Keeping your life in balance with your values

Each of us knows what is important to us. Whether it be our relationship with family and friends, getting out of debt, saving for the future, starting our own business or giving back to the community, it is something we each value and work at achieving. For me, it is saving for my goals and living a greener life. These are large goals and encompass many small steps.

I find myself focusing on the little things I can do every day to better align my lifestyle to my personal values. That means I create a spending plan each month, automate my savings, keep track of every purchase, consider whether I could either make it or fix it myself, and assess my net worth every month. When how I live my life is in harmony with my personal values, I am more positive and I want to strive to do better. When I am out of alignment, I am unhappy, short with others and resort to poor behaviors: spending more money on conveniences, letting the household maintenance fall by the wayside and spending too much time in escapist activities that only delay the inevitable. I have to deal with my problems.

Unfortunately, when there is dissonance, a gap between your values and how you live your life, it disrupts everything. For example, I am usually frugal and prudent with my money, but find myself spending more money eating out because it is just easier to go to lunch with a friend than eat what I have on hand. It seems easier to pick up some junk food and eat that than take the time to do the dishes that have been piling up and actually make a dinner. My patience disappears and everything my cat does irritates me and my colleagues seem to offend me a lot easier than normal. I lose my emotional and fiscal equilibrium where I make good decisions rather than abdicating for convenience and emotional displays more reminiscent of a cranky child than an adult.

How to restore balance? I find writing down my thoughts, asking myself what is going to be useful. Whatever is bothering eventually makes itself obvious and then I can consider rectifying the situation. For my issue, I realized I not only needed to catchup on my dishes, but also plan meals better. I have neglected to have a list of meals I can prepare and rely on the moment. That encourages me to make poorer choices. Therefore, if I know what I was planning on making this month, I am less likely to get off the plan. And clean dishes make sure I have all my cooking items on hand for whatever I choose to make. With a strategy, I am able to overcome the dissonance and keep closer alignment to my desired lifestyle.

Will you consider how to improve your life and alignment to your values?

The voting booth and your finances

One area I believe people do not consider when evaluating their financial situation is their performance in the voting booth. I worked as an election inspector on April 6 and my city faced several races and two referenda. The most obvious effect on my tax burden was a referendum that would exceed the state's tax levy for funding the city's schools. This would mean for the next four years, my property taxes would definitely increase, with the fourth and final year seeing a $275 fee added to my tax bill. Personally, I voted no on the resolution, but the entire voting community ended up passing the measure. Thus, I know my property tax bill will be increasing by more than I have seen the past few years. Better save more money.

A less direct but certainly important effect of voting is the selection of local alderpeople, mayors and county or regional board members (terms used in the United States). I have witnessed the turnout experienced during a Presidential election and that is wonderful. However, the most direct effect of your vote can be seen locally not nationally. If you vote for a fiscally conservative or growth-oriented mayor or alderperson, that will affect your finances. If you do not vote, you do not have a voice in the democracy. While I am glad there was over 55% turnout in my voting ward on April 6, I still wonder where the nearly 45% of the rest were.

Remember, local council and board members of all stripes and mayors live and work in your community. They answer to you and are there to listen to your comments and represent you in government. Exercise your right as a citizen and make sure to vote every time there is an election. These elected representatives determine how the city/town/village spends your tax dollars and how much they want to levy you each year. It is difficult to support or defeat a measure without all the voices in a community, and harder to control your finances without voting in elections and holding your representatives accountable.

Figuring out what to do with a salary increase

I am quite meticulous about planning what to do with future money. Everything from small bonuses to merit increases are carefully assessed to figure out what best aligns with my financial goals, whether to spend or save. However, there is planning and there is something that blows all projected plans to heck.

Yesterday, I was notified that not only did I receive an annual merit increase but an unexpected promotion as well. Notably, this position change came a further salary increase. Since I was not expecting to be promoted,I was unprepared for the change in my salary. Prior to my notification, I worked on a number of scenarios to figure out how much I could add to my various savings accounts if I received anywhere from 2%-4% increase. (In fact, I felt the high number was too optimistic.) All told, I received a nearly 10% increase in my salary. Therefore, I have some work to do on figuring out how to distribute my new salary.

My first priority was restoring the level of automatic transfers to my various savings accounts (emergency, house and car). This year, we are on a 27 paycheck cycle (rather than the normal 26) that reduced the amount of the individual paycheck but totaled the same salary as a 26 pay periods. The first place I compromised was how much I added to my savings accounts rather than changing my spending levels. Being able to fund my savings at previous levels makes me happier as I can reach the goals I am striving for sooner.

Furthermore, I dedicated more money to my future farm account. I have been considering a second job to add more money to this account so with my new salary increase comes along, I can afford to put more money toward this savings goal. In fact, I am now saving 6.5 times more for my future farm than I could before. I am rather pleased I can advance this goal more rapidly without finding alternative income sources.

Finally, a fraction of this new pay level will go to various spending categories. Most are small increases in the monthly allocation. However, some of my spending categories I felt confined by the numbers I allowed myself. Therefore, I believe a tiny increase in the amount I can spend will be helpful without much lifestyle inflation.

I am a numbers gal so as soon as I learned how much more I would be earning with my salary, I had to figure out what to do with it. I cannot let any money just sit there without determining how I can make use of it. With a plan in place, I feel calmer and more in-control regarding my spending allocations and my savings goals.

How do you handle similar situations?

Getting out the last drop

Recently, a local news show has been highlighting money-saving tips for families squeezed by the economy. The two-minute segment talked about how to get the most out of the items you purchase. I was surprised at the advice they gave because the ideas were practical. My thought was "people do not do this all the time?" So I thought I would present them:

Cut lotion containers and toothpaste tubes in half to get the last bits inside.
I hate throwing things away without getting the remnants out especially lotions because I buy many from Bath and Body Works. These lotions moisturize well, smell great and come at a premium. While I tend to slice the lotion tube vertically and not horizontally, I do use my fingers to get every last drop.

