A lady I worked with at the library retired last week.  She’s 50, and her husband is 55.  He’ll be retiring in May from the Postal Service.  They have two twenty-something sons who are out on their own.  My friend and her husband paid off their mortgage “years ago” and just finished paying off the motor home that they’re planning to live in this summer.  I don’t know her husband, but my friend seems much younger than 50 – she’s bright and energetic and wears clothing in every color of the rainbow (mostly found at thrift stores and clearance sales).  They are going to have a blast in retirement.  It’s inspiring to see people – who have obviously managed their money very well – getting to reap the rewards of careful planning.  They still live in the house they raised their sons in, they drive modest cars, they’re the classic example of the millionaire next door.  They own a house and a motor home and two cars outright.  They have no consumer debt.  Their only bills are day-to-day living expenses.  And they have saved enough money to be able to retire at 50 and 55.  He will have a pension from the Post Office, but they’ve also saved enough to make up the difference in her salary.  Very impressive.  Gives us all something to aspire to.  Even if a person has no desire to retire and go rambling around in a motor home at 50, it would still be nice to have a choice.  To be able to switch to a new career, maybe work in the nonprofit sector or devote yourself to something that had been a side interest.  Keep on saving!

Tired but Happy recently wrote a post about dining out with older, wealthier relatives, and the money dynamics that come into play.  I love how insightful she is about the psychological nuances of money.  I am the oldest in my family, and my parents would always rather cook (our place or theirs, they’d rather stay in).  My husband is the youngest though – his two sisters are 8 and 9 years older than him.  And his parents love to go out to eat when they are with us.  And they always want to pay.  Last year, we decided to go to a very nice restaurant for dinner while we were visiting them.  We planned (and budgeted) ahead for the whole month.  When we got to the restaurant, my husband went to the hostess and gave her our credit card.  When the meal was over, she brought the sales slip for him to sign – no arguing over the bill at the table.  His parents were flabbergasted, but the whole thing turned out great.  We couldn’t afford to do that often, but it meant alot to us to be able to do it once in a while.  And we frequently pay for small stuff like drinks when we’re with them.  Whenever they visit, I always try to make special meals for the nights we eat in.   They know that we don’t have a lot of money, but they know that we’re careful with what we have, and I think they respect us for it. 

Wow, what a long week this has been.  I just got home from my library job after my first full week of working 32 hrs there and as many hrs as I can at our insurance agency (I think I got about 20 this week).  I’m exhausted, but I feel great.  I’ve started working out in the morning because my new work schedule doesn’t give me much time in the evenings most nights.  I have always hated getting up early, but I’ve been doing it for about three weeks now, and it is getting a little easier.  I still feel a bit grumpy when the alarm goes off at 5:30, but by the time I’m up, I feel great.  So I started my day today with a great run, and then spent 8 hrs at the library.  It was a crazy busy day, so it flew by.  Just this week, I earned $112 for my new retirement account.  Whoo hoo!

My parents were also staying with us this week.  My father has Wegener’s Granulomatosis, a rare autoimmune disease that caused complete kidney failure in his case.  He has been on dialysis for almost 6 years.  His Wegener’s is in remission, but unfortunately his kidney function has not returned.  Recently, my parents were approved to begin a new pilot program of home hemodialysis.  They will have a dilaysis machine in their house, and my mother will be the tech.  This means that they will not have to go to the dialysis clinic three times a week, and even better, it means that my father will be able to have dialysis 6 days a week instead of 3.  This will keep his toxin levels lower and his fluid levels will be stable instead of peaking every other day.  The training for this program is near where we live, but about 2 hours from my parents’ house, so they are staying with us during the training. 

When we decided that we could stay in our current house forever (or for a long time anyway), we knew that we would have to do some remodeling in order to have an office and still have a bedroom for a child – since we do plan to have one or two someday.  Our plan was to build a wall in one of our living rooms to create a smaller living room and an separate office.  My parents love remodeling.  They’ve been buying and remodeling decrepit houses for 30 years, and are quite good at it.  So they were excited to help us with our little project this week.  My husband and my parents started on the wall yesterday afternoon, and by the time I got home they had several studs in place.  We now have a completed stud wall with framing for a door… it makes me happy just looking at it.  My parents went home for the weekend, but they’ll be back on Sunday (their training lasts 3 weeks), and we’re all excited to keep working on our new office. We’re thrilled that our plan to be able to keep the house we love (and can afford) is falling into place.  And I’m very thankful for my parents! 

