My Personal Finance Blog*

So I have 3 blog entries in January and then *poof* I disappear for the next 6 months. It's a good thing I dont have my exercise regimen tied to the frequency of my blogging, or I would be one large dude by now (and not in a muscular way).

The year has been a busy one, especially financially, but I will save that information for my annual self-introspection entry, due to come out in late December. Given my lack of regularity on this site, that should be the next time you hear from me.

Nonethless, I have an interesting topic for you to debate. Dont worry, you wont hurt my feelings if you disagree with me or each other, as the identification of an individual's emergency fund is different for everyone.

Here's the background: In June, my DW determined that, for a variety of reasons, she needed to resign from her job. She had been after me for years to stop working, and my canned response was always "Only if you can stop spending money." (Not that she is irresponsible in any way, but it was said in jest) Well, due to health and family concerns, we decided it was time to get serious. But she surprised me by coming out with, "I want to see if we can do the Dave Ramsey system." (We have some close friends that have been doing this for a little over a year, and I think she sees their success as something for which to strive.)

Being the numbers guy that I am, I have read most books by the popular finance gurus and have even used techniques from each of them in one form or fashion over the years. I like what the DR system can do for someone that has no concept of their spending habits, or for anyone just trying to get debt free. However, I have never been one to follow a recipe completely (I even put ham in my deviled eggs!), and I prefer to refine any free advice with my own knowledge and common sense. That is to say, I appreciate the intent in the DR philosophy, but will alter it to our situation.

I evaluated our cash situation at the time and determined that we could take care of the first couple "baby steps" right away: $1000 EF + pay off all non-mortgage debt. I had already maxed my 401K contribution so the 4th step is gone too. But what about that 3rd step - 3-6 months' EF?

I think we have covered at least a month's worth of EF through a current initiative. We have been working to stock up a full month's worth of expenses in our primary checking account and should be there soon. The goal is to live on last month's income (Hello YNAB fans!).

But in talking to my accountant, we dont see the sense in holding any more than that in a low interest savings account. Think about it. If you have, say, $25k sitting around "just in case", do you want it making 1% or 10%? That 9% is an awfully expensive insurance policy, and it gets even more so as the years go by, due to compounding.

You could debate that it's not quick to get money out of an investment account. I counter that with a backup plan to my backup plan. I have a $15k personal line of credit that I opened last year in case there were last second overruns on our pool construction project (fortunately, there werent). So for $25 a year, I can keep it open and it is there, acting like a 9% credit card, that is only used in the most dire emergency. There are no transaction fees and it is tied to my bank accounts, so I could have cash almost instantly, if needed. (Then when the investments are liquidated, I would eliminate the debt.)

Remember, we are talking emergency fund here, so none of it will be pretty. It would only be the most emergent situation, one which I hope to never need.

Sound feasible? Debate amongst yourselves. My accountant and I are on the same page, so I am comfortable with our strategy. I just wanted to share for the debate of my readers... both of you.

Next Entry: DR Step 6 - paying off the mortgage? or not?

...and I am out $1000. Or so it would seem.

I got my homeowners' insurance renewal policy this past week. (For those of you who have missed my history on this site, the only event of the last year that is pertinent to this post is that I moved to FL and closed on a house in February.) Hard to believe that we have almost been here a year and that it is time to renew such policies, but nevertheless, it is.

So I noticed that the policy was back to its original amount. Unlike what you would expect, I was not happy about this! Let me explain.

When we moved into our house, I spent several weeks and countless hours on the phone trying to nail down an insurer. As you might expect, insurance companies aren't that crazy about writing new policies in the state of FL, and so several times I was told NO! Even your most popular insurance companies - you know all those that advertise on TV - wouldnt write the policy. Anyhow, I finally got a quote from a company for $3500/yr. About $2k less than the only other option, for the same coverage, so I took it.

One good thing about FL is that you typically get a wind mitigation credit. If you catch your home inspector in time, you ask them to supply a wind mitigation report (for a nominal fee) and potentially save $100's. I did. Paid $40 to save $700. So that put my annual premium at about $2800.

So my renewal comes, and I find that the summary page shows:

Basic Policy: $3514
Current Changes: $328
Total Premium: $3842

Are you kidding me? A 10% increase in a year when FL had things fairly mild, and I didnt submit a single claim? What would happen in a bad year? Besides, it looks like they forgot the wind mit credit.

So I called them.

After some conversation, it seems that there was a rate change that actually took place in October. That premium was already NET OF my wind mit credit, so the real policy amount would have been $4534 per annum. It was not about a 10% change, but rather a 27% change!!

Wow. That's all that's left to say.

In other news, I found a new beer concoction this weekend: a Black and Blue. Hadnt heard of it before, but essentially, you start with a Blue Moon and then float Guiness on top. Not bad. The ending taste comes out something like a Red Ale.

Also, it's good to have hockey back.

Never knew before this morning that Jimmy Johnson was only the second coach in Dallas Cowboys history, which meant that Tom Landry was the first. Interesting tidbit, but nothing that a true Packer fan needs to know.

