Saturday, October 4, 2008

September Update

The official September update.

Items:
  • Trying to get the activation details solidified. When will be my last day of work, how long will I be gone, travel, household goods, dependents, etc... Hard work.
Goals Update
  • Review
    • Financial
      • Credit card debt totaling $0 (No change) ("deadbeat" credit card balance isn't counted. That card is paid off every month) (goal $0)
      • Loan debt totaling $0 *GOAL REACHED*
      • Loan debt totaling $0 *GOAL REACHED*
      • Car loan totaling $16,506.47 (down $226.9)
      • Emergency fund totaling $7,535.24(up $34.25) (goal $7,500) *GOAL REACHED*
      • Roth IRA contributions to date: In savings, $1,799.61 (up $1001.61), invested in Roth IRAs, $6390.15(No change)(goal $10,000)
    • Charitable
      • Total hours volunteered: 83 (goal: 100)
Just getting things finished now. I'm on a good financial track, and I want to keep it up.

Thursday, September 4, 2008

August Update

The official August update.

Items:
  • The activation is solidifying now. I am trying my best to prepare
Goals Update
  • Review
    • Financial
      • Credit card debt totaling $0 (No change) ("deadbeat" credit card balance isn't counted. That card is paid off every month) (goal $0)
      • Loan debt totaling $0 *GOAL REACHED*
      • Loan debt totaling $0 *GOAL REACHED*
      • Car loan totaling $16,733.37 (down $225.94)
      • Emergency fund totaling $7,520.99(up $11.54) (goal $7,500) *GOAL REACHED*
      • Roth IRA contributions to date: In savings, $798 (down $1758.54), invested in Roth IRAs, $6390.15(up $2625.68)(goal $10,000)
    • Charitable
      • Total hours volunteered: 71 (goal: 100)
Recieved my free assessment from Merriman Berkman Next. No real extra information, just a bit of fine tuning on asset allocation, advice for the deployment, and guidance on estate planning. Very boring to all but a few people.

Mobilization is upcoming. I'm planning to take as much advantage of the military benefits as I can. Free medical and dental care, extra pay for housing, etc. If I play my cards right, this could be a huge financial boost.

Not only that, but if there turns out to be a huge hospital where I'm going, I may be able to finish school there. That would be a huge load off of my mind.

Sunday, August 3, 2008

July Update

The official July update, in which all of my short term plans become worthless.

Items:
  • I will shortly be leaving for a moderate amount of time on an activation. Where, when, and how long aren't important, but what is important is that school, and some other plans have to go on the back burner for a while. Still, I'll continue to try to keep up on my financial plans, and do everything I can to progress myself while I'm there. Most likely, I'll be able to continue doing my updates.
Goals Update
  • Review
    • Financial
      • Credit card debt totaling $0 (No change) ("deadbeat" credit card balance isn't counted. That card is paid off every month) (goal $0)
      • Loan debt totaling $0 *GOAL REACHED*
      • Loan debt totaling $0 *GOAL REACHED*
      • Car loan totaling $16,959.31 (down $227.32)
      • Emergency fund totaling $7,509.45(down $18.03) (goal $7,500) *GOAL REACHED*
      • Roth IRA contributions to date: In savings, $2,556.54 (up $346.73), invested in Roth IRAs, $3,764.47(up $29.44)(goal $10,000)
    • Charitable
      • Total hours volunteered: 56 (goal: 100)
Of course, now everything will change. I'm not sure if I'll reach that 100 hours of volunteer service, but I'll keep going until the day I leave. I'll also need to tweak my retirement savings. I want to max my IRA still, then worry about the TSP plan, since there's no matching involved. I'll know more as things progress.

Friday, July 4, 2008

Why I do this

Microsoft Money generates a monthly report for me on spending. I like the reports, because it shows my progress, and where I'm sliding. For instance, I spent less this last month on dining out, groceries, entertainment, hobbies, utilities, and almost everything, except gas (partially out of my control)

The line that really made me happy?

Money calculates your net worth to be $2,290.68...
In January, your net worth was $-10,313.50.

That's an increase of $12,604.18 in SIX MONTHS! Now, a lot of that was reenlistment bonus, but it's proof that I spent that money wisely. This stuff works, and it works fast.

June Update

The official monthly update.

Items:
  • School will begin in September. Between Army TA, GI Bill, and TA from work, I should actually make a profit from going back to school.
Goals Update
  • Review
    • Financial
      • Credit card debt totaling $0 (No change) ("deadbeat" credit card balance isn't counted. That card is paid off every month) (goal $0)
      • Loan debt totaling $0 *GOAL REACHED*
      • Loan debt totaling $0 *GOAL REACHED*
      • Car loan totaling $17,186.63 (down $223.81)
      • Emergency fund totaling $7,527.48(up $27.48) (goal $7,500) *GOAL REACHED*
      • Roth IRA contributions to date: In savings, $2209.81 (up $682.23), invested in Roth IRAs, $3,735.03(up $285.03)(goal $10,000)
    • Charitable
      • Total hours volunteered: 45 (goal: 100)
No real changes. Working on my asset allocation plan still: Focusing on finding an all vanguard plan so there's no fees (more on the fees thing another time). Missing 2 weeks worth of volunteering due to other, more obligatory work.

Friday, June 6, 2008

May update

The official monthly update.

Items:
  • Union contract voted yesterday. We'll see what happens.
  • School is actually going forward, but slowly.
  • Decreased 401(k) to 3% match to favor my IRA
Goals Update
  • Review
    • Financial
      • Credit card debt totaling $0 (No change) ("deadbeat" credit card balance isn't counted. That card is paid off every month) (goal $0)
      • Loan debt totaling $0 *GOAL REACHED*
      • Loan debt totaling $0 *GOAL REACHED*
      • Car loan totaling $17,410.44 (down 1,038.02)
      • Emergency fund totaling $7,500 (up $236.24) (goal $7,500) *GOAL REACHED*
      • Roth IRA contributions to date: In savings, $1,527.58 (down $2,063.16), invested in Roth IRAs, $3,450 (up $3,150)(goal $10,000)
    • Charitable
      • Total hours volunteered: 39 (goal: 100)
Our emergency fund is now fully funded, and the money that was going from my paycheck into that fund is now directed towards our IRAs, meaning that I'm now allocating $668 per month into our IRAs. That extra cash means I will very easily make my goal of half funding our IRAs this year, so I've raised the bar. I want to max our IRAs this year. It would make a great start, and it would be a worthy investment. To that end, I've decided that we should make the minimum payments to our car loan. The interest rate on that loan is low, and the expected tax-free return on the Roths is much higher.

