Networth Update!!!

It's a few days early but it's been so long since I published a networth update that I wanted to get one out while I had a chance... It's been a good six months. Mr. Savvy's been working a lot more than he did last year, his industry is starting to pick up..... however he was told last week that he may not be working at all in July. We'll see what happens. We still work on limiting our spending. I'm in total declutter mode, so we are getting rid of a lot more than comes in, which is nice. I haven't been selling a lot, opting instead to give it away for the tax deductions. I just want it out of the house/garage/basement/yard/porch/attic. We have a second baby on the way, expected in early winter. It's very reassuring to know that we don't have to buy much for this one since he/she is due just a month after our first child's birthday. We have plenty of seasonally-appropriate clothes (although most are pretty boy-ish, so if this is a girl we might have to buy some stuff eventually), we already have slings and a co-sleeper, we will re-use our cloth diapers (which I'm thrilled about!), and I will nurse again (and I already have a good pump and we have bottles for daycare). We will have to pay for more daycare, and probably up the 529 contribution amount, but we'll manage. One thing we found out recently is that the eight-year-old roof on our house needs to be replaced. It was a complete tear-off and re-do that the previous owner had done in 2001, but the company that did it put the shingles on incorrectly. They are literally blowing off now. We have no recourse against the company that did the work, and we are looking at another complete tear off. No idea what it will cost. Our networth is starting to creep back up. We've been making progress on debt and maintaining our consistent contributions to our retirement accounts. Houses in our neighborhood are selling for pre-burst amounts. Cash versus Credit Card: -19,383 (Jan 2009: -29,294, up $9,911) Retirement: 146,657 (up $29,862 from Jan 09) Real Estate Equity: 84,939 529: 4,640 Random Stocks: 1,922 Total: 218,776 (up $44,504 from Jan 09)

Update on 2009 goals

Update on 2009 goals.... 1. Declutter! - We always have a stack (okay, pile) of towels in our bathroom that doesn't fit in the cupboard. Today I finally decided to bite the bullet and get rid of some towels. It wasn't difficult to sort out the ones we don't like, and now we have plenty of room to keep our towels folded neatly in the cupboard. This took about 20 minutes to solve a clutter problem I've been fighting for two years. 2. Garden more! Most of our garden is in the ground, thanks to my dad. We even have a raised bed that has a hoop over it, so we should be able to plant veggies early in the spring and late in the fall. 3. Install our rain barrels. One is in (after much trial and error), and one is waiting for me to buy some parts to hook it up. 4. Clean and organize our basement. No progress. 5. Knit. I've been knitting less and less, but I'm trying to carve out more time, even if it is just a few minutes a day. I haven't been making it to any knitting groups... needs effort.

DIY blunders

The NY Times has an entertaining article on DIY Blunders - Even to Save Cash, Don't Try This Stuff at Home, that I just couldn't resist posting. The author is trying to make a good point, sometimes it is worth it to go to the professionals, but I have to laugh at the examples used in the article. Most DIYers learned long ago to do the research first, before purchasing materials, performing demolition, or otherwise crossing the point of no return. Don't let the article scare you, DIY doesn't always mean a professional will be cleaning up your mistakes at 10x the original cost. Search online, visit the library, ask friends and family. As your DIY skills improve, your confidence will grow and you will become better able to judge the projects within your realm of abailities and desires. This coming from someone who has successfully installed her own toilet, cuts her son's hair, waxes her own eyebrows, hems her own pants, and cooks the majority of her family's food from scratch. I also hire electricians and plumbers, don't do carpentry (although Mr. Savvy does some), and pay someone else to change the oil in our cars and rotate the tires (again, Mr. Savvy does this sometimes, but we've found it saves less than $10 and can take an entire afternoon). DIY can save you time and money (yes, I said time - once you become proficient at something it can save you lots of time), but you also have to know your limits.

Trading in our truck?

I wrote a couple months back about selling our two-door Civic and buying a Fit... at that point we had the check in our hands and were ready to purchase, but we decided to hold off because we were still a little uncomfortable taking out a car loan in an uncertain economy. Now it seems like we might have a great opportunity if the Cash for Clunkers plan gets passed... we might get rid of both our 1997 pickup truck (which gets 17.5 mpg according to FuelEconomy.gov, as well as our Civic. The plan as it is written right now would make the truck worth $4,500 at trade-in, about $3,000 more than it is worth on the open market. We would sell our Civic via private party. I don't like having an third vehicle, and our goal as has been to get down to two, but our truck is worth so little that it hasn't made sense to sell or trade it in since it runs well. It also gets very little use at our house since the gas mileage is so poor and its inability to accommodate a car seat, even in a pinch. If we are able to do this, we would have a Fit and an Impala... eventually we'd like to get something that suits us a little better than the Impala, but for now it runs great and is paid for. This would be a great opportunity for us to reduce the number of vehicles we own, eliminate the two vehicles that don't fit our family anymore, and improve our overall fuel economy. We'll have to see how it all plays out.