 

We spent last weekend visiting friends who live a few hours from us.  My husband and I each have friends we’ve known for years who happen to live in the same town, so it’s always a two-for-one trip when we visit.  It’s a beautiful resort (expensive) town in the mountains, and we love spending time there.  We stayed with my friend in the new house she and her husband bought last year.  It’s a $600,000 house with three bedrooms and all the upgrades.  granite counters, hardwood floors, huge whirlpool tub, gourmet kitchen, radiant heating in the floors, heated garage… it’s a great house.  They pay about $3,000/month for the mortgage on the house, which is well within their means.  They have some student loans, but no consumer debt, and they have a healthy retirement portfolio. 

I had a great time with my friend, and was glad that we got to spend the weekend with her.  On the way home, I thought about all that she has, and all that I have, and I felt good about my life.  Our counters are Formica, our carpet is a touch worn, and our appliances don’t all match, but we have a great life.  Our expenses are well within our means, and we’re really happy most of the time.  I’ve noticed that people with big houses and lots of nifty toys (including my friend) are no happier than we are, and often seem to be less happy.  I can honestly say that I’d rather be me.  That feels good.

My new job at the library started today.  I had a meeting with human resources to get all my benefit info sorted out.  It’s amazing how excited I got over benefits – I guess I’ve gotten very used to having to make my own benefits (one of the non-perks of self-employment), and getting them from an employer again is pretty damn exciting.  So what do I get?  Well, there’s dental, which we haven’t had since we became self-employed.  They’ll take about $50/month out of my check for that, but it’s better coverage and less expensive than what we could get on our own.  And we get a reimbursement for health coverage, so we’re bumping our health insurance up to an HSA with better coverage than what we have now.  And there’s a 457 retirement plan.  I opted to put 30% of my pre-tax pay into the 457.  That’s a lot, but we’re trying to save all the extra money I’ll make by getting this promotion.  And putting it into a retirement account before I get paid is a good way to make sure we actually do save it.  The promotion is giving me a 45% pay raise, so if we put 30% of the total into the retirement fund, I still end up with just about the same amount in my paycheck, give or take a bit for the dental coverage and health reimbursement.

Most people probably wouldn’t consider a 457 with no employer match to be a stellar benefit.  Just goes to show how excited you can get about something that you haven’t had for several years!  All we’ve had for the last few years is our IRAs, so it’s nice to have another pre-tax account.  And we’ll also be able to set up an HSA this year and have another place to stick pre-tax money.  Whether we’ll be able to max out the IRAs and the HSA is yet to be seen, but just having the accounts there is a nice feeling.  And seeing their little numbers grow is a good motivator for squeezing some extra money out of the budget to add to them. 

The Festival of Frugality is up at Fire Finance.  They did a great job of weaving all the posts into the story of Joe – a pretty frugal guy.  I liked the Simple Dollar’s post on how he and his wife watch all their favorite tv shows without paying $50/month for cable.  They have a pretty good system set up, where they find the show on DVD on eBay, and then resell it once they’re finished watching it.  Another option is the library.  I work part time in our public library, and lots of people tell us that they didn’t know that the library has lots of tv shows on DVD.  Our library has about 20 different tv shows on DVD.  Some are just a few disks, others have 10 or more.  If the library you go to doesn’t have the show you want, chances are another library in your state will have it, and you should be able to order it – usually free of charge (I found Sex and the City this way).  The bigger libraries in our state usually get new shows as soon as they come out on DVD.  If it’s a popular one, there could be a bit of a wait, but it beats paying for cable.  And if you return your library stuff on time, it’s free. 

I also loved the post from Stop the Ride about her daughter’s birthday cake.  I too am a fan of making pretty much everything we eat, and I’ve found that it’s better all around.  It’s less expensive (even using organic ingredients), it’s better for our health (organic ingredients, and nothing I can’t pronounce), and it’s fun.  The picture of the strawberry shortcake she baked was wonderful – looked so much tastier than a store-bought cake coated in chemically frosting!