I'm still continuing to review my asset allocation plan before it's fully implemented. I'm considering taking 5% from each of the actively managed international funds (PRIDX, TIVFX), and getting 10% into an investment grade bond fund as well, probably VBLTX. It will increase my stability with a low chance of decreasing my return.

So, now we're just focusing on cutting costs where we can, and spending our money smartly. If we keep this up, I have high hopes for our futures.

Thursday, May 29, 2008

Asset Allocation: A Primer

I mentioned in my last post my asset allocation plan. I've been aware of the concept of asset allocation for a while, but I didn't really know all the details until I started reading "All About Asset Allocation". So, I'm going to try to sum it up here.

Nobody can predict the way the stock market will go. Sometimes, you can make a prediction, and have it be correct, or get lucky, but you have the same information and chance that a fund manager does. A fund manager has education on their side, but they're human too, and they won't be right all the time. Overall, funds in the long run follow the market, but they have higher fees. This is an application of the random walk theory. So, if you want to follow the market and have low fees, index funds are the way to go.

But, there's a prediction problem here too. Which sector or index is going to do well? Every market has good years and bad years. Do you really want to put all of your money into a fund that only invests in 1 kind of stock? A smart investor would invest in more than one market so that his money is diversified. So, the portfolio I created has many different sectors, sizes, and markets that it invests in.

But, not every fund will act the same. Some will go up, some will go down, some will correlate well with others, while some will do their own thing. What if, in a year, my percentages are all different than when I began?

A good asset allocation strategy involves rebalancing. I would sell the excess fund that did well, and use the money to buy from the fund that lost money. The price of the respective funds don't matter, because I'm doing everything as a percentage of my own portfolio.

What does this achieve? There's an old saying: Buy low, sell high. Well, when I'm selling the fund that made extra money, I'm selling those shares for more than I purchased them for. This is the "sell high" half. Then, I take that money, and purchase the fund that costs less then I originally paid. That's the "buy low" half.

There are 2 main theories to rebalancing. One has better performance, but requires extra work and maintenance, and the other requires less work for slightly less effect.

  • percentage based: When one of your assets deviates a preset percentage from your ideal, you rebalance. Works slightly better overall, but you have to be constantly keeping track.
  • time based: Rebalance after a specific period of time, say, quarterly, or annually.


Which is better? Depends on your style. I'm a fiddler. I love to tweak this, adjust that, change things up a lot. I'm opting to rebalance on percentage, and I'm choosing a relatively low limit: 2%. So, the instant a fund hits 8% or 12%, I'm rebalancing. If I didn't want to think about it until the next year, I would use the other method.

So, in a nutshell, that's asset allocation. I like the concept. I love the fact that it's not depending on somebody else to have better knowledge than me. It's just pure statistics at work.

Saturday, May 24, 2008

My asset allocation plan

I've been putting together an asset allocation plan for mine and Mrs. Dreamer's IRAs for a while now. We have a good amount socked away especially for investment, and it's best to make sure that your portfolio is balance all across the board.

First, my investment plan. I plan to take full advantage of any and all tax advantaged funds before opening a full brokerage account. Here's that plan: The idea is to start at the top, and contribute at the next level only if the previous level is maxed out.

  1. 5% into 401(k) and TSP plans. The combination of tax savings and employee matching make these especially appealing. The 5% number keeps my tax bracket from accidentally crossing that borderline.
  2. Roth IRAs. Both Mrs. Dreamer and I are very young (mid 20's), and the tax exempt growth is an unbeatable deal. Plus, putting after tax dollars in there is like putting an extra 15% on top of what I could have put from a traditional IRA. If our income ever breaks the income limit, we'd open a traditional IRA.
  3. 529 plan. We don't have kids now, but we may in the future, and the earlier we start saving money for college, the better. We do have a niece whom we could give the money to if we decide not to have kids.
  4. increase 401(k) and TSP up to 15%. If the day comes that I can max both Roth IRAs and have money left over, obviously I could be saving more in taxes from that money. 15% is the max for my 401(k)
  5. increase TSP up to 100% (minus allotments). The max for TSP is 100%. I would need to determine how much would pay my SGLI (life insurance) and any other allotments, then contribute the rest to the tax deferred TSP.
  6. Brokerage. If I've maxed all my retirement plans, tucked away money for college, and still have money to invest (wouldn't we all love that), THEN I'll look at a regular brokerage. Why pay capital gains and earnings taxes if you don't have to? If I ever reach this point, I'll gladly pay those taxes, but until then, I need every penny I can get.


Now, for the asset allocation plan. Much of the inspiration for my asset allocation comes from the investment advice provided at FundAdvice.com, combined with the advice of the investment advisors from USAA.

401(k): The 401(k) at my work just got a huge makeover, and it's much, much better. Before, there were no mid-cap or small-cap offerings, a majority of large-cap, some international, an S&P 500 index tracking fund, and some "balanced" (asset allocation) funds. They got rid of some of the large-cap in favor of a mid-cap value, mid-cap blend, and small cap value fund.
  • 50% Fidelity International Discovery (FIGRX), International blended
  • 10% Fidelity Equity Income (FEQIX, Large cap value
  • 10% Fidelity US EQ Index Pool (no ticker), S&P 500 tracking fund, large cap blend
  • 10% Columbia Acorn Z (ACRNX, Mid cap growth
  • 15% Keeley Small Cap Value (KSCVX, Small cap value
  • 5% Fidelity US Bond Index(FBIDX Intermediate Bonds


TSP: The TSP plan has a weird setup, but luckily, Paul Merriman had an artice about it that helped. Both Mrs Dreamer and I have a TSP account.
  • Dreamer
    • 30% C fund (S&P 500 index)
    • 30% S fund (Wilshire 4500 index. Combining the S and C funds invests in the top 5000 companies in the US as a whole)
    • 40% I fund (International fund)

