Caoineag's Personal Finance Blog

So who knows if that will last the weekend.

I think this weekend after grocery shopping we are going to be hermits and hide in our apartment all weekend long. We were constantly on the go last weekend so we feel seriously abused. On a financial note, that should keep the expenses low since the weekends are when we spend our money.

Everyone have a good weekend!

Our bid was accepted and we got the signed paperwork today which is great but now we wait 2-4 weeks for the short sale approval.

At least we know we will have plenty of cash for the closing by the time it takes place.

Oh boy. So bid is in. We will end up with this house if the following go well:

Sellers accept the contract
Bank approves the bid (this is a short sale)
House appraises for the bid amount
Home inspection goes well

Yuck.

There are no real comparables for this house. Fully remodeled, it would go for a lot more (add another 100k+ even in a down market and they go in less than 5 days at that price). Big issue, its not remodeled. It needs lots of work. It also has a basement and the cheaper homes in the area do not. So our Realtor isn't sure it will appraise high enough. Not that she thinks it will appraise low, she just doesn't know what they will appraise it for since this neighborhood doesn't sell homes very frequently.

Bank approval of the short sale should go well, the other agent just had a contract fail at that number due to down payment assistance disappearing as of Oct 1. Incidentally that's why we made the offer there. It is a discount of 8k and if it doesn't appraise there, it will quicker to have an appraisal come back too low then to have the bank reject our first offer and then go through the whole process anyways.

I am really not too worried about the home inspection. This house is valued so low and has so much potential that its a steal even in this market. But the missing water heater will need to make it back there before inspection. This was a rent to family while we buy a new house deal that went very wrong. On a positive note, that means that the sellers are in a better position to help out and the utilities aren't way behind as a result.

Wow. This is going to be a major project. But definitely worth it if we can manage to get the deal to go through...

I tend to see myself as a spender so I always seem to think I am spending too much on wants. But, according to the 50/30/20 (needs/wants/savings) rule, I am not even close...

My ratio is more like 37/19/54 and is going to be 55/27/19 once we have the house (401(k) doesn't get counted in this formula because its after tax and we will start maxing that in January).

The reason this is kind of important is because I feel guilty that we spend so much on our entertainment right now and especially guilty that was/am planning to raise the amount after we get a house.

I need to stop feeling guilty and just enjoy the fact that we have completely cleaned up our act. Not being allowed to spend anything on myself in college is part of the reason we went nuts after we got our careers started.

The weird part is that I have checked this formula before but I guess I was convinced that I was somehow out of balance again.

Do I plan on eventually raising the savings amount? Most definitely, but for now maxing out the 401(k) and saving 20% of my after tax money is perfectly fine.

This is totally not finance related.

I don't tolerate clutter well. Once things get messy enough, I tend to rearrange everything in order to make my spaces look open and airy. My living room has definitely violated my clutter tolerance. I think I have an idea for how to organize it so that half of the items currently in my living room can be packed up for the move while still leaving us things we can use.

Normally I feel sorry for my DH when I rearrange but I think the clutter is getting to him even so he's happy I will be rearranging.

Saturday we only left the house to grab food and Sunday we didn't leave the house at all. Very peaceful. First time in months that we have spent so much time at home.

Unfortunately the house is trashed because we are getting things packed. Ugg. On one hand, I have a lot of items that won't be going to a new house with us but on the other hand, I only own things that we use so packing in advance is a little difficult.

I have been informed by my friend that she expects me to host Thanksgiving. I am really hoping we have a house by then because we don't have the space to do it justice in our current apartment. Maybe we will make Thanksgiving dinner at her place if we don't have a house by then... Hmmm.

Next weekend is the Harvest Festival already. So looking forward to the pumpkin picking and carving. Fall is my favorite time of the year. Must resist urge to load up on harvest and halloween decorations...

Starting in January, my household will be saving at least 25% of our income for retirement and the original plan was to save 31%. I am wondering if the original plan of 31% might be a little too agressive given that we will be adapting to owning a house and maybe needing to fix up things. Not to mention our emergency fund will be depleted after buying a house...Hmmm...

