We had a great Christmas. We even celebrated an adoption yesterday, but more on that in a future post.

We treated ourselves a bit more this year than the past couple of years. We bought a new family computer, and bought some towels. Our old towels were given to us as wedding gifts, 15 1/2 year ago. It was time.

We also bought gifts for the kids, but trust me, we didn't go overboard.

As I read what others have to say about getting yourself out a a financial mess, usually there is something about treating yourself once in a while. That, I think is what this Christmas was about. Sure, that money could have gone toward further debt repayment, but you have to treat yourself once in a while.

Oh, yeah, all of this was cash flowed, we didn't go into debt on our little treat for ourselves!

Happy New Year to all.

My wife and I met while we were undergraduates at Michigan State University. We would, as would be expected, like for our children to follow in our footsteps. The following was copied directly from the msu.edu admissions website:

In-State Freshmen
•Tuition and fees (15 credits/semester): $12,822
•Housing (double room/Silver Meal Plan): $8,204

Total for two semesters: $21,026

How are we going to afford that?

That's just an estimate for one child for one year. For the 2011/2012 year. Our oldest won't be ready for college for another 10 years.

My oh my. One financial crisis just follows another.

I stopped by the bank to cash in my accumulated coins again. The total was $18.19. The last time I cashed in my coins was early October, so let's say 10 weeks. That's an average of about two bucks per week of accumulated coins.

A couple of years ago, when cash was really really tight, we would literally paw through the coins to pay for gas and grocery items at the end of the month. We never had extra coins just sitting around.

Obviously, we still have a considerable debt load. But, from a family cash flow stand point, things have begun to turn around, and I think that the coin accumulation situation is a signal of that.

I listen to a lot of radio. In this political season, you hear a lot about tax rates for "wealthy" Americans. "Wealthy" Americans seems to be defined as couples who make more than 200K per year.

My pet peeve is that yearly income isn't the same as wealth. Wealth is your net worth. I'm sure there's a strong correlation between income and net worth, but they're NOT the same thing.

If one family's yearly income is 100K. And a family down the road makes 50K per year, and another family down the road makes 200K per year, which one is wealthiest? It's impossible to know. The wealthiest family is the one with the greatest net worth.

It may very well be that the 65 year old couple who earned 50K per year, and saved every penny that they could are wealthier than the 30 somethings that gross 200K per year, and spend nearly all of it.

My point has nothing to do with tax policy, and which household should pay a greater marginal rate. It's the mis-use of the term "wealth" when discussing marginal rates on the news.

A summary of some of my personal finacial calculations that I've talked about in previous entries.

Credit card debt to retirement savings ratio: 16.1%

Non mortgage debt to income ratio: 13.1%
Total Debt to Income ratio: 32.6%

Daily Interest Expense (December 2011):
Credit Cards: $2.60
CC + Auto: $3.23
CC + Auto + Mortgage: $21.09

As of this month, to remain current on our credit card payments, the minimum payment is $549. What we will probably end up paying is about $630, or about $80 over minumum. Note that I've slowed down payback a bit this month, mainly because of extra Christmas spending and keeping some cash in reserve for the home heating bill. We also need to pay property taxes in February. (Never a lack of places for cash to go).

If we paid only minimum payments on CCs, it would take an estimated 28 months to pay off CCs. It's hard to estimate that because minimum payments can change (hopefully down) month-to-month.

If we paid the $630 that we'll be paying this month, it would take 24 months to retire the CC debt.

If we bumped that up by $100 to $730 per month, every month, it would take 21 months to pay off. Not a huge change in terms of months to pay off, but a difference in $160 in accumulated interest, as compared to a $630 payment.

I think we can manage an average payment of $730 per month over the next 12 months. Hopefully some months substantially over $730, no months less than $630, and definitely no months less than $549!

DW bought a new lap top computer yesterday. A Christmas present for the whole family.

The total was right around $475. No new borrowing, we had the money in checking. But I always get edgy when big purchases are made, especially with so much month left.

But, as I've mentioned in prevoius posts, debt repayment has been slowed a bit to brace for Christmas spending.

We needed a new computer. The old one began crashing and slowing down, and all in all has been becoming annoying. We switched to a lap top to facilitate the use by our daughters (ages 9 and 5). Our old desk top was housed in the office, not exactly a kid friendly environment.

Will be interesting having a "family" computer now. Especially have to think more about parental controls - if anyone has any advice, let me know.

I guess it's time to blog about net worth. I don't think I have so far. I've spent a lot of time on the liabilities side, and not so much on the assets side.