Use a spatula to get all the mayonnaise or salad dressing from the jar.
I use a spatula most of the time I use mayo or Miracle Whip. Of course, when there is just those small amounts clinging to the side, the spatula can really help retrieve them for your sandwich.

Add water to the shampoo bottle to use for another wash or two.
Even dilute, shampoo works quite well. I also add water to body wash and use on my shower puff. The bottle gets rinsed out before recycling. May as well use the rinse to your advantage.

Make vinaigrette right in the bottle of olive oil.
I do not use vinaigrette dressing on my salads but could see how adding the ingredients directly to the bottle to use the olive oil remaining would be useful. Plus the salad dressing could be stored in the bottle.

So, do you use these tactics to get the most for your money?

The financial consequences of "just in case"

I am a cautious person who believes in being prepared. I save my money and keep some cash in the house and in my wallet. I have at least two weeks worth of food available in my pantry and basement just in case. I rarely let the gas tank gauge in the car fall below half a tank. I take my car to the mechanic twice a year to have it checked over, the oil changed and the tires rotated. I have several CFLs available in various wattages for when the incandescents or other CFLs in my home need replacing. I have at least one replacement for body lotion, shampoo, conditions, soap, razor blades, contact lens solution, cotton balls and Q-tips so I have a ready supply.

Why am I telling you all this? While you may be wondering why this strange, obsessive woman is roaming free in the upper Midwest, I will demonstrate the benefits to my behavior. The first reason: I like to have backups. I feel more secure that when that light bulb goes out I can change it, or the winter weather prevents me from going anywhere, I can survive on my backup water supply and full pantry for however long my life is disrupted. I find it gratifying to turn to my cabinet, pantry or basement storage and grab the next bottle of contact lens solution or container of deodorant without cursing that I forgot it on my last shopping trip. This means I do not have to make a single trip for one item and then end up buying six other things I do not need but decided I wanted.

Being American, I am dependent on my car for getting me to and from work. If I need to buy items or visit my family, I need to drive my car. For these reasons, I schedule semiannual maintenance of my car to ensure all systems are working well. This saves me time, money and aggravation. Why? By having my car looked over regularly, I am able to fix items before they become critical and leave me stranded somewhere. Regular maintenance is likely to reduce the total cost of ownership by anticipating problems before they become catastrophic.

However, this "just in case" mentality can also have its downside. I need sufficient space to store these extra items, which can add clutter to the house. This need for storage may increase spending because now I require another shelf in the basement to store all my back up items. Deciding to get an item may lead to buying more than needed. While I am thinking "just in case" as I buy my third wool blanket from the thrift shop, do I really need three wool blankets with one down blanket and three cotton blankets at home? I blame reading Sharon's blog for this particular weakness.

Whether being prepared and doing preventative maintenance balances out the expenses associated with greater storage needs depends on execution. Living in an area where severe winter weather can mean impassable roads and loss of power, and summer brings severe thunderstorms with a chance of tornadoes, stocking up seems prudent. I am shielded from temporary disruptions in food supplies with my pantry stockpile and can keep myself warm without power under all the layers of blankets I have. This security is worth more to me than a few extra dollars in my savings account.

Analyzing my net worth for August 2008

I am still surprised we have reached September already. It just seems like summer slipped by me although my garden would tell me otherwise. Where does the time go? The same place my money seems to go--in the wind. Actually, August was not that bad, but I realized I have not checked in with my yearly goals so that will be the next post after this. After two months where my assets decreased, I have a positive month. I am reservedly cheering my 2.3% gain and hope that the trend continues.

That crazy 401(k) (and Roth IRA)
In August, both the Fidelity 401(k) and T. Rowe Price Roth IRA were up. While the Roth IRA gained almost $100 of value over my monthly contribution, the 401(k) was up but no where near the amount contributed. However, I will take a few hundred dollars more than last month especially with the markets closing more down than up. The very modest gains seen with the mutual funds prevented these stock-driven values from decreasing my total assets, contributing to a gain for the month.

The extra paycheck month
Being paid biweekly means twice a year, I receive an extra paycheck. Since I calculate all my expenses based on 24 paychecks rather than 26, I carefully plan how to save the extra month I receive. While a good portion is taken by the automatic transfers set up for each pay period, the extra $1,000 means I can pad my emergency savings account or open a new account or CD. This month I chose to split the money from my extra paycheck among emergency savings, car savings, found money account and opened a farm account. The farm account is for accumulating money for my long-term goal of owning and operating a small farm in the country. The extra check also means a boost to my overall cash situation, substantially helping August end on positive note.

Lack of activity on other accounts
Some of my assets are updated yearly, biannually or quarterly. Without new statements, these numbers remain unchanged. With half of my assets remaining unchanged and the others moving into positive territory, I came out with a gain for August.

While I am glad my mortgage is moving glacially downward and my assets are increasing, the gain is not moving as quickly as I like. I really need to buckle down and determine what means I can use to generate more income. I still have plenty of items to sell, but need something more sustainable for the long term to really get me closer to my goals. In looking at my finances, I need an extra $150 per month to get me closer to my dream of self-sufficient living on a farm.

How do I relate to my money?

I apologize for my absence. My mind has been on many things--work around the house, in the garden, in the kitchen and lots of thinking about the future.

Keeping and not spending money is always a battle. Temptation is there whether you expect it or not. For example, I really wanted some chocolate last week. I had even decided to raid the vending machine, but ended up finding a small square of brownie in a nearby counter. I ate that, saving me both money and calories as I satisfied the chocolate craving. Truly, it is the small hand-to-hand combat urges that sabotage my efforts at minimizing spending and saving more. I try to ask myself if I really need that item I want or am craving, and remind myself of my long-term goals.

