1. More staffing changes at work lead to more work production expected with fewer people.
2. I broke my right arm about 5 weeks ago leaving me with just the ability to peck at the keyboard.  I am right handed so not having use of this arm made it even tougher.

But work has now slowed down and I am ready get back to contributing again!

Since my last post, several new things have happened:

1. Paid down the last $2500 on 2nd to last credit card. I was very excited to get this debt knocked out and only have 1 card left.  Part of this was from the savings but it was the last $2,500 and was more of a mental accomplishment than anything else.  Now that I only have 1 credit card with less than $10K left and I am pushing every penny towards it.
2. Selling/Renting out townhouse next May. Never too early to start planning right??  My roommate and I were college roommates and were both looking to enter the real estate market after  graduation.  Hindsight is 20/20 but we purchased near the top of the real estate boom; luckily housing prices in our community have remained steady and even slightly increased.  So based off comparable homes that have sold and adding in fix up costs and real estate agent fees we should come out a couple grand on top each.  Another positive is that there are a limited number of our models in the neighborhood (2 bedroom end unit w/ basement) and 2 other end units are on the market now so we should have a good idea of the selling price come spring.

   The other scenario is to keep the house and rent it out.  We are currently deciding if we want to be landlords.  It would be nice to get some extra cash right now to pay off the debt from the sale but long term it might be nice to have someone else pay down the mortgage.   Renting was our original goal when purchasing the house but as you all know things change and thus both of our goals have changed in the last 4 years.

   Thus, Debt Kid’s last article about home ownership has really hit home lately!

3. Broken arm. This created some surprise medical expenses.  I am on a high deductible plan so I have to pay everything out of pocket at first.   Luckily I do have an HSA to cover the deductibles and I have contributed a significant amount over the past year.  But medical bills add up quickly so combine this accident with x rays I needed earlier this year and I will be using up all of those funds and probably paying some out of pocket.
4. Cleaning house. I have been relentlessly cleaning shop to find extra cash to pay down debt.  I sold quite a bit of electronics on ebay/amazon earlier and now I’ve moved onto extra clothes, books, and random items.  I’ve taken a lot of these items to Goodwill and taking another batch over to Platos Closet too see if I can get anything there.

   I am contemplating a career change/move and realized I need to be as mobile as possible.  Going through my closet/attic I also realized how much junk I’ve accumulated and have absolutely no need for.

   How do you sell/donate your extras?  What is the best way to achieve the highest return on your investment/time?

I look forward to posting again!!

It sucks.

When I was living in my office, I needed $1,000 a secure an apartment and actually have a place to live. I knew I was going to have that $1,000 in a few weeks, but didn’t at the moment. So, I borrowed from my older brother.

It turned out fine, in a few weeks I mailed him a check, and that was that. But still, I didn’t like it.

I’ve been pretty lucky that even though I owe still owe my mum a ton, she hasn’t freaked out too much. And that she hasn’t been charging me any interest, which is fantastic.

But even still, owing family money just blows. It can change the relationship in a negative way if you’re not careful.

As a rule, I would say never borrow from family or friends if you can avoid it.

Have you ever borrowed or lent to a family member or friend? How did it turn out?

why buy when you can rent?

I love that the love affair with “home ownership” has come crashing down in the past few years.

Especially among 20-somethings. I’m obviously sympathetic to those that have lost their homes, but nonetheless glad “homeowner” isn’t such a golden term anymore.

Graduating from school in the heyday of the housing boom, there was a quiet and sometimes not so quiet “race to be the first homeowner” among my peers.

Why were we all chasing this American dream?

We got caught up in the hype. Caught up in the lie that owning a home is always a good investment.

I strongly believe now that owning a home in your 20’s is a bad idea for the majority of us

Why?

Most 20’s college grads live/work in urban, high priced areas. Rents may be high, but they are still much cheaper than the mortgage on comparable places for sale.

You pay a crapload of interest the first few years of even a traditional 30 year fixed mortgage.

Property Taxes.

Homeowners Fees.

If money buys freedom, why would I use it to tie myself down?

I understand the advantages of homeowners (tax deductions, pride, etc), but I just think for most urban 20-year olds, you’re much better off to rent than stretch to afford a condo that’s small and ties you down just so you can “buy a home”

I have a friend who’s girlfriend is upset because he can’t afford a house here in Seattle. He is 26 and in grad school. Are you kidding me? A decent single family house, in the city limits is going to start at 300K not falling apart.

By this time next year, I’m pretty sure I could be in a position to buy a nice place if I wanted….and I’m gonna pass.

My allowance at the time was .50 a week, and the squirt gun I wanted to purchase was $20.

It was the earliest “saving experience” I can remember, I was 6 or 7 at the time.

