Real World Finance$

I had my annual check up at the doctor a couple weeks ago now.  I was down about 10 pounds from last year and my blood pressure was back down to the normal range as well. 

With all of my thoughts and posts recently on health care, I was tempted to ask my doctor if he had ever considered doing a “cash only” business and leaving the insurance processing up to the patients.  However, considering he ended up running an hour late coming from his hospital rounds I was in the mood to just get out of there.

Then, last Friday, I got some mail from my doctor.  A very nice color brochure talking about upcoming changes to his medical practice.  He says he will be seeing fewer patients and spending more time with them and on preventive care.  He will also be offering direct phone contact within an hour of call and his personal cell phone available on evenings and weekends.  Now, there is no information on exactly how is planning to do that, buy my thought is that he very well might be going cash only.

The brochure says details will be coming in the next couple of months and that patients will need to apply for the new practice to start in September.  I’m looking forward to getting the information to see what’s coming down the pipe.  Personally, I would be very excited for him to be cash only. 

I recently looked at moving to a private insurance rather than through my employer.  For the same plan I currently have, I can buy one with a $10,000 deductible rather than my current $2,000 and save $400 a month on insurance cost.  Yes, that leaves a lot of expense there should something major occur.  However, by putting that $400 a month into the HSA account (which is done tax free) that adds $4,800 a year to money available to pay the deductible.  Add that to the $125 a paycheck I’m putting in there now ($3,250) and that covers $9,000 a year with only a minor change in my tax liability.  Because payments to the HSA come out as adjustments to gross income, I’m only paying additional taxes on the $180 monthly premium. 

The real catch to the whole situation is this, if I don’t spend my entire deductible in a year, I can drastically reduce my contributions for the following year and have upwards of $9,000 extra income (before taxes).  If I have to dip into it during the year, I can always put more in to replace it and save on taxes while still keeping our buffer.

Am I nuts or does this make sense to more people besides me?

We finally made the plunge with our big debt for our A/C we had installed last year.  It was “financed” then with 1 year, no payments and not interest.  That was set to expire in Mid May and I’ve been putting together plans to make the move.  The total debt on that special card was $16,064 (we had no duct-work or anything, so we were starting from scratch, and we also qualified for the $300 energy tax credit this year because of this).

I have a scheduled transfer from our savings account of $4,000 on the 30th of the month.  That same day I have a scheduled payment from the checking account of $4,064.  The remaining $12,000 is in process to be transferred to a credit card that is in my wife’s name.  It didn’t have a balance previously and had room for the balance.  While we did have to pay a 3% transfer fee, the transfer offer is at 0.99% for 6 months and then goes to her current fixed rate of 5.99%.  The 3% fee basically washes out with the savings from the 0.99% for the first 6 months.  That said, the fixed rate on her card is outstanding for a credit card, so we don’t really have any complaints there.

The best news is still that there is $4,000 less of debt for the end of this month!  That’s a really big step and puts us near the halfway point of our goal for debt reduction this year.  Hopefully after we get some other work done on the house and plan for our vacation there will still be some money left for another big payment sometime in the next few months.

In a preview of our month end, I saw where we currently have less than $48,000 in “credit card” debt with these payments (though there is an interest charge yet to post on our line of credit account) and our net worth has gone up to -$12,000.  That’s another big jump this month thanks to the tax refunds and such.  Everything should be done and posted by the end of the week for me to get some final numbers by the first of next week. 

This was meant to a post for Earth Day, but with jury duty and trying keep up/catch up at work it got pushed off. 

We’ve been doing sort of an energy audit around our house lately, not really on purpose, but it’s getting done none the less.  It seems over the last few years we have gradually been moving faster towards being Green in our house.  You can save some pretty good money with being more green, but it’s not always a quick payback.  Here’s some of the changes we’ve either made or are contemplating sometime soon.