An unexpected way to boost the economy

These days you are more likely to catch me reading Mothering instead of Smart Money, but when I saw this article I just had to share. Mothering has an excellent article, ,Nursing by Numbers: How Breastfeeding Boosts the National Economy. The numbers aren't just thought provoking, they are shocking. I've posted some snippets below, but I highly recommend reading the entire article, as it is full of interesting information. In 2001, the USDA concluded that if breastfeeding rates were increased to 75 percent at birth and 50 percent at six months, it would lead to a national government savings of a minimum of $3.6 billion. This amount was easily an underestimation since it represents savings in the treatment of only three of the dozens of illnesses proven to be decreased by breastfeeding: ear infections, gastroenteritis, and necrotizing enterocolitis. ... The AAP says each formula-fed infant costs the healthcare system between $331 and $475 more than a breastfed baby in its first year of life. The cost of treating respiratory viruses resulting from not breastfeeding is $225 million a year. ... The multi-study report estimated that breast cancer rates could be cut by more than half if women increased their lifetime breastfeeding duration. The National Cancer Institute reported the national expenditure on breast cancer treatment in 2004 was $8.1 billion, meaning extended nursing could save upwards of $4 billion a year. ... For the national Special Supplemental Nutrition Program for Women, Infants and Children (WIC), supporting a breastfeeding mother costs about 45 percent less than a formula-feeding mother. Every year, $578 million in federal funds buys formula for babies who could be breastfeeding. The health benefits of breastfeeding alone is what motivates many families to feed their babies breastmilk, but the individual costs of formula (quoted as anywhere from $700 to $3,000 per year) also has a huge impact on family budgets.

Debt payment update!

Now that Mr. Savvy is back at work on a more regular basis, we've been able to make more progress on our debt repayment. I don't have an exact number because some of my accounts won't update in Yodlee, however a little effort with pen and paper tells me that we have a cash versus cc debt number of ($25,000). This is an increase from ($29,294) on February 1, or $4,294 in just two months! We still haven't completed our 2008 taxes and we have our fingers crossed hoping for a small refund. I'm going to try to update NetworthIQ soon, but probably not today.

The American Life

I love listening to This American Life every Sunday, broadcast on my local NPR affiliate. This week's broadcast featured an especially interesting story about what happens when a bank fails. They mention the fact that in the US right now there is an average of one bank failure a week. You read that right, one bank fails every week. What was interesting was the way in which the FDIC goes about taking over the failed banks... in a very covert, SWAT-team-like manner. I recommend listening to the podcast (Scenes from a Recession), also available on iTunes, if you can't catch the broadcast locally.

Updates on the Savvy House

I haven't posted much in the last month. Thinks have been good for us... Mr. Savvy's job is pretty steady again, which is a nice change from this time last year. He thinks he's got solid work through June, with the exception of any weather-related days off. He's employment status is very fluid, so I think the gradual uptick in work is an early indicator that the economy is starting to recover slightly. Yesterday's stock market rally also has us hopeful. We did have to put the Savvy Dog to sleep a couple weeks ago. Her health has been deteriorating, and she was having some issues. It was very sad, and I still miss her greatly. Just yesterday I caught myself looking for her to come running around the corner when I pulled into the driveway. We are considering buying a new car, replacing our 2001 Civic Coupe. The Civic doesn't suit our family much anymore, Baby Savvy is getting big, and it is difficult to get a 25 lb kid into the back seat of a two door car and secured in a car seat. We have selected a 2009 Honda Fit Sport. We've actually negotiated the price and secured a loan, we are just waiting to make sure it is what we really want to do. We like the size, the price, the gas mileage, and the predicted reliability. It is just hard to justify going from a super reliable vehicle with no payments to having payments again. Baby Savvy is doing great. He's an "independent" toddler now, walking, talking, learning everything he can about everything around him. He's tons of fun, and I look forward to summer when we can go to the park and the pool again.

Have you been wanting one of these?

We have wanted a Flip video camera ever since we used my mom's at Christmas. They are so convenient and easy to use, but we have been trying really hard to not spend any money on frivolous things. Well... Amazon has the Flip Ultra in white on sale for $79.99 with free super saver shipping. I think I might have to splurge a little and buy one.... after all Baby Savvy is only a baby once, and that price is hard to beat.

Making progress even when things are tight...

