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I-bonds vs. the stock market

October 12th, 2008 at 12:48 pm

Thought this might be a good time to post a link to this chart, being that the stock market has been so choppy lately. Note that the chart is updated to October 1st--and the I-bonds were already ahead before the worst of the stock market's descent. Might be good for anybody else who's feeling rather chicken right now.

http://www.savings-bond-advisor.com/i-bonds-versus-the-stock...

I've been thinking about these for a long time as part of our Emergency Fund, but never seem to have enough money to spare. They can't be bought in IRA's, where the bulk of our already-accumulated money is, so I'd have to find new money.

I know you can buy them in small amounts, but I guess I'm embarrassed to put a bank through the paperwork for a $50 bond. (I'd rather do the paper ones, as it would be a help to DH in an emergency.) But maybe I will start, once I know the new rate as of November 1. They are supposed to announce the new rate this week.

Asset allocation--any ideas?

October 5th, 2008 at 11:54 am

Hi, and hugs to everyone who left a comment for me last week.

SCFR mentioned how some older folks may be in trouble because they never changed their asset allocation as their situation changed:
http://scfr.savingadvice.com/2008/10/02/still-around_43742/

I think that hits the nail on the head for me, also. When we had two incomes, a higher total income, and cheaper health insurance, it wouldn't have been so painful to see the balance in my IRA drop over $800 in one day. I could have just saved harder for a couple of months and made up the loss. But the way things are right now, it could take me a year or more of scrimping to make it up, if it's possible to do at all.

Maybe it isn't just fear that makes me want to lessen my exposure to stocks, but good common sense. I've heard you shouldn't invest what you can't afford to lose--and right now I don't feel like we can afford to lose ANY of it.

Here's our asset allocation right now,
roughly:

Cash 46%
Bonds 36%
Stocks 17%

Only $6487 is easily accessible, i.e., cash and not in IRAs. Most of the bonds are non-IRA, but it's not like I can count on the values holding up if I needed to sell them. I have a GMAC thing that's lost 2/3 of its original value, although it's still paying me interest.

Honestly, I think I could sleep a lot better at night if I cashed it all in and just paid off our house!

Even if I sold the rest of the stock, it still wouldn't be accessible because it's all in my IRA. But at least I'd know for sure how much I had. I did sell my S&P 500 index fund last week, and I don't regret it. It only went down from where I sold it, and then I read that more S&P 500 companies cut their dividends in Sept. than ever before. That doesn't bode well.

Any thoughts?

Back because I'm scared

September 27th, 2008 at 04:13 pm

I feel like I need to huddle around the virtual campfire at Saving Advice again, safe from the cold, cruel world with some people who have their heads on straight. Smile

I'm trying not to be a Nervous Nellie, but all this upheaval in the economy is starting to get to me. It's not just what I'm hearing on the news--it's real life.

WAMU-we have our one credit card with them. Things should be business as usual, but it feels strange to have a 2nd credit card provider go belly up on me. (I had a NextBank card years ago.)

Wachovia-I have a brokerage account with them, DMom has two brokerage accounts plus she owns a pretty significant chunk of Wachovia stock which is already showing a loss. I'm hoping they don't do a WAMU and that she doesn't lose it all.

The housing market-My mother, at 91, has finally put her "extra" house up for sale, seemingly at the worst possible time in recent memory. There have only been two showings in about 3 weeks. If it goes on too many months, we may need to help her get it ready to rent out.

It's been a year, and DH still isn't working. In a lot of ways it's been a help, but we could sure use some extra money.

Especially since we are still paying $660 a month for his COBRA health insurance, which runs out in March. The prospects for me getting full-time at my present job don't look good, and the cost of an individual (non-COBRA) policy will be even higher.

Our emergency fund is below the $1000 minimum that I feel comfortable with, and I'm going to have to work hard to get it built up again. I'm unavoidably spending $200 a month on gas now (because of driving my mother), and our car insurance just went up $35 a month.

Somehow I'm going to have to get back to frugal ways, but I don't have time to fiddle around with Quicken like I used to.

Hope things are going a little more smoothly with everyone else.

Resisted temptation and added $70 to savings

May 17th, 2008 at 10:27 am

There are two special purchases at Aldi that I've been itching to buy--a paper cutter for $20 and a metal detector for $50.

I decided today that if I could dig up the money to pay for them somehow, then I could just as well afford to move the money into savings instead. I've already spent quite a bit this spring, and our emergency account balances are low.

Still, I always find it hard to put money aside for vague reasons like "emergencies." Maybe playing mind games with myself like this is the only way to get it done.

Catching up

February 23rd, 2008 at 09:30 am

Thanks for all your condolences. A Going Jessie--I love it! Yes, sad as it is, wouldn't we all rather go like that--quickly, after a long and interesting life.

This morning I sat down and tried to catch up on our financial record-keeping, generally. I was also finally able to come up with what this whole crisis has cost us specifically. It's roughly $1000.

