Archive for July, 2008
Tuesday, July 29th, 2008
I was just sitting around thinking about finances and other things that randomly run past my brain when it occurred to me that throughout my entire debt free blogging I have no financial goals outside of getting (almost) debt free for ‘08.
More specifically, at the beginning of the year when I create my financial budget and distribute it to people, I usually have a round-a-bout number of how much we’ll have in savings at the end of the year. Last year, my ‘07 goal was to have $10k in the bank which I easily beat. I ended up writing checks totaling $20k check last year paying off most of our bills.
Last year completely drained our savings, and it took approximately 6 months to get out of tight spending mode. This year though, when doing our budget for the year we were on pace to have more than $20K in savings. Then I got laid off in March which put a damper on that projection.
With me taking a $15k pay cut this year, we’re now projected to have close to $14k in savings at the end of the year. Not a bad number but I’d like that to be better and it will (significantly) since we’re getting a lump sum in a few weeks due to my wife’s company being bought out.
So despite the lump sum payment we’re going to receive, I’d like our savings goal to be $13K at the end of the year. The way I usually come up with the number is, I take the projected savings we’ll end up with at the end of the year and subtract $3-5k. Since we’re in the 3rd quarter of the year It looks like we’ll be around the $13k range. If not, I may have to think of more ways to be creative with the budget in order for us to obtain that goal.
In the meantime, I’m working on tweaking my budgeting spreadsheet to be more user friendly. I’ll distribute it for ‘09 closer to when that time comes.
Posted in Generate income, Informational, Personal debt, goals | 1 Comment »
Wednesday, July 23rd, 2008
I sometimes get lost in my quest to become debt free and liberate my family from the debt monsters of the world while trying to change my family’s legacy. With that in mind, I’ve never thought about “How much money is enough”, until I checked my email today and saw the article topic staring right back at me.
Needless to say, I clicked the link and within the article there’s a 4 step process to figure out how much is enough. For me, I’m thinking I have a more simple formula.
Short Answer: Being debt free is enough money for me because without debt our lives tend to change. No longer are we FORCED to go to work on dreaded Monday’s. No longer are we bound by legal contracts to credit card, mortgage, and loan companies. Instead we can focus our attention on PAYING OURSELVES (which we should do anyways).
In the previous blog entry I wrote of a goal of mine. To be at a point to where I don’t have to work if I don’t want to. If we pay off our home and her student loan payment, I’ll quickly be at that point. The beauty of it is… after those are paid off, it’s smooth sailing. Income will be just that… INCOME!
But for the lazy (which I tend to be) here’s the 4 steps from the article:
Link
Step 1: List your top five goals or desires.
In contrast with the hundreds or even thousands of cravings and urges you feel each day, your deepest desires may include benefits to others and not solely to yourself, may be characterized by patience rather than a childlike urgency and may carry a sense of profound importance: “I yearn to do or have this before I die in order to feel truly fulfilled.” You may wish to begin by listing all the desires you can in 60 seconds and then select the five which most fit this definition.
Step 2: Put a price tag on each goal.
If your deepest desires include things like buying a home, you (or your financial planner) can fairly easily convert that goal into a monthly or lump-sum financial requirement. But if your goals include states of being — such as a desire to work half time and spend more time with your kids or volunteering for a cherished cause — you’ll need a replacement income source.
For these types of desires, list the amount of annual income you’d need to replace. Our rule of thumb is that you’ll generally need an investment portfolio equal to about 20 times your annual withdrawals. So if you’re hoping to have your investments cover $25,000 a year of expenditures, for instance, you’ll need to have or save $500,000 to cover it.
Step 3: Calculate your “enough for life” number.
By adding up the total of all the lump sums needed, you can calculate how much is enough for you to achieve your deepest desires.
Step 4: Create a financial plan to get there.
If your financial net worth exceeds your “enough for life” number, great news: You can stop worrying and live the life you most want to live. I don’t mean to be glib, but if you know you have enough to take care of your deepest desires, as well as your basic necessities and retirement savings, it may be time to stop chasing each extra dollar. Instead, solidify your sense of abundance by sharing your good fortune with others, through philanthropy (or just plain old-fashioned generosity).