Tight with a capital T is how I'd describe our finances these past couple months. We are trying to not spend (I still haven't ordered the Flip Ultra I mentioned in my last post... I've talked myself out of it for the time being), and save as much as possible, but there isn't a whole lot to save. So we are making due. It's actually not all bad, I think it gives me focus. We are smarter about the cents, and hoping the dollars come naturally. I'm starting to do a few more zero-percent balance transfers... while the big money isn't there anymore, even an extra $100-$200/month helps. We're also smarter with our credit card rewards, using a card that offers 5% cash back on gas purchases when we buy gas, and using another card that offers 2% back in the form of mortgage principle buy down all other purchases. There's also some other arbitrage opportunities, nothing like the heyday of 2005-2006, still out there. You have to look for them, but they can be found.

Net worth update

Just completed our net worth update over at NetworthIQ. Did more adjusting of real estate values, resulting in a further decline, but I don't want to over-estimate the value of our properties. The good news is that we've seen an increase in our cc debt versus cash value. We were at ($31,803), and we are now at ($29,294), for an increase of $2,509! We've really reigned in spending, and are seeing the benefits. Additionally, Mr. Savvy worked three full weeks this month, more than he's been able to work in months.

sold my soul for a cheap car seat

I just placed an order on Wal-Mart.com for an inexpensive car seat. We need a third seat for Mr. Savvy's parents, so they can take Baby Savvy on Fridays during the summer. I didn't want to spend much money, and just needed a utilitarian car seat that was safe. Wal-Mart and Target were both cheap, there was no local purchasing option, and Wal-Mart had the cheapest shipping.... so they got my business. On a happier note, we've recently discovered Signing Time, a series of video episodes that teach babies and toddlers sign language. They were viewable for a brief period of time on some PBS stations, and luckily we can get them from our library. I don't generally like children's DVDs and programming, but these are a gem, being educational, entertaining, engaging, and completely lacking in product placements or any type of marketable toys or characters. I love them, and more importantly, Baby Savvy loves them. He's just recently started having toddler melt-downs and I think knowing signs will help him communicate with us better, avoiding frustration that can often lead to tantrums. We even noticed improvements after watching just one video.

Silver lining

I was able to find a renter for our unexpectedly open unit. We did have to offer 1/2 month free with a one-year lease as a promotion, but that isn't too bad this time of year. We aren't in the clear yet, the existing tenant owes a lot on her utility bill (much more than the deposit we are holding), but I have confirmation from her that she will pay the bill before the end of next week.... and I do think she will. Our refinance went off without a hitch, despite not having a signed lease in time for closing. Another silver lining is that the carpet installer honored our quote from last year, as well as a promotion they are running right now, saving us an additional $180 on top of the price we negotiated last year.

Closing on refinance tonight

We close on our 15 year fixed-rate mortgage tonight. We got a rate of 4.75% with no points (although I think I would have preferred a 30 year, but that's another post), and decided to jump on it. The change to our payment is negligible, but the house will be paid off 2 1/2 years sooner!

Continuing to declutter

I'm so proud of myself. I've been on a Craigslist binge recently (maybe purge is a better word?), selling some exercise and sporting equipment. A couple hundred dollars in my pocket, less clutter in the house, and someone else is getting a good deal on some equipment that will hopefully get a lot of use in its new home. Everyone's a winner! In the last few months I've actually been able to get rid of a couple big items. My goal right now is to not replace them, to instead enjoy the extra space and extra play area for Baby Savvy.

Net worth update

I just updated our net worth over at NetWorthIQ. MoneyCenter is being slow today (or maybe it is me) so I didn't bother with the typical chart. A couple of notes... I adjusted the value of our house and our apartment building, resulting in a drop in equity of $9,000. Our house was adjusted down, the apartment adjusted up based on the estimated fair market value on our tax bills. We are still not making any progress on debt paydown, due to the holiday and Mr. Savvy's continued layoff.

Welcome to 2009!

