I was looking at our business credit card statements today, to make sure that everything was in order after our fraud incident last month.  They had cancelled my husband’s card and issued a new one, which was done as soon as we reported the problem.  We paid all the legit charges on the card, and that’s reflected on the new card statement.  The new statement also shows a reversal of the $3600 charge that someone made on the card, so all is well as far as the balance goes.  But then I noticed that our rewards points balance was negative 3200.  Hmmm.  It had been 10,081 last month, and I had cashed in 10,000 points to get $100 in gas cards.  So we should have been left with 81 points, plus what we earned this month. 

So I called them today, and after spending about 15 minutes on the phone talking with two very helpful reps, we figured out the problem.  Balance transfers don’t accumulate rewards points (only purchases do that).  So when the fraudulent balance transfer went through, it didn’t affect our rewards points at all.  But when the bank reversed the charges, it showed up on our statement as a credit, and the rewards system saw that as a return.  It basically treated it as if we had bought something for $3600 and then sent it back.  So the system subtracted 3600 points from our total.  Hence the negative points currently showing on our statement. 

The second person I talked to said that it was a mistake, and that since the balance transfer hadn’t increased our points balance, a reversal of the transfer should not have decreased our rewards balance either.  She submitted an order to get it fixed, and said I would be notified within 30 days of the outcome of all this, and hopefully we’ll see the rewards points fixed on our next statement.  We only spend about $500/month on our business card, so it would have taken half of 2008 to just get back to zero if I hadn’t noticed the problem.  Now we can get back on track towards earning another $50 gas card much sooner than we would have if I hadn’t noticed the error.  Another reminder to double check financial statements carefully!

When my parents came to see us on Christmas, they brought us a crib, which is now assembled in my office, awaiting my ouster to the guest room and the arrival of our little one in the spring.  My parents paid $30 for the crib (almost everything I know about being frugal was learned from my parents) at a thrift store last week.  They saw it outside the store just as it has been donated, and inquired about a price.  The manager said that they rarely accept crib donations, but that this one was in such good shape that he decided to take it.  He said it would cost $30. 

I had been talking to my mother about my perusals of cribs on Craig’s List.  I knew that I didn’t want to buy new (I had wandered around Babies R Us with a friend last summer and the price tags were out of control), but I was nervous about buying used.  All you have to do is Google crib safety and you’ll find 375,000 results – many of which will make an parent-to-be cringe.  I had seen some good cribs on Craig’s List for under $200, but I hadn’t seen anything that seemed like an amazing bargain, and since we weren’t in a huge hurry, I hadn’t bought anything yet.  I’m glad I didn’t. 

The crib my parents bought is solid ash, with beautiful solid head and foot boards.  It included a mattress, mattress pad, and sheet – all of which look brand new.  The crib itself is in great shape.  But since it was a used crib, and since my mother knew that I would be concerned by the 375,000 articles online about crib safety, she called the manufacturer to get more details. 

She was told that this crib had never been recalled, but that it no longer met safety code because the corner posts were more than 1/16 of an inch taller than the head and foot boards.  (they were about 1/4 inch higher).  So my father took the crib apart and sawed the top 1/4 off each corner post.  Then he sanded down the edges until you’d never know that he had worked on them at all.  If they hadn’t told me this story, I would have assumed that the crib came with corner posts that were even with the head and foot boards. 

So now we have a crib that meets code, is very solid (we put the whole thing together earlier in the week, checking each bolt and spring as we went), and is a beautiful piece of furniture.  For $30, plus the time my parents spent tracking down the code issues fixing the corner posts. 
I’m ever so grateful to my parents for -as always – leading by example in how to stretch a dollar and for getting us set up with such a beautiful crib.  I’m glad that we won’t be spending $400 to buy a new crib, and I’m glad that I can be completely confident that our crib is safe and secure while at the same time fitting into our frugal lifestyle. 

Our corporation got its final commission check for 2007 today, and it was bigger than usual from that particular insurance company.  Combined with the fact that our business expenses were quite a bit lower in December than usual, we have about $1000 left over in our business account.  So we’re getting holiday bonuses.  I’m going to give each of us a $500 bonus (maybe inspired by watching Christmas Vacation earlier in the week?) on Monday. 

When we do bonuses and dividends, there are no taxes taken out, so all year we’ve been compensating for dividend taxes by having additional taxes withheld from our regular paychecks and from my paychecks at the library.  But this $1000 hasn’t been accounted for with tax withholdings.  So we’re going to put the whole $1000 into my husband’s IRA on Monday, to solve the tax problem – his IRA is a traditional account, so the entire amount will be a tax deduction for the year anyway.  We had put $2400 into his account so far, so this will bring us to $3400, only $600 short of maxxing out his IRA for 2007.  I’m excited about the extra $1000, and about getting so close to maxxing out an IRA right after we maxxed out our HSA this month. 

