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Archive for September, 2008

Cheap Entertainment

September 26th, 2008 at 09:18 am

My cat, TC, is an indoor cat but she loves to go out to our small patio when I water. She is quick to catch bugs, lizards, and other moving critters so I watch her like a hawk. Yesterday she found a very, very large feather, one that made me wonder what type of bird was flying about. TC rejects expensive toys in favor of bottle caps, crumpled paper, or a found feather, so she was definitely pleased with her find. She brought her feather in the house and proceeded to entertain me at length.


Later, I heard TC "chirping" in the office while looking out the window. The mystery was solved... we are being invaded by wild turkeys!


Boy, are those wild turkeys homely!


Our complex is close to a park, and our common areas are a pathway for deer, turkeys, and even wild pigs as they travel from the foothills to the park. The complex residents gladly share the habitat with them, especially since it was theirs first. The exception is the wild pigs. Last year, they destroyed so much landscaping with their rooting that we had to spend thousands of dollars to "relocate" them and also to repair the damage.

Not sure where the pigs were relocated to, but it was done through the Department of Fish and Game. Hopefully, not to someone's freezer. Well, the point of this post that seemingly has nothing to do with finance, is that one does not have to spend large sums to be entertained... just look around you and enjoy the simple things.

What a Difference Two Years Make

September 25th, 2008 at 08:50 am

The real estate market in my neck of the woods has gone to hell in a hand basket, although realtors like to use less graphic language like "it's a buyer's market" or "we are in a temporary downtrend." Today I looked up the house we downsized from in 2006 on zillow and was astounded to see that it is currently valued $200,000 less than what we sold it for two years ago. Back then, when we put the house on the market, it sold in less than a week and we had three offers above the asking price. It's sobering... I think the family who bought our old house will be OK, though, since they were solid buyers.

No one's been left unscathed. The townhouse we moved to when we downsized has lost at least $115,000 in value in the last two years. Thankfully, we are not thinking about selling for a while, and we since we bought it in 2003, we actually have some equity. What would be a nightmare is to owe more on your mortgage than your house is worth.

A family I know is in that predicament. They bought their house for $620,000 in 2006 and got 100% financing through a special first-time buyer program for teachers. Believe it or not, their purchase was "entry level" in our area but they had to buy in a nearby town because there was nothing available in their price range in our city (only "dumps" according to them). Today, their house is worth $454,000. Their saving grace is that they are able to make the payments so they are OK for now. When will they have equity again? That remains to be seen, but it could be years.

Are you a secret blogger?

September 24th, 2008 at 10:37 pm

Well, I am. By "secret blogger" I mean that I have not told anyone about my blog... not family, not friends, not even my DH, DS, or DDs, the closest people in my life. It's not that I've written anything I would be embarrassed for family or friends to read. To me, it's about the freedom in the anonymity of my blog... I can write about anything and everything... I have "blog mates" who understand my interest in finances. By being a "secret blogger," I have no pressure to write every day nor do I have to discuss any of my posts with people who know me. Perhaps someday I'll tell friends or family about my SA blog, but for now I like it this way.

Survived Wall Street's Wild Ride

September 19th, 2008 at 06:42 pm

Wall Street gave us a roller coaster ride we won't soon forget and now my bank (WAMU) is faltering! Where will it end... or is this just the beginning of the end? Don't answer that... I really don't want to think about things getting worse right now, especially since I just broke down and checked my stocks, even though I'm trying to get into the habit of checking just once or twice a month (vs. my previous obsession of checking daily). Here's a recap of my battered stock portfolio:

Monday, September 15th - Down 3.72%
Tuesday, September 16th - Up 2.95%
Wednesday, September 17th - Down 4.67%
Thursday, September 18th - Up 3.73%
Friday, September 19th - Up 3.42%

Surprisingly, this week my portfolio fared better than expected considering the havoc in the market. But the bigger picture is bleaker: I'm down 6.1% for the month (from the previous month) and down 14.3% for the year. I'm not too alarmed (yet), but it's definitely disappointing for someone like me who just retired. Well, at least I'm not depending on this money to live on right now, but it sure would be nice for it to be there when I'm 85. I made the decision not to buy long-term care insurance because I thought I had enough assets and we also have good health insurance but I may have to rethink this.