Yeah, 2009 is here! I'm hoping that it beats us up a little less than 2008, but I have a feeling that it will be more about learning to roll with the punches, and appreciating non-material things a little more. 2008 was a really good year for us... if you ignore the stock market crash, the housing crash, the layoffs, and the massive amounts of snow and flooding, 2008 was pretty damn fun. Baby Savvy is growing up to be a handful (but a very fun handful!), I'm learning the importance of having hobbies that aren't work or school, and Mr. Savvy has a lot of time to enjoy being a dad since he's had more time off than expected this year. We had some goals for 2008 that I'd like to recap below.... 1. Become a paper-towel and napkin-free house. Success! We used the last of our paper towels a few months ago and haven't bought any more. We use cloth napkins (hemp ones actually, we've learned to avoid anything with synthetics, and we like hemp ones more than cotton), and it works really, really well. I recommend it to everyone who wants to try... even with three adults and a toddler in the house it doesn't add much any noticeable extra laundry. If you want to try it out, wait for Kohl's to have 50% off their placemats and buy some cotton napkins. If you like it, you might want to consider acquiring some hemp ones from Ecolution. You could also buy some cotton dishtowels and hem them if you want. 2. Continue to increase the amount of food we buy locally. Success, with more room for improvement. We do plan to have a larger garden next year, growing more than garlic, herbs, and tomatoes, and we have planted more fruit trees. We still belong to our CSA and love it, and we buy our meat locally. We've also been trying to eat more game (I'm not a game fan, but I'm learning to cook it in ways that make it more palatable), since Mr. Savvy is a hunter. 3. Make-do. Room for improvement. I've gotten much better at this (otherwise we would have never made it through this year financially), but I still spend a lot of money. I really need to cut back on shopping, especially online. 4. Spend more time with friends and family. Success, with room for improvement. I made efforts at the beginning and ends of the year, but let this slip a lot. Needs work. 5. Compost. Success!!!! We have a compost bin and a bucket and are composting maniacs. Okay, we haven't actually gotten to use any of our compost, but we are making it and should have some nice dirt for next year's garden. It is AMAZING how much trash we have been able to compost. I'm also exploring ways to use cardboard or paper in our compost (anyone have any links or info I would appreciate it). So what goals do we have for 2009? Obviously we have to continue working on the items above, but I want to add a few more things to our list.... 1. Declutter! I've been decluttering a lot the last few months, and it makes keeping the house clean MUCH easier. I also want to eliminate not only physical clutter, but mail clutter, emotional clutter, digital clutter, time clutter, and any other type of clutter I can find. Here's a cool website I've found that has lots of useful information (and some clutter) on decluttering. I also need to remember that clutter gets into our lives because we bring it in, so I will work on eliminating the sources of clutter as well. 2. Garden more! I want to grow more vegetables and herbs, including storage crops. I'm making lists of the things I want to grow, trying to be realistic (will we eat it? do we have the time/space/desire to grow it?), and planning our space and time. We'll start small this year, see what grows well, and go from there. 3. Install our rain barrels. We bought rain barrels at the end of the season last year, but haven't installed them. I want to install and use them this spring, as well as come up with a way to store them for winter that is convenient and protects them from freezing and cracking. 4. Clean and organize our basement. Really. This needs to be done. I did one room a couple months ago (it looks great!), but the rest is a disaster. We buy materials and tools we don't need because we can't find the one we have, and every project is a chore because we have to sort through loads of crap to find a decent paintbrush or the needlenose pliers. 5. Knit. I'm just adding this because I love to knit and it makes me happy. Who doesn't need a resolution that makes them happy? I should add that part of this resolution is also to attend the local knitting groups, they make me happy too. Farewell 2008 and welcome to 2009! I hope everyone has a great year!

burned by a renter

One of our tenant's lease expired yesterday. About a month ago, we negotiated over the phone a five-month extension, and I dropped off the paperwork at her apartment shortly after. I didn't receive the signed lease back, but expected it to come with the January rent. I'm typically pretty laid back about these things, but I probably won't be after this. Yesterday, I received an email from the tenant giving me 30 days notice. Never mind that a month-to-month was not an option (technically she has no right to be living there right now since her old lease expired and the new one hasn't been signed). So I now have 30 days to find a new tenant. We also need to install new carpet in this unit, something we weren't planning for a few more months. Oh, and we are refinancing our house right now and have to provide signed copies of all our leases to the underwriter by January 5th. Unless a miracle happens, we probably won't be able to refinance at this time. I haven't received her January rent, but she promised it is in the mail (she has until the 5th to get it here). I put ads up last night on Craigslist and a few other places. I've already received some interest, so hopefully it won't be too difficult to rent. My biggest concern is that this unit doesn't show well since the existing carpet is so old.

yikes! four years ago...

It looks like the fourth anniversary of this blog came and went with no fanfare. Here's a link to my first post. My old posts are definitely much more interesting than anything I post now. Probably because I had a lot more time back then, and because it is interesting to read about how much has changed, both personally and from an economic standpoint, since writing them. Archived posts are all available on the right sidebar.

refi time!

We, like many other people, are going to try to refinance our house in the next couple weeks. We just locked in a good rate on a 15 year fixed mortgage, and have been pre-approved, but we still have the agonizing appraisal process to go through. We had a failed refi attempt earlier this year when an appraiser had blatant mistakes on our appraisal, devaluing our house by about $20,000. We currently have two mortgages on our house. Our primary mortgage is a 5.375% and has 16 years left, and our second mortgage is at 5.99% and has 18 years left. The 15 year rate is lower, and our total payment will go up by a few dollars, but it will shave several years off repayment period, saving us tens of thousands of dollars in interest. Aren't sure if you should refinance? Check out Dinkytown for some great calculators that can help. If you don't know where to get a good rate and no closing costs, check out PenFed.org. On a side note, I turn 30 next week! Holy crap, where does the time go? I think I started this blog when I was 25 years old!