  • Mrs. Dreamer
    • 10% F fund (Fixed income fund, tracks Lehman Brothers U.S. Aggregate bond index)
    • 10% G fund (special treasury securities specifically made for the TSP)
    • 24% C fund
    • 24% S fund
    • 32% I fund


Roth IRAs: For the purposes of asset allocation, both mine and Mrs Dreamer IRAs are included in the plan. This is the plan for overall funds we will hold.
  • 10% Vanguard 500 Index (VFINX), Large cap blend
  • 10% Vanguard Value Index (VIVAX), Large cap value
  • 10% Vanguard Small Cap Index (NAESX), Small cap blend
  • 10% Vanguard Small Cap Value (VISVX), Small cap value
  • 10% Vanguard REIT Index (VGSIX), Real Estate Investment Trust (REIT)
  • 10% Vanguard Vanguard Developed Markets Index (VDMIX), International large cap blend
  • 10% Vanguard International Value (VTRIX), International large cap value
  • 10% Vanguard Emerging Market Index (VEIEX), Emerging markets
  • 10% Tocqueville International Value (TIVFX), International small cap value
  • 10% T. Rowe Price International Discovery (PRIDX)
, International small cap growth

I estimate it will take about 5-6 years to set up this asset allocation plan. Once it's up though, I will only need to rebalance occasionally, and let the diversification work for me. Plus, once all the funds have their initial investment ($3000), I can either use dollar cost averaging for my remaining contributions until retirement, or use the yearly contribution to rebalance, depending on if I have the cash available all at once, or over a period.

Friday, May 23, 2008

Saving money on groceries

Me and my wife try to take every (reasonable) method we have to minimize our grocery bill. We make a list, we try to stick to it, we go shopping at WinCo foods (a discount grocery chain kind of like a cross between Costco and WalMart, except it's employee owned and local, and no membership is required), and we buy generic and pay close attention to price per unit.

One thing that we never realized was costing us money was one simple thing: We had no idea how much we actually had! We would sometimes grab diced tomatos, or canned beans, just because we thought we might need more.

Well, we just did an inventory of our pantry (I was looking for something to munch on, and I was so struck by how much actual food we had, we just fell into it.) We have noodles galore, over 12 cans of diced tomatos, side dishes, starches, rice, beans, canned and frozen vegetables, snack bars, sandwich stuff, you name it.

After looking at everything, we determined that we probably have enough food for a couple of weeks. It was like a shopping trip for free, discovering things up at the top of the cupboards that we forgot we had. Now, our shopping trip will only consist of fruits and veggies, and a couple of missing items for specific recipes.

The same concept is probably true all over the house. We haven't bought DVDs in months, because of how many movies and such we already have (I'm looking at just selling them soon, we don't watch them enough to justify the storage space). We have books we've barely read, toys and gadgets that sit in boxes, clothes that we haven't worn in a long time.

If we continue to tackle things like we just did the cupboards, we could not only clear out a lot of clutter, we could save money by not buying things we didn't know we already had.

Speculative investing

Buying "hot stocks", or investing in a fund just because it was just featured in some magazine is stupid. I know it, you know it, and yet, that's what everybody thinks will make them rich someday. It rarely happens, and it's just not worth the risk.

There is one, and only one time when you can indulge in speculative investing: When you don't care about the money you're spending. If every single penny were to disappear tomorrow, would you kick yourself, or would you barely shrug?

With that in mind, I did a little speculation myself. I used the remaining $300 of my stimulus check and purchased 10 shares of a new ETF, Powershares global nuclear energy (PKN).

Why would I do something like that? I weighed the pros and the cons, and here's what I came up with:
  • Cons:
    • This ETF is brand spanking new. Although it tracks the WNA index, which hasn't done too badly, there is no real precedent Similar ETFs have done marginally well, although there is a volatility to them that is troubling.
    • The fees on this ETF are very high for an index fund: 0.75%! That cuts into compounding returns for sure. Still, it primarily invests internationally, and that always affects costs. Many countries charge exorbitant taxes for out of country stock sales, and that can be reflected in the management fees.
    • Buying an ETF costs money. Since this was less than $2500, and it went into my IRA, I had to pay a $10.99 commission for this trade. For such a low number of shares, that's a huge chunk of change, and it starts me out at a loss.

  • Pros:
    • A major reason why America's economy isn't as strong as it could be is our dependence on fossil fuels. Hopefully, with more money going into nuclear research, we could wean ourselves off of depending on an unstable region that hates us to provide our energy. I'm basically placing a bet that America will turn to nuclear energy before long.
    • It feels moral. I don't like the stimulus check, I didn't want it, and I'd rather that money went to the federal budget, honestly. If this ETF goes bust, I won't care. I'll just pretend I never got it in the first place.


Irresponsible? Probably. Will it work? Only time will tell. This is a buy and hold ETF for me, so I won't be selling it anytime soon. With luck, the value will continue to rise.

Thursday, May 22, 2008

Henry Rollins on credit and retirement



Henry Rollins is awesome. I love his music, his show, and his spoken word performances.

Wednesday, May 21, 2008

Podcasts

At work, I can listen to my mp3 player (that Archos 650 wifi I bought earlier) while I work. Although music is great, even 30GB of music can get old after a few weeks of listening to it on shuffle for 8 1/2 hours a day, so I've turned to podcasts for constantly updating entertainment at work.

Of the podcasts I've enjoyed are some NPR podcasts (Wait Wait Don't Tell Me and Intelligence Squared being some of my favorites), and podcasts about humanism and atheism, two topics that also interest me.

I saw that there were lots of personal finance podcasts, but I was hesitant to listen to any, because I know that for every person out there with good knowledge and advice, there are 20 that are trying to sell something. So, there were no real finance based podcasts in my lineup.

Enter Get Rich Slowly. This list of twelve personal finance podcasts was just what I needed. I didn't pick all twelve to listen to, but I did start listening to some.

