Year: 2013

2013 In Review

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Every year, I like to go over what happened over the last 12 months and see if the things that I have done/am doing are helping further me down the path to my long term goals of saving more money and living a more sustainable life. I’ve been doing this for a while (since 07) but have been putting them on this site since 2010. (to read previous years, here’s 2010, 2011 and 2012). Looking back, I’ve come quite a long way from that first update in 2010. I had 50k+ in consumer debt at the time, with hardly any savings. I’ve worked hard since then and my finances have taken quite the turn, as you’ll see below.

If you’ve never done a review of your year but are curious, I’d encourage you to do so. It can really help take the guessing out of where you’re going and help identify priorities. I like to start out by listing my priorities, then looking over my assets, debts and spending. Places where my spending doesnt match my stated priorities are problem areas that I need to work on for the next 12 months. For instance, one of my priorities is travel, and sometimes I end up spending more on dining out over 12 months than I do on traveling. Obviously that means that while I tell myself that travel is a priority, I get lost in the day to day temptations of dining out and dont have as much cash as I’d like for travel. So, if you’re looking to do a review yourself and dont know where to start, shoot me an email and I’ll help you out – keep in mind they dont have to be anything complicated. With these processes, it’s more important that you start them than what they look like. Of course, they will evolve over the years and that’s to be expected, but you cant compare where you are to where you were if you dont know exactly where you were.

This year started off great, with a successful elk hunt (after many tries) in January. I really enjoy hunting, as it gives me a chance to get outside and see some great country. I am not always successful, but when I am I get pretty cheap, very high quality grass fed, free range, organic meat. Even though my wife is a vegetarian, it’s a nice way to lower our food bill throughout the year. In February, I was able to take a little down time with my dad and go to key west. Below is Ft Jefferson, Probably the worst fort in the whole country.

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We went on a fishing trip and even caught a few mackrel, but unfortunately I left the bag of fish at the airport on the way to fort meyers dunk city. In march was more downtime for me, mainly to catch up watching basketball and the NCAA Tournament while my wife took a break and headed to the Carolinas with family. Work continued on the house up to this point, but by march we were almost fully finished with the main parts of the upstairs (bathroom, bedroom and kitchen).  Work on the house continued through april (and still continues to this day), and there wasnt much that we did (aside from make our 12th mortgage payment). In may, H and I both ran a half marathon, which was a great time but had  brutal 1k+ feet of vertical ascent over the last mile or so. I also had a good time planning and attending a bachelor party for a good friend in vegas. June brought summer into town full on, and my wife worked hard on the house while off work, and I trained for the death race in my spare time. I worked to secure media mentions, and made sure that I was physically and mentally prepared for what I was about to go through.

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I didnt finish the race, and I’m still kind of annoyed by that fact, so I decided to sign up again for 2014. Above is me and a few other racers (and a support crew guy) at around 8am, 24 hours into the race.

In the second half of the year, my wife and I spent our first anniversary camping around alaska. We were able to make most of the trip cheap, but ended up spending a bit more than anticipated over the last 2 days of the trip, crimping our budget.

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Above is me on the glacier bay tour boat, at our destination (What I think is the Johns Hopkins Glacier)

However, higher than normal spending in july led to the lowest spending month that we have had since we bought our house – which is a good sign for the future. It was heartening to know that we could get so low and neither of us felt like we were missing out on anything during that august. September was another big month for us, as we found out that my wife was pregnant, and later confirmed (after many jokes by me) that we were having twins. After spending over a year trying, and most of 2013 trying hard and going through a lot of testing, it stuck. Naturally, both of us were (and still are) very excited. October brought the financial bloggers conference, which I was able to attend and ended up winning a plutus award for the “best green/sustainability” finance blog. Also in october, we told our friends and families that we were expecting, which was oddly nerve-wracking but mostly exciting. In november we hosted thanksgiving, and december we will be traveling and trying to relax and prepare for the new year.

On the personal side, this year was good for H and I, and we are excited to tackle the challenge of raising 2 kids together next year. I am looking forward to it.

Finances

H and I started to focus on the financial side after we wound down the house work. Last year, because of all the house repairs that we did, our income was only 2% larger than our expenses. Obviously, a lot of that extra spending went to the house, but it left us in a rather precarious position that neither of us wanted to be in. We were able to limit the losses early on, then once projects got finished the amount of money we were spending on the house started to get limited by gift cards, then went to zero in october, november and december. It’s crazy how much my finances have changed since 2010.