Rental unit update

I did the annual books on our rental unit last week to prepare for filing income taxes after the first of the year. There are still a few things outstanding, primarily the receipt and payment of our property tax bill, as well as some maintenance and supply purchases. However, I was able to get a good picture on how we did during our second year as rental property owners, and it was much better than I thought. Our income was buoyed by having zero days of vacancy across all four units. I'm very proud of that number, I've worked hard to keep our building full since we bought it, and I think this year shows that there is benefit in all that hard work. We have all four units coming up for renewal next summer, I know at least two will need new renters. Hopefully I can turn them quickly. We also had much less in the way of maintenance expenses this year compared to last year. We still had some, more than I would like, but it was a very reasonable and expected amount. We will have to replace carpet in one unit next summer, and that will cost a lot of money, but we have started a savings account to pay for it. We still will show a considerable loss on our taxes, so there will be additional tax benefits to our investment. The municipality that the building is in also is predicting the value of the building has gone up slightly this past year. No idea if that number is reality based because no like building are currently for sale nor have any sold recently. We just renewed two leases and took small rent increases (1.5%) to cover the increases in insurance, maintenance, and snow removal. We still have really great renters. We've gotten very lucky in that regard.

Memorable gifts for a toddler

Baby Savvy loves active toys; trikes, balls, cars, anything that involves jumping, bouncing, riding. I have found several toys on Amazon that I think Baby Savvy would love, and they appear to be good quality, durable toys that will be played with for years. We have both the Rock and Bounce Pony and the Scoot About and they both get used almost daily. The Rock and Bounce Pony is great for smaller kids, we started Baby Savvy in his at about 8 1/2 months. The Scoot About is also great for young kids as it doesn't have pedals. I had a Scoot About as a small child, and rode it until I was about three years old. I still remember riding it around the house, in what seemed at the time like cavernous rooms at break-neck speeds. Any one of these toys would make for a unforgettable Christmas for a toddler, as well as provide years of play, without spending tons of money.

the season of shopping

I've only shopped on Black Friday a couple of times. The last few years I didn't because it was too hectic and I most of the deals didn't appeal to me. In high school and college I worked at Best Buy, so I was there for Black Friday (the entire grueling 18 hour day), but not shopping. It took me a few years to recover from the frenzy of fistfights over parking spots and cheap laptops, but then I found myself venturing out at 5am in search of deals. After a few years I realized that true Black Friday deals were usually few and far between, so I started staying home again. This year my mom and I hit the thrift stores. It was the most fun I've ever had on Black Friday. We bought TONS of useful stuff, and didn't break the bank. I'm a big fan of thrift shopping anyway, and the thrift stores, not to be outdone by big box stores, were stocked to the gills, well merchandised, and poised for sales. Some of my best deals were a brand new Lands End Baby Squall Jacket for Baby Savvy. It's his size, and he needed a coat for this year. It retails for $49.50 new (and this was brand new, defect free, with tags), and I paid $7.38. I also got him a used, but very nice, winter coat for next year for less than $5. I purchased a pair of Ugg driving moccasins in my size, brand new again, for $1.50. They are the trifecta of thrift shopping, cute, comfortable, and cheap! On top of that, I scored a replacement toaster oven (once again brand new and spotless) to replace ours that has a broken door for just $25, the exact same model retails new for over $80. I purchased lots of other stuff... clothes, a toy and a book for Baby Savvy, lots of work jeans for Mr. Savvy. Some really nice men's sweaters, and a couple of sweaters for me. My mom found good stuff too, including a great pair of unworn Born loafers in my dad's size for less than $10. It was great fun... less stressful and a little more adventurous than going to the mall, and much easier on the pocketbook.... and no stupid mail-in rebates to worry about.

News alert regarding mail-in rebates

This might be old news to some, but with the holidays approaching it may well be worth repeating. Just last week, one of the largest processors of mail-in rebates, Continental Promotions Group, started pressuring their customers (retailers and manufacturers) to provide additional funds to help cover rebates. The company is cash-strapped, and has said they may not have the funds available to pay consumer rebates. More information is available here. A list of companies that hire CPG is available here. While rebates may be tempting, the old adage that a bird in the hand is worth two in the bush may be very true this year.

Updates on the Savvy Household

Life is good at the Savvy house! Mr. Savvy got a call yesterday asking him to come back to work on Monday. Hopefully it will be for more than a couple days... we are hoping for at least a few weeks. Baby Savvy is learning so much every day, it is amazing. And I swear he grew an entire inch in the last week, all his clothes (which were already short due to his long lankiness) look comical on him. He loves to eat, play with the (mostly un-enthused) Savvy Dog, ride his trike, and listen to music. We are getting him a pair of Bilibos for Christmas, I think they will be fun for all of us. We got our first winter storage share from our CSA two days ago. Lots of yummy food, different varieties of onions, potatoes, garlic, cabbage, rutabagas, carrots, leeks (my favorite!), daikon radishes, beets, Brussels sprouts, squash, pumpkins... We received the Brussels sprouts still on the "tree" and it looked so cool that I think we are going to plant a Brussels sprout plant or two next year. Last night we had roasted Brussels sprouts with our grilled pork chops, and today I'm making chicken pot pies (one for the freezer), and a fresh pumpkin pie.