My favorite so far? Sound Investing. This is a podcast of a weekly radio show in Seattle, which is close to me. The hosts are obviously knowledgeable, and seem to really care about people's investments, especially retirement. Not only that, but they're very upfront about who they represent, and what financial interest they have: The host, Paul Merriman owns a financial advising firm that advocates index fund investing and asset allocation as a long term investment strategy. They share all of their secrets, and their website, fundadvice.com, is a wealth of information. Their policy seems to be this: If you want to manage your own portfolio, we'll show you how we would do it so you can do it well, but if you decide that we do well enough and it's worth it for you to let us take care of the day to day stuff, we'll be happy to. It's refreshing to see advisors that don't just push annuities or their own products, but will actually care enough to give you advice on funds that they have no chance of ever getting control of, such as the TSP account, a 401(k) like retirement plan for government employees and military members.

I've never heard of Paul Merriman before, but I like him already, and I would love to pick his brain. I wonder if somebody at that company would agree to an informational interview about what they do. I'm a little interested in exploring that sort of thing as a possible career.

More updates, more often!

So far, I've just been using this myself to keep track of my finance goals. I think from this point on, I'd like to be more active with this. I'd like to bring up things that I like, and personal finance issues that interest me. Maybe someday, I'll actually think about trying to get people to read this.

Friday, May 2, 2008

April Update

The official monthly update.

Items:
  • My wife's bonus finally showed, and things are moving smoothly.
  • My work union is negotiating a new contract, which will include a raise.
  • I'm working as hard as I can to get back into school.
  • I've increased my 401(k) contribution to 5% (3% matched).
Goals Update
  • Review
    • Financial
      • Credit card debt totaling $0 (No change) ("deadbeat" credit card balance isn't counted. That card is paid off every month) (goal $0)
      • Loan debt totaling $0 *GOAL REACHED*
      • Loan debt totaling $0 *GOAL REACHED*
      • Car loan totaling $18,448.46 (No change)
      • Emergency fund totaling $7263.76 (up $1,955.04) (goal $7,500)
      • Roth IRA contributions to date: In savings, $3590.74 (up $1114.8), invested in DCA plans, $300 (up $100)(goal $5000)
    • Charitable
      • Total hours volunteered: 21 (goal: 100)
My wife's bonus has already been distributed, and all the remainder after savings, investment, and the car down payment are hers, as she so graciously agreed.

The stimulus payment will show up soon. We had a direct deposit refund, so we'll get ours in a short while. Me and my wife had a discussion about what to do with each of our shares ($600 each, but I'm not going to decide what to do with her money.)

My wife has been halfway getting into this frugality thing too. I'm very proud of her. We agreed that half of our money will go to our largest debt (the new car), and the other half can be spent as desired. I'll probably just put mine in my IRA.

Right now, we just need to maintain, and cut costs where we can. I think at some point soon, we might sit down and discuss a monthly budget. I've got enough information from my pay stubs to know about how much I get paid now (paid per hour, and it varies by a bit from paycheck to paycheck.)

Thursday, April 10, 2008

March Update

The official monthly update.

First, I did end up buying a new car. I need something reliable, and this one will last me a long time. I plan to make extra payments to get it out of the way quickly though.

Goals Update
  • Review
    • Financial
      • Credit card debt totaling $0 (down $1,000.00) ("deadbeat" credit card balance isn't counted. That card is paid off every month) (goal $0)
      • Loan debt totaling $0 (down $2,020) (goal $0) *GOAL REACHED*
      • Loan debt totaling $0 (down $3,029.58)(goal $0) *GOAL REACHED*
      • Old car loan totaling $0 (down $7,728.01) (goal $5,485.41)
      • New car loan totaling $18,448.46 (up $18,448.46)
      • Emergency fund totaling $5,268.72 (down $272.82) (goal $7,500)
      • Roth IRA contributions to date: In savings, $2475.94 (up $418), invested in DCA plans, $200 (no change)(goal $5000)
    • Charitable
      • Total hours volunteered: 12
Of course, some small changes. I used some money from the emergency fund to pay off the other credit card when they decided to charge interest. I've paid back $500 into the fund so far, plus the regular donation from my paycheck. I still owe another $522.82 back, and I consider that a bill that needs to be paid. At least now, there's not that to worry about.

The car, of course, is new, but I talked about that already. I'll live. The car wasn't that expensive, but I was upside down on the first loan. Gap insurance was a must, and it was exceedingly affordable via USAA.

Other than that, things are going as planned.

Friday, March 21, 2008

Update, just because

Lots of new things have occurred since the last update, so here's a spring update for the beginning of spring.

Goals Update
  • Review
    • Financial
      • Credit card debt totaling $1,000.00 (down $308.83) ("deadbeat" credit card balance isn't counted. That card is paid off every month) (goal $0)
      • Loan debt totaling $0 (down $2,020) (goal $0) *GOAL REACHED*
      • Loan debt totaling $0 (down $3,029.58)(goal $0) *GOAL REACHED*
      • Car loan totaling $7,728.01 (down $169.13) (goal $5,485.41)
      • Emergency fund totaling $5,268.72 (up $2,008.32) (goal $7,500)
      • Roth IRA contributions to date: In savings, $2,057.94 (up $902.31), invested in DCA plans, $200 (up $100)(goal $5000)
    • Charitable
      • Total hours volunteered: 3
So, as you can see, big changes, and they're not done yet! My bonus showed up, and I used it exactly as I planned. I paid off two signature loans, freeing up money monthly (which I'll apply most of to my car payment), and I made payments to my IRA savings account, and my emergency fund. I also started my volunteer position at planned parenthood. I enjoyed that immensely, and I look forward to doing it weekly.

There was a little episode of "New Car Fever" that I almost succumbed to, but I was saved by the lack of ethics of car salespeople. My car's fuel pump went out, and I was tired of having car issues (although that warranty saved me over $600. Worth it) I wanted to look into a new car with a good warranty, and the dealership was only too glad to help. I had a great deal lined up: 0.0% financing for 60 months, invoice price for a new Chevy Aveo5, and $4000 trade in for my car (more than it's worth). Then, "oops, the %0.0 is only on the impala, but we do have %2.9 for the Aveo5."

Well, no problem. That's still a great rate, and everything else still applied. I set everything up ahead of time, confirmed the numbers, and went down to seal the deal.

2 hours into the paperwork, they pull me aside and say "we made a mistake: The %2.9 is on the Chevy Cobalt. The best we can do for the Aveo5 is %6.75".