I’m feeling really good about where we stand financially.  We’re on track to have one of our lowest spending months in years, and neither of us is itching to buy anything.  So when our credit card cycle ends on January 10th, it should be a nice low bill for the month.  The padding on our emergency cushion is getting more and more comfortable, which just inspires me more to keep on keeping on with what we’re doing.

Happy New Year, and I hope that you all have a great 2008!

Our networth rose to $90,772 this month, a $4000 increase since October.  That’s mostly due to aggressive contributions to our HSA, along with a $1000 increase in our retirement funds.  We also paid off some more money on our HELOC and our main mortgage. 

Our networth will take a hit over the next few months as we draw money out of our HSA to pay our deductible if my husband’s knee needs surgery, and to pay our midwife.  But I still expect us to hit the $100,000 mark by the middle of 2008, which will be a good milestone.  When I started this blog, our networth was just under $69,000.  We’ve added a little bit each time I’ve run the numbers, and it’s nice to see that we’ve been headed in the right direction the whole time.  Confirmation that we live below our means.  Now that we’re within $10,000 of a six figure net worth, I’m even more motivated to be even more frugal!

Since we’re just about to start a new year, I thought I’d write about our goals for 2008 as far as money is concerned.

• Max out our HSA ($5800)
• Max out my Roth IRA ($5000) and my husband’s traditional IRA ($5000)
• Pay off $5000 in principal on our HELOC

In addition to these very concrete goals, we’d also like to look into either siding our house or repairing/replacing our roof. Both of these things need to be done, although neither one is an emergency. We could repaint the house, but since we’re planning to stay here forever, we figure that siding would be a better long-term solution. So that will be on our list of considerations next summer.

Our financial situation is easier now that it was at the start of 2007, since we paid off the last of our business debt in August, and we’re going into 2008 able to save everything that we don’t need for day to day expenses. But when the baby is born, I’ll have to decide whether to keep working at the library or quit, and that will have an impact on our finances. If I stay, we’ll have enough money to easily meet our financial goals for the year, but I’m a little concerned that I might be putting myself in a more stressful situation than I want. If I quit, it will ease the stress level considerably, but it will tighten our money situation quite a bit. We’ll have to really stretch to meet our goals if I don’t work at the library for the second half of the year. I would continue to work as a sub, but that would obviously mean a significant reduction in pay.

For now, we’re going to focus on saving as much as possible over the next five months. I’d like to have the HSA maxxed out by June, so that we can move our focus to the IRAs. We currently have $200/month going into an index fund in my husband’s IRA – I might increase that to $400/month, so that we could automatically have $4800 in it by the end of the year. My Roth IRA doesn’t have an automatic contribution set, because I want to buy an exchange-traded fund with one lump sum of money at some point in the year.

Overall, I’m feeling really good about where we are. We’re happy, healthy, excited about the baby, and feeling settled and secure. We don’t have debt other than our mortgage, we’re living on less than we earn, and we have goals for 2008 that are realistic but at the same time will require a stretch to reach I like it that way. I hope everyone had a great Christmas, and here’s to a great new year!

We’ve both had our final paychecks for 2007, so I have total numbers available for income and savings.  Our pretax income was $70,106.  We paid a total of $15,618 in taxes – not sure if we might get some of that back or not (this was our first year of being W2 employees of our corporation, and taxes are different that when we were just strictly self-employed).  We put $5650 into our HSA (maxxed out – whoo hoo!).  We put $3793 into my 457 retirement plan at the library.  We put a total of $3700 into our IRAs (hoping to do a lot better in 2008 with the IRAs).  And we put $1200 into our emergency fund, which is all still there, in an ING account.  Between those four savings areas, we saved a total of $14,343 this year, just over 20% of our pre-tax income. 

In addition to savings, we also paid off $4260 in mortgage principal, and about $5000 in business debt (which was on personal credit cards) that we still had at the start of the year.  We paid off the last of that debt in August. 

If you start with $70,103 and subtract taxes and savings and debt repayments, we lived on $35,142 this year, or just under $3000/month.  About $1250 of that is our mortgage, so everything else comes to $1750/month.  This gives me a pretty accurate gauge of how we spend our money and how much we need to bring in if we want to keep living below our means.  We could get by on less than $3000, because we do have some splurges now and then that could be eliminated if we needed to. 