$30,000+ drop in net worth

As you can see in the chart below (some users will need to scroll down a lot to see it), this month was a bad, bad month for our net worth. Our personal financial situation isn't great (it's not terribly bad though either), and the recent stock market fluctuations have taken a toll on our retirement accounts. Our cash versus credit card amount was down $4,945, which isn't as bad as it looks. We paid the contractor doing work on our house $4,900 this month, and we also paid a $610 annual life insurance premium. We are also paying $350 extra per month on the second mortgage on the apartment. Mr. Savvy hasn't been working, but we still managed to keep our normal expenses fairly reasonable (although a previous post talks about some cuts we want to make there as well). We are looking on the bright side though... we converted a Rollover IRA to a Roth. This might be the best/only opportunity we have to do that. We are also resuming our small monthly investments in a couple of DRIPS through ComputerShare. I'm also going to be doing some portfolio rebalancing soon, taking advantage of some of the more beaten up sectors, as well as the nice yields from dividend paying stocks. November October Difference Cash vs Credit Cards (30,634) (25,689) (4,945) Retirement 131,985 159,657 (27,671) Real Estate 95,154 93,077 2,077 Stocks 1,632 1,930 (298) Education 2,374 2,594 (219) Total 198,435 231,568 (33,133)

Roth IRA conversion complete

I received our trade confirmation from Fidelity for the Roth IRA conversion, so I logged into our account and confirmed that all is as it should be. The conversion is done, the only outstanding task is paying taxes on the account value. And now that Mr. Savvy's original Roth (the one we contribute to every year) and his old Rollover IRA are one account, we have more flexibility when choosing our investments.

Spending challenge

Some days I love Yodlee... some days I hate it. Today it told me how much we spent in October in various categories, and let me say that the numbers did not make me happy. I won't bore you with all the details, but here are the high low lights... Insurance - $835 - Not much we can do here. $605 was an annual life insurance premium. The remainder ($230) is three vehicles, our house, and the apartment building. Groceries - $490 - for people that buy their produce from a co-op (and pay at the beginning of the summer) and their meat from the farmer (paid months ago), and mostly cook from scratch, this is a lot of money. I think about $200 was on wine alone, but the wine rack is now stocked, so that should be an easy expense to eliminate. General Merchandise - $470 - Exactly what it sounds like, general merchandise. Stuff. This can be whittled down considerably. Home improvement/maint - $220 - Not much to cut here. $60 was a shutter for a new window in our house, so it matches other windows. I didn't include the $4,900 (ouch!) we paid the contractor this month. There are other expenditures, but not much that I didn't expect there. We spent $100 on a new tire, and a few other things like a year's supply of contact lens solution (had to use that FSA money), but nothing we could forgo or put off. Add that to the mortgages, day care expenses, gasoline ($350!), natural gas ($200), electricity and water ($150), phone and internet, DirecTV, retirement and 529 contributions, etc... well, it's no wonder our debt isn't getting paid off. So what should we do about this? I think we should cut our grocery budget, including wine, to $300/month. I think general merchandise should be also be cut to $300/month, and I think I will call our insurance agent and drop the truck down to liability only coverage, saving another couple dollars.

Roth IRA conversion

I just realized today that we will be qualified this year to do a Roth IRA conversion. To qualify is simple, your MAGI has to be under $100,000, even for married couples, and you have to have funds in a traditional or rollover IRA to convert. Because I worked part-time for three months when I went back to work after maternity leave, and Mr. Savvy has been laid-off about 1/3 of the year, we will come in just under that line*. For us, figuring our MAGI equaled our AGI with our rental losses added back in. 401(k) contributions are allowed as deductions to MAGI, but my understanding is that IRA contribution deductions are not. One site I found very helpful in figuring our MAGI is here. What also made our decision easier is that the value of the account we have to convert is down quite a bit as well, that means we have to pay taxes this year on less money. The conversion will probably still cost us $3,000 in additional taxes, which is more than we can afford, but I figured I'd seize the opportunity while we had it. We are of course risking that next year will bring further declines in the market, and Mr. Savvy could still be unemployed, but that's a risk we are willing to take. One key decision we made was to pay the taxes ourselves, rather than having them withheld from the converted account. This is important for several reasons, the primary one being that the goal is to have as much money in the new Roth account as possible, the second is that any monies withheld for tax purposes count as income in the MAGI equation and could thus put you over the $100,000 limit. The conversion itself took about 15 minutes. The IRA account we converted was one of Mr. Savvy's from an old employer. The account is held at Fidelity, and they were able to, with just one phone call, execute a conversion which will move his existing assets (nothing is being sold) from his Rollover IRA account to his Roth IRA account. *My estimates are that our MAGI will be between $96,400 and $99,700. There's not a lot of room for error in those numbers, so hopefully I'm right.

