  What’s not to love?

Rite Aid is offering several steals this week on bathroom products:

Herbal Essence shampoo and conditioner, 2/$5 (normally $3.99 each)
There was also a coupon for $3 off 2, and a rebate for $2 off two.
Total cost: Free

Infusium leave in treatment, $4.99 (normally $7.69)
I had a coupon for $3 off, and a rebate for $2
Total cost: Free

Crest toothpaste, $2.49 (normally 2.99)
I had a coupon for $1 off, and a rebate for $1.74
Total cost: -$.25

The final verdict: Rite Aid paid me $.25 for $18.66 worth of stuff.
That $.25 pays for the sales tax, which means I break even after taxes and get a summer’s worth of hair products for free!