Assets
House 1 $80,000
House 2 $73,000
Retiement $86,274
Autos (2) $7,850
Checking $1,308
Tot. Assets $248,432

Liabilities
House 1 $103,968
House 2 $70,000
CCs $13,867
Auto $6,373
Tot. Liab. $194,208

Net Worth $54,224

The BIG question is value of House 1. We'll not know that for sure until it sells.

Retirement savings has increased about 16K over a year ago.

But now I have it logged in cyberspace, our December 2011 net worth is $54,224. Hopefully it goes up from here.

The tank that holds the fuel oil that heats our house sits in the corner of our unfinished basement. Not exactly a place that i find myself going a lot. Well, yesterday I thought I better check the level in the tank. When I had it filled this summer, I expected that the fuel would last through December.

The level was between 3/8 and 1/2 full! We'll get at least through December.

I started to actively log my family's debt progress last Novemebr in the SA forums. I thought it was time to check progress made over the past 12 months.

Mortgage debt on for sale house decreased by $2,600.

CC debt decreased by $8,684.

Automobile debt increased by $6,362.

Mortgage debt on house we currently live in unchanged (this is family borrowing, and we plan to start moving on it during the next 12 months).

Total debt decreased by $4,954.

Average interest rate (all debts) Nov. 2010: 7.02%
Average interest rate (all debts) current: 6.19%
Average interest rate (CC) Nov. 2010: 10.66%
Average interest rate (CC + auto) current: 5.88%

So, it's an improvement, a step in the right direction, blah blah blah. Obviously, we would be in much better shape without the auto loan. But, I still stand by our decision. It made sense at the time.

What I'm happiest with is the decrease in average interest rate over the past 12 months. A function of attacking high interest debt, and of course the credit card company with the big balance dropped the rate by 4 points in June.

$5,036

That's what I came up with when I ran a tax estimate on the Turbo Tax web site.

I even adjusted my withholdings last February, so I kept more of my money, and my refund wouldn't be so big.

That's based on my income, my tax withholdings, also I estimated a $3,000 loss on our rental. The big kicker is four child tax credits.

We'll be getting another tax credit that wasn't part of the estimate, because we used energy efficient materials when we had the roof put on. That might be $500.

A 5K tax refund will help a lot.

It won't be used for a cruise.
It won't be used for a new plasma TV.
It won't be used as a down payment for a 25K car.

It will be used, in one form or another, to reduce debt (or toward an EF).

Now to begin planning on how best to place that money for financial security.

I've blogged about our rental house before. We are reluctant land lords, because this is not an investment property. This is the house we used to live in, and put up for sale when we moved almost four years ago.

We've had three different renters in the house. The first was an interim pastor, who didn't pay very much for rent. My thoughts in renting the house to him for well below market value was that it was some income, plus he would maintain the house (which he did), and pay the electric, water, and heat bill (which he did), and keep the snow shoveled out of the driveway (which he did very well). He also paid his rent a day or two before it was due. But, (I thought) the best reason to rent to him well below market value was that if the house did sell, we could ask him to leave, no questions asked. Well, the house didn't sell, and he left when his interim period was over.

October 2010, new renters moved in. They paid substantially more than the previous renter. They were OK renters. They always paid their rent, just not on time. It was always paid three or four days after it was due. They made a few complaints along the way, and we always felt that they did things to undermine our efforts to sell the house. They moved out last June.

In July, our new renters moved in. They are paying a bit more than renters #2, and they pay on time. We don't hear much in the way of complaints from them. We still wish we weren't land lords, but if we have to be, this is better than a couple of other alternatives.

Dec 2011 Debt
Mort 1 - $103,968
Mort 2 - $70,000
CC 1 - $7,832
CC2 - $2,577
CC3 - $1,902
CC4 - $1,556
Van Loan - $6,362

These are my updated numbers. $1,013 of debt paid off, as compared to November numbers!

Credit card debt is $628 less than November.

I could have paid off an approximate additional $300 in debt, but the reality of Christmas season, and winter heating has set in. We also got our property tax bill yesterday. Due in February.

I bought a new battery for my beater 1994 Chevy Lumina today. It was a hundred bucks. Hopefully it will outlive my car, because it is such a big pain in the rear to get out. It's even almost impossible to jump start my car because of how it's positioned in there.

I replaced it three years ago. I bought a cheapie back then, because I thought my car didn't have much life in it. I should have gritted my teeth and bought the expensive one then!