Hotel $177 (they gave us a bereavement discount)
Train $208
Taxis to and from train $130
Obituary in paper down here (to be reimbursed from the estate) $195
Clothes for DH $95
Luggage and locks $50
Flowers $66
Gift certificate for neighbors who watched our pets $25
Gas and tolls for trips to hospital $45
Meals out $120

There was no free food on the train; they did have a cafe car, but all we got was coffee. Mainly, we ate our own snacks on the trip. We took full advantage of the hotel's free breakfast buffet, and free coffee in the lobby.

There's still $156 of cash we spent that I can't account for at all. Some of it might be regular groceries and such, but I really can't tell. Every once in awhile something else comes to me, and maybe more receipts will turn up. I really don't like having that much unaccounted for.

The kicker is, there is going to be a lot of family pressure to make the trip again in the summer. The ground was too frozen to bury the ashes, and they'll want to do it during this big family reunion in August. DH is still not working, and our emergency fund is about wiped out. We avoided going out for a similar "second funeral" for DH's father some years back, and I'm determined not to be pushed into it this time, either. If money isn't so tight then and DH really wants to go, then maybe. But I'm not putting out another big chunk of money, and using more vacation time, just to make a bunch of distant relatives happy. DH barely knows them himself!

Death in the family

February 19th, 2008 at 06:02 am

One day we got a call that my MIL had a stroke, but not to worry because it appeared to be mild. A week later we were hundreds of miles from home, attending her viewing. I can't believe everything happened so fast. She was 90, so it shouldn't have been a surprise, but it was. She was still driving til the end, and had just cooked a big dinner the night before the stroke.

Since this is a financial blog, I'll try to write about things from that perspective.

First of all, when you're in a crisis situation like this, you can't always do things the cheapest way. We took Amtrak, which probably cost a bit more than driving would have been. But we didn't want to drive that far in wintry weather, on roads we weren't familiar with. We could have gotten a AAA discount if we could have made our reservations sooner, but we didn't know the date of the viewing and funeral til after the discount deadline. I also just found out we could have gotten a discount on one return fare with a coupon code, but I didn't have time to search for codes beforehand.

I'm glad that we still had a credit card, and I hadn't closed it out as per Dave Ramsey. It was nice to be able to charge the train fare, reserve the rooms, buy DH some clothes and pay for the local obituary FAST. I had enough to do without running around, getting extra money into the account that has the debit card and waiting for the deposit to clear. OTOH, I'm glad we had some money in the Emergency Fund so we can pay the bill off right away.

It's a good idea to always have suitable clothes on hand for a funeral (or wedding), and sufficient traveling gear. We hadn't traveled in years, and had gotten rid of some crummy old luggage without replacing it. I had to run out and buy a cheap set of suitcases at the last minute. (Nope, I didn't have the time to check where they were made!) Luckily, I'd bought DH some dress shoes on sale awhile back, even though he rarely needs them. He also still had a suit that fit. But he needed a new shirt, and a coat to wear over the suit. His old bomber jacket would have just looked embarrassing. It would have been a lot less stressful if we'd had all of this stuff on hand to begin with.

My oldest BIL is executor, and when we last saw him he was having trouble even finding my MIL's social security number. He hadn't really been involved with her paperwork over the years, and lives at a distance, so he's going to have quite a job finding and making sense of things. I'm more determined than ever to arrange things so DH can manage if something happens to me. He doesn't do computers at all, so this will mean converting back to paper in a lot of ways.

Finally, and most importantly, my MIL's eulogy reminded me to spend less time on finances and more time on enjoying life. The contrast with my own mother is marked. MIL didn't end up with a fortune, but she had a lot of travel and other fun under her belt. She enjoyed trying new things when she had the chance. My own mother has been very careful about money and everything else over the years. Rather than trying new things, she's apt to wonder "why would anyone want to do that?" She's a worrier from way back. So I've been thinking about how I'd rather hear my life summed up, at the end.



My plate is full

December 9th, 2007 at 08:43 am

Since DH left his job, all heck has broken loose. Not due to him--on the contrary, if he didn't have the time and energy to help with this stuff, I don't see how I could have managed. As it is, we are both feeling pretty stressed, and at times physically shaky.

In this entry, the financial front.

Just before DH left his job, he decided to get a tooth fixed. Looking back on it, I think he wanted to look better for job interviews, but it didn't occur to me at the time. That cost $1500.

I managed to pick up some extra hours at work, which covers our COBRA insurance almost exactly. My boss knows I'm ready to go full time and get benefits, and she'd like to give it to me, but it's not in the budget right now.

Still, the cheapest COBRA option (keeping the high deductible insurance and the HSA account) is $645 a month and it's kind of painful to pay. It's more than our mortgage! And we still have to find money to put into the HSA.

We had to start paying on life insurance for DH, because the only policy he had was at work. $94 a quarter.

In October, our dog had a swelling on her cheek that we thought might be a tumor. It was relatively good news--an abscessed tooth that needed to be removed. The vet visits, surgery and medicine totalled $605.

One of the little additions on our house had a much older roof than the main part, and it started to leak once in a while. It kept getting worse and in November we decided we'd better get it replaced before snow season started. Even I could see it was beyond repair, unless we just wanted to lay a tarp over it for the winter! $1125.