Thanks for all the great reading everyone!

The Carnival of Personal Finance is up at Young and Broke.  I just spent an hour reading most of the posts, which inspired me to keep chipping away at my own financial goals.  I agree with Lazy Man when he talks about how so many personal finance articles have the same stuff – once you’ve eliminated the lattes and cable tv, that tip doesn’t help anymore.  When I started reading pf books, magazines, and blogs about three years ago, I was already pretty frugal, and pretty broke.  It didn’t help to tell me to eliminate lattes and pack my lunch, because I was already doing that out of necessity.  These days, we have our investments and savings automated, we pay extra on our mortgage every month, we pay our credit card in full every month, and the only debt we have besides our mortgage is $2800 on a 0% interest credit card.  So most of the advice and tips I read aren’t ideas that I can implement. 

But I still like to read library copies of pf mags, and I love pf blogs.  Even if I don’t get a new idea, I still feel inspired to keep working towards our goals, to keep increasing our savings, and to continue to live meaningfully, with a purpose not defined by my stuff.  And every once in a while, I get a new idea.  So thanks for all the great articles, and may 2007 be a great year for all of you!

Last week we got a letter in the mail from American Family, our home and auto insurer. Turns out they use our credit info as part of the rating factor for our home owners insurance. I’m not sure if they’ve always done this, but we’ve never gotten a letter like this before… Anyway, the letter said that “based on our review of your credit information, you did not receive our lowest insurance rate, which is considered unfavorable to you.” (no kidding – that’s unfavorable?). The letter also says they use credit reports “because an individual’s credit information is a good indicator of a person’s likelihood of filing future claims…” In the four years since we bought our house, we have never filed a claim. Even the time the washing machine overflowed and we had to tear out the bathroom floor, the garage ceiling, and all the insulation around the furnace ducts in the garage… we didn’t file a claim with our insurance company. We did the work ourselves, including tearing out insulation and wet drywall until 3 am. We found industrial quality tile from a surplus distributor (67 cents/sq. foot, versus the $5.50/sq.foot retail value – they had 200 sq feet left over from a big job, and we only needed about 70 sq. feet. So there is a silver lining to having your washing machine overflow onto your ugly yellow linoleum floor). Since we did the work ourselves, all we paid for was new insulation (about $40), new drywall for half the garage ceiling (about $45), and the tile ($100, including the backer board, grout and supplies).

I wonder how accurate their claim is that a credit history determines how likely someone is to file a claim on their homeowner’s policy? I’m sure they’re not making it up, I just wonder how big the correlation is. I guess it does make sense that someone who is totally irresponsible when it comes to paying bills on time might also be irresponsible about leaving a candle burning unattended.

In our case, the letter says that the bad things on our credit report are: Insufficient length of credit history (we both got credit cards at least 10 years ago, and have continued to build our credit ever since without any blemishes… how long do they keep holding this one against us?), and Proportion of revolving balances to revolving credit limits is too high, or there are no revolving credit accounts (I don’t really understand this one, as we’ve paid off all but one credit card, so our total revolving balance is about 3 grand, while our total revolving credit limit is probably close to 40 grand). Luckily for us, the nice people at American Family provided a phone number where we can reach TransUnion with questions or to obtain a copy of our credit report. When I call the number, I’m informed that it is not a working number. Sweet.

We got the bill for our homeowners policy last week aswell: $554. I went back and looked at last year’s bill: $587. And they’ve updated our coverage limits and added $11,000 to the insured amount for our house. So we’re getting more coverage for less money this year. So although it would be great to get the best price based on our credit history, I’m not going to complain. And it seems that the “problems” with our credit score aren’t things we can just fix. Maybe in 5 years they won’t say that we have insufficient length of credit history?

I consider myself pretty well educated in personal finance. But I didn’t know that homeowners insurance rates vary depending on credit history. Who da thunk it? And I’m even in the insurance industry, although I work in health insurance, where credit scores are not an issue. So now I know. And so do you.