Maybe I won't worry about funding DH's Roth IRA until next year. That way we can save for our short and mid-term goals as well as for retirement.

If I only do 25% to retirement, we can do 12.5% for our EF to replenish it. I figure we will need between 14k-19k in the EF to cover 6 months comfortably. At the rate I have it, that would take 16-22 months to do.

Another 3% could even go towards vacations because we love to travel. My big concern though is getting the EF replenished.

We are shooting to be financially independent in our 50's so that we can have whatever type of job we want (workaholics with lots of interests) so that is probably something to keep in mind.

So what do you think is a reasonable percent of a budget to save solely for retirement?

Periodically we have to reset our budget because we get a little carried away so this is the plan for the discretionary part of our budget for October.

$75 x4 trips for groceries
$20 for 2 burger runs
$36 for Royal Gorge Park tickets
$20 for food for Royal Gorge outing
$40 for Harvest festival
$40 for 2 sushi runs
$40 for food while house shopping

It will equalize out the recent overspending to get everything back where we want it.

I have also told DH that we have $50 he can spend and I have $50 for groceries to get us through the rest of this month which should be manageable.

Part of his money will go to buy sticky mousetraps for our apartment...Have I mentioned I am looking forward to a house?

So spoke with my DH yesterday about the food bill (he pays the out to eat). Find out he hasn't checked it very thoroughly and its been running over by a decent amount as a result. While I have learned alot of finance by controlling our finances, he's dealt with it so little that he really doesn't have that sense of budget and need for restraint. All he sees is rent, savings and out to eat.

We talked about what we could do and we decided a couple of things would help.

1. We are going to close his checking account (we are joint on both accounts) because it doesn't have any autopays out of it and just use mine.

2. We are going to add him as a joint user on my credit card that I use for the household budget so everything is going on one card. That way we have the complete picture of our spending.

3. We are going to take turns paying all of the bills at once. Instead of a partial picture, we both will be able to see everything that is happening at any given point. So once we have everything settled, he gets to take over paying for everything. Every couple of months we will swap who controls the finances.

Over the past 8 years together, we have been gradually heading this way but its only recently that our finances have simplified sufficiently to do this. He had no objections really to doing this sooner but I was the hold out. Well I am fine with merging now.

The weird part is I think I am only okay with this because we have almost all the debt gone. I don't feel like I am burdening him with my mistakes. That and the effort of saving up money and paying off debts as a team has shown me that we can operate our finances as one pot.

Its still going to be about 6 months before we can do this since things get really messy come Jan-April due to last minute Roth IRA's, the paying off of the last debt and building a new budget for the house BUT I will have him help me through all of that and then will turn the reigns over to him.

So got the preapproval, looks like they did it just off of my DH's income since we are asking for so little. We have an FHA 15 year at 5.5%. As of this Monday, we will have all the money to close and this Saturday we are meeting with a Realtor that I know from work. (She has a sense of humor, always takes good care of her contacts and seems to have enough time to get things done right despite being very busy).

So tonight DH and I get to put together a list of houses, a list of wants and needs, and a list of questions for the Realtor. Not only that, if we are closing before December and maybe sooner, I need to start packing.

So basically, all we are missing is the house :P

Have to say, I was more than a little surprised by the not so subtle desperation in her voice. I know the industry is in bad shape but I didn't expect a bank based mortgage counselor to sound so desperate. After all, local banks tend to be stricter about qualifying for mortgages so they shouldn't be as bad as the mortgage brokers.

I was more than a little surprised when she offered to come to our home if we wanted rather than having to come to her office (we told her the office was fine). We did claim evening was best for contacting though so she is probably the one who works nights and weekends alot.

I figure meeting with the mortgage counselor is my last minute sanity check before starting this whole process. That and I know this bank does renovation loans which may be a nice way to go depending on what we get.

We meet on Monday(our day off) so will let you know how it goes!

August was an extra paycheck month for my DH so our savings got an extra boost. I was about $200 overbudget for this month but despite that, we are $400 ahead of our savings budget. Between overtime and having a skimpy base budget, we had room for the overrun.