That was the final straw. I thanked them for their time, and walked out. Of course, as always happens, the salesman ran out at the last minute and stopped me. "Wait! Let us see what we can do." So I did. The short answer? Nothing worth my money. Tired, cranky, and up way past my bedtime, I drove my own car back. A new car can wait. Besides, with the market the way it is, I predict low, low, new car prices soon.

So, I feel I've made great progress this month. Next month should look good as well, as my wife's bonus is still due to show up.

And, of course, I did splurge a bit with my bonus. I bought a new Archos 605 wifi, with accessories. I plan to use that thing everywhere, from work to the gym.

Wednesday, March 5, 2008

February Update

Goals Update

  • Review
    • Financial
      • Credit card debt totaling $1,308.83 (up $229.64) (goal $0)
      • Loan debt totaling $2,020.00 (down 122.78) (goal $0)
      • Loan debt totaling $3,029.58 (new loan)
      • Car loan totaling $7,897.14 (down 2380.78) (goal $5,485.41)
      • Emergency fund totaling $3,260.40 (up $1628.52) (goal $7,500)
      • Roth IRA contributions to date: In savings, $1155.63 (up $528.63), invested in DCA plans, $100 (goal $5000)
    • Charitable
      • Total hours volunteered: 0
  • Financial review
    • Pay off credit card with wife's bonus
      • Now there are two bonuses: Mine for reenlisting, and my wife's for affiliating. $15,000 for me lump sum, $20,000 for my wife, paid in installments ($10,000 now, then two more payments of $5,000 over the next 3 years). My wife's bonus will still pay the credit card, plus doing some saving, and I'll pay off the two personal loans, plus saving. As soon as those bonuses post, we'll take care of it.
    • Deposit at least $250 into my emergency fund from my paycheck
      • Done. I've also set up direct deposit at work. Now, $125 a paycheck goes into the emergency fund account.
    • Deposit at least $418 into our IRAs
      • Done. Also set up direct deposit for that savings account too. $209 a pay period.
      • I also set up a dollar cost averaging plan for my wife and I. We now pay $50 a month into a mutual fund of our choice. They're not doing fantastic right now, but I'm much more interested in buying right now than selling, so the current value doesn't matter much to me.
    • Save at least half of our tax return
      • Done. It went into our savings account, and it was as if the money never existed.
    • Increase my payments on the signature loan to $150/month instead of the $122/month
      • Done. My payment for February was $150
  • Educational/Professional
    • Follow up on board of registry application with the other person.
      • Done. Finally got the information. I'll be sending the packet with transcripts soon.
    • Follow up on the life experience credit forms
      • Unfortunately, not possible anymore. All the life experience forms were put aside by the people in charge of them, and the expiration date passed. That sucked.
    • Follow up on the alternate clinical site
      • Done. The other site is happy to have me. They may even coordinate to pay me to go there. That would be nice.
    • Assemble and submit E-6 packet
      • Not done. Not a priority right now.
  • Physical
    • Continue training for the half marathon
      • Not done as much as I would like. I admit, I hate exercise. I need to do it.
  • Charitable
    • Begin working volunteer position if accepted, apply elsewhere if not.
      • Had the position offered, filled out the appropriate paperwork, waiting to hear about the next step.
March goals
  • Financial
    • Pay off credit card with wife's bonus
    • Pay off personal loans with my bonus
    • Deposit at least $250 into my emergency fund from my paycheck (recurring goal)
      • +$2000 from my wife's bonus
      • +$2000 from my bonus
    • Deposit at least $418 into our IRAs (recurring goal)
      • +$1000 for my wife's IRA from her bonus
      • +$1000 for my IRA from my bonus
  • Educational/Professional
    • Follow up on board of registry application
    • Continue to follow up on the alternate clinical site
    • Assemble and submit E-6 packet
  • Physical
    • Continue training for the half marathon
  • Charitable
    • Begin working volunteer position.

Thursday, February 7, 2008

Much better

I checked off one of my goals. I've refinanced my auto loan.

My previous auto loan had an interest rate of 14%, which was killing me. My monthly payments were $308 (for a 5 year loan), and too much of that was just interest.

Here's what I did. USAA would give me a loan for 6.434%, A huge improvement. But, they wouldn't cover the whole amount, since I owe more than the car is worth. But, they were willing to extend a personal loan for the remainder (at 12% interest).

I know what you're thinking. "Aren't you just getting further into debt?". Here's how bad my rate was. The monthly payment for the personal loan AND the new auto loan are still less than my current auto loan, and the total interest paid is much lower.

Not only that, but I'm reenlisting very soon, and I plan to use that money to pay off the two personal loans. That means that I won't be paying most of the larger interest bearing loan, and my auto loan payments go to about $190 for a 4 year plan. That's one year less at minimum payments, and I'm still saving a huge amount of money.

So, this adjusts my amounts owed. This will be reflected at the beginning of next month.

Also, this highlights the importance of READING WHAT YOU SIGN! When I received the documents to sign, I noticed that the interest rate was 7.434%. They had failed to include the 1% discount for applying online. I called them, and requested they change it. That extra 5 minutes to call and check saved me a good amount of money.

Friday, February 1, 2008

Automating my banking

Following advice of some such as J.D. from Get Rich Slowly, I'm going to try to automate as much of my monthly issues as I can. I'm doing this a few different ways.

Direct Deposit - Automating my savings
I've turned in a change form for my direct deposit. Previously, it went into my online checking account at HSBC, and I would transfer payments to where I needed them to go. Now, I'm going to automate it. From every paycheck, $125 goes into my emergency fund savings account, and $209 goes into my IRA savings account. The remainder goes into my USAA checking account, which has a rewards debit card attached.

In addition, I have already set up for myself, and will set up for my wife (as soon as the account authorization finishes) an IRA account, to which $50/month will be drawn directly from the IRA savings account in a dollar cost averaging program, which is a good plan in times with price fluctuations, such as now.

So, with 2 paychecks per month, that means that the $250/month into my emergency fund, and the $418/month into my IRA savings account will happen automatically. Plus, we will then start making contributions to our IRAs at $50/month each. Once we're a little bit better off savings wise, we might set up another dollar cost averaging plan for a different mutual fund.