• Recycling- We’ve been doing this for a number of years now.  While we weren’t always the best at it, we’ve been much more conscious of what we throw away in the last 6-9 months.  While our savings are $0 due to the trash pick up being included in our property taxes, the feeling of throwing away only about 1 sack of trash a week for a family of 3 is pretty good.
• New Car - Yes, we bought a more fuel efficient car back in December.  With 27 MPG compared to the minivan at 17 MPG, we are saving about half the extra payment in gas alone each month (and using only 5-6 gallons of gas a week is a good feeling).  Add on the couple thousand we needed to do in maintenance on the van to the ever increasing gas prices, and we’ll probably break even this year on expenses.
• Lighting- We’ve switched out almost half our light-bulbs in the house now with Compact Florescent.  I’ve been very pleased that they don’t have the typical florescent lab look from the lighting.  We’ve been buying them on sale for about $1 a piece.  The change from 60 watts down to 14 watts will have some impact on the electric bill for sure.  The fact the bulbs are expected to last 6-7 years rather than 6-7 months should help too!
• Air Conditioning - We had central air installed in the house last year.  It was very expensive, but well worth the expense in comfort alone.  We were stuck using window units in a large home with not really enough outlets to plug them in before.  Our budget electric bill did go up about $20 a month after using the AC for a summer, but with having it as a heat pump, our natural gas budget bill went down $29 a month from turning the boiler on later and off sooner this year.
• Windows - Our house is 85 years old, and so are the beautiful wood windows.  Unfortunately, they are also single pane and not very energy efficient.  However, I’m not about to deface my beautiful home with vinyl windows while there is still breath in my body.  We did take the time to put all the storm windows back in this winter and noticed a considerable difference in the draft.  Several of the storms are missing windows and several others are just in pretty poor shape, so it might be worth the effort to look into some new storms at least.  I may even choose to put them inside to show off the windows on the outside a little better, but I’m not sure yet.
• Doors - Again, with an old house come beautiful old wooden doors.  The back door, doesn’t currently have a storm/screen door.  We’ll need one of those so we can leave it open during nice spring and fall days more often.  The front door has a storm, but it is warped and doesn’t close so it too needs to be replaced.  Problem is, 39″ doors.  Yep, standard sizes only go up to 36″, so we are looking at custom.  My solution, build my own.  It’ll be a fun project for this summer and let us keep the doors open for breezes in the fall like the house was built to use.
• Heating - Yet again, the old house blues.  While the feeling of radiator heat in the winter is beyond compare, our approximately 40% efficient, 85 year old, originally coal fired boiler just isn’t always the best.  We can get up to 80% efficient for about $1500 plus installation.  There are boilers ranging up to 95%-98%, but those are 3-4 thousand.  Payback time is much longer for this one, but if natural gas rates go up over time, the payback comes even sooner.
• Electric - We’ll be replacing some of the old knob & tube wiring in our home soon.  Part of the plan is to put electric back out in the garage at the same time.  However, we’ve also gotten a quote to run our garage and my workshop off of strictly solar and keep it off the grid (it’s a detached garage).  Seems though that the cost might not be worth it at $2500 versus about $500.  Sure, there’s now energy costs, but I won’t use enough of it to make much difference.  The next option would be to see the difference in cost of making the system grid connected so that the extra electricity we generate doesn’t just sit idle in batteries, but gets either used in the main house or sold back to the electric utility.  Again, will be quite a while for pay back, but there is a request for a 17% increase in electric rates also.
• Appliances - We do have some older appliances in our kitchen that sometimes seem on their last leg, while we don’t plan on replacing any at the moment, we’ll keep energy efficiency in mind if it comes to that in a few years.
• Water - While we are not currently on a water meter (we pay a fixed rate based on the number of “fixtures” in the house) we are still conscious of our water usage.  I actually assume we would pay less for water if we were actually on a meter because we don’t water the yard and there is only 3 of us in a house built for 5.  That said, we are planting our vegetable garden this weekend and we will need to water there.  Unfortunately, we didn’t get the chance to get some gutters put up on our garage these last few weeks as we would like to do that and send the water to a rain barrel instead of the alley.  That water would be perfect for watering the garden later and we’ve had a ton of rain the last month.  I’m sure, with our luck, we’ll hit a drought about the time we get it in place, but it will still be done.  About $50 for gutters and $100 for the rain barrel to use fresh water on the garden and avoid the water bill if we were on a meter.

So, lots of ideas some of which will happen and others won’t.  To help me keep better track of things I just contacted both our electric and natural gas utilities this morning and requested they send a report of our usage for the past 2 years we’ve lived in the house.  That way I can really see the impact we are having by changes we are making. 

Any other ideas out there?

Will be back to writing in a few days.  I’ll be completing my civic duty as a juror in the mean time.