I am still trying to figure out how much to set aside for travelling and festivals. I know that $25 per month is definitely not enough so once we settle into a home I may have to take a look back through the year and attempt to figure out what I need. I suspect it will be trial and error for awhile. Currently I only separate out a little bit and then take the rest from the monthly free money.

Since I only use a credit card that I pay in full each month, when we start travelling again I will need to do a better job of saving out that money. Currently, the small trips have worked pretty well in the monthly budget so I just need to really save out for the big items (plane tickets, reservations, etc).

Next month, we figure we will be ready to talk to the banker to see what sort of mortgage options will be available and to a realtor so that we can start looking at houses in person instead of just online.

We figure it will take a couple of months to find a home, have the inspection and get all the paperwork done so we are trying not to leave the looking until the last minute.

Currently, everything in our life in on hold until after the house purchase. We can't up the retirement amounts till after, we aren't allowing ourselves to buy any household appliances or other large purchases and we have a pretty strict budget so that we can save $2,000 per month.

I do have it so that DH will be maxing out his 401(k) contribution starting in January and the sooner we get into a house, the more likely I will be able to max both of our Roth's for 2008.

Frankly I am both impatient and bored. I am afraid we will start looking and suddenly become picky and then we will have to rent for at least another year because rent leases are far too expensive in the month to month or 6 month version in our current place. And if we move to another rental, I won't be willing to move for at least 2 years. Uggg.

Amazing how much you can save when you go from eating like a 300 lb man to eating like an 80 lb girl. I think its the heat that has so effectively sabotaged my appetite and its frustrating.

But the silver lining is that I have no interest in eating out and I don't have to worry about getting hungry when I am out doing things (usually have to eat every couple of hours).

Despite all that, I want my appetite back because this is frustrating...

Finished helping my friend out financially. All that remains is to help her stay on budget (easier said than done).

Still accumulating money for the downpayment on a small cheap house and still holding off on paying off the credit cards so that I can have enough cash for closing on a house (at an interest rate of 1% ave).

Overall, things are going well and I am just waiting for time to work its magic.

This next month I am going to need to watch my food costs. Because my friend has not had a lot of money lately due to unemployment (a situation recently remedied), both our out to eat budget and food budget has gone high.

So, next month, I am going to see how high it needs to be for us to be comfortable because I am not sure if its just paying for the friend or if total food costs have gone up. I am pretty sure that part of it is food costs so I think I will need to adjust the budget accordingly.

I would like to cut all of our spending drastically again to see what we really need and what was just us not paying attention while keeping our friend afloat through the hard times.

Which begs the question, I seem to revamp our budget every couple of months thanks to various asundry items coming up but it doesn't seem like everyone else needs to do it as often so how often are you adjusting your budget?

So my friend checked her free credit report yesterday and discovered that one of the cards that her debt settlement company (this company is gone now of course, they caused her lots of issues)was supposed to take care of 2 years ago was never paid off. Not only that but in that time it has jumped from $5700 to $9600.

So much for her being able to contribute to an IRA. I will have to change that contribution into a debt payoff fund. They will no doubt want a lump sum.

The best part was having her tell me that since they stopped contacting her or her mother (yes mom cosigned and who do you think daughter dearest learned her bad money management from) that they thought it was paid off. What was a little ridiculous about this is that she thought they took $530 for $5k! Uggg..

But at least she is catching it now so we can get everything taken care of and this is the last of the old monster debts when she went nuts.

We were cooking fools this weekend. Our first meal included Saffron Rice, Tabbouleh (think parsley salad), Pita Chips (we had to make the pitas first since we didn't have any made up in the freezer), and Baba Ganoush (eggplant based dip).

Our second meal included homemade thousand island dressing, a corned beef roast and the rye bread for the sandwiches was store bought (we don't use enough to justify buying the flour).

Turned out excellent despite the fact that the Saffron Rice was a first time try and so was the thousand island dressing.

The funny thing is we only cooked on Sunday. Saturday we were pretty lazy and only managed to go grocery shopping.