Although my future plans include buying a small farmette to be as self-sufficient as I can be, I am working with what I currently have to make sure that this sort of living is what I truly want to do. This means I walk around my property with a measuring tape and watch how much sun a particular spot gets during the day. I was committed to my farmette purchase four years from now until my dad tells me of a farm that is on the market--just three miles from him.

You see, this is a real temptation. I wish my dad had not told me of the place because my mind is full of the possibilities with my family nearby to help me out. Now, I have not seen the farm and buildings, and it is likely more than I can handle. The previous owner had been sick for some time and just died, meaning the buildings were neglected for that same period of time, at least two years. But here my dad presented a place, a farm with 10 acres, the minimum size I believe I want at a fairly reasonable price, $250,000. Honestly, I cannot afford this and I am not prepared to buy now, but now I am thinking hard about it. My plans had not included buying a farm in the next year or two. I intended to work at my current job until I found a suitable farm in approximately four years before leaving for my life in the country. Granted, life is not neatly wrapped up in nice packages like that, but four years would give me time to save for the farm. Not only do I have to deal with a mortgage, which means I would have to have an outside job, but I have all the investments to make: renovating buildings, building new facilities, fencing for animals, starting a garden, planting trees, purchasing animals, all things I want to do on my farm. While I may be emotionally prepared for a move, my finances are not.

In fact, I had to perform a reality check, looking at my finances and calculating what four more years at my job would get me. I need to keep working where I am to save the money I need for the farm in the future. Unless a large chunk of money is going to fall in my lap, my plans include the slow and steady course I have steered. My analysis also demonstrated that supplementing my income would help build a larger cushion for the farm purchase and investments.

Generally, I have a good relationship with my money. I may make some compromises with my spending plan that involve borrowing from other categories rather than strictly staying within the allocation. This behavior does shortchange me in the short- and long-term, but if I do not consistently do this every month, I am okay. Then there are the larger temptations. Yes, I can pay $1,400 for a newer laptop, but that would deplete my savings of nearly a month's worth of expenses. The return on investment is important: is this item important enough to sacrifice liquidity to purchase it? And then there is a strong opportunity like this farm. It is a great location, something I can really work with, but not worth throwing over my plans to work and save to do it now.

Therefore, while I live on 40% of my income, save 30% and the rest disappears into taxes, fees and insurance, I still have to be wary of how I spend my money. Sometimes I am less on guard (Oh, it's fine, I'll get that anyway) while other times, I take a harder line (I may want that, but I don't need it). No one can be perfect 100% of the time, that is keeping to the spending plan and not spending money in savings. However, there is always room for improvement. Learning to grow my own food and preserve it eases some of the burden on my grocery allocation even with an initial investment. Breaking sod by hand saves money and gasoline (if not hands or back). I try to make choices based on capability and comfort (e.g., can change an electric outlet but not willing to deal with adding an outlet in a new location) that will help me save money where I can and strategically use the resources I have to increase the value of my property, home and even my savings account.

Analyzing my net worth for July 2008

It's that time of the month again, to look back at the just-completed month and see how my finances held up. As I am sure you have hear around the web, the stock market has been a bit rough on finances. My rollover IRA is down 11%, my 401(k) down 11.7% and my Roth IRA has lost 4%. Since these stock-driven vehicles are a good share of my net worth, it is no surprise I lost another 1% of my net worth over the last month.

Will I change my investments? No, I am holding tight, letting my monthly or biweekly investments move forward and letting time (and my money) work for me. A down market is good for dollar-cost averaging. Stocks (and mutual funds) are on sale, meaning the more shares I buy now, the greater my gain in the future when the stock market moves upward again.

Notables in my net worth analysis:

Mortgage
I received a midyear statement and learned my mortgage calculator (in a spreadsheet) was off by two cents. Those extra decimal places really add up. Still, the amount owed on my mortgage is getting smaller and I plan on continuing this trend. On the other hand, paying off my mortgage is not eminent, but certainly manageable on the 30-year basis my mortgage repayment is based on.

Retirement funds
While my 401(k) is down (even as it is the largest pool of my retirement money), my Roth IRA gained. Granted, it only gained the amount of my contribution for July, but at least its total value is holding for the moment. Since the Roth IRA is made up of two index funds and my 401(k) of six managed funds, I find this month's snapshot interesting, but ultimately an atypical blip as the two investment vehicles usually have the same reflection, not opposite ones.

Larger expenses
I bought a chest freezer, had a large bill for the veterinarian and my electric usage is climbing for the summertime. I could be better at saving than I am, but both large and small expenses are bleeding off some of the money I could stash away.

I am feeling less controlled in my life, which stems from many things. Automated savings will get me part of the way there, but I need to take a more active role in managing my income. August is an extra paycheck month so I should have more in my savings account at the end of August, boosting my net worth. I will have to see the results in 30 days to find out if this extra savings is enough to bring me back to positive territory.

My regrettable chest freezer purchase

Recently, I purchased a chest freezer. I was motivated to buy a freezer as I was hitting the capacity limits of the freezer in my refrigerator and then I go on a "make-freezer-jam" spree. I had wanted to purchase a used chest freezer for a while, but was running into two major obstacles:

1. Finding one of the appropriate size


2. Getting the freezer to my house

My first preparation step was to measure the width of the doorway to my basement. If it did not fit, I could not purchase it. Then I did research on three retailers that delivered: Best Buy, Sears and Home Depot. After figuring the maximum freezer width I could have was 34 inches, I settled on a 5 cubic foot freezer.

To address the electrical issues, I had an electrician come in and wire a new outlet on a separate circuit for the freezer. He reassured me that my initial concerns were correct: putting a dehumidifier and a freezer on the same outlet was asking for trouble. Total cost of three new outlets, bringing the basement wiring up to code and installing two lights: $230. This is a good price and one less thing an inspector will note on his report as "bad" when I sell the house.