Automated payments - consolidating bills, and earning money for doing it
I've opened up a rewards credit card at USAA. This does a few things for me: It makes my debt/credit ratio much better, and it allows me to consolidate my bills. Many of my bills can be paid via credit card, and most of those can be set up to automatically charge the card. Once the card is charged, I can pay the balance on the card off immediately. The other upside to this is that it's a rewards card. I get cash back (only 1%, but it's better than nothing) just for paying my bills!

Not only that, but the card actually comes with checks that can be written, and the checks are treated as credit card transactions, for no extra fee! That's very easily abused, but I plan to use it for one purpose only: Rent. My apartment requires checks or money orders. This way, I can still earn cash back on my rent.

Only a few bills remain that have to be paid from a checking/savings account:
  • My power bill will do credit card payments, but charges a fee. Not worth it. Maybe the credit card checks will help with that one.
  • My auto and signature loans will only take bank to bank transfers. I'll have to pay that myself.
If setting up automatic payment plans from the loans didn't freak me out so much, I'd set them up too, but I just don't like the idea. I review my finances regularly, and don't expect to accidentally miss a payment.

January Update

Goals Update

First, an update, then some quick new items.
  • Review
    • Financial
      • Credit card debt totaling $1,079.19 (down $335.41) (goal $0)
      • Loan debt totaling $2,142.78 (no change) (goal $250)
      • Car loan totaling $10,277.92 (no change) (goal $5,485.41)
      • Emergency fund totaling $1,631.88(up about $377.81) (goal $7,500)
      • Roth IRA contributions to date: In savings, $627 (up $209) (goal $5000)
    • Charitable
      • Total hours volunteered: 0
  • Financial review
    • Use some of my wife's bonus to pay off credit card
      • I've been directing extra cash to the credit card, trying to bring down the balance so my debt/credit ratio improves. But, once my wife passes her APFT, as I'm sure she will, she has agreed to use some of her bonus to pay off the card. From that point on, the credit cards will be used only on a "deadbeat" basis (I will pay off the card before interest charges are assessed)
    • Deposit $2000 of My wife's bonus to savings account
      • My wife has agreed that $2000 will go into the emergency fund, and $1000 into her IRA. The entire remainder, after the card and the savings, will be $3500. It's hers to do with whatever she wants. She's been talking about a Wii and a new tattoo. She's definitely earned the money.
    • Deposit at least $250 to savings account from pay
      • This was done
    • Deposit at least $418 to Roth IRA
      • This was done
  • Educational/Professional review
    • Submit AMT BOR packet
      • No change so far
    • Assemble and submit E-6 packet
      • No change so far
    • Send off and follow up on life credit packet for BS
      • I've sent off the forms to former employers. I hope they'll respond in time.
      • I have also found an alternate location for my clinicals. If everything gets into place, I should be able to do those things I couldn't do at my employers at another facility.
  • Physical review
    • Start training for marathon on January 15th
      • Started, and I've been doing some of the planned running, but not all of it. My wife has decided that it's not the right time for her to do a full marathon in May, due to her school workload, so we've keyed it down to a half, and we'll plan on doing the Seattle full marathon in November. Plus, it's way too cold to be running 10+ miles a day this time of year.
  • Charitable review
    • Volunteer at least one day to a charitable cause.
      • I've turned in the paperwork, and interviewed for a volunteer position at planned parenthood. It will be 3 hours a week, as a clinic assistant. Nothing glamorous, but I feel it will be fulfilling. I expect to hear back soon.
February goals
  • Financial
    • Pay off credit card with wife's bonus
    • Deposit at least $250 into my emergency fund from my paycheck
      • +$2000 from my wife's bonus
    • Deposit at least $418 into our IRAs
      • +$1000 for my wife's IRA from her bonus
    • Save at least half of our tax return
    • Increase my payments on the signature loan to $150/month instead of the $122/month
  • Educational/Professional
    • Follow up on board of registry application with the other person.
    • Follow up on the life experience credit forms
    • Follow up on the alternate clinical site
    • Assemble and submit E-6 packet
  • Physical
    • Continue training for the half marathon
  • Charitable
    • Begin working volunteer position if accepted, apply elsewhere if not.

Tuesday, January 29, 2008

Why I do this

Just recently, it became time for me to register my car tabs. In this county, we have to get emissions checks occasionally, and this was the year for my car.

It failed. Not really, but there's an automatic failure if the engine computer returns any code, and my car mentioned an issue with the A/C system. With this program, you have to go fix the issue or spend at least $150 trying to, then get a second (free) emissions test, and either pass, or get a waiver.

Off to the mechanics. The assessment alone cost $98. After that, they said fixing it would cost an additional $300! I got a limited warranty when I bought the car, so I had them check that. The warranty would cover the cost of the repairs, after a $150 deductible. So, I'm still responsible for about $250.

Recently, that would have ruined me, and I would have had to charge it on a card. This time, I didn't even have to dip into my emergency fund. I took some money from an old bank account I was planning to close, and paid the bill on the spot. 2 days later, new car tabs. The stupid engine light is still on, but at least that issue is over.

Financial peace of mind is worth more than all the frivolous spending in the world.

Friday, January 25, 2008

The times, they are a changing

So, that rate cut the federal reserve has, of course, changed things. I was hoping that the rate would at least stay static, or possibly increase, but that seems not to be the case. As such, I must readjust.

The rates of CDs have dropped immensely. I'm abandoning my CD ladder plan for now. I'll get better rates just having the money in my savings account, which brings me to the second expected change.

Any day now, my high yield savings account will be dropping their rates. I'm not going to do anything about it, but I am aware that it will happen. I'll readjust as it happens. On the bright side, I'll be able to get better rates on my debts, and refinancing my auto will result in a better deal. That's very good.

Sunday, January 20, 2008

That's better

I think it's finally time I stopped using my credit union. They were good at one point, but now they just weigh me down. I pay for my own checks, they require a minimum balance to get interest on your checking account, I haven't used my savings account since I opened one at HSBC, and they haven't kept up with the times.

Plus, they just switched their online banking system to a horrible one. I had to make them cancel overdraft fees after the new site failed to tell me they put a hold on a deposited check. Add no Microsoft Money access, and I'm done.

I opened an account as USAA. It bears interest (not a lot, but better than none), a rewards debit card, free checks, and best of all, I can deposit checks from home with my scanner. That. Is. Awesome.