Back in 2010, I had 7 different debts, and all of them were consumer debts. Student loans, credit cards and a car. Now, I havent paid interest to a bank for a credit card for years, own my truck (and H’s car) and have 6500 left in student loans – a far cry from the ~$55,000 that I owed back in 2010. This year, H and I decided that we should switch credit cards (we’ve been using the same points earning card for ~2 years). We looked at what else was out there and eventually switched to a new credit card with a different bank. Now, after we have switched credit cards, we are still earning points, just in a different program. I really like credit card points because we pay off the cards every month.

Of course paying off debt was hard. It took a lot of work and working 2 jobs for 18 months, but I can say from (almost) the other side that it was 100% worth it. Now, we are focused on building up various savings accounts and saving for retirement. Here’s where we stand at the end of the year:

Total Debt

Windows: Like planned, we took out a 0% note to replace almost all of the windows in our house. We got the 0% rate for 12 months, and paid the loan off in about 5 months. At this rate, I’m kind of kicking myself for not just doing the last 14 of the windows in the house. Total paid off in 2013: $7,300

Truck: I bought this truck in 2009 when the world was ending. Thankfully, it didnt, and I was able to get a .9% financing rate on a more reliable car than I had (something I desperately needed because I was driving 150 miles/day). After focusing on the credit cards, I made a point to pay off this note early. The balance of this note was $4,380 in january, and was zeroed out at the end of april. Total paid off in 2013: $4,380

Student Loan: This one is really starting to annoy me, and I’m happy to report that we can FINALLY begin to focus on this note. I had the payments at $600/mo earlier this year, but I bumped that back down because we elected to get new windows (far better ROI). This note started at $9,336 in january of this year and unfortunately doesnt go down nearly as fast as I’d like. I’m tired of this loan. Even though I’ve only been out of school for 4 years, it needs to go. I’m pushing for the end of the first quarter, meaning we’d have to pay a whopping $2,180 per month to meet that goal. That could be a bit out of reach, but by the end of the second quarter this should be gone. I’d like it to be gone before the babies get here, which is slated for May 1. Right now, this is at $6,539, and will take a few 1k+ months to slay. Total paid off in 2013: $2,797 (would have paid the extra to get to 3k had I known I would be that close).

House: This is our mortgage. We live in a 3 bedroom, 2 bath house in an older neighborhood near our downtown. We bought near bottom in the market, and got a rate in the 3% range. As mentioned earlier, we have a 15 year note, and are making payments monthly. As of now, we have not paid any extra on the note. The balance as of january 1 was $119,073. Total paid off in 2013: $5,974

Since we focused on our savings quite a bit over the last 12 months, our overall savings have increased 3x, spread throughout our various accounts. We now have enough for about a 4 months of living if one of us were to lose our jobs (unlikely, but possible), and are planning on building these accounts while polishing off the last of our non mortgage debt (putting us at baby step 6 – 3 years later).

Financially, this was a pretty good year for us – we stopped the bleeding with the house, and started spending way less and saving way more. In real terms, our net worth went up 40.22%, which is a pretty awesome jump, but not unheard of when your net worth is small like ours. Hopefully, there will be many more years like this going forward, though I’m not sure that will be the case as we could see about a 50% income drop in the next 12 months if H decides she wants to stay home with our children (we will be making a decision by the new year).

Health

This is one area where I try to focus on all the time, and end up not getting really anywhere. I’ve been trying to figure out a solid eating plan and decided on one in september. It went well for about 3 weeks, then totally fell apart and I’ve been trying to climb back on the wagon (and subsequently fall off) ever since. I’ve also been meaning to write a post about my failings (and why I think I’ve failed and what I plan to do differently going forward) but have been to embarrassed to admit it to you all (and myself). I guess now it’s time for the rubber to meet the road and time to fess up in a small amount of detail, and start writing the larger (more detailed) post and stop being a wimp.

I’ve never really cared about what I eat – food goes in, food comes out. I’ve always been fairly thin (I didnt break the 100lb marker until junior year in HS). Unfortunately now that I’m getting older, I cant really go to chipotle or qudoba and eat two burritos in 1 sitting (and yes, I’ve done it). Since I realized this, I’ve been trying to put myself on an eating plan. First I tried eating fewer calories and more meals a day (about 5) and that went OK but was a pretty big pain in the ass. I’d always have to remember to have a snack or two prepared to take with me to work, and after a while that just got too cumbersome. It took up too much time, and I wasnt really seeing any results after about 2 months and as I mentioned earlier I thought it was a hassle, so I stopped and decided to look elsewhere.