Reassured the electrical supply was adequate for my new house guest, I went back to the web sites, and did a survey of prices. Since I had only seriously looked once before the electrical work was done, I only had one price for comparison. I was thrilled because the freezer I was interested in was reduced in price by $20. Hurrah for me--I get to save money. While Home Depot had a similar price for a 5.5 cubic foot model, their delivery was only to my threshold. I needed delivery to the final location of my chest freezer-my basement. Sears was my second choice (and had the $20 savings). I choked on the delivery charge ($65), but wanted the freezer so I accepted the price. With purchase price, delivery and tax, it came to just over $237. This was more than I wanted to pay, but I had no idea what the delivery charge would be before I decided to buy the item.

So I have the freezer delivered, life was good and then I realize my first error: the width listed on the freezer was for the long side, not the short one. Depth was the measurement I needed to account for when fitting through my door way, and would have allowed me to get an 8-10 cubic foot freezer, a capacity range I wanted. The one I purchased is adequate, but for maximum use, I would have needed at least 7.2 cubic feet for all the items and garden produce I want to store in the chest freezer.

The second error: I should have taken more time to shop. I went to Sears.com three days after my freezer was delivered, and found my same freezer back at retail price ($40 more than I paid). However, they were offering a rebate for free shipping up to $75--starting one day after I had mine delivered. Since I decided I wanted a freezer and purchased it in a week, I had not systematically tracked the sales and rebates involved with them for any appreciable period of time.

So, what was the end result? I have a chest freezer, but smaller than I wanted. Because I did not read and understand the measurements correctly, I short changed myself for the long term. Since my window between deciding to purchase and actually purchasing was small, I sacrificed $25 for immediate gratification. Research and patience would have gone a long way to saving money and purchasing the right chest freezer for long-term satisfaction.

Lesson to be learned: take more time to research a purchase and ensure I understand the dimensions and my real limitations.

Poor food choices and their consequences

Recently I have been feeling overwhelmed and consequently, have not been doing as much as I need to. Oh, I take care of the garden and begrudgingly mow the lawn, but the indoor chores tend to slide more often. Even with food coming in every week with my CSA box in addition to my supplies from the monthly grocery shopping trip, I have not been cooking or creating meals from scratch. My lunches are sandwiches or a frozen entree, my dinners are as simple as possible (and tend to dip into the chips and dip area more often than not). What are the consequences of this neglect of my more frugal moves?

Increased cost
Prepackaged foods whether a frozen lunch entree or deli sliced meat will add cost to each meal. While these options are less expensive than a lunch purchased at work, the cost is lower taking leftovers to to work for lunch than preparing a lunch every morning (and usually a bit quicker).

Wasted food
I am especially guilty of this regarding my CSA box. Much of the reason all of it does not end up in the compost bin is because I give it away. Many of the greens do not get me excited, radishes are not my thing and I am not enthusiastic about eating lettuce and spinach. Since I am not cooking as much, I tend not to experiment with some of the items I receive and they are relocated to make compost rather than feed me. This is not the best use of my locally grown produce.

In addition, I have also thawed meat that sat too long in the refrigerator before I remembered I was intending on making meatballs or some other dish. This is expensive and wasteful.

Poorer health
Despite my vow to eat healthier and exercise more, I have reverted to old habits rather than adopting new ones. Many prepackaged foods have more fat and sodium than recommended, and may lack many nutrients needed by the body. Decreasing my bottom line and adding to my rear does not help me get closer to my goals.

So, what can I do to rectify this? First, I need to organize my kitchen (messiness is always a barrier to cooking) and choose a recipe to make. With my time and energy constraints, finding something to cook can be a challenge, but trying something new is fun as well. I plan to look up recipes the night before and get out items to thaw if needed. With an organized kitchen and recipe in hand, I will cook the meal (hoping there are leftovers for one more meal, lunch or dinner the next day).

If there is a weekend looming, cooking can be made an even higher priority. I usually have more time available so cooking long-simmering sauces or dealing with multiple preparation steps are less onerous. Making a list is important so I will have to decide what to make and post the resulting list in a prominent location.

The hardest part: not stopping by the store for the craved chips or sweets. By making a vow to only eat something I have made and supplying myself with a variety of items to eat, I lessen temptation and improve both my diet and my financial bottom line. Making time for cooking will only help me keep within my spending plan rather than exceeding it.

Do you have similar food challenges?

The advantages of electronic bill pay

I have a confession to make--I still pay bills using a check. I know it is old fashioned and so 1980s, but there you are. In fact, up until last month, I had paid my utilties, phone/DSL and wireless accounts electronically, but sent a check for my mortgage and credit card payments. However, I decided to take advantage of my credit union's free bill pay service to begin to pay these latter two bills. There were two reasons for this change:
1. I save myself the 42 cent stamp to send the payment.
2. I can schedule when the payment is sent out.

I am leery of my credit card company having direct access to my bank account especially when I was recently informed of some unauthorized activity on my account. (Is this what I get for switching to a well-known credit card company?) My mortgage company has an automatic payment service, but it is an assigned date every month. Frankly, I like having control over my money to the point that I dictate when my money is used for bill payment, not the company. Using the bill pay service via my credit union allows me to keep control of my money, but retain the advantages of electronic payment.

My paper checks will still be used albeit rarely. My once monthly grocery trip is paid for using a check (tradition more than necessity as the store now accepts debit cards), occasional workers are paid with a check (e.g., I just had some electrical work done in my basement), and other sporatic events that may arise. Not only does using electronic bill pay save me money in the short run (i.e., not using a stamp), it saves me money long term as the checks I have purchased last longer before I need to purchase another set. Who knows? By the time I need to order new checks, they may be obsolete!

How to rollover (or move) your IRA

The ease of rolling over your money from a 401(k), 403(b) or other pretax retirement benefit from an previous job depends on the company holding your money. Let me use my experience as an example.

