The heating fuel tank was filled yesterday. We've been paying in full after it gets filled, but that can cause a cash flow crunch in the cold months.
Our fuel company does have a budget program. We've explored it before, but never took advantage. We are leaning very heavily toward enrolling in the program.
The way it works with our company is, starting in July, they will take our average monthly fuel use, and multiply it by a "cap" price. We'll make 11 equal monthly payments, and settle up in June. The June payment could be more or less depending on actual usage, and actual price. Also, our budgeted amount could go up or down if our actual use, or the price is drastically different than what was figured at the beginning.
So, basically, we'll be pre paying July - October.
I know, I know, interest free loan from us to them, etc. etc.
But, once we get into the program, it will be nice to have a constant monthly payment, and not have to scramble to pay only when we're heating the house.
Are any of you on a budget plan for seasonal expenses? Do you cringe at the very idea?
Archive for January, 2013
The heating fuel tank was filled yesterday. We've been paying in full after it gets filled, but that can cause a cash flow crunch in the cold months.
I took our family mini van in for two minor repairs.
1. the rear windshield wiper was broken
2. the airbag sensor was broken (the air bag light was always on)
The total bill was $130.12
Sensor - $33
Wiring - $12
Wiper - $7
Labor - $75
Tax - $3.12
The vehicle is a 2005 Dodge Grand Caravan. It is paid for, and maintenance has been fairly inexpensive.
While the guy who runs the repair shop seems to charge plenty for labor, he is honest, and doesn't try to sell unneeded stuff, or tell you something is broke when it isn't. But, hopefully we're done with repairs for a while.
I ordered heating fuel today. This will be our second fill up of the season. We carried about 80 gallons over from last year.
We have a 200 gallon fuel oil tank in the basement. So I check it periodically, and call when we need a fill up. It's at 1/8 tank today. We use a smidge over 3 gallons per day when it's cold, so we're probably good for another week, but I'd sure hate to run out.
Heating fuel runs between $3.50 - $3.80 in our neck of the woods, so that's about $11.50 per day to heat the house when it's cold.
My wife and I are usually at odds as to the temp the house should be. I'm usually comfortable at 68, and she would prefer 70. Actually, I think she would prefer 72, but she has settled for 70. Probably most of the time the thermostat is set at 69 during the day. She is usually home all day (SAHM), so we don't have the option of turning it down. We do have a programmable thermostat, so the temp runs at 65 at night. I know some people who run the house temp at 65 all day.
I'm not sure how much money is actually saved by turning the thermostat down at night. We got a valuable lesson in home heating costs the winter we moved from our old house. We moved Feb. 14 (easy to remember Valentine's Day), and didn't have a renter until the following May (or June?). So, we heated that house the rest of Feb. plus March and April. I believe we had the thermostat set at 52. Plus, because that thermostat was also programmable, we programmed it to heat for 15 minutes at noon. To get some warm air blowing around to keep the water lines from freezing.
Anyway, what we found out is that the cost to heat an empty house to 52 degrees isn't terribly different than heating a lived-in house to 68. It was less, of course, but not as much less as I would have expected. I don't remember the exact figures, I just remember being surprised by how much we were spending to heat an empty house. Thank goodness the house has been occupied by renters ever since!
So, I'm still not sure how much, if anything we may be saving by turning the heat down at night, but it just seems like the frugal thing to do.
I had set up a very aggressive CC debt payoff plan that would have had us out of CC debt by April. I'm afraid it will have to remain just that - a plan.
As most of you know we have a house we are desperately trying to sell. We came to the realization that we might need to have significant cash reserves to actually get the house sold.
I had mentioned that the current buyer has made an offer backed by a USDA Rural Development loan. USDA RD loans have some hoops to jump through that can require the owners to make improvements before the house is sold - things like replacing worn carpeting, sufficient rain gutters, energy efficiencies, etc. Also, it's not unrealistic to expect that we may have to cover some closing costs for the buyer, or the bank may require that we bring some cash to the close.
So, we've set a goal of $4,000 in cash reserves to finally get this monkey off our back. Where will this cash come from? We'll have to slow down CC repayment. For now, anyway.
So, I've set up a new CC repayment projection that has CCs paid off by next October. It will cost a grand total of $35 in additional interest, over having the CCs paid off in April.
Of course we'll be probably be getting income tax refunds that will help build this reserve, but we're also saving for that porch improvement.
So, until we know how much our tax refund is, when we will actually close on the house, and how much our porch improvements will cost, we'll be going with this October CC debt payoff plan.
A while back I blogged about making a decision about whether or not we were going to get satellite TV. The decision then was to not get satellite TV, and that remains the decision. But, I do have an update.
My folks bought DW and me a brand new high def flat screen TV for our birthdays in November. Please, don't read that as a very expensive high-end deluxe TV. It's a nice TV, but my mom didn't break the bank. And, it replaced a mid 90's era box like analog TV.