After a few months, I decided that I’d give the paleo diet a try. Since this was around the time we found out my wife was pregnant, I decided to make the switch and try paleo and stop drinking for a while to help cover up my wife’s non drinking. (Those who are about my age and female will constantly be accused of being pregnant if they turn down a glass of wine – it’s annoying). It went really well for the first 2 months or so, then I hit a few things that crunched me for time and I kind of caved in. It also was getting to be bothersome preparing 2 different meals because of different eating habits between me & my wife.

So in short, the eating plan has not been going all that great, but more to come on that later (including changes made).

Getting to the gym, however doesnt seem to be a problem with me. I’ve been able to consistently head over to the gym at least 3x per week, and have now incorporated 3 days of weight lifting, 3 days of cardio (HIIT training) and a day off. That’s been going pretty good for the last month or so and I dont anticipate many major changes in this area for next year.

Sustainability

This area H and I didnt really work hard in in 2013, as we were focused on improvements on the house. Thankfully, that didnt mean that things didnt get done and that we didnt decrease our resource usage over the course of the year.

Unfortunately with the move, we lost our compost bin and I have not made time to make another one (I’m also having placement issues with H, so those need to be resolved as well). Despite the loss of a compost bin, we were still successful in the “outside” arena of sustainability, and I was able to build a pretty nice garden over the summer. I planted mostly tomatoes and peppers, but a few eggplants and other odds and ends as well. Our harvest was pretty good, and I learned a lot so that hopefully yields increase for next year. Since the garden went so well, H is letting me expand it by a few square feet for next year, so I’m looking forward to that. One of our favorite things to do in the late summer was pick some tomatoes and basil for the garden and whip up a nice margherita pizza for friday night. Unfortunately, that was about it for our efforts outside this year. Next year, I’d like to get the cold frame set up and the garden expanded, as well as a compost heap.

Inside the house though, we are working hard to reduce our energy and gas usage. We got an energy audit done by the local utility, and they told us what areas to focus in to increase our efficiency. Not suprisingly, the house needed insulation (and bad) so we had r60 sprayed into the attic, and r13 sprayed into the walls. That cost us about $1,300 after all the utility rebates, and has already started to have an effect. We had 8 days in a row where the temp never got above 0 degrees recently, and our bill was under $150 – something we never managed in the colder months of last winter (which didnt have nearly as long of a cold snap). The insulation has been very effective, and our heat is no longer escaping out our attic. Great win for saving money and lowering your resource use!

We also got some new windows. Since there were 20+ windows in the upstairs of our house, we were not able to replace them all but we did get most of them. We even took out a 1 year,  0%  interest loan for them, breaking my hope of no new debt just to get the house a bit more efficient. We have since paid the note off, and now will be saving to replace the last of the windows upstairs, as well as the ones downstairs. Like the insulation, those new windows helped quite a bit keeping our energy costs low last month, and will help well into the future.

In addition to the insulation, we have been upgrading our lights from the old incandescent to LED every time a new light is put in or when an old light burns out. It’s kind of lame going to buy a light fixture for the hallway and have the light bulb cost almost 2x what the fixture does, but with such a low operating cost and long life, I dont mind paying the extra cash. Our goal for the house is to lower our fixed costs as much as possible wherever possible, and even though the light bulbs seem insignificant every little bit helps. Our energy usage has gone down since we moved into the house and most of it is because of upgrades that we have made. At some point (probably pretty soon) we are going to get the energy use so low that we will have to stop and focus on another area where we can invest our money to save money and go green, but we are not quite there yet. Of course, sustainability isnt just what we are buying that uses energy – it’s also our daily habits and the products that we use (or do not use).

I still am walking to work every day which is nice and saves quite a bit of money on gas and ensures that I get at least a bit of exercise no matter how bad the weather is. Unfortunately, this habit does not really carry over into my errand running, as I usually drive to the grocery store, the hardware store and other places that I visit semi frequently. This is something that I’d like to change in 2014, and am looking at getting (or making) a bike trailer so that I’ll be able to ride my bike to and from these places and carry whatever I’ve purchased home, which is the main reason that I drive to those places anyway. I also would like to start biking to the gym in the mornings when the weather cooperates, but that only seemed to happen in the summer. I use the excuse that I’m kind of pressed for time at that hour, but usually I’m just being a big baby. Even though I do a lot to try and lower my impact and be more sustainable, there’s always more things for me to do – the best part about them is that they usually all save money!