It’s funny how little has changed now that I’m grown up. I still get an allowance (payday!), and I have goals that I’m saving for. The only difference now is the numbers.

At some point growing up, I switched from a “saver” to a spender. I believe it was around my 18th birthday. It’s only in the last 3 years, really since I started the blog, that I’ve reverted back to my “saver” mode. I spend significantly less now than I earn, which has allowed me to make some huge strides in paying back my debts this year.

Some thoughts that parents could use to encourage saving:

1. Be a saver yourself

5. Set savings goals (ala smartypig)

Are you a saver or a spender? Did your parents encourage saving?

A lot of people have been complaining about unsubstantiated rate hikes recently. In actuality they are not unsubstantiated, at least from the bank’s point of view. Almost every credit card that currently exists, even so called “fixed rate” cards, can have their terms and conditions modified at any point in time by the bank. You even signed something saying this was OK when you applied for the card. I’m sure you didn’t read it, but it was there in the fine print.

So, what’s the bank’s point of view?

Well, unknown, or maybe forgotten (since it was signed in May of this year), by a lot of people is the Credit CARD Act of 2009. This law was passed on May 22, 2009 but does not go into effect until February 22, 2010 and seems to have faded from the news lately. Basically this law will protect credit card users from the unfair practices the credit card companies have been using for years to make as much money as possible off us. The banks’ point of view is that this is the deadline for the unfair changes they can make to your credit card, and therefore they are trying to maximize their profit now by hiking up rates. You can read up more about the act here, but the main points as I see them are:

• No more “universal default” rate increases
• No more “double-cycle” billing
• Payments are applied to the highest rate balance first
• A hard credit limit (selectable by the card holder) in which transactions going over will be denied, eliminating over-limit fees.
• 21 calendar days grace period (increased from 14 days minimum now)

What to do if your rate is hiked?

The credit card I mentioned above is a Citi card and they allow me to reject the rate hike and close out my account at my current terms if I choose to. This means the account is still open until I pay off my balance at my current rate, but no new charges are allowed on the account. While Citi is doing this now, and I’m sure some other cards are as well, this option will also be available to all cardholders under the new law going in effect early next year. You might not want to close a credit card but at the same time, you just might not be able to afford not to.

Mint:

SmartyPig: Who doesn’t love a 2% return on a small-balance savings account? Just try to beat that with your local bank for a minimum deposit under $100. This is like savings account and gift registry, with all the convenience of an automated 401K contribution. Set it and forget it—literally, and there’s no charge to use it. These handy free savings accounts are set to automatically transfer from your primary account at any bank over to your SmartyPig account until you’ve reached a savings goal. You can even use a widget to show your savings goals on your Web site or Facebook. Kids’ college fund, honeymoon cruise, or just your annual Christmas shopping savings account, this is free, convenient and cute. Check it out! (Also, they offer great customer support via phone or Twitter!)

Podcasts: My personal favorite is The Dave Ramsey Show—especially the “Debt Free Friday” shows. I plug this one-hour daily podcast in and hit the treadmill. So far I haven’t lost any weight but I’ve lost a lot of debt!

NetQuote: If you love shopping for insurance… you’ll be disappointed. But if you’re like me, and would rather hang out with your dentist—a wealth of free quotes is pretty spiffy and saves time and money.

SmartHippo Nope, the name doesn’t tell you anything, but SmartHippo.com can tell you if you can get a better deal on a mortgage. It’s smart and social search engine is an awesome tool for getting the best deal out there—it helped me get a screamin’ deal on a refinance earlier this year.

Credit Score: You don’t get your full credit report, but you can monitor your credit score for free at CreditKarma.com. Handy for a multitude of reasons, and allows you to watch for long-term trends in your credit history.

Blogs: The blog world is vast. Most bloggers aren’t experts in their area. I’m no personal finance expert—but I’m an expert on my situation—and you may find some things are similar to your situation. Perhaps we can all learn something from one another. Not only is the blogsphere a great resource for creativity and ideas, but also for community. We get to know our readers and our readers get to know us. It helps keep us on track and accountable.

So—speaking of staying on track and accountable—what have I missed? What are your favorite free financial tools online?

The new page takes all the granular, nitty gritty data that Lending Club collects on it’s borrowers and lenders and turns it into a beautiful, almost sensory, colorful experience.

Lending Club's new stats page

Data Highlights

• 79% of Investors are earning returns between 6% and 15%
• Lending Club has issued over 61 million in loans to date
• 58% of Lending Club borrowers use their loan to consolidate or payoff credit cards
• The highest returning loan purpose? Renewable Energy Financing at 10.58%
• The lowest returning loan purpose? Moving Expenses at 4.59%
• “E” credit grade borrowers are providing the highest average return of 10.88% (”A” credit grade is the highest)

Get $25 to Lend at Lending Club

Lending Club is still giving you $25 to lend if you sign up using this link.