IRA news

Okay, so here's how the IRAs will work. Instead of going with Fidelity, even though the Freedom Fund is great, I'm going with USAA. Why? I can open the account for free, and sign up for some good mutual funds for as little as $50 a month. I can swing that, while keeping any extra in the bank just in case, and make one big contribution later. In the future, I could always roll over, but USAA has been good to me, and I like them.

Thursday, January 17, 2008

Climbing the ladder

I just found out I get free financial planning advice from USAA, where I have my auto insurance. I spent a good amount of time on the phone with the planner today, running some ideas past him and getting a feel for what I should be doing. He agreed that my plan is a good one so far.

One other thing I ran past him was a plan to make my emergency fund work for me better. He was very critical, but at the end, agreed that it would work IF I made sure that there was an adequate amount for immediate access to emergency funds. Here's the plan.

In my savings account right now, I have $1,506.88. This is not counting the money I have aside for my IRA (more on that later), this is pure emergency fund money. I Assume the following things:

  • In February, my wife will receive a bonus, $2000 of which she will contribute to our emergency fund.
  • In March, I will receive a bonus, $2000 of which I will contribute to our emergency fund.
  • Monthly, I will contribute $250 to the emergency fund, regardless of any other contributions.


All of these are possible.

The plan is this. Starting this February, I deposit $1000 of the $2000 my wife will contribute into a 182 day CD from USAA, compounding monthly (current rate is 4.34%). There are better rates out there, but I like the fact that I can work with USAA's financial people to keep things on track.

The next month, I will deposit another $1000 into another 6 month CD. This will be either the other $1000 from my wife, which has been sitting in the savings account, or $1000 from my bonus. It doesn't matter.

The following two months, I deposit the other $2000 of bonus money, $1000 per month.

June, I will not do anything more than the $250.

Starting with July, I will deposit $1000 into a 6 month CD every time my savings account balance breaks $3000. The next time that happens will be December 2008, which means I will have a CD maturing once a month from that point on set up to roll into another CD. Once that happens, I will roll an extra $1000 into the CD that matures each month that breaks $3000, and reinvesting it (this is known as a ladder, giving me the chance to take advantage of new rates every month). I will be adding $1000 into the CD for the specific months of:


  • March 2009
  • July 2009
  • November 2009
  • March 2010
  • June 2010
  • October 2010
  • February 2011
  • June 2011
  • October 2011
  • June 2012
Starting July 2012, I will begin pulling the money back into the savings account as they mature. In December 2012, I will have around $26,000 (varies according to rates of CDs) in that account.

At no point will my liquid savings account dip below $2000, which should cover any immediate emergency. The rest of the money will be available, either by waiting, or by drawing the money out for a fee, in the case of extreme emergency. At the end of this 5 year period, I will have turned about $1,500 into about $26,000 for the cost of $250 a month, while still keeping it accessible in case of emergency.

This is just the emergency fund. This does not count IRA contributions, additional savings, or any other investments. I like the idea of that.

That was one of the hardest things

If anybody knows me, they know that all I've been talking about car wise is the Smart Car. I saw them everywhere in Germany (their home town) and they work great, especially for what I would need a vehicle for. I really, really want one.

However, "buy new car" isn't on my list of goals. In fact, it's in direct opposition with one goal, to bring my auto debt down. It is possible to get one. What they would do is roll the current debt in with the new debt, and cut me a loan for that. The only problem there is that then, I owe far more than the car is worth: about $10,000 more. If the car gets totaled, the entire debt won't be forgiven, just the amount the vehicle is worth. I'm not comfortable with that.

So, I called Smart. They had a plan I bought into more than a year ago to reserve a Smart FourTwo. At that time, I had a car I owned outright, and less bills. Now, I have an auto loan, and more bills. So, I asked them to refund the money I put down (only $99), and I'll have to wait on the Smart car.

I'm bummed, but at least I know I'm avoiding a mistake.

Thursday, January 10, 2008

January update

Goals Update

  • Review

    • Financial

      • Credit card debt totaling $1,414.60 (up $622.68) (goal $0)

      • Loan debt totaling $2,142.78 (down $101) (goal $250)

      • Car loan totaling $10,277.92 (down $207.49) (goal $5,485.41)

      • Emergency fund totaling $1,254.07 (up about $254.07) (goal $7,500)

      • Roth IRA contributions to date: Me: $208, Wife: $208 (in savings, up $418) (goal $5000)

    • Charitable

      • Total hours volunteered: 0

  • Financial

    • Use some of my wife's bonus to pay off credit card

        • Credit card debt has actually increased to buy another quarter's worth of textbooks for my wife. However, her grandparents have offered to reimburse her for her books, so they will send a check for the value (over $500! Textbooks are expensive!)

        • My wife has to take an Army Physical Fitness Test (APFT) to reenlist and receive her bonus. She is due to take the APFT next month.

    • Use some of my wife's bonus to pay off loan

      • After talking to the credit union, it was determined that we should pay off a big chunk, but don't close the loan just yet, as it will increase our debt/credit ratio, and hurt my credit score. I have renegotiated the loan, dropping the APY by 2%, and will pay off a large amount of the loan.

      • Also, my wife has determined that she would prefer to spend her bonus on some other items for herself. Of course, it's hers, and she's earned it, so I defer completely. She has agreed to use part to pay off the credit card, and to donate to savings, but she wants the remainder for her own use. Specifically, she wants a Wii.

    • Deposit $2000 of my wife's bonus to savings account

      • Waiting on the bonus

    • Deposit at least $250 to savings account from pay

      • Completed.

    • Deposit at least $418 to Roth IRA

      • Sort of done. Once a contribution is made, that's it. You can't take it out, except for certain reasons, and even then it's not easy. Instead, I'm setting up a sub savings account and put the money in there. That way, it's more liquid, but separate. Then, I can make the contribution in a lump sum. That way, I can still put the (rather large) amount to the side without getting in trouble later.

    • Contact credit union about car loan refinance

      • I have done this. The credit union will refinance for 8% (from 14%), but they will not cover the entire value. So, I will wait until my own bonus, and pay the difference as a down payment on the loan.

  • Educational/Professional

    • Submit AMT BOR packet

      • The packet is still missing. I have found another AMT member who will sign the application for me

    • Assemble and submit E-6 packet

      • Still needs to be done

    • Send off and follow up on life credit packet for BS

      • Still needs to be done.