For anyone who loves to be entertained and who works in the world of business, Shark Tank is a great show. Starting to get a bid redundant, but I think with some tweaks, the show could go on for years.

SQUIRREL!

On that note, I'm out.

Admit it. You just finished that phrase with "...take me away." At least you did if you are over the age of 25. You remember the Calgon commercials showing a stressed-out woman just longing for a nice bath of Calgon-induced suds. They aired in the early 80s, but can probably be found on youtube someplace. (I am betting that someone who reads this will respond with a comment containing a link!)

In my case, today it is "SavingAdvice.com, take me away." Doesnt have quite the same ring to it, but oh well. I just finished the past two days work of reading 115 pages of an RFP response for a major project at work. I had to review all the details and then send out my 10+ pages of notes on it.

See it isnt about the difficulty of the task. I love what I do and am thoroughly enjoying the procurement process that we are knee-deep in. And its not that 115 pages is really that much. My wife would have read through that in about 4 hours. The problem is I read so cotton-pickin' slow!

(By the way, did you see that firestorm on the Internet about the Wheel of Fortune contestant who loast about $4k because she mis-enunciated "Seven Swans A-Swimming"? She left the "g" off swimming, so it came out Swimmin'. Pat Sajak (and whoever his off-screen judge is)said that she could not win because she didnt correctly give the answer.)

Anyway, I read horribly slow. Always have. Especially when I am reading for detail. I think part of it is the short attention span that I mentioned before. I think I read a paragraph or two, get distracted and have to start over again because I forget where I was. Not good.

And it is so exhausting for me. Like seriously, physically exhausting. I am a big-picture guy. I ask for details when I need them to better understand strategy or approach. It drains me when I am stuck in the details for too long, and I have been there all week. You would never guess I did my undergrad work in Accounting. (Of course, it IS why I left public accounting after a couple years and did my Master's in Strategic Management. There's that whole introspection thing again...)

So thank you SavingAdvice.com for re-charging my batteries. I think I need another extended holiday break. TGIF.

Well, everyone is looking back on the past year, wondering what happened to the last 12 months and so on. That's why I like working these last few days of the calendar year - there is nobody in the office and it allows a person to do some good house cleaning and self-reflection. I am not immune to such introspection, and in fact I embrace it.

2012 was ugly. Dont get me wrong. I am very blessed with my family, friends, health and employment, and given the events of the past few weeks, I can overlook other items that - at the time - seemed to be big deals for me.

But that's the beauty of self introspection. You dont have to equate it to the triumph or tragedy of others, but rather to the changes in yourself over the past 12 months. And in that light, 2012 was all a roller coaster full of disappearing dollars.

In the past 12 months we have:

* relocated twice, including an apartment and a housing purchase.
* because we relocated to FL, I watched our insurance costs double, almost across the board.
* both my DW and I changed jobs (not always because we wanted to).
* I blew apart my achilles tendon in the Spring, so the resulting surgery, rehab, and doctor's visits - net of insurance - totaled between $6500-7000 for the year.
* DW had some dental surgery that totaled over $3000 after paltry insurance input.
* several touch-ups were required of the new place, totaling a few thousand bucks.
* we had issues with a couple of our pets, and the vet bills were about 4x the typical annual expense.
* we decided to put in a pool at the house, involving 2 months of construction and many dollars! (but boy it looks beautiful)

So when it came time to review the year's performance against last January's budget, it was challenging to say the least. However, all things considered , I think I did ok. Only a handful of categories were significantly different than the original estimates, and often those could be explained through cost of living or lifestyle changes that were previously unknown.

Incidentally, have you ever noticed how as soon as you decide to make a major purchase, unexpected items start popping up? It's as if someone out there says "Ok, you signed the contract, but I want to make sure you earn this" and quickly your down payment vanishes into a vet bill or your vacation money gets sucked into an AC repair. Hate those situations! If I had hair, I would be pulling it out.

So bring on 2013!! I've got some ambitious goals set and a budget laid out. Let's see how well we do. Here's a couple known items for 2013 that we will be using as qualifying factors at the end of next year.

* we will need to replace one of our cars (long story).
* the company my DW works for was just acquired (again), so we will keep an eye on the fallout from that.
* I have a 7-year old son, so you know something (car window, ming vase, etc.) will end up being replaced this year.
* then there is all those unknowns that spark the need for annual self-reflection.

"... and the hits just keep on comin'..." (think Tom Cruise in A Few Good Men - love that movie!)

This is the second post in less than a month. That's some sort of record for me. So I got to thinking - and the more you read my blogs, the more you will realize that I am ALWAYS thinking something - that writing a blog may be a good exercise to help me focus.

You know how you hear about people that have a notebook by their bedside or in the bathroom or outside the shower so they can write down ideas that pop in their head? You know those ideas - what did i forget to pack? I need to remember to call... what do I need to do tomorrow? etc. In order to sleep (or do whatever) in peace, it helps to write them down. There is something in the act of doing so that puts your mind at ease and says it is ok to move on.