We obviously don’t have anywhere near enough money in our emergency fund.  It currently has $1200, and we add $100 each month.  In order to have three months of living expenses in that account, we need another $7800, which at our current rate of contribution, will take us until 2013.  On the plus side, we do have medical expenses covered, since our worst-case scenario with our health insurance  is $3000 out of pocket per year, and we have more than that amount in the HSA.  So we wouldn’t need to dip into the emergency fund for unexpected medical expenses.  We have two cars but could get by with one, since my husband works exclusively from home and I work at home and at the library, which is only a mile away and I usually get there by walking or riding my bike.  But still, I’d feel more comfortable with more money in the emergency fund.  I’m tempted to increase the monthly amount that we put into our ING account, but I also want to focus on the IRAs and the HSA in 2008.  We’re still debating how we want to prioritize our savings for the coming year.  It’s nice to be starting 2008 without debt – the first year we’ve been able to say that since 2003.  And overall, I’m really happy with how we did in 2007.   

Yesterday we officially maxxed out our HSA for the year.  $5650 is the IRS limit on contributions for a family, and we hit that mark – a huge milestone for us.  It puts us well on our way to having enough money to pay for our baby’s birth and to meet our deductible on our health insurance to get my husband’s knee worked on next month.  And it’s a sweet tax deduction.  I think this is the first time we’ve ever maxxed out any contribution account.   We haven’t ever gotten there with our IRAs or my 457 plan at the library, so it’s nice to be at a point where we have an account finished for the year.  Next year, I’d like to max it out earlier in the year to give the money more time to grow.  I’m working on 2008 goals and I’ll post about them soon. 

Wow, what a week this has been.  And we don’t even “do” Christmas – can’t imagine what it would be like if we did!  On Monday, I bought a shadow box picture frame (50% off) and was up until midnight making a scrapbook page to put in the frame for one of my best friends.  I used a picture of her husband and their son, and it turned out adorable.  I mailed it on Tuesday, with lots of recycled air filled packaging stuff and crossed fingers that it would get to her in one piece.  She called last night and said it arrived and she loved it, so that was good.

On Wednesday morning, a coworker had a coffee/tea party at her house, and we went there for a little bit before heading to see our midwife for our 19 week checkup.  We had been hoping that we could hear the baby’s heartbeat, but the baby wasn’t cooperating, and we didn’t get to hear it this time.  By next time (22 weeks) we should be able to hear it no matter what position the baby’s in (we elected not to listen with a Doppler because it’s uses ultrasound and we don’t want any ultrasounds done unless there’s a medical reason to do so).

After our appointment, we went shopping our our turkey, and found an organic one at Whole Foods.  It set us back $55, but I feel good about it’s origin, so I’m happy with the price.  My whole family is coming for Christmas, so I see lots of cooking in my future.  Although my parents are coming early that day and my mother is going to help me, which is a huge plus. 

I went in to the library on Wednesday afternoon, even though I’m usually off on Wednesdays.  They needed extra help, and since we’re going to be closed on Monday and Tuesday next week, adding hours now allows me to avoid taking paid time off for days that we’re closed (I’m saving all the paid time off that I can, so that we’ll have it when the baby arrives).  I’m working this weekend as well, so I’ll actually get my full hours in for this pay period without taking any vacation at all.  And I think I have the same thing set up for next week, when we’re closed for New Year’s.  But I’m looking forward to three days off next week, since I’m working at least part days at the library for seven days in a row this week.

I finished making Christmas presents for my coworkers – I made note cards using photographs I had taken, and tied them up with pretty yarn.  I made 3 dozen cookies on Wednesday night, and divided them up among the eight women I work with.  I’ve had lots of positive comments about the cookies and the cards, so I’m satisfied with my efforts there.

Last night we went to a white elephant party with a bunch of friends, which was a huge helping of comic relief.  We had a blast, and I’m glad we were able to fit that party into our week.  We had a get together with some neighbors last Saturday, and I baked stuff for both of those parties, so I’ve been spending a lot of my free time in the kitchen (with more to come in the next few days…) 

Whew!  And that’s just the stuff we DID do for Christmas.   We don’t have a tree, we don’t have any decorations up except for the Christmas cards we’ve received.  We don’t do Christmas presents for each other or for anyone in my family (everyone who’s coming here on Tuesday).  I like the way we did it.  Most of our presents were homemade (I estimate we spent about $120 for all the Christmas presents and cards we gave out this year).  We’ve had no financial stress at all from the holiday.  It has taken up some extra time, but I enjoyed making stuff for people, and I honestly think that I still spent far less time in my craft nook than most people spend wandering around the mall looking for gifts. 

Now it’s time to clean the house before our company gets here next week.  And I better start making a shopping list for the grocery store…  At least I won’t be at the mall this weekend! 