In other money matters, I've been super-busy and this is a good thing because it kept my mind off the stock market. Here's how I've saved money this week:

1) Called my TV satellite company to complain about the high cost of their service. To me keep me as a happy customer, they gave me a credit of $10 a month for a year, gave me the high definition channels free for a year (another $10). I canceled HBO that we rarely watch and saved another $14. Total monthly savings: $34

2) Called the phone company about my landline because I wasn't happy with my rate plan. They reduced my plan to the rate they offer new customers. Monthly savings: $20 and no change to services.

3) Saved $3,000+ by buying airline tickets with miles for a family celebration we're going to in December. See yesterday's post for details.

4) Took an inventory of the pantry and freezer and stocked upon staples to last at least 3-4 months. Spent $192.58 but saved $39.73 by shopping carefully. I stocked up on chicken, ground turkey, pork roast (to be frozen), canned tuna, pasta, marinara sauce, coffee, green tea, 16#s assorted dry beans (red, black, lentils, garbanzos, green peas, and pinto), EV olive oil, salad dressing, canned tomatoes, popcorn, canned corn, cream of mushroom soup (I use it in various recipes), and a large bottle my favorite sake (yes, it's a staple!).

5) Bought a Brita "smart" water pitcher for filtering tap water to use for drinking. (We need to reduce our copious bottled water consumption and be more "green" consumers.) Used a $10 off coupon at BBB and will send for a $4 rebate on the extra filters. Final cost $45 for the large size plus filters for a year. We will also save about $30 a month by not buying as much bottled water. My DD uses a Brita pitcher and they have well water. She says it does a great job filtering.

6) Took a free online defensive driving class sponsored by my employer (my PT job). Not only will my auto insurance company reduce the annual premium by $40, but now I'm also eligible to get reimbursed for my mileage by my employer.

7) I was able to find a solid tenant for the rental that will be available on October 1. Since I leased the house without using a property manager, the monthly savings will be $119.50. I also raised the rent by $45 a month because I was told the previous rent was way under market (I've kept it the same for five years because I had really great tenants). Finding a tenant for this house is a huge load off my mind... a vacancy can suck a reserve account dry in no time.

On top of all this, I worked six hours on on Monday and spent Wednesday in beautiful Monterey at a workshop. My room was paid for, we had excellent meals, and the presenters did a decent job... not the best but better than some I've suffered through. Now, I'm ready to relax for a while. After all, I AM retired!

Whoopee! I Saved $3,000!

September 18th, 2008 at 10:02 pm

In December, my dear aunt (mother's youngest sister) is celebrating her 50th wedding anniversary. My DA is the only surviving sibling on my mother's side. If my mother were alive, she would be 92... my DA is a mere 79. DA lives in El Salvador, and although I frequently talk to her by phone, I rarely get to see her. DH and I decided we could not pass up this wonderful event, but when I researched the tickets, the "cheapest" were $1,590 per person for the dates we have to travel. Ouch!! Although we have a travel budget for 2008-09, this trip was not included. So, my mission has been to figure out the best way to plan this trip frugally.

This is where my credit card mileage plan definitely pays off. When shopping with "miles," I always request coach tickets because they cost less. Unfortunately, coach tickets were not available and I was told December is the worst time of year to travel to Central America from our neck of the words. Nonetheless, I had enough miles to secure two business class tickets (same as first class since the plane has only two sections). The total transaction cost for both tickets: $154, including taxes and a booking fee, and of course the miles.