There has to be a paper written on that someplace. If not, I just gave a psych professor somewhere a great idea.

Incidentally, I think that parentheses and dashes were invented for the random thinker - or what I call a popcorn thinker (Pop! There's an idea. Pop! There's another...). The popcorn thinker has difficulty keeping a single train of thought so he/she uses the parentheses and dashes to insert the actual thoughts that enter their mind, whether or not it is relevant to the current discussion. You will notice a lot of these in my blogs.

Anyway, I started to think that writing a blog post might be therapeutic in helping me get thoughts out of my head so I can perform better at work. I love numbers and could talk personal finance all day. Unfortunately, it is not necessarilly germain to my job, and I dont get paid to be thinking about personal finance. So, maybe if I get my thoughts - random as they are - out on 'paper' and out of my head, I will be more productive! Sound plausible?

Remind me later to ask my boss for a raise. Such an increase in productivity needs to be rewarded!

One more random thought - when a job posting states "awesome culture", is that like saying your blind date has a good personality? Not that I am looking, but I saw it in a LinkedIn status update.

Nonethless, if I can remember to post an entry now and then, expect a lot of random thoughts. I just need to get stuff out of my head. You, my Faithful Reader (a term Stephen King often uses - love his work!) have become my therapy. Good luck with that.


** In fact (and this is the honest truth), I just had to re-type this entire blog. I went to categorize it and saw the link for "Edit Categories". Since I didnt (at the time) have a Category for Random Thoughts, I clicked on the link and promptly lost my original post.

SQUIRREL!

OK, so yeah, it's been almost a year since my last post. I am beginning to think that my work is seasonal, and the only month I am available to Blog is during December.

Nonetheless, I am doing something tonight that I have never done on my own. I will purchase 3 Powerball tickets. One each for myself, my son, and my wife. The numbers will be random, maybe to save time at the store, but more likely because I believe fully in luck, fate, and the science behind this not-so-random universe in which we live.

Sure, I have thrown in a buck here and there when the lottery exceeds a given amount (used to be $100MM, but that is too common now), but I have never had to make the actual purchase.

Probably the most daunting decision is where to buy... I think I will find some rundown looking place in the middle of nowhere that looks like it needs a touch of fate.

Anyway, I'm human, so I couldnt help but dream about what it would mean for me to win. I would probably take the $375MM one-time payout, since none of us is guaranteed tomorrow, and I want to enjoy the results while I can.

What are the first 5 things u would do with that kind of money? I mean besides the drop-in-the-pan things like paying off any debt and giving all immediate family members $1MM each. Spend a few minutes dreaming - it's that time of year, after all. What would you do...

It's that time of the year again. Over the next couple weeks, we will read about 40 blogs on this website alone regarding New Year's resolutions, how to make them, why to make them, why NOT to make them, etc. Let's make that 41... well sort of.

See, I'm not a big fan of resolutions, probably because they don't work. But what people don't understand is WHY they don't work. We tend to blame ourselves when that diet/budget/exercise regimen fails. What we don't realize is that resolutions fail because they are designed to fail by their very nature.

We make resolutions because they are "lines in the sand". The new year is a convenient time to draw these lines because we see it as a clean slate. Resolutions provide us with the opportunity to state that we will NO LONGER do this, or NEVER AGAIN do that, or ALWAYS do something else. Then the minute we slip up, we have dirtied the slate and begin to look to next week/month/year instead, and soon our grandiose plans go out the door.

Think of it in a biological sense. Why do we hear that a gradual diet is more effective in the long term than a cold turkey one? Because it takes time to retrain your body. If you take something away that your body has become dependent on, it will crave it more than ever. (see nicotine, alcohol, caffeine) Instead train your body to become dependent on other things (see adrenaline, endorphins, fruit and veggies), and in time it has a healthy dependency rather than a destructive one.

Personal Finance works the same way. Don't resolve to eliminate half of your discretionary spending this year and then expect to do it by January 31st. Give it more thought and set short-, medium-, and long-term goals. Be patient with yourself and understand that it takes time to create lasting change. Here are some popular tips to review in your goal-setting:

1. Make them SMART (specific, measureable, attainable, realistic and timely).
2. Review them often. This means every month, week and day if you need to, in order to remain focused.
3. Give yourself a reward for completion. Put the carrot in front of the horse, if you will.
4. Write them down (write, not type). I don't recall what the differential is, but goals are extremely more effective when we write them down. There is something in the physiological act of writing that increases accountability to one's self. (and be sure to SIGN your name at the bottom)
5. Share them with others. This website is a tremendous forum for doing just that. Write a blog entry and share your goals with us. Ask questions if necessary. Let us know when you feel weak and unfocused and we can help you stay on track.
6. Reward Progress. I'm not saying your should go on a spending binge to celebrate, but a

One caveat: I do believe that January 1st is a great time to start, specifically from a measurability standpoint. It makes things easier to monitor how many days, weeks, months you have been successful. (especially this year, since 1/1 is at the beginning of a week, on Sunday)

That gives you 3 days. Get going and good luck with your goal setting. Happy New Year to All!