My Lending Club returns

My current return with Lending Club is at 9.15%. I’m going to be moving a decent chunk of my cash fund into Lending Club in the next month.

This is the first time we’ve had to consider the whole family on one plan—and to shop around for the best deal—the last time we’d added our newest daughter and I on the plan as secondary insurance—just in case of layoffs at my company. It turned out to be a good move, as it became our primary insurance within a month.

So, how do you compare plans?

Our options range from $373 a month to $71 a month for our family of four—but how does one choose the best plan for their family? How do you compare tiered versus flat-fee prescription coverage? What about formulary/non-formulary medications? How do you compare deductibles, annual maximums and other items?

These questions and growing dissatisfaction with our current company’s bizarre fee structure has had me probing this problem for answers—and the best deal.

Here’s what I’ve discovered:

1. You must consider your needs. While my family is in generally good health, both of our daughters have chronic manageable health conditions that require extremely expensive medications. For us, a $2,000 annual maximum is no problem—provided we know we’re not going to be spending $10,000 on medications in a year. That is to say, we’re all in good health when we’re on our medications. If we expected an inpatient hospital stay or a kidney transplant to be part of the process, we may choose a different plan.

2. You must consider your providers. Who do you want to be seeing? I called our doctor’s office to see which plans are accepted. I also called the social work department at our local Children’s Hospital to see what they recommend in terms of coverage based on our kids’ conditions. The hospital informed me that because we make less than $106,000 annually—they won’t bill us for anything beyond our insurance company’s share of the bill. We just have to provide quarterly income verification. I wish I knew this about $2,000 ago.

3. Consider your health, both physical and financial. Can your savings account take the hit of you in the hospital for a week? Can you cover 25% of an inpatient stay, or should you look at a plan with a co-pay of $200 for an inpatient stay? Take annual maximums and deductibles into account. On our plan, an annual deductible of $4,000 per family is really not that bad, considering we only pay $123 a month.

4. Consider your prescription uses. I called our pharmacist and asked for more info about our co-pays. One of my daughter’s medications ranges from $5 a dose to $5.80 a dose. Our current insurance just has us pay 30%, not a fixed amount—so our co-pay varies with the cost of the drug. She suggested I ask the prescription plan about specifics on the medication. Our youngest will require extraordinarily expensive medications soon, so I called the prescription plan to inquire. They provided me with an online calculator that shows the current price (just like a commodity) of each drug so I could calculate my price. (Usually about $44 a month). They then said that if our doctor would fill three months at a time, we could get 3 months for a total of $50. (A savings of $328 a year!). I could calculate the medications that our littlest daughter will be on later and see that, as feared, they’ll be expensive.

5. Don’t forget to consider all of your options together. Remember the little daughter with the crazy-expensive meds to come? She doesn’t need them yet, but she will, and a 30% co-pay could be devastating, but remember option 2? Our little one’s medications are covered through the hospital’s pharmacy (our regular pharmacy won’t even carry the meds)—and any part not covered by insurance is covered by the hospital.

In the end, it turned out that the insurance company we have is actually the best deal for our family. Ultimately, I’m disappointed (and embarrassed) that I didn’t learn to navigate this plan a little better when we first signed up last year—it would have saved us almost $5,000. If you don’t understand your health insurance, trust me—it’s worth the time to sit down and figure it out. It took me about a half day and a half-dozen phone calls, but was well worth the effort.

image credit: Freedigitalphotos.net

I’m financially preparing for disaster. My family has been notified by FEMA that our home is now in a flood zone—already, preemptively declared an emergency.

You see, we live on a river. Upstream is a very effective flood-control dam. In the 15 years our home has been here—it hasn’t flooded. We’ve been here since 2004 and have never even been concerned about the water. We couldn’t even get quoted on flood insurance because it was deemed unnecessary.

That all changed after a storm last year that put pressure on the dam, and an earthen abutment that supports the dam was seriously compromised.

Now we’ve got our flood insurance, and we’re preparing for the worst. As you can imagine, that includes sandbags and plastic bins and high shelves, but there’s also some financial preparedness that is key to surviving a disaster intact.

Steps to financially weathering the storm

Read your insurance policy:
We live in a condominium, so our insurance works like renter’s insurance. We cover anything not nailed to the house (furniture, personal articles, appliances) they cover flooring, drywall, windows, carpets and the building itself. This means I had to read both policies to verify our actual coverage! In the end, I discovered that neither policy will cover loss of use on our building. If we can’t live here—we still have to pay the mortgage, and we aren’t provided any money to pay for a hotel. Thank goodness that mom has an extra room big enough for the whole family. If the dam fails however, our losses are projected to be catastrophic—and we may be at mom’s house a couple of years until our place is rebuilt. I’m working with a broker to create a specific “loss of use” policy to cover our time out of our house if we have to evacuate long-term.