Want to be in a booming business during this current real estate and mortgage affair?  Check out this story I heard yesterday on NPR titled Foreclosures Keep Locksmiths in High Demand.  The story follows around a DC area locksmith as he spends long days and weekends working for banks changing the locks on newly foreclosed homes. 

He says he’s seen everything from the really nice, big brick homes to a small duplex in the ghetto.  It’s hitting everyone.  His routine is to get into the house by picking the lock.  It seems that foreclosed owners at least think to lock the door when they leave, and take the keys with them!  After getting in the house, he marches through checking all the rooms and closets for signs of people still in the house since he doesn’t want someone surprising him while he works (it has been known to happen evidently).

It was sad to hear him walk through a house and point out where carpet had been ripped up, appliances removed (dishwashers and the like that should have stayed) and just some of the general destruction people will do to their former home before they leave.  One house even still had a room full of children’s toys and pictures of the kids playing still stuck to the fridge. 

A booming business to be sure in these times, but one that would certainly take it’s toll on your psyche.  The story is less than 10 minutes long and I think it’s well worth a listen to hear the foreclosure market from the front lines.  These are the first guys there when a home is foreclosed, within hours.  The bankers and mortgage brokers don’t see the people from this view point I can assure you.

It’s been about 7 months since I started this blog and I’m getting to the point where I need to further define my direction.  I’m enjoying having this forum to talk about my finances and help keep me grounded and on task of getting out of debt.  This has also given me a good sounding board for my views on economics and politics.  But where do I go from here?

So, I’m a little torn as to not only my continued direction, but also about growth.  I’m not sure how big I want to make this and how much I really want to pursue advertising and money making on here.  On one hand, the extra money is nice and could help if something ever happened with my full time contract work.  On the other, is this something so important to me that I want to put in that kind of time and effort?

In case you hadn’t noticed, this blog is a story and commentary.  I have tried to avoid offering advice to others on how to handle their own money.  I’m learning to manage mine and bringing you along on the journey.  Hopefully you are enjoying hanging around here and keeping up with what’s going on with me.  If you have any suggestions on this blogs future, feel free to leave your comments here or use the contact me form on the page link above.

We belong to a local homeschooling co-op.  Kids are able to take special classes offered by parents as long as their parents also offer a class for other kids.  It’s been a great way for our son to get exposed to arts, crafts, sports and many other things that we wouldn’t have the time to do on our own.  Last night, I was preparing for my offering this coming weekend on Building a Birdhouse.

I have lots of scrap pieces of fence pickets from repairing and shortening our wooden privacy fence last fall.  I had found a free bird house plan online that used a single fence picket as the material.  So, I was out cutting pieces from my scraps to have “kits” put together to assemble 6 birdhouses on Saturday.  I’ve known my miter saw blade was getting a little dull and had an extra one handy.  After cutting all the sides, and cutting the end pieces to length the blade was on it’s last legs. 

I grabbed some wrenches and the new blade and started to change the blade.  There’s a little lever on the back of the saw that locks the shaft in place to keep the blade from spinning so that you can tighten and remove the nut holding it on.  The problem was, the shaft kept turning while I was holding it!  Determined to make this work, I got out some screwdrivers and started taking things apart.  I ended up with the saw motor (blade still attached) in my hands.  Then I saw the problem, the shaft is flat on two sides so that it can be locked from spinning, and that edge between the flat and round were “stripped” so to speak and allowed it to rotate through the locking mechanism.  Even wrenches on either side of the blade didn’t seem to do the trick of loosening it (and yes, I realize they are right hand threaded in case you were wondering, I’ve changed this blade on more than one occasion in the past.”

So, now the dilemma, I need to cut a number of other pieces and the hand saw just didn’t seem like a lot of fun.  I would LOVE a new miter saw, but I’m not ready to spend the $300-$400 to buy the kind I want to have for future projects.   I searched online to see what was available locally.  I talked with my brother about what he would recommend (he’s a total tool snob when it comes to quality tools, so I highly value his opinion).  I made a quick run out to both Home Depot and Lowe’s as well. 

I so love working with wood and my power tools.  I so wanted to get a new saw, but it’s just not the right time.  I stood there looking and drooling over some of the tools, but managed to walk out without getting one.  I decided that I can make do with my table saw to finish up the few dozen cuts I have left to make.  It’s not the most ideal way to make them, but it will be good enough for this.  In the mean time, I can do some more research, save and get the tool I really want rather than buying something on impulse and regretting it later.

