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Archive for September, 2012

End of month ramblings

September 27th, 2012 at 07:49 am

Tomorrow is the final work day of the month, so it's pay day. October also marks the anniversary of my family's becoming serious about turning finances around. This October will mark two years. Two years ago, we had about 24K in unsecured credit card debt. Now, we have about 5K. Paradoxically, it's much harder to allocate the same amount of money to debt reduction, because we had no choice two years ago. Our minimum monthly required on CC debt was about $750 two years ago, and now it's $250.

So, we keep plugging along, with the goal of having all credit card debt retired in May, 2013.

One of my CCs will also be retired after the October payment clears! At its height, it was a $9,770 debt. I might buy a 20 oz. Mountain Dew to celebrate.

Time for a new, make that different, vehicle?

September 19th, 2012 at 09:59 am

I thinking about a new pickup. Something compact, like a Dakota, S-10, or Ranger. I'm not particular to makes.

This purchase wouldn't be until after December, when that one credit card that will shoot up to 23% APR is paid off. Then we'll be in the midst of winter heating, and post-Christmas financial trauma, so maybe not til next spring. We'll see.

I bought my current car from my aunt and uncle for a dollar last May. It runs OK. It's a 1997 Mazda 626. It has about 200K miles, so I can't ask for much from it. Of course we also have the family mini van that we recently paid off with adoption subsidy money. That's seven years old, and had 110K miles. It should last another 3-5 or more years, but we'll see.

So I started with the rule that I learned in the SA forums - monthly payment of no more than 10% of your monthly pay, financed for no more than 3 years. I cut the monthly payment in half, because it is possible that we would need to replace the mini van in that time frame. What I came up with is between 9 and 10K for a pick up.

A really quick look at KBB told me that I could buy a 2007 or so model with somewhere north of 120K miles. Not great, but a step up. And, having a pickup, especially in the country is nice.

So, I'm at least four months away from the purchase. Gives me time to possibly save some money, which will either get me a better pickup, or reduce my monthly payment. I can also spend that time becoming familiar with what's out there in my price range.

Yes, this does mean more debt. But, using the 10%, three year rule, I'm at least entering it with some reasonable restraints.

My Dad's Retirement Party

September 17th, 2012 at 06:00 am

At the age of 65, and after 32 years of service to his company, my my dad retired last month.

About two week, or so, before he retired, I had talked with one of his co-workers, Duane. Duane asked me if I had been planning to throw him a retirement party. Honestly, the thought had not crossed my mind. Duane assured me that my dad's company would throw in some money. He encouraged me to look into it.

Shortly after dad did retire, I called his company. The man I talked with said that the company would allocate $250 toward the party. That was an amount we could work with.

Dad worked in the dairy industry, and my DW is from a dairy farm, so we decided to go with an ice cream social. We ordered 3 - 3 gallon containers of ice cream ($90). Two were French vanilla, and the other was pumpkin. We reserved a pavilion at a local park ($65). The rest of the money was spent on toppings (strawberries, chocolate syrup, bananas, sprinkles, etc.), decorations, milk, ice, and tableware. We ended up spending about $290, and were happy to cover the $40 overage.

The party was yesterday. We figure about 75 people attended. We had beautiful weather in September for an outside venue. Most importantly, my dad really enjoyed himself. And, $3.87 per participant isn't bad. Let's also say that my family will have enough chocolate syrup to last us a few months!

Retirement Planning

September 13th, 2012 at 10:19 am

I've been doing a bit of thinking about retirement. Maybe it's because my parents are retiring right now. Maybe it's because I'll be turning 40 in a couple of months. Another big part is that we've turned the corner on our massive debt problem, and positive financial growth seems much more real now.

Anyway, retirement for me is still another 20+ years away. But, as far as that goes, 20 years ago I was a sophomore in college.

Anyway, there are two big unknowns in developing a solid plan. The first is - what is critical mass?

So, what will my spending be in 20 years? Dunno. I can project salary increases based on some conservative raise figure. Then take 80% of that? I won't be paying a mortgage by then. I hope not, anyway. Some say you need 25X spending. But, I think that assumes 4% draw down, and 4% growth, so you end up with the same amount you started out with. I'd rather start out with a figure and assume conservative growth, and somewhat liberal spending. If growth minus spending takes me to 100 years old, and the number at the end is positive, I figure I've done alright. The figure I've tentatively reached is $1.13 mil. But, that assumes SS income. Which, brings me to question 2!

Will Social Security be around 20, 30, 40, 50 years from now? My guess is yes, but it also seems like a good idea to figure that it won't be. That scenario has me working another 2 1/2 years, drawing less from the pot, and starting out with a figure closer to $1.3 mil.

Obviously, the SS question will be much clearer, for me anyway, 20 years from now. I have time to plan. But, maybe I should seek the advice of a professional on this one.

What can we learn from the Amish?

September 10th, 2012 at 06:41 am

An Amish family moved down the road from my folks in 1992. I was in college at the time. Since then, three of their children have built houses in the neighborhood, and several other families have settled in the general area. So, I am acquainted with several Amish people, and know the local family quite well.

I'll also add the caveat that Amish people depend on English people (that is their name for all non-Amish Americans) for lots of things, including medical technology, roads, long distance transportation, and yes, our banks. I've heard that some Amish communities are self financed, that is, all borrowing is within the community. But, my sense is that most Amish communities, and at least the one closest to my home, borrow money from the bank just like you and I do. And, this recent credit crunch has also shown that some Amish over extend themselves just like the rest of us.

But, for the most part, Amish people are very self reliant. With the exception of their shoes, and male Sunday hats, pretty much everything they wear is made at home. A lot of what they eat is raised at home either in the barn, in the garden, or shot in the woods. Yes, you do see Amish shopping at the local grocery stores, but they aren't buying Doritos. A substantial part of their commerce is done within the community. They buy buggies, tarps, shoes, tools, building materials, cloth, and other necessities from Amish vendors. You do see them shopping at Wal Mart, but they're not buying a flat screen TV. My guess is that most Amish men who work away from home make somewhere in the 25K per year range, and manage, with their wives who make nothing away from the home, to care for, clothe and feed 6-12 children. They live cheap.

There is a "buy local" and "eat local" movement among some in our society. But, most of us don't live up to it. And, I'm certainly not suggesting that everyone make their own clothes, and grow and can 80% of what we eat, and, I really like my car, electricity and indoor plumbing. But, it seems that if more of us tried to be a bit more self-reliant, a bit closer to home on mores stuff, and a bit more neighborly, we'd be a bit better off.

Decision on TV

September 6th, 2012 at 05:53 am

Last month I posted that we were considering getting satellite TV again. We've made our decision - we're not getting it.

While the monthly cost was a factor, that wasn't the main driver. The primary reason is our kids. They don't need it. The crap that's marketed to them via TV. The crap that's on TV. Our kids aren't even bugging us to get TV. So, why would we?

Clearly, we're saving money by not getting satellite again. That's great. And I miss some aspects of TV. But, we just don't need it.

September Debt Update

September 4th, 2012 at 09:00 am

Current balances on all outstanding debts:

Mort 1 $102,153
Mort 2 $65,870
CC1 $2,324
CC2 $1,387
CC3 $194
CC4 $1,109

Difference from last month: $1,118!

CC3 will be paid off next month, then that payment will be shifted to CC4, to be paid off before the end of the year.

My total credit card interest expense for the month will be $24. Less than a dollar a day. I'm really happy with that number. My goal is for it to be zero by next June.