The good news is that we will have the first meal for a couple of lunches and have the second meal for supper tonight so won't have to worry about food today. Now I just have to plan tomorrow's supper in advance so I am not tempted to eat out...

I admit, I am very excited. This means that this month is the last month that we need to help her out. Woohoo! No more worries on that score.

Obviously with a new job I will make her a new budget so that she can afford the things she needs to buy and start stashing money in a retirement account. An emergency fund and paying off her few remaining credit cards will be number one.

So now there shouldn't be anymore reasons not to be able to get a house this upcoming February. We were getting nervous that the downturn around here was going to make it impossible for her but things are finally looking up.

Since we are getting ready to start squirreling away money for our downpayment fund, my DH and I have opened an ING savings. I know a lot of you like them and they pay a decent rate so we did an initial deposit of $50 to get it going.

Now we just have to wait patiently for the verification deposits so we can start putting money into it. We have twice per month that we can put money into it so it should be fun to watch it go up.

Right now, we are going to shoot for 20k before going house shopping which should be good for the price range we are looking at. Obviously though we will shoot for as much as possible.

Here is the background info. I have two remaining credit card debts, one at 0% apr, and one at 1.87% apr as of this month. They will remain that way til Feb 2009. My lease on my current place is up in February. I guarantee our rent will go up, if we rent for less than a year, it will go up by at least $300 per month (don't ask about month to month, the fee alone is 400 plus an increase in the rental rate itself and we will not sign a lease for one more year.)We want to buy something small and equivalent to our current rent or not much higher.

With the market changing dramatically, we will be in a better position if we have the ability to put 20% down and have closing costs covered. Our current plan of pay everything off then saving the money will make things tight and most likely won't allow 20% down. If instead we just pay the min payments on the last two cards, we will definitely have the cash on hand we need.

By keeping the debt we are keeping our options open. The increased debt will not affect our ratios because we want far less than they would willingly loan us.

So we are going to save like mad and start househunting in the fall. If we do go with a loan product that doesn't require all our cash or we get some assistance from the seller, we will use the remaining cash to pay on the credit cards. If not, we can pay the remaining debt with 3 months of our closing.

What you can't see from my ticker since I joined here after I paid the first part off is that we have actually paid off over 32,000 in debt over the past 2 years.

As much as I want the debt gone, I want a home far more, especially at those interest rates. There is only one other way of doing this that might be more financially reasonable and that is signing another year long lease (at a different place) and that is just not something we are willing to do.

That said, the plan could always change again as circumstances change but unless I am missing something, this is the best plan in the long run.

Okay, so lay into me. What do you think is wrong with my current plan and why? I am at least willing to listen.

Couple of updates. My friend managed to get a part time retail job at night and on weekends which should help her keep her feet under her while she does graphic design contracts and builds the experience she needs to further her career.

She also looked at me this weekend as we were finishing up our chores and said (with a little shock in her voice) that she was starting to automatically categorize her spending into her budget without even trying. I take that as a good sign that the budget I made for her is working.

I didn't really accomplish much of anything this weekend like I planned but it was nice to relax. I did manage to finally order my saffron in bulk online so that I don't have to pay the outrageous cost of it at the grocery stores. Now just have to wait for it to show up this week so we can make Moroccan Lamb Stew, so yummy.

Figure I would put this out for people who consider themselves very untalented in tke kitchen. It's good, very easy and is a great take to work lunch. Don't let the list of steps intimidate you. Once you do it once, you usually don't need the recipe thereafter.

Preheat the oven to 400 degrees F (200 C).

Take 1 acorn squash, cut it in half from top to bottom and remove the seeds.

Take a fork and poke the inside flesh a couple of times to allow the ingredients to seep in.

Put a pat of butter (about 1-2 tablespoons) into the bottom of each half.

Sprinkle a tablespoon of brown sugar in each half.

In a bowl mix up about a 2 cups of bread stuffing mix with enough chicken broth to get the mixture moist (~1 1/2 cups).

Stuff the acorn squash halves with the stuffing.

Wrap with aluminum foil and bake for 60 minutes or until the squash is tender.

Pull off aluminum foil and bake for 5 more minutes to crisp the stuffing a little.

