Real World Finance$

Is it just me, or is anyone else noticing an increase in SPAM related to financial topics these last couple of weeks?  Even just today, I’ve gotten at least 3 messages that said I needed to follow a link to verify my account after the wrong password had been entered 3 times.  Of course, they were all to banks I do not have accounts with.  I was also aided by the fact that Google actually put the mail in the SPAM folder as well.

Just one more reminder I guess that criminals really don’t care who they hurt or when.  And its one more reason to keep on top of your finances so that you don’t get pulled into stuff like those e-mails.

Earlier this year I began putting together some information to track our average daily use of electricity.  I wanted to know if having central air versus our window units had made any difference and also if our new compact florescent lights were doing much.  In the last couple of months, our electric budget bill was adjust down from $126 to $102 per month.  Of course, since that’s also based on the cost of electric and not the real usage, I dug further to see how we were really doing.

Here’s what we’ve looked like over the past 2+ years in our home (avg kWh/day):

So, we moved into our house in June of 2006.  Back then we had window air conditioners for our 2300 square feet.  They were old and noisy and we used them sparingly.  We willingly opened the windows when we had the chance.  In May of 2007, we had a central air system installed.   Since it works best to remove humidity from the air, we don’t open and shut the windows as freely, so it stays on longer.  Notice 2007 started it’s peak earlier and it lasted longer.  It was then our budget bill went from $104 to $126.

Now, early 2008, we replaced a number of our well used light bulbs with compact fluorescent, and we made the decision to raise the temperature of our central air by 1-2 degrees this summer.  Luckily as well, the temperature this summer seemed to be much more moderate.  Combine that with and earlier vacation (September rather than October) and our real electric use has been way down this year.

In case you don’t realize, we have a natural gas boiler that runs our radiators, so we don’t use much electric in the winter.  The “central air” is actually a heat pump, so it can provide some heat.  However, we use that as a back up system that is more of a signal that the pilot light is out on the boiler, you better go re-light it!  If we notice the heat pump kicking out heat in January, we know something is wrong.

There’s several more things I’d like to do to make this number look even better next year:

• Replace more bulbs in the house with CFLs
• Update some of the electrical system with properly grounded and wired outlets
• Replace the rest of the power supplies in our computers with lower wattage and higher efficiency “green” power supplies
• Rearrange some electronics and things to allow for more visible power strips so we can easily turn the television and all the associated stuff completely off when we leave the room, rather than leave clocks and wireless networks drawing power constantly

Of course, we should really do this same sort of thing with our gas usage in the winter, though it’s a bit more challenging.  We use practically no gas most of the year (water heater and range) and then use a ton of it during the winter months with our 80 year old boiler.  It was converted from coal to natural gas years ago.  I’m sure the boiler is somewhere around 50% efficient, but the replacement cost can get pretty pricey.  I looked and just buying a 95% efficient boiler was going to run $3k or so.  And I’m sure installation is at least that much if not more.  Even if that did cut our gas use in half, that would save us like $80-90 a month.  It takes a looong time to pay back five or six thousand dollars if you are paying that much a month.

This summer we have been rather lax with our spending.  We haven’t made quite the progress we were earlier in the year.  Although, only part of that was because of our spending.  The other part was that I haven’t been teaching and bringing in the extra income.  The summer off was nice, but it’s time to get back down to business again.

Having just got back from vacation a couple weeks ago, we have begun to tighten the belt again and hold ourselves back to our budget.  We’ve got some old furniture up for sale on Craigslist so that we can pay for a new bed for our son.  I’ve signed up to begin teaching another class starting in early November as well.  That should give me two more extra paychecks by the end of the year and one more the end of January (just in time for Christmas and an early February vacation).

In light of the stock market this year, I’m not anticipating actually reaching my goal on retirement savings.  Then again, I don’t know anyone who is!  So, this year is not shaping up to be quite as good as I’d hoped, it’s still going to be many times better than if we’d continued with our previous habits, so I’m still happy at this point.  If things continue to go well with my new business, we just might make some very big strides next year as I start to get income from there while I’m still working my regular job.