Like most females, I have always loved clothes.  I love shopping for new (used) clothes, trying them on, bringing them home, wearing new (to me) stuff.  Since I buy 95% of my clothes in thrift stores, I’ve never been a big spender when it comes to my wardrobe (a huge shopping spree for me is about $40).  But over the last few years, since we got a huge thrift store about half a mile from our house, I’ve been there at least once every two weeks.  I usually spend between $10 and $20 a trip.  Not exactly breaking the bank, but our house was definitely starting to feel full.  A new coat here, a pair of shoes there, and pretty soon I was using not only my half of the closet in our room, but most of the closet in the guest room aswell.  So I decided I didn’t need any more clothes for a while.  I didn’t put any strict time frame on it, I just decided to see how long I could go without buying clothes.  From the beginning of October until last week, I went to the thrift store once.  Not bad, considering my usual 2 or 3 times a month routine.  Last week, my brother and his girlfriend came over for dinner.  Afterwards, they suggested we hit the thrift store, so I went, but I didn’t buy anything.  I didn’t even have to try.  I just didn’t need anything, and I found I no longer had a desire to buy stuff just because it was there.

Today, I went to the thrift store to drop off a bunch of stuff that I no longer need.  Stuff that’s just been cluttering up our house.  I had recently gotten rid of our aluminum pans, and was on a mission to find stainless steel cookware (but not willing to pay $50 a pan…)  So I decided to venture into the store to see what they had in the cooking section.  I used to just browse in thrift stores, and find stuff that I didn’t even know I wanted until I saw it.  But today I had a purpose.  Most of the pots and pans had scratched non-stick surfaces, but then I found two heavy duty stainless steel Ekco saucepans, exactly the right size, for a total of $4.  I didn’t even look at the rest of the store – why bother, when I had found what I needed already (the old me would have kept browsing for another half hour).

My thrift store habit has never been a large part of our monthly expenditures – it was always about $40/month.  So cutting it way back isn’t going to make us millionaires.  But it will make our house seem bigger.  Especially if I keep making trips to the thrift store to drop off donations – without going inside.

Happy New Year!  2006 is in the books, and it was a good year.  I just calculated our net worth, which went up by $939 in December.  December is a tough month, because estimated taxes are due in January, so I always have to keep lots of money in reserve to pay the quarterly tax bill.  This is the last time I’ll have to do that though, because we incorporated this year, and we’re W2 employees of our corporation as of yesterday.  We hired a payroll service, and later this month we’ll get our first paychecks from our corporation (with taxes withheld – no more estimated taxes!)  Anyway, the only real gain we made in December was with our mortgage principal, and our retirement accounts and ING account, all of which have automatic contributions.  January should be better, we should be able to start making a dent in the HELOC.

I’m going to be taking a different position at the library later this month.  I’ve been working there for over 2 years now.  I love the people I work with, but shelving books gets pretty old.  A lady I work with had a baby last summer, and has decided to stay home with the baby for now.  I told my boss I was interested, and she said the job’s all mine.  I’m already trained, as I’ve been a substitute circulation clerk for almost a year now, and that’s what I’ll be doing with this job.  It pays a lot better than what I get now, and I’ll have a 457 plan available (another retirement account – yipee!) and health insurance reimbursement.  Also, I’ll get paid vacations (1 hour for every 9 hours I work – that adds up fast).  I don’t get any of these things now – the only perk I currently get is my gym membership.  Anyway, my husband and I talked about it, and decided that all of those positives outweighed the negatives, which were really just scheduling issues.  I currently work about 25 hours a week at the library, and the new job will be 32.  I do have a set schedule now, but it can easily be changed at a moment’s notice, since my current work is pretty self-directed.  Not so when I’ll be working at the desk.  Some of my library hours will be in the evening, so I’ll still have 2 full days each week that I can work at our insurance agency (currently I have 3, although we sometimes quit early on Fridays, so it’s more like 2.5).  We’re hoping to have a baby in the next year or so, and if we could save the money I’ll make at the library, it would help a lot.  We currently save pretty much everything I make there already, so there’s no reason we won’t be able to also save the extra that the new job generates.  We’ll see how it goes, but I’m excited.