Posted in Generate income, Informational, Inspirational, Personal debt, education, goals | No Comments »
Monday, July 21st, 2008
I’m constantly thinking of ways to be thriftier, cutback, or minimize debt in order to change my family’s legacy. So far all we have as debt (besides the mortgage) is my wife’s $31K student loan ($288/month).
I’ve been considering paying it off when I get a chance but is it really worth it to do that and drain my cash stash? Before we were getting the $40 gift I was on target to possibly be able to pay the student loan off middle to end of next year.
Now since we have this opportunity it sorta changes things. I’m 75% certain we’re going to invest it on a rental property for long term income potential. The way I look at it, the $600-$800/month income from a 3 bedroom home could go towards paying off the student loan as well as provide a means to reach one of my other goals which is to retire by the age of 40.
Not fully retire, but to make it to where my wife & I will not have to work or deal with the daily stress of working if we don’t want to. Basically, my plan is to get as much rental property as I can with cash and have them pay our salary to manage them. I’ve always said my 1st rental property would be the one I’d learn from my mistakes and I feel like it has taught me a lot to bypass obstacles on the next go round.
That’s why I believe in purchasing homes with nothing but cash. Of course, I had to get started with the first property and it was a great learrning experience and has a potential to be a great purchase later on down the line once the economy corrects itself. At the same time, the $180/month profit after paying the mortgage currently isn’t worth it. The profits just sit in the business account for maintenance in case something goes wrong with the property.
Currently, I’m stuck with the dilemma of should we move into our second home or stay put? Housing prices are at a great low right now and foreclosures are all over the place ripe fo the picking. However, we proably wouldn’t be able to sell our home and I’d rather NOT pay 2 mortgages. I think we’re ready to move but then again, I love our house and neighborhood. Nice quiet well kept cul-de-sac, no housing association rules, and my kids can play in the street without me having to watch for coming cars.
I feel like if we move, then we’ll lose a lot of that. One benenfit of moving would be that the kids could be in a better school district. Another would be we really need the space as we currently have 2 bedrooms upstairs and 1 downstairs with 4 kids living in the home.
Now that I think about it… It’s a no brainer… We’re moving.
I just don’t know when.
Posted in Generate income, Informational, goals, purchases | No Comments »
Monday, July 14th, 2008
Don’t really have anything to add today but I did manage to go get a term life insurance policy taken out to make sure my family will be able to manage should something happen to me.
It’s a $500/k policy effective immediately. I have to take some test and such but it’s pretty much official. What’s weird was hearing his take on whole life and term life insurance. If you’re a Dave Ramsey cult follower, you know that whole life insurance is the devil. My insurance man likes to think it’s an investment avenue. But I like to hear both sides of the coin so I asked him about it and it still didn’t sound too good while he was explaining the difference between the 2.
I’m just relieved because my severance with Sprint runs out in a little more than a month and my policy I held with them will run out then too. But now I feel much better with my entire situation. It (along with my new Honda insurance) raised my premium $120/month. I walked out feeling like I’ve just got my ass handed to me by a car salesman but I looked at it as an investment, sorta.
My insurance man did have some great advice about death and situations and stuff. . I know you’re heard that it’s best to have a will. That’s something that I really need to get off of my ass about. I’ve always thought that a will is the be-all end-all to beneficiary paperwork. He stated that a TRUST would probably be the best way to go because it tells when/how money is to be dispersed. For instance, you can leave money to your kids only after they’ve completed a bachelors degree or a certain age or whatever.
I think I might get creative with my $ to include that they either have to be maintain a certain liquid net worth, hold at least an associates degree (college isn’t for everybody), and or be a certain age. I think 25 is a responsible age unless the beneficiaries are taught and have practiced financial responsibility at a young age.
Well there’s my take and hopefully it helps someone.
Note: i wasn’t able to install the w4g system on the Yukon this weekend. Hopefully I can get it done this week as I’m dieing to try it out.
Posted in Informational, education, purchases | 1 Comment »
Wednesday, July 9th, 2008
Have you ever thought about what you’d do with a lump sum of money if it was given to you? We all talk about what we’d do, how we’d invest it or pay off whatever.