My first job after graduate school was working in a laboratory at the same university from which I graduated. This new job doubled my income from my graduate stipend and offered me the opportunity to invest in retirement funds via a 403(b), which is a pretax retirement plan for nonprofits or universities. I started investing in 1999 and then 2000-2001 came along, blithely wiping out the value of my account. When I left the university position in late 2001, the retirement account value was ~50% of my contributions.

The company I am with now hired me seven months after I left my university position. While I was fairly pleased with the 401(k) plan my new employer offered, in January 2007, I consulted with a financial advisor about my 403(b) from the university job. I had let the money (and the plan choices I made) sit for six years. In that time, with no new contributions, I had finally gained all the value I had lost in the 2001 stock drop. I was ready to move on and wondered what to do with this money.

My financial advisor recommended Transamerica, which invests in several mutual funds, buying and selling funds to maximize returns. He was invested in the plan, explained it was a front-load fund and I thought the philosophy meshed well with my future goals. Now I realize funds that charge a load really are stealing my money, but I did not really think about it so I paid to join the mutual fund. Actually, I almost broke even for the first year in the fund so that was a plus.

However, it was not easy to retrieve the retirement money from my current 403(b) custodian to rollover into the IRA mutual fund I wanted. First, I had to sign lots of paperwork stating "Yes, I would like all the money invested in Wells Fargo Funds to be liquidated and transfer custody to Transamerica, where it will be invested in new mutual funds." The paperwork did not take long to fill out, but required I identify myself, list the custodian of my current funds including its address and phone number, my account numbers and indicate that all the money would be rolled over. Since I was conducting this rollover with the assistance of a financial advisor, I needed a witness as I signed my papers and noted the amount being transferred. The paperwork was then sent to the current account custodian for processing and transfer to Transamerica.

Despite a phone call from my financial advisor to Wells Fargo, it took two or three more phone calls and second round of paperwork to finally get my money transfered to Transamerica. Depending on the customer service agent my advisor spoke with, the paperwork was either adequate, inadequate or unable to be found. However, by April 2007, my 403(b) money was moved to its new custodian, Transamerica and earning back the 5% front-load fee for me.

There are a few options for rolling over money from retirement accounts into IRAs.

Visit a financial advisor.
As my story above illustrates, a financial advisor can help you chose an appropriate mutual fund family for your goals and assist you in taking your money from a retirement benefit plan and placing it into a rollover IRA.

Rollover the money into the new employer's retirement plan.
Many 401(k) plans including my own through Fidelity allow you to take money from a previous job and add it into the new retirement plan. This is not necessary. Money can be left in the previous account until you decide you want to move it, but being able to add it to the new 401(k) or other retirement benefit plan minimizes the accounts you need to keep track of as well as reducing the number of plan statements to review.

Rollover the money yourself.
Many companies like Fidelity, T. Rowe Price and Vanguard would be happy to receive your business (and your money) with a rollover IRA. You can call them via phone or sign up online to open an account. As long as you meet the minimum investment amounts for each fund and fill out the appropriate paperwork for the rollover, you can set up the new IRA yourself. These companies have no-load funds, allowing you to keep more of the money you saved and invested.

Regardless of how you choose to rollover your money, be aware that some custodial companies are more reluctant to release your money than others. Wells Fargo seemed quite tight fisted and required several follow up calls and a second round of paperwork to get my money. Oppenheimer, my Roth IRA custodian, just needed the paperwork I filled out to move my money to T. Rowe Price. If you tackle this job yourself, you may need to spend time coaching the money through the system. However, once the money is in your new IRA account, you can watch it grow (hopefully) and be happy with its new investment home.

The expensive reality of homeownership

When I started telling others I was planning on buying a house, I received my share of "You can write it off on your taxes" comments. My perception was my mortgage payment would be subtracted from my taxes, but the reality is the only items I can write off are my mortgage interest and my property taxes, and then only a percentage of these (based on my income tax rate).

When I bought my house, my mother said to me "Congratulations on owning a piece of real estate." However, signing up for paying a mortgage for 30 years did not prepare me for all the costs of homeownership. Here are a few things I knew about but did not truly think through the effect on my finances:

Landscaping and lawn mowing
Among the tree trimming (to keep the lone tree I had in good condition), shrub removal (because I hated what was on the property) and figuring out what plants and shrubs I wanted to install, the costs added up. I paid arborists to take care of my tree and remove unwanted shrubbery. While I may have planted the new landscaping myself, the costs were not cheap whether I purchased a plant, bare-root stock or bulbs. In addition, I had to spend extra money on appropriate amendments or fertilizers plus my time and energy to plant all these things around the house.

In the warmer weather, lawn mowing is one of those neverending chores, and when I first moved into the house, I did not have a lawn mower. My first (and only dip) into the water of hiring a neighbor boy failed badly so I ended up buying my electric mower before I saved the money for it, and mowed the lawn myself. I do not like mowing grass, but am too cheap to hire someone else. This means I have to spend at least 1.5 hours mowing my small lot and grumbling about the work as I bat away insects. This was not highlighted during the home-purchase process.

Home maintenance
Taking care of the home is more than fixing things when they break; it is also preventing catastrophic failure. For example, I am painting the siding on my house because it is starting to crack and peel. While I do not perform the job of professional, I am doing a patch job until I can convince my neighbor, who owns the other half of the duplex, to have the entire structure painted. By painting in between professional repainting, I prevent any damage from occurring to the wood exterior.

I also have to do things like change the furnace filter regularly, add salt to the water softener, empty out the bucket on the dehumidifier and have the furnace and AC unit checked. Again, these are reasonable steps to take to keep the house working well, but not detailed in that homeownership document it took over an hour to sign.

Utility bills
In my apartments, I was responsible for heat, electric and phone. Sometimes heat and electric were the same thing. While I had a number for water, sewer and natural gas from the previous owner, I did not realize how much higher these numbers were until I started paying these bills. In winter, the natural gas-fueled furnace means a high bill; in summer, the electric-powered AC unit means the electric bill reaches untold heights. On average, I pay at least twice as much for utilities (which includes water and sewer) as I did when I was in an apartment.