During this same time, we got fed up with our very slow cell internet connection. We finally tracked down the single company that could provide true high speed internet to our very rural surrounded by woods location. For the record, that company is Hughes Net. We've been with them for about two months, and we are actually pleased with their service. We do pay them $96 per month. Remember, they are our single option.
Anyway, with this new TV, and high speed internet, it seemed a shame to continue limiting ourselves to DVDs. So, we bought the Netflix streaming package. The available movies that we can watch seems limited, especially with young children in the house, but we were away from TV for long enough that the television shows are like brand new to us.
DD1 even made a YouTube video for a home school project yesterday, and we got to watch that on the TV.
So, it's been fun with the new TV and internet connection. We aren't slaves to the TV. It's not on all day. It's not even on every day.
The negotiations with the short sale continue. I'm the pessimist, and lean toward thinking this deal is dead. DW is the optimist (and a better negotiator than I), and knows that this is how the game is played. Still, I believe that this deal has a less than 50% chance of closing. The negotiations are between our bank, and the buyer, so we just sit back and watch at this point.
A number that I've not reported on in a while is my credit card debt to retirement savings ratio. That's a number that I (to my knowledge) made up a while back. Seven years ago, that number was 100%, we owed about 30K in credit debt, and my retirement savings was about $30K. In August 2011, that number was 20%. My retirement savings was 5 times greater than my credit card debt.
Today that ratio is 1.66%. For every dollar I have in credit card debt, I have about $60 in retirement savings. I know that the number is meaningless. It's not as if I'm using my retirement savings as collateral against credit cards.
But, I still remember that day seven years ago, when I realized that CC debt was equal to retirement savings. That was one eye opening experience. And, ever since, I've used it as sort of a personal proxy of financial health. I also like it, because it tells two stories - decrease in CC debt as well as increase in retirement savings.
The temperature on my way in to work started out at -2 this morning. For a brief time, it rose all the way up to 0, but settled back down at -1. Brr.
I bought new windshield wipers yesterday. I had a choice between three models. The cheapest was $14 for a pair, there was a pair for $28, and the most expensive was $38.
I opted for the middle of the road $28 pair.
I know that you get what you pay for, and I probably would have been replacing the $14 set in a few months. And, $38 seemed too much to pay for windshield wipers.
It seems as if I usually choose the "middle of the road" option in most cases. Even when we were butt-crack broke a couple of years ago, we almost never bought the cheapest of anything. Again, you get what you pay for.
But, I still almost never opt for the most expensive model, either. Even if I were debt free, and had my EF at 6 months spending, and were contributing 15% to retirement, and had extra cash, I don't think I'd part with the money for the most expensive of anything.
So, what's your opinion on simple things like windshield wipers, car batteries, shingles, cabinets - things where there are 3 basic choices. Do you buy cheap, middle, or expensive?
DW and DD1 ordered some chickens Saturday. The newly hatched, yellow peep-peep kind. We'll raise them for a couple of months, and sell them as fryers.
They will arrive via US mail Mon, Tues, or Wed next week. It's funny, because you usually get a 7:30 AM call from a confused Postmaster telling you that you've got a package of chickens???, and will you please come here as quickly as possible, and pick them up.
The chicks cost $2.29 apiece. We're getting 25. They'll send one or two extra chicks at no charge to account for mortality, but we've never received a dead chick yet.
This is DD1's project. DD2 will help, and the proceeds will be split between the girls according to contributed labor. If all goes well with this project, honestly the proceeds will probably get dumped into the next project.
It'll cost $3.50-$4 each to have them processed. We're not ready to process them on our own yet. Plus, we (of course) have to feed them. Have I mentioned that corn and soybeans are at historically high prices? Mom and dad will spring for the electricity for the heat lamps.
DW's market research has told us that we can sell each bird for $12-$14. I'm sure we'll keep a few for the freezer, plus grandparents.
We're looking to sell them in March. I blogged last year about our open house at our maple syrup woods the third Saturday of March. We hope to sell the bulk of them that weekend.
If we do have another batch in the spring, we can pasture that group, and cut our cost of production a bit.
DW also ordered a half dozen layers. So, by June or July, we'll have three or four fresh eggs every day.
I'm sure I'll be offering updates along the way on how this project progresses. Stay tuned!
Our "for sale" house has a current, active offer. The new offer contract was signed 12-6. This is the third offer since October, and none of them have made it this far. We are in the "negotiation" stage. That is, our bank negotiating with the buyer. Just today we saw the bank's counter - they are about 6K apart.
Our buyer is getting a loan backed by the USDA Rural Development program. Kind of like an FHA loan, but for buyers in rural areas. My understanding is that a USDA RD loan means slightly different rules, and a few more hoops to jump through than an FHA loan.
Our buyer is waiting for the short sale approval before getting the RD inspections done. So, still plenty of chances for this deal to fall through. We cross our fingers and wait.
I need to talk to DW about it, but if this deal does fall through, I'm thinking about approaching our renters (again) about buying the house. They are interested, but claim to have no money for a down payment. And, her credit is trashed due to a recent divorce and foreclosure. Sound like prime buyers, right? They have been making their rent payment every month, although late, and seemingly later every month.