Well my wife came home today and asked me what I’d do with $30 - $40,000 dollars if we had it in the bank. I immediately shout out the most responsible answer I could think of, “pay off your student loan and save the rest. I don’t know, why?” (currently at $31,200).
As soon as I asked the question she handed me a 3 page letter. I noticed it was from the owner of her company. I also immediately noticed it was personalized to her so I eagerly started reading. It started out with the normal fluff… “great job, etc”. But then I damn near shit myself once I got to the second paragraph.
First I must say, with her having the greatest boss one could ever ask for, I feel her boss’ gesture itself should be looked at and admired. So in turn, we’re taking 10% of that money and giving it away to something/ someone. So far, we’ve discussed: Struggling college Juniors and/or seniors needing books to giving some to a specific family member in need. Nothings yet official.
Secondly, now I’m REALLY stuck with the question of what am I to do with “me precious”. My heart says to buy a second rental property for long term income. No better time to do it than now. The way I see it, her student loan is with a 6% interest rate so any investment I’d make would have to get me more than 6%. What better investment than something that will pay me monthly with no overhead? So I’m thinking some will go towards buying and fixing a rental property.
Since the deal is to finalize in weeks, that’s when she’ll get her “gift” from her company. But still I’m sitting here wondering, what would you really do with a small (in the thousands) lump sum of money? We all fantasize about it but what would we really do with it? It’s a problem I’m loving to have at the moment. Life’s good right now.
Posted in Informational, Inspirational, success | No Comments »
Tuesday, July 8th, 2008
Today was supposed to be the day. The day I start the modifying of my ‘02 Yukon Denali XL.
I was to get the exhaust modified in order to increase the mpg efficiency. It was to cost me $188 for the parts and labor. I dropped the truck off this morning before work and had a coworker drive me to pick it up afterwards. The mechanic tells me that I’m unable to put just one on because there’s 2 close exhaust pipes coming from the engine. I’m then quoted a price of $388 for parts and labor for 2 exhaust systems. The reason for the extra labor is he’d have to basically create some space between the side by side exhaust pipes.
However, I do have so good news… My Hydrogen boost system has finally arrived and I can start implimenting that system and track it’s results after the install. So starting this weekend, I’m going to install the water 4 gas system in order to tapp into this possible increased mpg phenomenon.
After that’s installed I’m going to have to buy an air intake regulator that reads and adjusts my O2 sensors so that I can achieve the most mpg gain possible. The box runs about an additional $100 on top of the $103 I’ve spent for the w4g system (on ebay).
So as a result, I’m going to test the mpg improvement with the w4g system only. Ride it around for 2 weeks until my mpg averages out (It’s currently at 13.3 mpg). Then, I’m going to add the fuel regulator box to maximize mpg gain. If I’m close to the 20 mpg mark with those 2 modifications, I’ll then get the dual exhaust system put in.
Of course, all details will be recorded and produced for your enjoyment. All goes well, I may be able to sell the (recently acquired) 2000 Honda Civic for a profit.
Posted in purchases | No Comments »
Friday, July 4th, 2008
It’s amazing! 1-2 years ago you couldn’t give away a small sedan such as a Focus, Corolla or Civic. Now you really can’t give them away.
In the last 3 months I’ve seen the Kelly Blue Book value on my 02 Yukon XL Denali go from $15k to a little more than $10k. 3 MONTHS!
In the meantime, I’ve seen the value of used (since I never buy new) gas savers go up in value. For instance, 6 months ago, a 2000 Honda Civic could’ve been had for $3k. I just spend almost double that just to save on gas. $5,350 to be exact.
On another note… one of my first blog entry’s ever, I mentioned that I would be one of the first to blog about the water4gas concept concerning my Yukon. Well I ordered the hookup kit to install. Currently my average is 13.5.
I have a coworker who’s tried it on his escort ZX2 and he says he’s gone from 29 to 44 mpg. Of course he’s tried a couple of configurations and my first confirugation will be an Aero exhaust. I’ll test that around with a full tank of gas to see if my mpg improves. After that, I’m going to install the w4g system.
More results when I get them.
Posted in Informational, Personal debt, education, purchases | No Comments »