A post over at Get Rich Slowly a while back let me know that April is Financial Literacy Month.  I had started working on putting together my own set of financial education courses, so I was excited to see all the links on financial education.

I followed around from one link to the next and eventually ran across a program sponsored by the FDIC called Money Smart.  They offer a complete course, 10 sessions of 1-2 hours from the basics of banking, to savings and retirement and home buying.  The best part is that the information is free!  You can sign-up online and they will send you free CD/DVD of not only the participant paperwork, but everything needed to present the program to others (including PowerPoint slides, handouts and promotional fliers).  They even have a free disk on “training the trainer” or learning how to teach the program.

I signed up to get the instructor guide and material (it includes the handouts and information to give to students) and the train the trainer video.  I got both disks in the mail over the weekend.  I’ve looked through them a little and they are very comprehensive with all the learning material you need.  All the handouts and printable stuff is in PDF format and there are Power Point slides for a presentation.  I haven’t gotten a chance to watch the video on the training yet, but I will be doing that soon.

Now I just need to take some time to get more familiar with the stuff and then work on finding a location to give some classes.   There are several locations in my neighborhood I believe will work and probably available for something like this.  Between them and our neighborhood association, I can probably get some pretty good help promoting the class as well.  I think I’ll shoot for the fall to start something to wait for people to be done with their hectic summers first.

Monday evening (just after 10 pm) I finally got the tax forms from my side business from our accountant.  I got to claim my part of the loss for the year minus some carryover loss for next year (we are close to getting our first customer, so hopefully there will be some inflows for the first time this year).  The losses added about $400 to our refund for the year between State and Federal.  I stayed up late entering the form and verifying everything before I e-filed my taxes around 11:30.

Yesterday, I got the direct deposit from my State tax refund!  Talk about service!  The IRS is estimating I will have the Federal by the 22nd.

Yesterday was also a pay day for me.  The  exciting part about that is that it was also my first paycheck with employer matching in my 401(k)!  With all that excitement I sat down to update my MS Money file through the end of the month.  The only update I didn’t put in was my next paycheck this month.  I did enter all of our bills through the end of the month (including the four thousand dollar debt payment on the AC) and were are already showing a gain to our net worth of like $2500!

Yes, we will be spending more money on groceries and gas sort of stuff, but that is pretty minimal to another paycheck coming in.  It’s gonna be great this month to see our credit card debt under $50k and our net worth taking a nice big leap forward.

This is not a typical book for me to review.  It’s not directly related to economics or personal finance either one.  It does, however, give you the story of a man who had everything and loses it all.  The crux is, he learns how to live in his new world and finds out he enjoys it more than he ever did the old one. 

Michael Gates Gill is the author of this wonderful story subtitled “A son of privilege learns to live like everyone else.”  I heard an interview with the author on NPR a few weeks back and just had to reserve the book at my library.  It’s a quick read that really keeps you moving along (I finished it in a week of bus rides to and from work).  It’s the story of a man who grew up with everything this consumerist society enjoys.  His father was a long time editor of New Yorker magazine.  He grew up in large houses with housekeepers and summer house to spend time away from the city.

A Harvard education (a skull & bones member) and friends with the rich and powerful of the country.  The book shares stories of meetings with famous authors, poets, and Jackie Kennedy.  After school leads Michael into the high power advertising industry in Manhattan.  Big accounts, big money and everything a man could hope for in life. 

Twenty-five years later, he’s pushed out the door of the firm after it’s acquired by another company.  Forced to find his own way, he attempts to do some consulting in his own field.  Several years (and a failed marriage) later, he hits a low point at life when his is almost half-heatedly asked if he’d like a job when sitting has his local Starbucks with a cup of coffee.  After learning about the medical insurance (and knowing he has 5 children and a small brain tumor), he jumps at the chance.

The rest of the book follows his wonderful enlightenment as he finds an affordable place to live, use public transportation and grow relationships with people he looked down at in his former life.  Timely reflections of his past intermingled with the present gives you a great sense of what he really managed to learn about people at his ripe old age of 64.  Respect is the key theme throughout his learning process. 

It’s a very uplifting story, and a reminder that it’s not about how much money you make or save.  For everyone who thinks they can’t get buy without those big cars, big televisions and their babysitters, you need to read this book.  Learn to be truly happy and you’ll be glad to deal with whatever money you’ve got.