 

Lending Club Update: Backing Out

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In early 2012, I decided to jump on the most popular bandwagon in blogging (at the time) and get into some peer-to-peer lending. Initially I started off with $300, but quickly upped my stake to a total of $1,000 and then decided to let my experiment ride before I committed more money to it. Statistics showed that lending club investors were getting great returns, on average of 5% for “A” grade notes, all the way up to the much riskier “G” grade notes, returning 9.22%. The sweet spot seems to be mostly “E” grade notes, which return 10.22% on average (source). Things looked good to me, and it was sure better than the shitty ass <1% that H and I are getting for our savings accounts. Of course, I mentioned it to my dad and he looked at me like I had four heads, but also slightly curious.

Initially, my lending club experience was going quite well. After 6 months, I was convinced enough to up my stake in lending club from the initial 300. Everything was going good, and if I remember right my return was in the 8% range, which is more than adequate for what I was looking for (and I think a bit better than the S&P 500 at the time). Now that everything was going great, I figured this could become a pretty significant part of H and I’s portfolio going forward. We could use it to generate additional cash flow as well as get better returns than a regular savings account. Of course, in my initial excitement, I had forgotten that I was taking on quite a bit more risk than I was had I opened just a regular savings account.

After 9 months in, there was still no trouble in paradise. I had kicked my investment to the 1,000 range and was holding steady at an 11%+ return – not bad at all. I had even started taking on riskier notes. I started with A & B grade notes, with a few C grade in there for my first round, but the next round I was looking for higher returns and only was looking for B, C, D and E Grade notes.

I was making good returns in month 9, but still was looking forward to the awesome returns, though I did mention if I had a default or 2, I would still be much higher than I would in a regular savings account (you can see the increased risk had yet to sink in at this point), but I was totally happy with my return and probably would have put a bit more into it had I not decided to throw the last of the cash into the house so we could finally finish up some stuff upstairs. Since everything was going so well, I adopted the ron popiel strategy for this asset that I had built up:ron-popeil-rotisserie-oven

Unfortunately, this strategy was rather poor, and my 10%+ returns were not going to last much longer.

Why you shouldnt leave lending club on auto pilot

After executing my awesome strategy, I decided to check in 3 months later at the 1 year mark and see how it was working. Unfortunately, I was greeted with a nice slap in the face (and noticed I was $50 poorer). I had 1 loan past due at this point, but 2 had already been charged off, and I was currently looking at losing about $75 in principal! This was rather shocking to me, as I had about 50% of my investment in the most secure, lowest returning notes (A & B grade) and another 22% in the C grade – Over 70% of my exposure was in the top half of their rating structure!

My return had plummeted, but I figured that the defaults were mostly behind me, so I decided to keep the money there and figured that I could ride out the bad loans. My friend joe over at retireby40 had a similar situation and saw his ROI drop after a few defaults, but then started to climb back up again after other loans kept paying back in full on time. I did know that this was a risk of the game, and had finally realized it, but only after it cost me $50. I was still ahead of where the banks were giving me, so I wasnt too worried quite yet. I’d just let the money sit, figure on no more defaults and then my ROI would climb back up around the 10% range and everything would be just fine. Unfortunately, these borrowers had other plans.

I noticed that one of my notes was late at this point, but instead of hopping on the trading platform to unload it at a partial loss, but I decided to do nothing and just blindly hope that the borrower would pay me back (not a good idea, FYI). It finally sunk in for me that I was probably taking on a bit more risk than I thought I was getting a return for, and even noted that had I simply tossed it into an S&P 500 index fund I would have been way better off. I was still fairly optimistic there though, and not really ready for what I would find a mere 6 months later.

How Low Can You Go?

During my 1.5 year check in, I realized that I really needed to pay more attention to this. I now had double the amount of defaults, and a few more notes that were late. This was not going well, and my return dropped below 2%. I had absolutely not heard of anyone with this poor of luck (friends were still earning 15%+ in some cases) but I still wasnt sure what I should do with it. Just over 1/2 of the term of most of my notes had passed, and I’d taken a bath! At this point, I had pretty well decided that I needed to back out of it, I just wasnt sure how to price my notes on the secondary market, so I basically sat on my hands for a while.