Keep your fingers crossed for me.  By the way, I do plan on writing up a little something on our venture here soon.  We are putting some final updates to our website this week, so after that I’d love to start getting some traffic over there!

There have been a rash of financial bailouts over the past several weeks.

• Bear Stearns
• Fannie Mae & Freddie Mac
  
• AIG

Add to that the restructuring of the last 2 large investment banks

• Goldman Sachs & Morgan Stanley

And don’t forget the other bailouts in the works by congress

• $700 Billion for the financial industry
• $25 Billion for the auto industry to re-tool for more efficient vehicles

Wow, that’s a lot of money going to help out companies who made bad decisions and I’m sure I’m forgetting some.  Should we really be helping out these companies?  Shouldn’t they be forced to face the consequences?  Yes…. and No.  It’s a difficult question to answer.  Yes, they should face the consequences of their actions, but those consequences if they were left to rot would have ripple effects to more Americans than those that will be felt by the bailouts.

Consider just the housing market for instance.  If all of these large banks were forced to make do at the same time, then the cost of mortgages would skyrocket in the very near future as no one would have money to lend (supply would be next to nothing).  With the difficulty of getting a mortgage, the construction market would turn even worse than it is today, forcing even more people into unemployment.  These workers had nothing to do with how the banks made their decisions, but they will feel the after effects.  Fewer construction workers means there will be fewer pick-ups sold, fewer hammers sold and so on and so forth.

As my wife and I listened to NPR over the weekend and heard about all these deals going on, part of me wanted to be a real fiscal conservative and say “tough luck.”  But as much as higher taxes and lower income will probably hurt me, it’s still for the greater good of me to be able to help out.  As I finally said to my wife, “Now is not the time to point fingers.  Now is the time to fix things.”  It’s not fun doing what this country is doing right now, but it needs to be done to keep things from going from worse to terrible.

Of course, there SHOULD come a time for finger pointing.  We must keep in mind what happened and work diligently over the next few years to avoid the type of scenario we have witnessed from reoccurring.   Failure happens, but it can also be a valuable learning experience.  As long as we use this massive failure as a way to learn from our mistakes, we will be a stronger country in the future.

So, what about me?  Where’s my bailout?  Well, either you will indirectly be bailed out by keeping your job and/or your home when you otherwise might have lost it, or you are part of the unfortunate bunch that will only pay the bill to help everyone else.  So sorry, thanks for the help, we promise to do better next time.

Glad to see I still have a few people hanging around here.  I know I’ve done a terrible job of keeping up to date the last couple of months.  Between my regular job, taking over as treasurer of the neighborhood association, and things getting up and moving on my own business, there just doesn’t seem to be enough time in the day most days.  Anyway, so here’s an update of what’s happened these last several, dormant, weeks.

• I haven’t been teaching at all.  I decided to take the summer off and relax.  However, my schedule now is so full that I don’t see when I can fit 6-8 straight weeks in of teaching during the week.  Maybe I’ll start a class this winter heading into the new year.
• We were on vacation the first week of September.  All expenses were paid out of pocket, except for the pre-paid hotel bills that I put on a card.  I’ll be paying that card off as soon as the bill comes in later this month.
•  My business is starting to take off.  We’re working on getting our first customer up and running by the end of next week.  We were also invited to speak at a trade show in AZ come November, so that’s exciting.
• In order to help fund the business, my business partner and I were approved for a line of credit from a local business.  We had to secure it with second mortgages and personal guarantees.  We’ve set up spending limits on the line for ourselves and projects we know need to be done soon.  I haven’t put that amount on our net worth.  If worse comes to worse and we are forced to pay it personally I’ll so so at that time, but right now, it’s still a liability of the LLC.

Also, I did just update our NetWorth IQ last night as well.  Our net worth is still headed up towards $0, which is exciting.  It’s not looking like we will make it all the way by the end of the year, but we will be MUCH closer than the -$20k we had towards the beginning of the year.  So, unless my business takes a quick turn (which is possible) and we’re able to draw some income from it yet this year, we will likely end up short of most of our goals.   But being short of lofty goals is still better than being in the same boat we were in 12 months ago, wouldn’t you agree?