A quick phone call was all it took...

I called our phone company today, and in the midst of doing other business, they offered me a killer deal on Dish Network. Now we are loyal, long-time DirecTV customers (check out my DirecTV-tagged posts if you want to know more about why I love DirecTV), and don't want to switch, but there was ~$25/month difference in price for very comparable services. So I hung up with the phone company and immediately called DirecTV. I was transfered to the retention department, where a nice man named Jimmy took care of me. $10 off a month for one year, free DVR for one year (we already have DVR, so this is money in our pockets), free HBO for 3 months (we already have HBO as well), and free Starz for 3 months (we don't normally subscribe to Starz). When I tallied up the savings, excluding the Starz because we don't normally pay for that, I figured we are saving about $234 in the course of a year... for just one phone call! I am very pleased. If anyone would like to subscribe to DirecTV and participate in the referral program (you get $50 and the referrer gets $50), feel free to use me as your referrer. Our account number is 5099041. No pressure, but I would of course appreciate it immensely.

You asked for random...

I've been tagged by Little People Wealth. I normally don't participate in these, but for some reason this morning I feel like sharing some random facts.... 1. Baby Savvy's latest word is "shit", I'm not kidding. Mr. Savvy accused me of teaching our angelic son his first cuss word, but then we figured out he was trying to say "light". He points at the ceiling fan, or the lamp, and says "shit". We turned the lights on and off and he clapped and said "shit shit". We are going to hurry up and teach him another word quickly. 2. I've been using a cotton fabric coffee filter and really like it. I've been looking for a reusable coffee filter option for a while, mostly because I run out of coffee filters and forget to buy them, but also because I want to be environmentally-friendly and reduce the extra chemicals in my coffee. I tried a metal coffee filter (about $7), but my coffee pot didn't cooperate and the filter didn't fit quite right. So then I found a cotton one, paid about $1.50 for it, and it works great! If you can't find one in your area, you could easily make one with a woven cotton dishtowel and rudimentary sewing skills. 3. I like to knit. I really like to buy yarn. I started last February, and have been addicted ever since. I've made lots of stuff for Baby Savvy, including longies (a type of diaper cover for cloth diapers, mine aren't near as cute as those in the link), a sweater, hats, toys. I've also made myself a pair of these. I'm addicted to wool yarn, especially hand-dyed, I have a massive yarn stash already. 4. I wish they made these in adult sizes. 5. We don't own a flat-screen TV, or an HDTV, or any of that other new-fangled home entertainment stuff. I didn't even realize this was mentionable until Mr. Savvy and I discovered that all of our renters owned at least one flat screen TV, some own two or three. Who has money for fancy electronics when you spend it all on yarn? 6. Clutter. I'm trying so hard to declutter our house. We've made HUGE improvements, thrown a lot out (donations), and organized the rest. Our lack of organization meant that we had more of a lot of things than we needed... from tools to pantry staples. I'm also making huge strides in not adding to the clutter, hopefully I can keep it up. 7. I haven't used soap on my face in a year. I "wash" my face using the oil cleansing method (OCM to its loyal followers). I LOVE it, I used to have frequent breakouts on my chin, nothing serious, but always seemed to have one blemish. I have had a TOTAL of three pimples in the last year, none of which have been deep or taken longer than week to heal on their own. Bonus is that it is really inexpensive and most people can try it with products they already have in their house. I'm not going to tag anyone. If you want to volunteer for a tag, drop me a comment and I'd add a link to your blog at the bottom of this post.

Updates at the Savvy House

As usual, we've been really busy at the Savvy house. Baby Savvy recently turned one, and has been keeping us on our toes. He has a lot of words and does some baby sign language, and he can go up and down the stairs faster than the old Savvy Dog at this point. We have to be constantly vigilant, because it only takes seconds for him to be into something that he shouldn't be. We've also had some work done on the house. Some soffit and fascia replacement, as well as replacing an exterior door in a bathroom with a window. That same bathroom is getting a new toilet, a new (recycled) light fixture, a mirror, removal of wallpaper, and some fresh trim, crown, and paint. We plan to do most of the cosmetic work ourselves. Expect a ~$5,000 drop in our net worth in the near future as we pay the bill. Any toilet buying tips or recommendations welcome. I just planted our second annual garlic crop. What started as an expensive habit, turned into a self-sustaining hobby. I love garlic, especially some of the specialty varieties, and I bought about $70 worth of organic garlic in half a dozen different varieties from The Garlic Store last year, ate most of it, but managed to stick some of it in the ground. When I come across a head of garlic at a farmers market I always buy two, just in case it is a variety that I need to plant. Our garlic harvest this year was great, and we were able to plant some of our harvest to keep the circle going. I've also been reading about root cellars, storage vegetables, and other food gardening topics. We put in a raised bed just a couple weeks ago, so I'm making a list of the foods I want to try to grow next year, and hopefully store over the winter. Mr. Savvy is still barely employed. As he and his coworkers joke, they work 24/7... twenty-four hours a week, seven months of the year. He's off completely at this point, and we have no idea when they will be back to work. It's not all bad, he gets extra time with Baby Savvy. Our debt isn't really being paid off as quickly as we'd like, but we still manage to sleep just fine. We are still socking money away in the 401(k), Roth IRAs, and 529... as long as we can do that I won't worry too much.