Eventually, my Return dipped below .75% and I got fed up. It was time for me to make a move before I got killed with this even more. Unlike losses in the stock market, these arent “paper losses” and are immediately realized when the borrower defaults. At least in the market there’s a chance that your holdings can increase in value after falling – not so at lending club.

Also at this point, I was saving up some cash for tax lien sales. Though I only got about $100 worth of tax liens this year, I’m hoping to increase that next year by going to sales in more counties. I’d also like to be able to sink a few hundred (or thousand) into a property that I feel like will be paid back, just for the sure 18% return.

Unloading

Finally, I ended up taking some action and put a block of notes up on foliofn for sale. Not all of them sold, but some of them did. I decided that I wanted to back out half of my portfolio (not sure why just half) and am selling them in blocks as they come up. I’ve gotten about 20% of my initial investment back at this point, with about another 50% of my investment on the trading block. I dont expect all of those notes to sell within the week time that is allotted, but some of them will and I’ll be able to move the cash out of lending club and back into my bank account, where it will be reinvested somewhere else. Right now, I dont have a plan for it and it will just sit in cash, but I’ll probably open a brokerage account and fund it with these proceeds. If things go well, I may just back everything out of my lending club account.

LC

I can say that I do like the lending club idea, and I honestly think that I just had a bit of bad luck and I didnt screen the borrowers that I was lending to close enough. I also think that I didnt have a large enough balance to swallow the defaults that were coming my way. Lending club recommends a balance about 20x the size of what I had, and I think that would be enough to swallow the defaults that I was experiencing and still come out with a very solid rate of return – somewhere in the 8-9.75% range if I followed the same allocation as I had before.

I may decide to build this portfolio back up in the future when I’ve got a bit more cash, but right now me and lending club are on the outs, as you can see from the picture above. I’ve sold off 35% of my holdings, and plan to sell off more.

The odd thing about this entire situation is that many of my friends also signed up for lending club, and have been absolutely killing it. They’ve enjoyed anywhere from 8% on the low end (Joe) to 11% in the mid range (eric), and a personal friend without a website juiced returns up to 19%, before falling back to around 16.5%.

Readers: Do you use lending club or its friend prosper? If so, how have you been doing so far? How long have you been investing, and how much total do you have invested?

 

Most Pressing Financial Issue In My Mind

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Earlier this year, I had the pleasure of attending the financial bloggers conference. The conference was held in st louis (and was fantastic, as usual). Thrown yearly by my friend Phil Taylor of PT Money, I had a great time and learned a ton. I’m not going to bore you with a full recap, but there were a few things I wanted to point out.

The first is that I won my first blogging award! Every year, they have the Plutus awards at the financial bloggers conference, and I won for the “best green/sustainability finance blog”. It was nice to win, unfortunately I was in the restroom at the time and had to go collect my trophy the next day. Since I was a winner, the kind people at Experian asked me to come cut a short video segment on what I thought was the most pressing financial issue right now.

For me, I thought about it a bit, but there was 1 true winner – student loans. People who aren’t old enough to (legally) have a beer are borrowing thousands and thousands of dollars to go to school! I don’t feel like 95% (or more) of the 18 year olds signing those papers really understand exactly what they are doing will mean to them 5 years down the road.  Here’s the video clip:

If you’re curious, I talked about student loans. I think they are a real problem because a lot of people take them out, and when they do, they can quickly get north of 20k in the hole without any sort of earning power to back it up. At 18, I don’t think that most are ready for that sort of debt.

The most interesting part of the talk was chatting with the sound guy after – he said he was in his mid thirties and had just finished paying back almost 90k (!!!) in student loan debt that him and his wife had just paid off, much of it in the last 2-3 years. Being in that big of a hole really limits your opportunities when you’re just starting out, which I think is a huge barrier.

Readers: What do you think the most pressing issue is, financially speaking?

The Cost of Energy Savings

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This is a guest post from my dad, who posts occasionally (typically when he’s spending a boatload of money on something that he finds annoying). If you want to read other posts from my dad, check here. 

We recently also have moved into a new home that I would consider a “fixer upper”.  As I told my wife “we are moving out of a lot better home than we are moving into”.  That took some getting used to and it is an on going process.  When we found the house and moved, we suddenly got the opportunity to look at new thing and upgrades that are on the market, especially when you have a fixer on your hands.  At our old house everything was good and we liked it so there was not much incentive to spend money for the latest and greatest things, even if they would save money over the long haul.  We went to a home improvement show and I for one was shocked over what is on the market now and how much it all costs!