Mortgage and property taxes
I did make sure I could afford my house with the escrow included. My monthly payment came in just under what I felt comfortable paying. However, my mortgage (plus escrow and PMI) was more than my rent and with the increase in my utility bills, I found more of my income was committed to fixed expenses. While I can pay my mortgage and other bills with nary a wince, I realize that with so much of my money dedicated to these expenses, I have fewer resources to save.

While property taxes can be subtracted from a tax bill, they can also be raised in a dramatic fashion. While the payment on my house will never change since I chose a 30-year-fixed-rate mortgage, the property taxes do vary from year to year. Depending on the assessment or the financial strength of the city I live in, my monthly payment may be more than I wanted to pay and pinch the spending plan even more.

While I am happy to have a home and be able to decorate and customize as I would like, I did not weigh all the financial consequences of the purchase. I had taken into account what I could afford and knew my utilities would be higher, but the more irregular maintenance and replacement expenses were not considered. Many people consider a home an asset, but it has great expense associated with its use and maintenance even when divided over time. Truly look at yourself and your finances before diving into homeownership. It is a tough (and expensive) job, but you may find such challenges rewarding.

Vacation fantasy and money reality

One of my cousins announced that he and his fiancée were planning on getting married in Jamaica in April 2009, and we (his extended family) were all invited. With the magical e-mail address, information would be passed to us and we could learn all about the location and the expense for joining him and his future wife at this location. I have not been to Jamaica but it would be something different under the guise of attending a wedding. Therefore, I shared my e-mail address and waited for the information to arrive.

About a month later, an e-mail from an unknown person came to my inbox. Once I figured out the strange name was my cousin's fiancée, I clicked the link, waited forever for the image-heavy web page to load and then scrolled for what seemed like several minutes to get to the details. Turns out, there were no details and I had to submit information on the web page to get a quote for airfare and hotel, a couple's resort.

It has taken another five months, but I finally received the numbers involved in this destination wedding. From my location to the resort and back, including airfare, I could pay $3,400 to $4,000 per couple (depending on if the room has a garden view, ocean view or beach-side placement) or $1,700 to $2,000 per person. This may not seem like much, but does not include incidentals and spending money. Taking the larger number ($2,000) and dividing it by the number of pay periods between now and the wedding, I came up with the magical number of $85. This means I have to save $85 per paycheck between now and April 2009 to pay for this trip.

Broken down into the small number $85, this does not seem too intimidating. However, even if I gave up my entertainment money, my eating out allocation and most of my miscellaneous money, I would not fund even half this vacation. To fully fund this trip, I would need to cut my spending plan quite thin and steal money that I was sending to various savings accounts (general, house and car). Not only would I not be able to enjoy a meal with a friend without having to borrow against savings, but I would compromise my current savings goals. This seems quite short-sighted: make me feel pinched immediately and decrease funding of other items.

The $2,000 I could save for the vacation could also fund replacement windows or attic insulation, an investment in making my house more comfortable and energy efficient, something I could enjoy every day rather than once. I was really excited (and anxious) about my first overseas trip to Germany last year. I saved for 15 months and had more than enough money for my trip. I am glad I went and enjoyed the experience. This trip to Jamaica has not generated the same amount of excitement, and I have mixed feelings about weddings and family. The fantasy of a tropical trip is lovely but the financial realities are I am better off staying home and saving my money for other long-term goals.

How I will manage my increased income

No, I do not have a new income stream. I am still clueless when it comes to alternative income, old boy-band records for sale on ebay notwithstanding. Frankly, there is only so much stuff I can sell either locally or on ebay and then what? Today I am discussing the merit increase I will receive starting with my first paycheck this month. In my company, the average increase is ~3% so I was glad my supervisor rewarded me with 4% salary increase. What does a person trying fund her Roth IRA and save money for a new car do? Calculate how much the raise will translate to net income increase and figure out what to do with the money.

Ironically, in doing this calculation, I found an error in how I was calculating my Roth IRA contribution in 2007. When I took 6% of my gross salary and then calculated the net number, I used a percentage that included not only taxes but my 401(k) contribution, fees for disability, medical and dental insurance as well as my F.S.A. I lost just over 1% of my possible contribution to this error. However, I corrected it for the new calculation and it looks like I can contribute ~7.5% of my gross income to my Roth IRA. After calculating taxes, I will contribute just over $3,100 per year. This is a 150% increase over the year before and brings me closer to making the maximum $5,000 contribution for 2008. Since I already have an extra $500 in the account this year and my tax rebate check will give me another $500 to add to the account, my planned Roth contributions are over $4,000. After figuring my 2008 taxes, I will likely have another $500 to add to the fund bringing me close to the maximum. These numbers make me think I can max out my Roth IRA two years in a row, pending no big financial blow up.

Between a share of the money I was contributing to a charity organization through work (I just reached my contribution goal) and my raise, I will be able to contribute an extra $10 every paycheck toward purchasing a new car. This is an important goal for me and every little bit brings me closer to buying a newer car without financing.

According to my calculations, there are still a few dollars left from my raise and they will be added to my prescription/medical copay allocation and my cat care fund. My cats are 14 and 12 so the expenses (visits, food, medication) add up quickly. They are fairly healthy, but I have been dealing with some chronic issues that are not easily resolved and office visits are not cheap.

These plans do not involve lifestyle increases. In fact, my net savings will increase to 34% of my annual income without further changes to my spending plan. This is good news for increasing savings as a percent of my income, but still a ways to go to reach the 40% savings rate at which I would like to be.