FREE and really cool

I might be the last to know, but I just discovered Gmaps Pedometer. Gmaps Pedometer is web-based hack of Google Maps that allows you to plot your walking/running/biking path to see how many miles it is, as well as how many calories it burns (walking, I'm assuming since I can't get the FAQ to open). You can save your routes as a URL for future reference. This is a great tool for anyone who is doing a 1-mile, 2-mile, 3-mile (etc) challenge. I know my dad has been doing a 2-mile challenge since last spring... he does not drive anywhere that is within two miles of his house. Buying groceries? He bikes. Going to a bar or restaurant? He walks. He's really gotten into it. I now know that the hardware store is .23 miles from our house, the library is a brief .14 miles away, and the video store is merely .26 miles away. I have no excuse for hopping in the car now!

My insightful economic crisis post

For two weeks I've been trying to come up something insightful and comforting as a response to the recent stock market meltdown. Something better than, "hey, at least it's only a 30% drop", or "well, you have 30 more years before you retire anyway". But alas, nothing. One thing I have found myself doing is almost like a personal SWOT analysis, in response to the economy, stock market, personal situations, etc. For those of you that aren't familiar, a SWOT analysis is usually performed on a company, industry, or business venture, and involves listing out the Strengths, Weaknesses, Opportunities, and Threats. It's something I've done many times both in my undergrad and graduate school work, and for some reason my mind keeps doing it for our own personal financial situation. So what would the Savvy Family SWOT analysis look like? Strengths: Savvy has a good job with a steady paycheck. We have health insurance. We are still in a position where we can fund their 401(k) and Roth IRAs. We don't have student loan debt. We own our vehicles outright. Our mortgages are fixed rate and affordable. Our apartment building is full at the moment. Weaknesses: Mr. Savvy's job isn't steady. He's been unemployed for about 30% of the year, including right now. Savvy has a long commute to work (27 miles), so the increase in fuel prices have a negative impact to expendable income. We have outstanding credit card debt related to a remodeling project (all currently at 0% interest). We own a piece of highly leveraged investment real estate. Opportunities: A downturn it the market might make this a good buying opportunity for young people and those with expendable income. Inflation could lead to an increase in rent prices. Threats: Increases in fuel prices can impact our bottom line, as well as negatively impact house values in our area. A fall in rent prices, or increase in vacancy rates, can leave us with open apartment units or a gap between what we take in and our monthly expenses for the apartment building. The credit crisis is drying up 0% credit card balance transfer offers, meaning we will have to transfer our credit card debt to our HELOC, thus costing us additional money in interest. Savvy's employer is undergoing yet another round of workforce reductions, making Savvy's job less stable. So now that I've written this out, I'm not sure if it made me feel better, or worse. I wish I had more time to spend on it, but Baby Savvy is calling.

Money saving tip-o-the-day

If you don't have a good cash back credit card, now's a great time to get one. PenFed has a cash back Visa that offers the following... Earn 2% cash back on supermarket purchases Earn 5.00% cash back from gas purchases paid at the pump Earn 1.25% cash back from all purchases you make with the card during each billing cycle Up to $50,000 limit No Annual Fee Cash Rewards credited each month We were using other rewards cards (a Countrywide Visa that paid a portion of our mortgage with rewards, an Amex Blue Cash...), but this Penfed card beats everything else I've ever seen. My only regret is that we didn't sign up sooner.

ouch

October August Difference Cash vs. Credit Cards (25,689) (18,013) (7,676) Retirement 159,657 165,309 (5,652) Real Estate 93,077 90,498 2,597 Stocks 1,930 1,831 99 Education 2,594 2,358 236 Total 231,568 241,984 (10,415)

Public Service Announcement - Wisconsin Residents

Ever wondered who your county circuit court judges were? How about your State Senators? State Treasurer? How about where you should go to vote? Wisconsin residents have a nifty little website that they can use to make sure they are registered to vote, view the address of their poling place, view sample ballots, check the status of provisional ballots, and see their current office holders. http://vpa.wi.gov/