We had a list of things we wanted to fix up but soon were derailed by reality.  The living room had very little lighting and none of it was over head.  It was dark and hard to use after the sun went down.  We looked around and decided we wanted to go with flush mounted, ceiling LED lights.  Needless to say they were quite spendy, but we decided to get them anyway and have been very happy but have not gotten the bill to see the effect of the much lower power consumption.  They are totally sealed units and have a 25 year life, we shall see, but I am fully expecting to see a noticeable change in our electrical use.   We had tried the CFL’s but they are a hassle at best, and do not last as long as they say in the real world, and a con job at worst.

We are now looking at ways to cool the house since it is hot water heat which everybody always says “it is the best heat you can get”.  They always fail to bring up that you cannot use central air because there are no ducts in the house.  There are several different types of choices but again we are looking at a Mitsubishi heat pump/AC inverter unit.  The box is outside but you have blowers in the house that you control the A/C room by room.  Looks like a nice system and at 18-22 SEER rating very efficient and cheap to run.  The down side is of course COST.  A unit that will cool 2 rooms will run about 8000.00$ and the more you add, the more it costs all the way to 19,000$ for 4 rooms.  I do not think I will live long enough to pay back that kind of investment, but I know the heat with 3 large, west facing windows may kill me quicker, if my hot, sweaty and irritable wife doesn’t do it first.

Sprinkler systems are another thing that we need and low flow, rotating heads cost more than fine mist pop-up heads.  Not bad I think so quote me the rotators.  Well by the time you add 25 heads, it adds up to a 6500.00$ system to save a little more water.

Window replacement was something we had done before and knew the ups & downs of that, but decided to replace 5 old steel frame casements windows with Marvin aluminum clad wood windows.  The Marvin brand is not as well known as Anderson but in my opinion have a much better product for a little more money.  Our last house we had replaced the windows and never had any issues with the Marvins we used.  Very energy efficient but again 6500.00 for 5 windows I am not sure there is a realistic payback in money saved.

Like a lot of people my kids have helped educate me about energy savings and as a native westerner I have always been conscious of things like saving water.  After all we have seen and looked at I would do it all again and pay more for energy savings, I’m just not sure that my desire to save energy will leave me any money to pay the utility bills when they come in.

 

 

November 2013 Monthly Review

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In case you missed my post last week, my wife and I are expecting twins in the second quarter of 2014. We are both very excited, and are looking forward to expanding our family. My wife was pretty nervous at the prospect of twins at first, but she seems to have warmed up to the idea. Obviously, the decisions that we make between now and when the babies arrive about spending, saving and what our income situation is going to look like in the future can have huge ramifications in the years to come. We are going to try and have a lot of the things figured out (like child care, if a parent stays home, etc) by late january, so that will give us quite a bit of time to watch college basketball further plan for the arrival of the children.

We have already started looking at stuff we may need, and I swear this baby industry could be a bigger racket than the wedding industry! How many things can a baby need that isnt food and clothing? All they do is poop and sleep all day!

At any rate, here’s the latest update from the financial side. Some of these savings numbers may change because we’ve made quite a few purchases this month (We bought a roomba, yes, it is awesome – and new cell phones) and there were a few other things that we may end up taking cash out of savings for.

House

Mortgage $113,099 (-551).  Just the normal payment here.

Windows $0  (-1,300) After a $3,000 payment early in november (which we ended up dividing into two payments because we wanted them to come out and finish the work) we have only $1,300 left to pay on this note. We have the cash for this and I’ll call them for a pay off balance (I dont trust these guys at all, and I dont want to short them like $2 and end up paying out the wazoo for it) and send in the last payment for these. We are already noticing lower energy bills and the heat kicking on far less than it used to (though we also insulated our attic this summer as well). So now that this has gone away, H and I are going to have to have a sit down and talk about where we want to focus our energy for a while – which will be handy to do in conjunction with an end of year review. Im sure it’s something my wife has been waiting to do since october.

Student Loan

Great Lakes Loan $ 6,539   (-$169) This got bumped down from 600 per month to 200 per month so that we could focus on the windows and wipe them out before the 0% offer expired (though we probably would have still been fine keeping this at 600). This keeps going down slow and steady, and it would be really nice to have this finished before the new addition(s) get here. It’s possible, but we will figure something out at our end of the year meeting.