Analysis of my net worth for March 2008

I was surprised at my numbers in March. The volatility of the stock market made me fear I would have a losing month overall since a good portion of my net worth is determined by the mutual funds in which I have my retirement invested. In the end, my net worth increased 1.16%. This is not a dramatic increase and certainly not as good as February, but a few factors helped me stay positive in March.

Cashed out term life insurance
I have term life insurance through work for three times my salary so I thought having a separate policy was unnecessary. Other than my cats, I have no dependents so the need for this insurance is reduced. The future may show this was a poor choice, but I think investing in my Roth IRA was important. As a result, the cash value allowed me to fully fund my Roth IRA for 2007 and still had money to contribute in 2008. My purchases in the index fund that comprises my Roth IRA were also made when the market had some of its worst days in March. I did not time the market at all, but knew that I would get good value over the long term with the mostly downward volatility the stock market has been experiencing.

Gained some value in the stock market by the end of the month
My 401(k) has not been performing very well and while March was not an exception, I did come out higher than I started the month. A gain of $800 does not seem much, but since it is more than my contribution for that month, I will take it. This is where I hope the dollar-cost averaging will show its strength in a few years when I imagine the market will have gained value relative to my purchase price.

Added a few extra dollars toward my mortgage principle
My escrow fell from the year before so more of the money I allocated for paying my mortgage goes to principle. I doubt I will contribute a whole extra payment over the year, but I am happy another $7 that will decrease my principle. Again, I am starting my third year of a 30-year mortgage so interest is quite a bit of my payment, but every dollar counts, working to decrease my debt. I will take an extra 0.01% more of my mortgage paid!

Received interest income
Despite the lower rates even on the high-yield savings accounts, I still have interest compounding on top of interest and the additional contributions. This interest is money I did not have before and I will take it! It is a small bit of passive income and at today's inflation and interest rates, not keeping me above inflation, but is slowing my money's erosion.

April will be an interesting month. I have a large car repair bill and the purchase of replacement windows that will draw down my cash reserves. While the windows will add value to my home, it is no longer liquid and involves a long-term investment that I may not fully realize. Since the no-spending vow is a bit iffy right now, I do not know if the extra saved money will be exist or not. Stay tuned for next month's analysis!

Three days into my no-spending month

This no-spending experiment really is a challenge for me. While I will not count the necessary car repairs (at greater cost than I expected) and the replacement hard drive for my iBook (covered under my AppleCare plan with only the cost of time, gas and wear and tear on my car), I also had unprecedented opportunity to spend money even in these first three days. The Apple Store is in a mall and I pass the the Bath and Body Works store on the way. Therefore, I purchased lotion as I knew I was running low and am partial to some of their products since I rarely go to the mall. In addition, I shipped items to my winning ebay bidders from the post office so I bought a book of Forever stamps to beat the price increase in May.

Furthermore, I spent money on eating out for lunch Wednesday as a farewell to a friend leaving for a new position in another company. So much for a no-spending challenge; I am 0 for 3. I can say opportunities that arose under atypical circumstances, but I still spent money.

However, I have made my monthly grocery run and that should help keep me from being as tempted to buy my lunch or snacks. The vending machine typically satisfies the crunchy snack craving while the coffee shop has yummy scones. Pending cat health issues, car or home emergencies, or other unplanned spending, the rest of month is looking better. The only expense that I had not considered before (and did not take care of in March) is ordering tickets to an outdoor theater in the area. It is an annual ritual with my friend W. and I am responsible for getting the tickets.

Unfortunately, technology envy has reared its ugly head and temptation is strong to get a 15" MacBook Pro of my very own. Despite the impressive screen size of the 17" MacBook Pro I bought for my mom, I decided it is just not quite portable enough for me. The 15" screen is bigger than my 14" iBook G4, has the cool new features like the back-lit keyboard, which I completely fell in love with when activated, and would be shiny and new with Leopard, the Mac OS. As argued previously, I do not need it, but I am finding hard to fight want. After dealing with car and iBook troubles, a brand-new piece of hardware is guaranteed to make me forget all my problems. Hence, I am more susceptible than I have been especially after experiencing a MacBook Pro personally. After my car repair bill, I doubt I will be buying such an item, but it is a desirable bit of Apple hardware.

Have gas prices affected driving behavior?

I have read articles that note people have been driving less, combining errands and even forgoing trips because the gas prices have increased over 25% since the same month the year before. However, my experience has shown that people, while combining trips and carpooling more often, still speed. Since the faster the car goes over 55mph, the greater the decrease in gas mileage, this seems an easy way to cut consumption. Even I, who never likes to go more than 5mph over the speed limit anyway, am hitting that 55 mark when the sign says 55mph, rather than 58mph. My payoff? I hit 30mpg my last fuel fill up. I was happy to see that number as winter has had me in the low- to mid-20s.

My car is a 1997 Dodge Stratus and the revised government estimates state that I can expect 26mpg at highway speeds. Since I mainly drive between 45-55mph, that is the number I use as my benchmark. Hence, my 30mpg looks very good in comparison to the rating for the car.

Yet, if people are concerned about the price of gas, I could not tell on my commute yesterday morning. I took a different route than I normally do and ended up on a two-lane 55mph highway. I was passed by no fewer than five vehicles when I had my cruise control set at 55. As it was a two-lane highway, they could only pass me if there was no oncoming traffic. Once I was passed, they definitely kept their higher rate of speed as the vehicles got further ahead of me.

When I turned onto a second highway, I knew the speed limit went from 55 to 65mph. However, I wait until I see that 65mph sign before accelerating (~2 miles). This behavior was in direct contrast to many other vehicles that eagerly anticipated the speed increase well before the sign. Since I set my cruise control for 65mph, I observed that over 90% of the vehicles passed me as I drove in the right lane of the four-lane split highway. These vehicles were a mix of minivans, cars, SUVs and trucks, many of which get poorer gas mileage than I do. Plus, I found when I speed, I tend to be more impatient and more easily angered by people on the road than if I just set my mind on the speed limit and let them pass me.