When I use miles to pay for tickets, I try to wait until it results in a substantial savings. For example, going to Idaho costs about $225 for a ticket or 20,000 miles, whereas airfare to El Salvador is at least $1,590 or 35,000 miles (coach). It's definitely a "no-brainer" to use the miles for the really big savings.

A caveat about using a credit card that gives rewards such as miles: use this strategy ONLY if you are able to pay off your balance monthly like I do. Otherwise, you are carrying debt and paying interest, two things that diminish the benefit of any type of "rewards."

How Can You Be Retired if You Have a Job?

September 11th, 2008 at 01:14 pm

This was a question from someone I've known for years. He tends to be very negative and is not someone I'd frequently associate with if it were not for a circumstance of fate: he is the significant other of a good friend but I don't hold that against her. (Have you ever noticed how negative people suck the life out of you?) Well, I explained, yes, I do have a job but it is because I choose to do it. I do not HAVE TO work. So I leave it at that since I know it is useless to try to explain myself to someone who just doesn't "get it."

I choose to work because I've found job that feeds a passion, not my pocketbook. That, to me, is the big difference. In my previous job, if I did not feel like going to work, I could not easily call in sick. There is not such thing as a substitute principal, although we have individuals assigned to carry on while we are off campus. It's just not the same. Our presence is required 99% of the time.

Now, I get to choose the days and times I work. I have tremendous flexibility, with the exception of having to meet seven times between September and December 1st for a two-hour seminar. But then, I was the one who decided on the dates/times, so it's not that bad. On some weeks, I have no scheduled workdays'these are my "free" days. On other weeks, I may work a day or two.

And a bonus: I get paid! I plan to use this extra money to expand our travel plans and increase my contributions to Heiffer International and Second Harvest Food Bank, two organizations I regularly support. Here's what my job commitment looks like for September:

~ 21 possible workdays (not counting Labor Day)
~ Of these, 11 days are completely free
~ My longest work day: 1 day @ 6 hours
~ On 7 work days, I have scheduled ~3 hours
~ 2 days will require working ~ 2 hours
~ My net pay estimate: ~ $34 an hour (after 33% withheld)

While the money is nice to have, it is not my reason working. My part-time work is a self-imposed experiment because, to confess, I was afraid of having way too much time in retirement. Back in May, when I decided to take the final step into retirement, I had some doubts... about having too much time on my hands, not enough to do, and well...I guess I just needed to be needed somewhere for something. And so, I applied for my PT job at a local university and also accepted a consulting contract with my former employer. When the academic year is over, I may choose to continue working... but then, maybe I won't. Gotta love having choices!

Play Day

September 7th, 2008 at 10:04 am

DH does not teach a class on Fridays, so after breakfast we took a leisurely drive over the Santa Cruz Mountains. The day was sunny and clear and the traffic very light. We drove up Hecker Pass Road, stopping at two wineries along the way for some free wine tasting (only me, since DH was the DD). Then we made our way down and over to the tiny town of Corralitos, famous for the Corralitos Market and Sausage Company that makes the best sausage in the western USA if not the entire country. We come here about twice a year and we always stock up on sausage. We spent $50.25 on:
~ 2 #s of linguica
~ 1 # of Creole
~ 1# of Andouille
~ 1# of Kobasico
~ 1# of Chorizo
~ 1# of Smoked Turkey
~ 1# of Hot Links
~ 1# of Polish

I calculated that weíll get 18 meals from our purchase, so we are set for about the next 6 months. Best of all, we had a great timeÖ what a luxury to be able to do this on a Friday. Itís definitely one of the perks of being retired!


September Budget

September 3rd, 2008 at 06:29 pm

Yesterday afternoon I took care of September transfers and bills. The way I manage our monthly finances might seem odd to some people, but it works for me. The interesting thing is that I didnít write a single check and the entire process online took about 30 minutes. Septemberís budget total is $12,152 and includes:

Payments Scheduled:
ē CC1 payment ($4882.27) due 9/10
ē CC2 payment ($1266.15) due 9/12

CC1 and CC2 are paid in full each month.
CC1 was higher than usual due to a homeownerís insurance payment for the ID house and my new laptop.
CC2 included gas and expenses for our Sedona road trip in late July and all groceries.