Document your belongings:
Our insurance policy will only cover the value of our items—which means we’ll have to itemize everything we want covered. We’re doing this with a digital camera. Going room-by-room and taking photographs. Receipts for high-dollar items like the piano, and appliances need to be packed in a plastic bag and put with our evacuation “stuff.”

Put things you need during/after the disaster OUTSIDE the disaster zone:
There’s a bin in the house where the “stuff” goes. This is everything we need to recover.
Banking info
Insurance Policy
Blockwatch phone list
Critical papers including recipts for appliances, etc, the kids’ adoption papers, etc.
These things aren’t “valuables” per se but it’s doubtful if we could put our lives back together easily without them.
Also in this bin is a disk with the photos of our belongings (backed up on Shutterfly in case we have to send them to our adjuster—they can be sent electronically immediately).
The bin is big enough for 3 days of clothes for each member of the family, our prescription medications and a bag of pet food. The emergency bin will go with us when we evacuate.

In the event that the evacuation order comes—the kids can pack remainder of the bin while I pile up the sandbags and move some valuables. Our insurance policy also provides $1000 towards sandbagging and $1000 towards removal of items that may otherwise become claim items (i.e. art, jewelry).

Save the money!
Our deductible is $1,000. It’s set aside in a separate bank account until the dam upstream from us is repaired—a five-year dedicated fund planned for flood, so we don’t find ourselves in a financial pinch paying the deductible and staying on our feet—however damp they may be.

Do you have a plan?

It sounds strange living a stone’s throw away from a river, but our disaster plan was really only prepared for the “3 days 3 ways” to stay put in our home in case of ice/snow, earthquake or power outage—we found our emergency plan totally unprepared for evacuation, and our home ill-prepared to meet the requirements of our insurance company. Have you considered and prepared for local and regional disasters that may force evacuation from your home?

Picture by Jeff Keen

I’ve wrestled with budgeting since becoming self-employed. How could we possibly budget when we don’t know from month to month how much income I’ll make?

Due to overtime, my husband’s income also varies pretty wildly, but we know the minimum and plan based on that.

I’ve finally reached a point where I think I’ve figured out a plan that works. I’m a slow learner. Don’t laugh. Starting two businesses in one year and managing the household finances is a big project for any gal! For those of you wandering around in the dark trying to figure this out like I was; here’s what I’m doing.

List your fixed expenses in order of priority—top to bottom

If you don’t have a budget, don not proceed. Do not pass go, go back a few steps and figure out your fixed and variable expenses for the month. This list should be the minimum you need to survive normally and keep the lights on and keep your credit intact. The minimum. I mean it!

Make a second list, in order of priority of items that you want/need.

This should be the list of all the “stuff” you want or need. Your emergency fund, paying off debts, savings for furniture, Christmas gifts, etc. The order of priority may change from month to month, so be prepared to change this list frequently.

Now what?

Now, with your monthly income, you pay the items from your fixed expenses, in order of priority. You make minimum payments on any debts. With any “variance” above that amount you apply it to the next item on your “wish list” (our first item is emergency fund, and second is an itemized list of each of our debts and after that we get into “stuff”).

If your minimum monthly income is not enough to meet your monthly fixed expenses plus minimums on debt payments, you need to slash your fixed expenses, and divert part of your income from a high month into a rollover fund—that can be spread in to fill the gaps in super-low months. You also might need a second job.

Being self-employed for nearly a year now, I’ve got a good idea of my average income per month and have a few “side hustle” tricks for picking up the income if it’s looking too low late in the month. I keep a running “work in progress” spreadsheet that shows all of my lines of business with rows for the projects that I’m billing and then a column for each month. I put the income amount in the month that I expect to receive the payments so that I can see my anticipated income each month. Each time an invoice is paid, I just hide that row. If I know a customer is going to slow-pay me, I just move it out a month, removing the “income” from this month’s projections and into next months.

By applying any income beyond your essential items in order of priority, you give yourself permission to stop spending when you run out of income for the month. You simply pick back up in the same place when your next check comes in—with the next paycheck, or invoice payment. If crisis hits and you can’t pay everything on your fixed list—you’ll be skipping purchases or payments on the least critical items (you sorted them by priority, remember?). You won’t find yourself foreclosed on or without food for the sake of paying or buying whatever was on your mind. Hopefully, this strategy will give you a plan, and with a plan will come peace of mind.
Good luck!