(If you pull it out too early, you will be able to see on the sides that the orange part is two different colors, you want the darker orange to go all the way to the edge of the green rind.)

Even my husband who thinks squash is a dirty word will eat this. I do cheat though and use Stove Top instead of making my own stuffing.

It occurs to me that I have only really mentioned this in passing and mostly on the forums so I made a category for it and will add some of my favorite recipes here for people interested.

One of the things I am doing to save money and to eat healthier is learning to cook from scratch. I still have a few items I haven't fully replaced and the big category is dressings. In fact, the only dressing I have successfully replaced is Catalina dressing and I only use it for taco salad.

I think this weekend I will explore making yogurt based salad dressings. I have seen a couple of recipes that look delicious and it should be fun experimenting.

Basically, I need a good italian, a good thousand island, a good creamy french and a ranch type dressing so I can work on 3 of the 4. Eventually I should learn to do a substitute mayo and whipped salad dressing but that can wait until I am ready to do potato salad.

So if I do find some good ones, I will probably do it as one post on salad dressings.

I mentioned awhile back that was I was going to experiment with using a credit card for bills and cash expenses and see if it was appropriate for me. I have had a credit card number stolen locally in the past which makes me nervous about using a debit card.

So far so good. I treat it like my atm card except I don't have to be quite as paranoid about when things clear.

Point two in its favor is the vast simplification of my budget. Part of that is I have paid off two credit cards and part is that I have bills autopaid by the credit card.

Current budget

CC1: Paid in Full
CC2:$95
CC3: $2200
Electric: $70
Student Loan: $194
IRA: $150
Savings $25
Rent: $730

Way easier to follow than the 14+ item one I had before. Mind you CC1 has rules for use like how much for me, how much for groceries, etc but those are sort of instinct by now and the real bills just pay themselves. I have to worry about missing a bill a lot less. In fact I only have to schedule 4 bills anymore since everything else is automatic. And pretty soon that will be down to 2 since 2 of the cc's are going away very quickly.

I really was afraid it would be easier to spend given my previous expenditures but it seems that somewhere along the way I actually learned some discipline. Imagine that!

I even periodically double check the budget overall to make sure things stay on track.Can't wait to change my ticker to a savings tracker instead of debt tracker.

My friend managed to get a contract job for about 2 weeks. This means $600 less dollars I need to give her. WooHoo! She has also been doing a good job of staying within budget which is better than I did with my first budget. We will probably do a quick talk about next month's budget this weekend since I should deposit the money into her account then anyways.

She has the budget printed out and on her frig so she won't go over so she is definitely committing to this whole budgeting thing. Its still difficult for her to imagine a budget that actually covers everything but time will help with that (her previous concept of a budget had no place for groceries, gas or personal expenditures, not very useful).

Now I just have to wait impatiently until next month for my next debt payoffs. I hate waiting...

Figure I would put this here to avoid taking up a lot of space in the SA blog comments. That and I believe this is a little subjective.

I need a budget because it shows me how I am spending my money. It gives me a way of measuring whether or not I am meeting my goals and allows me to see if there is something that I need to change.

Money doesn't just buy things, it allows you to buy experiences as well. I realized at a very young age that most people like to accumulate things while I like to accumulate experiences. I like to travel, to read, to hike, to bike, to listen to music, to play video games, to eat and to watch movies.

Some of these things are more tangible than others but these are the things I truly value. Almost all of these valued experiences require material stuff so by no means am I claiming to be non-materialistic. In fact, these enjoyable activities can result in the accumulation of too much stuff if I am not careful so I work hard to keep the clutter down.

My point with all of this, is that I want my budget to reflect what I enjoy. I don't want to waste a lot of money on clothing, jewelry, transportation, housing, decorations or knickknacks. I don't care about these things, they are fairly irrelevant to my happiness and can get in the way of something I do care about.

As much as I enjoy eating out, at one point it was eating up too much of my money and not allowing me to spend on my other hobbies. I also let clothing get out of hand because I don't enjoy shopping so instead of hunting sales I would buy what I needed when I needed it. I couldn't see that until I had a budget. That doesn't mean I need to be a slave to it, but I do need to be able to occasionally look at my numbers and make sure I am still doing what I want to be doing.