Transfers Scheduled:
ē $500 to CA Household Reserve account
ē $500 to ID Household Reserve account
ē $100 to Rental Reserve account
ē $1,500 to regular savings (cache fund)
ē $1,000 to Schwab Account (investment)

The reserve accounts collect funds to be used for periodic expenses as they come up (e.g., taxes, insurance, etc.). Not included here is DH's contribution to his 403b since it is $$ deducted by his employer and I do not have to manage the payments. (I am no longer able to contribute to my 403b/457 since I have retired.)


Other:
Mortgage payment for CA home, water bill, Direct TV, and HOA fees are on auto payment, so I donít have to schedule payments but these expenses are part of the monthly budget of $12,152 spent. Utilities for the ID house are on auto payment and are taken from the ID Household Reserve account.


Also scheduled but not payable until October:
ē utility bill payment for CA house ($99.57) on CC1;
ē phone bill payment (Internet, cell, and land-line = $244.08) on CC1 and it includes DHís iPhone charges.


Extra Deposits to Checking Account to offset expenses:
From household reserve account:
ē $543 for HO insurance
ē $114 for timeshare dues

From my savings account:
ē $2491 for my new laptop

Whew! That's a lot of money to move aroundÖ but I love the ease of managing everything online and using the CCs to earn miles. Best of all, the mortgage for the CA house is our only debt.

Will Retirement Income Keep Up With Inflation?

September 1st, 2008 at 12:11 pm

Retirement income update:
Iím still waiting for the final figures from my defined benefit pension plan, but so far estimates point to a monthly net pension @ ~ 99% of my working net pay. Although Iím pleased, it doesnít mean Iím getting a huge pension.

When I worked, I lived on a pre-determined (by me) portion of my income. I sheltered the maximum ($41,000 a year in my 403b and 457 accounts) and 8% of my gross income was contributed to the state teachers retirement system as a mandatory deduction. With so much being sheltered, my take home pay was reduced to a level I became accustomed to living on.

When I receive the final adjustment Iíll see how accurate the estimate is, but Iím grateful no matter what. Not surprisingly, Iíve been told it will likely take several months for the state to process the final figures from my employer (final compensation and unused sick leave).

A concern at this point is whether Iím having enough federal and state taxes withheld. I can adjust withholdings if need be, but Iím inclined to wait until my 2008 taxes are figured. Since I had a fairly large amount withheld in the 8 months of 2008 that I worked, and my gross pension is only about 46% of my previous gross pay, Iím counting on having had enough taxes withheld for the year. I guess Iím just too much of a control freak to like paying more in taxes than I have toÖ and I want my $$ to work for me, not Uncle Sam. To be on the safe side, Iím reserving 33% of any consulting income for taxes.

Thoughts about inflation:
Another concern is the impact of inflation on my retirement income. I think this is an issue commonly overlooked in retirement planning. To illustrate, a hypothetical pension of $4,000 a month will need to be about $5,375 in 10 years to keep up with a 3% inflation rate.

My pension plan provides for a mandated 2% COLA each year, but I am planning for at least 3-4% inflation. If my retirement income cannot keep up with inflation, Iíll look for ways to make up the shortfall.

First line of defense will be to reduce expenses but not to the point of feeling deprived. And, reducing expenses is a challenge Iím planning to undertake, regardless of inflation. Next, Iíll tap my taxable accounts and draw from the tax-sheltered accounts last. Right now my plan is to leave my 403b and 457 funds intact until I am 70Ĺ, but itís reassuring to have these funds as a backup.

Ideas to soften the impact of inflation:
ē be more frugal/ reduce expenses
ē rethink travel plans (get frugally creative)
ē withdraw shortfall from taxable reserves
ē increase part-time work

Any other ideas to offset inflation?