Total Debt: $ 119,638   (-$2,020)

Savings

I’ve decided to add our savings accounts to the mix. Currently, We have 4, and I have a Roth IRA. Both H and I (s0rt of) expect to get pensions if we stay with our current employers and retire with them. That being said, I’m not really one to trust all that, so we are looking at having a significant nest egg when we do end up retiring. We keep our savings accounts with capital one 360. We’ve used an online bank for over 5 years, and have had no problems with the at all. They pay the best (meager) rates of all the accounts we’ve found, so if you’re interested in getting a bit better rate, sign up with capital one now.

General Purpose $5,571 (+$254) – This savings account acts as our emergency fund right now but once the emergency fund is funded with 4 months of expenses, we will direct these funds toward some other goal. We have a few ideas for this savings account, but not anything concrete yet. In all reality, serious talks about what to do with this probably wont happen until the emergency fund reaches about 12k, so we’ve got some time.

House $1,023 (+$175) – This is the account we kept our house down payment in. Right now, we just add to it monthly and then when we come across something really big (like anenergy efficient washer/dryer) we pull the cash out and purchase it. Most of the house stuff we simply cash flow though.

Emergency Fund $5,601 (+5,050) – This got a huge boost this month thanks to a gift from the in-laws. This will remain our emergency fund, but we may move this money into our savings account for expenses related to when the babies come. The money wont be spent, but it may not stay in this account for the whole time. We are also still contributing money to it.

Vacation $126 (+26) – Savings account for vacations – it grows very slowly at the moment, and when we went to alaska, it was fairly depleted.

Health

Things are still going just OK in this arena. I’m working on a big post about why they are going OK and not great, and hopefully it will help someone. For now, I’m lifting 3 times  a week and doing cardio 3 times per week, with 1 day off. I just started the cardio after spending forever looking for a plan, so i’m still getting used to it. I”ll keep you up to date on how it goes.

Holy $hit, there’s 2

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Since I began my financial turnaround in 2009 and began focusing on paying off my debt, I found that it was really easy at first. I had no time and no money, and I was in a ton of debt so there was nothing else on my mind, every. single. day.

Since I’ve now paid off 3 credit cards, 2 student loans and taken out (and paid off) a vehicle loan, I dont feel like my back is up against the wall anymore. I’ve gotten married since then, and now H and I make a comfortable income compared to our expenses, and have been able to save quite a bit of money over the last couple years. We bought a house, spent a boatload fixing it up, and are now just trying to take care of the last little things (and build a new room, which is also almost finished). That being said, I’ve been feeling for quite a while that we probably should be saving more money. It’s not like we are going on a bunch of trips to far-flung locales, we arent buying a whole slug of new appliances, and we arent really buying anything big – just kind of wasting money because of our occasionally lack of preparation (mainly around mealtimes).

Though we would like to save more, it’s always difficult without a concrete reason. We arent going to alaska again this summer (which I think my wife is still broken hearted about – as am I), we dont have a wedding or a honeymoon to save for, and we arent making major upgrades on the house any longer.  The compulsive urge to save has dwindled, so we are looking for ways to get it back on track.

Well, we didnt have to look for long. We found out that we are pregnant toward the end of august, which was very exciting. We had been trying for a few months, and both H and I were happy that it finally took (though I wouldnt mind still being in the trying phase). We went to the doctor to get everything confirmed at week 8, and we were not prepared for what happened there.

As we were getting the ultrasound done, the tech moved the little wand around and I thought I saw 2 black spots on the screen. All I thought to myself was Holy shit, there’s 2! and a few seconds later, the tech said “well, it looks like there’s 2 in there” and my wife looked pretty shocked. We both left the doctor pretty excited and a bit nervous.

(For those that were at fincon, this is why you didnt see much of my wife – she still was not feeling all that hot in october). For those that heard me talking about her, and were convinced that she didnt exist (Joel, Kevin) she’s very real.

Right now, mom and babies are feeling much better than they have, and are starting to enjoy life again. Officially, our due date is may 1, but that is for 40 weeks and twins almost never make it that long – we are expected to go 37 weeks, which will put us sometime around early to mid april. She’s starting to tell people at work, but a lot of them have not figured out quite yet – she’s showing, but not all that much, considering it’s twins.

Needless to say, there’s now a fire lit under us again (though we did buy a roomba, but that’s a subject for another post) and we’ve been doing pretty well at increasing our savings drastically. I’ll let you know more about exactly where we are at the end of the month, but I think we are doing pretty good so far.

Right now, I’m also searching for ways to lower our impact (cost, and waste) while raising twins – those things go through diapers and baby wipes like it’s going out of style! So soon, be on the look out for some of the things that my wife and I are learning in the process.