Since I love to cook, we buy very little processed food.  Our vegetables and fruit are always either fresh or frozen, and we buy lots of stuff in bulk, with very little packaging.  But beans and tomatoes are the exception to the rule.  I buy various kinds of canned beans and I also stock up on canned diced tomatoes whenever we go to Costco.  But with the Bisphenol-A debate heating up, and especially since I’m pregnant and trying to avoid toxins as much as humanly possible, I’m going to stop buying canned goods and see if I can adapt to using other alternatives. 

Beans are easy – I bought a bag of dry black beans last week for about 2/3 the price of one can of black beans.  I soaked the beans overnight and cooked them in my crock pot while I was at work, ending up with about 4 or 5 cans worth of beans (for less than the cost of one can of beans plus the electricity to run my crock pot).  Plus, I cooked them in reverse osmosis filtered water, and I know that there is no BPA contamination in them from can liners.  I made some of the beans into chili, and some into a Caribbean mango-beans-and-rice dish that we both liked. 

We eat beans a lot, so I’ve decided to make the crock pot a counter top appliance.  It used to live in the pantry, and I would just bring it out when I needed it – but out of sight out of mind was an issue, and I haven’t used it that often.  If I keep it on my counter, where I can see it every day, I think I’ll be a lot more likely to use it.  My plan is to make a pot of beans each week, and use them in recipes for the rest of the week.  I’m going to store them in glass spaghetti sauce jars in the fridge, since glass doesn’t have the potential contamination problems that plastic does. 

Tomatoes are a tougher one.  They’re very acidic, so I don’t think that there are any companies that sell canned tomatoes without liners in the cans – the tomatoes would eat through the cans otherwise.  A suggestion I found on line was to use sun dried tomatoes (which come in jars that I sometimes buy at Costco) instead.  I love sun dried tomatoes, and often use them when I cook, but I hadn’t thought of using them in place of diced tomatoes.  I would have to tweak my cooking, since sun dried tomatoes have so much more flavor than canned tomatoes and I wouldn’t need to use as much.  And of course I can always use fresh tomatoes during the summer and fall when we have them in our garden and in our weekly produce delivery.  Anyway, I’m on a mission to cut our consumption of canned goods significantly.  There are some things (coconut milk, for example) that I think I’ll have to keep buying in cans, but if I can eliminate tomatoes and beans, I’ll be way ahead of where we are now.  And I’ll be cutting down on packaging waste and saving money in the process.  I’ll let you know how my tomato adventures turn out.

Last night, during the “quiet your mind” part of yoga class, I came to an epiphany about how to solve our HSA vs HELOC dilemma (good thing I’ve never been able to quiet my mind during that part of the class). 

When we first set up the HSA, we were planning to use it primarily as a long-term investment account, and we still planned to pay medical expenses out of pocket, while maxing out the HSA each year and rolling the money over from one year to the next, watching it grow.  We did plan to take money out to pay for childbirth, but that was it.  Then my husband hurt his knee last summer, and all of a sudden we needed to ramp up our contributions to make sure we had enough to pay our deductible so that he could get his knee fixed.  But since we’ve had the goal of not taking money out of the HSA firmly in our mind, we had been paying smaller medical expenses throughout the year, out of pocket, without reimbursing ourselves from the HSA.  I had been keeping the receipts just in case, because the law allows you to withdraw money from an HSA any time after a medical expense occurs – even years in the future – as long as you have receipts to prove the charges.

So this morning I sat down and looked at our medical expenses from this year.  Between my husband’s lipoma surgery last spring, and some dental fillings that we had, we incurred $1666 in medical expenses this year, which we had paid from our regular checking account.  So I transferred that amount from our HSA to our checking account.  Then I transferred $1900 from our checking account to our HSA, bringing our total contributions for the year to $5400.  Next week, when I get paid from my library job, I’ll transfer another $250 to the HSA, and we will have maxed out that account for 2007.  So we’ll get the full allowable tax deduction for HSA contributions.  And the $1666 that I transferred to our checking account can go back into our HELOC, since we already paid for the medical services.

The beautiful thing about an HSA is that in effect, we’re getting a first dollar tax deduction on our medical expenses this year.  In the past, before we had an HSA, we were limited by the 7.5% rule, where we could only deduct medical expenses that exceeded 7.5% of our income.  So that $1666 we spent this year wouldn’t have gotten us a deduction at all.  But since we have the HSA and we put money in it, we’re allowed to deduct everything we put in (up to $5650), and then take out as much as we spent on medical expenses.  I am so glad that we decided to switch our health insurance last winter!!!