  • Physical

    • Start training for marathon on January 15th

  • Charitable

    • Volunteer at least one day to a charitable cause.

      • I'm looking at some charities now. I need to find a charity I can really support, and who needs my volunteer work. Habitat for Humanity, and other charities like that are already quite popular, and have enough help. I want to go where I'm really needed.

Friday, January 4, 2008

You say you want a resolution baby...

Resolutions are tricky animals. Most people seem to make it too vague, something like: "I'll exercise more this year". It's pretty easy to get discouraged there. How much is more? If you don't have a set goal, then you'll get dismayed pretty quickly. This is why gyms fill up for 3 weeks in January, then settle back in.

I'm going to try something different, and not because of the resolution tradition, but mostly because my goals are chiefly financial, and it's a new tax year.

The rules of my yearly goals:
  1. The goals must be specific: Quantitate whenever possible, and have a definitive goal for everything. That way, I can gauge my progress, and know when I'm done.
  2. The goals must be transparent: I'm going to lay everything out, and hold myself accountable in a public forum (here). That means reasons, motivations, and numbers.
  3. The goals must be checked up on: Monthly, I will review the past month, progress so far this year, and set sub-goals for the next month. That breaks things down to easily manageable month long packages. These will also be posted. I can also add month specific goals.


And now, my goals for 2008.

  • FINANCIAL
    • Accumulate and maintain at least 3x monthly expenses as an emergency fund.
      • The recommended value of an emergency fund is supposed to be 3 months of bills and expenses. Our savings was drained by both the trip around Europe, and moving to the states (first and last months rent, covering us until I started working, etc). Bills and payments alone, I estimate cost me about $2000/month. That includes rent, car payments, debt payments, phone, internet, utilities, insurance, and other bills. Include food and gas, and we'll assume $2500 a month. That's $7500 dollars, not counting the drop in monthly bills I plan on enacting.
      • I plan to do this by depositing $2000 from each of the bonuses my wife and I will receive from the military this year, and by depositing at least $250/month from my paycheck into my HSBC savings account, which already contains about $1000 I've saved. This will lead to a total of $8000 by years end. The money will be saved in an easily accessible, liquid savings account by HSBC, earning 4.25% APY interest.

    • Deposit at least ½ max contributions to both mine and my wife's Roth IRAs
      • The earlier you prepare for retirement, the better. Even if we're not maxing out our IRAs, we can still deposit some. The maximum contribution for 2008 is $5000 dollars. My goal is to contribute at least $2500 each. This is a cost of $417 per month. For the first month or two, this may not be possible. Once some other items are paid off, it may become easier. This goal may not be met 100%, but any contribution will pay back in spades down the road.

    • Eliminate my credit card debt
      • I, for the first time, got a credit card, to help cover the costs of my wife's books and tuition. I get 0% interest for the first 6 months, and on any charges from the first 6 months. Although there is no interest, I want to eliminate that charge, and have the credit card maintained at $0 balance total per month. Once the card is empty, I will begin using it for specific purposes to improve my credit. I think I'll start out with using it to pay for gas, and pay it off in full at the end of each month.
      • There is $791.92 debt on the card right now. Paying that off will be a matter of using one of our bonuses.

    • Eliminate my loan debt
      • We had to take out a signature loan to pay for my wife's first quarter of school. Now that she's in the reserves, she'll get 100% tuition assistance. The loan was incredibly helpful, but I want to get rid of that $2,243.78 remaining, and the $211/month bill it carries.
      • That too, will be paid off by using some bonus money (in case you were wondering how much bonus money we'll be getting to be able to pay off so much and still save, we're each getting $7500 to affiliate with the reserves for our IRR time)

    • Refinance car for better rate, and reduce balance of loan by at least $5000
      • The car we were borrowing broke down, and we had to get a car quickly. Although we got an ok deal, our lack of a significant down payment meant our loan had 14% interest rate! Once we have more money for a better down payment (probably from my bonus), we should refinance through my credit union for a more reasonable rate. The balance remaining is $10,485.41. I want to see that rate reduced, the monthly payments dropped, and the total balance dropped by at least $5000. Much of that will be the monthly payments, and the rest will be the down payment we'll use for the refinanced loan to get that better rate.

  • Educational/Professional
    • Take and pass the AMT MT board certification exam
      • I qualify now for the AMT, even though I haven't finished my bachelor's. I need to turn the application in (it's being signed by somebody else as a recommendation now) and study enough to pass. The bachelor's degree program should be enough studying.

    • Complete my Bachelor's of Science
      • I had to stop my bachelor's program because the lab in Wuerzburg didn't do enough to let me do clinical exams. Now that I'm back in the states, I need to finish it. I qualify for life experience, which needs to be certified by previous supervisors, and I need to do the clinicals I don't have enough experience for.

    • Complete required courses to qualify for PA course
      • The next step I want to take is the Army PA course. A bachelor's after 1 year of study, and a masters after 1 year of clinical experience, owing only reserve time in return. I plan to continue on to med school, but for now, I want to do that. I will take this year to take the prerequisite courses I need, and put together the application packet. This will happen after my bachelor's is finished

    • Assemble and submit promotion packet for E-6
      • If I plan to do the PA course, I will be getting paid as the rank I hold when I'm accepted. A promotion to E-6 could mean good money later on. Also, if I'm deployed, I'd rather go as that rank. Not only that, but since much of our senior NCOs will be going to Kosovo for a year, I need to step up and fill that space.

  • Physical
    • Train for and complete a full marathon
      • I've really been slacking off on exercise to get more situated with work. I need to set a goal. My wife is doing a full marathon, and has come up with a training plan. I want to train for, and complete that marathon with her.

  • Charitable
    • Volunteer at least 1 day/month to charitable causes, and exceed a total of 100 hours within the year.
      • I need to get more involved in my community, and to get out. 1 day (8 hours) worth of volunteer work is not too much to ask per month. I need to discover volunteer opportunities, and take them.


    Those are my goals for the year. Most of them are financial, trying to get into a more stable place, and the rest are personal development, trying to set goals that will improve me as a person, and as a professional.

    I look forward to hearing your comments, and I hope you'll all wish me luck.
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