If we do approach them, at least this time we can arm them with the figures of what the bank will accept for an offer. We'll see.
Hopefully, this current deal pulls through. Then, we just need to kick the renters out. That will be fun.
This debt snowball thing is kind of fun when the snowball gets big, and starts crushing all the debt by its self. It takes a long time to get the snowball rolling, but it feels as if we've just gotten it to a size where we've pushed it down the hill, and gravity is taking care of the rest.
When we first started this quest, my idea was to follow more of a Dave Ramsey approach, and pay off debts by balance, smallest to largest. My greatest fear was losing an income source, like rent. My thought was that if one or two of the smaller debts were gone, we'd have an easier time making minimum payments on the remaining debts, if we lost an income source.
I ended up following the advice of the majority in the SA community, and tackled the debt by APR, highest to lowest. Of course, that makes most sense from a purely financial perspective - least amount of interest paid.
During the last two years, our income has remained steady. Actually, it's increased a bit. So, it turns out that highest to lowest APR has been the way to go. I can still see merit to both methods. If anyone who is reading this is trying to decide which order to tackle your debt, you're not going to hear a strong argument from me either way. OK, I chose highest to lowest APR, so clearly, that's my preferred method. That method also keeps your nose to the grindstone longer, because the individual accounts don't fall away as quickly, and you're forced to pay more money toward debt each month.
Anyway, three and a half months from now, we should be done with all of it! That's when the real discipline starts.
It's not everyday that you get a letter from the IRS. We did today. Naturally, it was the first thing I opened.
You may remember that last August we got a check from the IRS for an adoption credit. That check included $104.43 of interest. The mailing today was a 1099 reminding us that we are required to include the $104.43 interest payment in our 2012 Form 1040.
That's not such a big deal. Letters from the IRS can be a lot worse than that.
On a related note, you may also remember that we finalized another adoption in April 2012. I'm no tax expert, but it's my understanding that the credit for adoptions finalized in 2012 go back to non-refundable status. That's not so good. For us, anyway.
We deposited some money into our girl's 529 college savings plans. We opened a 529 for each of our girls when they were born. They both have pathetic balances.
The money we deposited this month was money that each of them have earned through their 4-H livestock projects. We deposited $1,900 into DD1's account, and $200 into DD2's account. DD1 has been showing and selling 4-H animals for three years, and this was DD2's first year.
Once we get the CC problem taken care of, college savings is yet another financial reality we will have to face. In 8 short years, DD1 will be ready. Ouch.
I know that it's recommended to have 3-6 months spending put away in an EF. We have about $1,000 in our EF, and that can fluctuate a bit each month.
I hope to have credit cards retired in May. And, I think we will. I'm thinking that after that phase of our financial life is over, our next conquest should be to beef up the EF.
I've had a figure of $10,000 bouncing around in my head for a while. I decided to take a more serious look at that number.
One month of spending in my family is about $4,680. So, a three month EF would be about $14,000. I was only off by 40%.
If I allocate the $750 that we've been sending toward credit cards lately, it will take about a year and a half to get it built up. OK, that assumes no withdrawals. Better make it two years.
So, here it is, a new goal! My goal is to have $14,000 saved up in an EF by June 2015.
I have solid net worth figures for Jan. 1, 2012 and Jan. 1, 2013. I had to do some financial forensic work to come up with a Jan. 1, 2011 value. I hadn't started posting here by then. The asset side is fairly solid, but the liability side is an estimate.
What I came up with is:
2011 net worth percentage increase = 19.6%
2012 net worth percentage increase = 78.9%
My retirement portfolio is my asset of greatest value. Thus, the performance of those funds greatly influences the change in net worth. 2011 was a crappy investment year, and 2012 was a better year.
And, of course, there is rapid debt payoff. While I was probably paying off debt a bit more aggressively in 2011, in 2012 much more of my payments went
toward principal, rather than interest.
I couldn't help myself. I projected my Jan. 1, 2014 net worth, based on projected decrease in debt plus monthly contributions to retirement, no asset growth. My projected net worth percentage increase for 2013 is about 32%.
I'll come back here in a year, and see how I did.
I've been gone for a few months, but with a new year, I thought I'd get started back up again.
I hope everyone had a Merry Christmas (or Happy Hanukkah), and a Happy New Year!
Despite holiday spending, we've managed to pay down quite a bit of credit card debt. Our current total is $1,963. Down from $4,587 in October. My goal remains total payoff next May.
We've also decided on our 2013 house project. We need something done with our back porch. My MIL is disabled, and has a great deal of difficulty entering our house the way it is. Also, it just plain looks very bad. We'll hopefully be getting a bid next week for a spring/summer project, but for now we're planning on saving $800 per month.
Just yesterday, I also began contributing an additional 1% of my salary per month to my retirement plan. I'll increase that again once the CCs are paid off. For those of you who may have been following my thread on the forums, I decided to stick with my employer, rather than the Roth. There were no transaction fees.