Readers: Do you have any kids? Got any helpful tips for us? Leave them in the comments (please!)

Financial Tips: Your money and wireless service contracts.

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Wireless carriers are constantly competing for your business with marketing tactics that include free hardware upgrades, expanded data-sharing plans, flexible contract options, and faster communication speed. Understanding what you’re buying and how much it actually costs can be difficult.

Let’s take a look at some examples.

Contracts versus Month-to-Month Plans

One of the confusing choices is between a month-to-month plan and a contracted commitment. Let’s take a look at this example:

  • One of the major carriers offers a hotspot modem service. You can buy the gadget for $200, or get it for free if you sign a 2-year contract, but which offer should you take? No matter which way you go there is a $20 per month access fee, and you need to also have cell phone service with that carrier. That’s $240 per year, so the gadget wasn’t really “free.” Signing a 2-year contract locks you into the service while it also guarantees your pricing plan for two years. You can terminate a month-to-month contract at any time, for any reason. The penalty for canceling early is generally around $175, though, and you are not required to pay the remaining months of access fees on the contract.

In the example above, the worst case scenario for someone who signs the contract is that they get a free gadget worth $200 and can potentially lose only $175 by cancelling. They still come out $25 ahead versus doing a month-to-month deal.

Do your own math to figure out the cost for breaching your contract by studying the specific terms and conditions. Crunch the numbers and make your decision based on a comparison of the pros and cons. Oftentimes it is cheaper and less of a financial risk if you go ahead and sign the contract, even if you do break it prematurely.

Are Free Phones Really Free?

Phone carriers market services that include a free upgrade of your phone. If you’re a steady customer, you’ll likely receive additional offers every year or two, but we all know nothing is free in this world. Here’s how it really works.

  • You sign up for a 2-year service and the carrier offers you a free smart phone with a retail value of $400. In order to add that device to your calling plan you usually pay a monthly access fee. If the fee is $40, then over the period of one year you pay your carrier $480, just for the privilege of being their customer and subscribing to their calling plan.
  •  Meanwhile the carrier doesn’t pay full retail price for the phones it gives away, so chances are that in one year’s time the carrier has already made a 100 percent profit, or more, on the so-called “free” phone you were given. Over the lifetime of a full 2-year contract, that free phone will generate $960
  • in access fees alone, not counting the money the carrier makes from your data, text, and talk. You ultimately wind up paying plenty for those free phones.

The above scenario doesn’t mean that free upgrades aren’t a good deal. As long as you still have to pay access fees and phone usage charges, you might as well take the phone they’re offering to you. Free phone upgrades aren’t charity – they are sophisticated marketing incentives.

Is Insurance Coverage a Wise Investment?

When it comes to insuring those expensive smart phones, make sure you read the small print on your policy. The insurance offered by cell phone carriers is reasonable and it covers a lot of different kinds of loss – from theft to accidentally dropping it on concrete or in the pool.

The premiums are affordable, too, with coverage for a $400-$500 gadget running about $10 or less per month. The tricky part is the deductible, however, because it can be as high as $200 on a typical iPhone policy. So if you pay $100 or more a year in monthly premiums and also have to fork over $200 as your deductible, the value of your coverage is not that wonderful. Suddenly you’re paying $300 to a company to reimburse the loss of a $400 phone. You may still come out ahead, but it won’t be as good of a deal as it appears at first glance.

Looking for an alternative? Many credit cards offer extended warranty protection. Just purchase your next smart phone with your credit card –check the terms and conditions first- and you should be covered for at least the next year. No monthly fees, no extra charges.

Do You Pay $75 for a $60 Phone Bill?

Ever buy something from the grocery store tax-free? Not likely, and a phone bill is no different. The taxes added to wireless bills tend to fly under the radar because most consumers just pay them without a second thought, but they can be exorbitant. According to CNN local, state and federal government taxes add an average of more than 17 percent to every cell phone bill in America. This was originally reported on a couple years ago, explaining that the taxes added to wireless bills can go as high as 23 percent or more in some states.

Jeff’s Note: I recently wrote about lowering your cell phone bill and how I was deciding between two carriers. Well, Republic wireless released the motoX as their new phone, and that made my decision for me. As of Thursday, you could buy a moto x through republic for 299 and a plan as low as 5/mo.

Tom Kerr writes for Comparecards.com in addition to others. He has been an avid writer for years, even winning awards for work he’s done.