My favorite poster as a child said "If you don't know where you are going, you will probably end up somewhere else." A budget is my way of knowing where I am going.

Okay, I will take a stab. I have tried to live my life having the goal of no regrets but I have made my share of mistakes.

1. I regret taking chemistry my first semester of college. If I hadn't, I wouldn't have lost my scholarship and that would have saved me 20k in student loans.

2. I regret not discussing money issues with husband before marrying. If I had, I would have discovered that my husband didn't really know anything about personal finances and we could have saved ourselves at least 10k of credit card debt, if not more.

3. I regret that we expanded to fill our income and then some when we moved out here. Its as if I forgot everything I already knew about money simply because I suddenly had more of it.

4. I regret that I didn't restart my retirement savings until last year. Poor financial decisions on my part resulted in my retirement savings starting over at age 26 when originally I had started at age 23.

5. I regret that I have a spender mentality. I am not sure why I have a spender mentality but its definitely been something I have had to work around.

6. I regret not trying to talk my friend out of buying a car at a dealership on her own. I have paid dearly (enough to buy a decent car outright) for her mistake because I wasn't actually willing to let her lose her apartment and wreck her credit further. While she still probably would have bought a car, I might have convinced her to pay attention to the total cost instead of focusing solely on the monthly payment.

7. I regret that I didn't realize immediately that my husband was incapable of telling me no. Simply being aware of this fact would have made me examine his side of the finances more closely. Now I know to interrogate my husband if I want to do something beyond what is budgeted.

8. I regret never having a written down budget until this past year. I always tried to keep monthly bills low but never had an overall plan.

9. In relation to number 8, I regret never having saved up for my really big ticket items. Its only been in the past year that I have actually saved in advance instead of taking a couple of months to pay off the financing. While I never paid a lot in interest, it was still a very bad habit to get into and lead to higher debt in the long run.

10. I regret that I let my obsession with food consume so much of our disposable income. I don't even want to consider how much money we have spent on food over the past 7 years together. I will never stop being obsessed with food but I can restrict it to a reasonable portion of our income.

I have a credit card that tracks my credit score and the latest was 729, woohoo! Unfortunately and fortunately, that will probably be the last update until I go to buy a house because you have to have activity on the card for it to track the score. And since I just paid it off completely, no more activity.

My stimulus check is no longer going to go to debt. The $1200 check from the gov will go towards my friend's living expenses to keep her afloat through the upcoming month since she still hasn't found work. The good news on that front is that she has an interview on Monday for a full time job in her field. Its less money than she would like but she can't afford to be picky with her lack of experience.

Hopefully we will know more in about two weeks.

First the good news, as of 5/16, I will be down to only 2 credit cards with balances (1 of the 2 is 0% apr).

Now the bad news. My friend that had been doing well finding temp work hit a dry spell and needed money so as to not crash and burn. It was only $800 but that is money that was originally scheduled for debt repayments so my payoff this month will be lower.

I am getting her more comfortable with the idea of budgeting and I am helping her track it more frequently. I think once we get her used to the idea of an allowance, she will not do the starvation/binge cycle that she always does.

Its still slow progress getting her used to it since her parents taught her nothing about finance and she never took any classes on it either (in fact, her parents are the worst examples ever so don't want her to emulate them).

However, she is starting to be a bit more savvy and the constant exposure to our budget is helping her grow more comfortable with finance. She is beginning to really want to develop an emergency fund so she isn't in constant panic mode and she is willing to work to get herself to that point.

Her big holdup at the moment is steady employment. Mind you, if she had ever built an emergency fund I wouldn't have to bail her out but baby steps, at least she is going to try living on a reasonable budget. I have even gotten her to agree that she isn't allowed to spend more than $20 on a person till she has an emergency fund set up (yes this is an issue).

I am still on schedule to payoff in August but a couple more setbacks like that could start to impact the payoff date. Hopefully she gets a contract or a full time gig soon. She has definitely been applying for stuff.