The danger is I also get tailgated (or vehicles are closer than I am comfortable with), but I want to maximize the use of my gas rather than get to work two minutes earlier as others seem intent on doing. I cannot change their behavior but I can do my best to be a good citizen of the road. Other drivers would disagree on how good a citizen I am since I do occasionally let loose my contempt for their tailgating or passing me while I drive the speed limit.

I could speculate people are not passing me at quite the same fast clip nor am I passed by every vehicle, but I am not seeing a dramatic effect of rising gas prices on speeding although morning rush hour was more competitive than an hour after the evening commute. My perspective reflects that people are unhappy with gas prices but still enjoy speeding around town and country. Just relax and drive the speed limit. You will get where you want to go and preserve a bit of cash. Is it truly worth the possible few minutes gained by speeding if it costs extra money every day?

First day of my fiscal challenge--not very successful

Well, I have already fallen off the nonspending wagon on the first day of April. Yes, I bought some Forever stamps at the Post Office when mailing items sold on ebay. While I was glad to make some money especially as I am trying to save more for a new car, I still had to spend for shipping (even if built into the price of the ebay item). I tend to discount my ebay shipping fees as spending since I was selling unneeded items and making money versus taking the money out of my budget, which is where the money for the stamps comes from.

I will also confess I am buying a computer, but as it is for my mom and she will be paying me back, this is neutral spending proposition. At least I can "test" my mom's new computer when I bring it home!

Speaking of computers, my iBook G4 is on the fritz. After spending three days backing up the hard drive (did this twice after the first back up failed), reinstalling the system software three times and finally retrieving my back up, I can say that this time I spent accomplished nothing, and I have to talk to an Apple Genius anyway. A colleague suggested a hard drive failure, which would be the first time for me. I have owned seven differnt Macs over the last 13 years, none of which ever had a hard drive fail until now (if the Apple Genius agrees). I am still covered under AppleCare so this should be of no cost to me (other than time and gas). However, I feel bereft, stressed and uncreative; hence the lack of posts. I am way too attached to my iBook, I know.

Please visit the Festival of Frugality #119 hosted by Consumerism Commentary for frugal tips since I am not in the mindset.

Update: Since I was at the mall getting my iBook fixed, I also spent money at the Bath and Body Works store. I do not like going to the mall (especially just for one thing) and I am running low on lotion so extra money was spent. I may have to exempt this week from my spending challenge.

My money or my (replacement) car

I have been very happy with my car. I bought it used almost six years ago from a man who rebuilds autos. This means my car is more experienced about accidents than I am. As a result, I could purchase a car of its vintage for less than what I found on dealer's lots and with fewer miles. In addition, this guy had been in business for nearly 20 years and if he was no good, I doubt he would still be in business. So my five-year-old car and I were united in human-auto bliss.

Well, not really. Cars in American society are captured by the phrase: cannot live without them and cost you a lot of money. Most people talk about total cost of ownership. I did have to take out an auto loan for the vehicle and paid it off a few months before it was due. Plus there are the issues that come up, oil changes and other maintenance. I just totaled up what my car has cost me over the last six years for oil, parts and repair: $2,600. I may have lost a receipt as I seem to find nothing for repairs in 2003. To add onto my repair bill, let us say it cost me $3,000 over six years. That is $500 per year. Add in car insurance, registration and initial purchase price and that gives me about $2,200 per year I paid for my car. Not a bad TCO (excluding gasoline as I did not have those numbers handy).

However, the story has just changed. The auto shop I visit for my semiannual auto checkup called me after my latest checkup and gave me a list of items to repair and $2,500 estimate for fixing my car. I am used to them telling me $200 or $300 at a time. I choked on the number and was thinking "Crap, I am not prepared to buy a new car." My plan was to drive my car another four or five years, save my money and purchase a newer used car outright. Being the car-ignorant person I am, I called my dad and asked for his opinion. He talked to his mechanic and got some numbers about the items I recalled from my mechanic's conversation and called me back.

I was a bit upset at this point because my dad, while helpful in getting a second opinion and even talking directly with my mechanic, was saying "In your situation, you should consider purchasing a new car where you are covered under a warranty." I completely subscribe to the view that new cars stink, losing value immediately off the lot and depreciating quickly after that. Plus, I could not afford loan payments for a new car. Essentially, I would have to trade saving money for a car payment, not the way I want to go. Needless to say, I was not receptive to Dad's point of view and he ended our conversation on a sour note--at least on my part.

He also encouraged me to add up my repair costs (hence the number above) and talk to him when I got home that evening. I did add up the numbers once I found all my receipts and then called him. I think I will decide to do some of the repairs, which will cost me between $500 and $670 depending on who I choose to do the repair, and still be able to run my car another 20,000 miles or so. This latter number is an assessment from my dad and from my perspective, will give me some time to beef up my car savings account. My found money account may not grow as quickly as I wanted since I have a new savings goal.

Of course, I could be out $600+ in less than a few months if the car just gives it up on me. This is a decision I do not want to make because financially, I am not comfortable taking on a mortgage and a car payment. However, I also do not want my car to fail me. I am quite reliant on it and is my only form of transportation. Well, there is my bicycle, but in my physical condition, a ride would not get me very far. Since I no longer car pool, I really do not have a backup plan.

In an ideal world, I want to pay cash for a newer used car (presumably more reliable), owning it free and clear. In the real world, I may have to consider a new car and the associated loan payment. One advantage to a new car: I can get one with great gas mileage. Right now, I have to decide who will fix my car, my mechanic or my parent's. Then I need to figure out how to increase my contributions to my car savings account. And while I am doing that, I need to research various car models (and years) to find out which might suit me and how having a loan payment will affect me. Just in case my fix is only temporary and the cost to repair exceeds the value, I need to know what to substitute for my current car. Hopefully, I will get the time I need to save the money for my next purchase.