We rarely have flea problems, but our dog and cat both got them recently. I didn't have the stuff on hand, so I ordered it online for the best price I could find--just under $100.

It was our balance month for natural gas, and we owed $48 extra. We needed a new faucet cartridge, $22. DH worked on hedges at DMom's house, sliced the extension cord. New cord, $25. MIL needed her phone card re-upped due to a family emergency, $25. We've been very involved with DMom and MIL lately, which has made it harder to do things the cheap way. We've been indulging in some fast food and I'm just happy to get out shopping when I can, let alone following sales and using coupons.

Amazingly, we are still afloat financially so far. I had to charge a few things only because the emergency money I had to spend wasn't in the account with the debit card. As soon as I pay that bill, we'll be debt-free again except for the mortgage.

Oh, and all that subprime mortgage news that's been coming out has made me very, very nervous about our ARM, due to adjust in 3 years. So I set up an automatic extra payment to principal for $50 a month--don't know how much it will help in the long run, but it makes me feel better.

Next time, the family crises. (Oh, joy!)





Goodbye, Netbank; No thanks, Everbank

May 22nd, 2007 at 05:56 am

In case you hadn't come across this, Netbank is being taken over by Everbank, and the changeover may be finished by the end of June.

biz.yahoo.com/pz/070521/119898.html

I've read good things about Everbank, but their money market account is too rich for my blood right now. I'm using our Netbank MM to try and build up a Fully Funded Emergency Fund. Netbank wants to you keep a minimum of $500 in the account, so although we have $955 in there, only $455 is really available for emergencies. I found that frustrating enough. But Everbank wants even more--a minimum of $1500 to avoid a monthly fee of $4.50.

www.everbank.com/001MoneyMarketYP.aspx

So I'm looking for alternatives. Right now it looks like Capital One Bank is our best bet. $1 to open their MM, no minimum balances to maintain, no fees. Plus they apparently send out paper statements! Smile

If anyone has experience with Capital One as a bank, I'd like to hear it. I only had a credit card with them years and years ago.

The most common emergencies

April 3rd, 2007 at 11:40 am

Bingo! Found a report that partially solves the "intangibility" problem for me.

Your kind comments yesterday also helped. Intangible is definitely the word for the problem. Earning interest in an incentive. And I can buy into the insurance deductible thing.

pewresearch.org/pubs/325/we-try-hard-we-fall-short-americans...

Thanks to My Money Blog, who mentioned it here:

www.mymoneyblog.com/archives/2007/02/americans-assess-their-...

The most common kinds of unexpected expenses are medical, car, home and housing, life events and children. The %'s for other occurrances is way lower.

We can save for medical deductibles and expenses in the HSA. I already have special savings accounts for car repair and replacement, household repairs and maintenance. That kind of leaves unemployment, veterinary expenses, and funding car and homeowner's insurance deductibles, and life event things like traveling for funerals.

The deductibles for car and homeowners comes to $2000.

Veterinary is kind of discretionary, and would depend on how much money we had on hand. Some people spend thousands trying to keep an animal alive, some would let a dog go naturally or have it put to sleep.

I can see building up the HSA to cover our $3000 annual medical deductible, and keeping $3000 handy for other deductibles, vet expenses and family events. We'd be covered for all the most common things.

I STILL can't see the point of building up even more cash-equivalent savings for remote possibilities I can't imagine, rather than increasing our retirement savings and getting the house paid off.

I haven't said so before, but we have some "untouchable" money in a regular brokerage account plus IRAs. It's not in the form of ready cash, but in the case of unemployment we could survive on it for well over a year. I don't see the point of cashing it out and putting it in the money market just because that's where Dave Ramsey says an emergency fund should be.

So I'm going to aim for $3000 in the HSA, and eventually $3000 in the money market, even though that's only a little over 2 month's expenses. And I'm going to concentrate on fully funding the HSA first, since medical expenses are the most common and we get a tax break.





Emergency Fund

April 2nd, 2007 at 05:58 am

I'm having trouble getting enthused about socking money away in a general Emergency Fund.

It's pretty easy for me to accept putting money away for specific purposes, like the property taxes or car repairs. I can see the purpose of the savings in my mind's eye.

But "emergencies" is so general, and the need to have the money on hand feels remote. It's been impossible for me to throw every extra penny toward building it up as Dave Ramsey recommends for "step 3"--it's even been uncomfortable trying to make myself get a small, steady monthly amount in there.

So I want to start keeping track of when it's come in handy, or would have if there'd been enough money in there.

March, Emergency vet visit - $460
April, PSE&G budget bill balancing - $102
Jan-March, costs of Indian meal moth infestation (airtight food containers and traps) - $60

That's a total of $622, or about $207 a month. I've been begrudgingly putting $100 or less a month into the EF account, and actually had to pay the vet bill out of the car/house repair money.

So, as of today I'm decreasing the amount automatically going into New Car Savings, and increasing the amount going into the EF. And I'll keep reminding myself here of why that's important.