New Year’s Resolutions

Making personal finance resolutions is either the #1 or #2 resolution each year. Below are some tips:

1) write down your financial goals
2) make specific or well-defined goals; don’t be too vague
3) identify small steps to take toward achieving financial goals
4) don’t list more than three goals

Listing goals is simple. Fulfiling them
is challenging.

Happy New Year.


Four Maids!

Today a representative from the pest control company stopped by my house to provide seasonal pest service (an expense worth paying for. When a fly enters my house, all activity stops until that fly is dead. Spraying vinegar at the fly is effective).

The rep who stopped was new to me. I asked about the rep who was servicing my home. He had been promoted to another division.

In making small talk I asked the rep what was his previous area of responsibility? He answered Potomac. Wow, very well-to-do people in that area, I replied. The rep shrugged his shoulders. Then I commented about that area having large & fancy home. He said, right, and some of those homes have four maids.

Four maids. What do they a maid per persons in household? The rep laughed, he wasn’t certain.

Four maids. Wow. And crazy.

It’s that time of year: “pretty please”

How many letters and/or e-mails have you received from charitable organizations? I’ve lost count.

This is the time of year that the charitable organizations are begging, nicely, for contributions. And they kindly remind you that your contributions are tax-deductible.

In addition to explaining why their mission is worthy of support, some charitable organizations hope to entice you by noting that your contribution will double.

With the 2010 rapidly approaching an end, the fastest way to ensure that contributions counts this year is to pay by credit card or debit card.

I’ve been debating which organization to select. The USO? Mercy Corps? AdoptaPlatoon? Doctors Without Borders? MAP International? There are so many charitable organizations that do great work.

I decided to go with Oxfam America. For 2010 I gave my first non-church contribution to Oxfam America in the aftermath of the powerful earthquake that struck Haiti. In my mind it’s fitting to give my last non-church charitable contribution to the same organization.

Robbing Peter to Pay Paul

I didn’t want to do it. I promised myself to never take money from this specific account EXCEPT for a specific reason. But, I caved.

Here’s the background.

The last two years (2008 and 2009), before December 31st, I made extra principal payments on mortgage debt so the balance at the end of the year was a “round figure.” In 2008, as of December 31st, the amount owed on my condo home equity loan was $20,000. That amount was paid off on 15 May 2009. In 2009, as of December 31st, the amount owed on my condo mortgage was $36,000. That amount was paid off on 5 October 2010.

Although those debts are history, I still have a 1st AND 2nd trust on my house. Recently, most of any disposable income I have had has been used to pay the vet bill (more in a future post). So, I didn’t have that extra money to get my 2nd trust to a “round figure” before December 31st.

At first, I told myself, “let it be. You’re not going to pay off the 2nd trust by the end of 2011, anyway.” But then I thought, by not making an effort to get the balance to a “round figure,” have I lost that “gazelle intensity?” Will I become distracted because I accomplished so much already?

To get to that “round figure,” I needed to find $227.51. I had $83.50 ready to deposit: $80 check as reimbursement for someone’s one night stay at a motel [which I charged] and $3.50 in coins (nickels and pennies). I needed another $144.01 (I wasn’t concerned about that penny). I looked at my credit union’s savings account and additional savings account. Between the two accounts, I could find $44.01. But I needed another $100. Where would I find the money?

Well, I looked at my car maintenance fund. I have $1,400 in the account [not a sizable amount but a decent amount]. I deposit $100/pay period into the account. I realized I could transfer $100 from that account. I came to this resolution after I deposited another $100 into the account raising the balance to $1,500.

I took the plunge. I robbed Peter (car maintenance fund) to pay Paul (2nd Trust). I also robbed John (savings account – $14.01) and Andrew (additional savings – $30.00) to also pay Paul (2nd Trust).

I’ve achieved my goal. The balance owed on the 2nd Trust is $59,000.

The choices one has to make in life (well, I didn’t have to make it, but it makes me feel better. Now keeping my fingers crossed – no major car repair anytime soon!).

What a Scrooge!

Sorry to say this last post just before Christmas is not joyous or jolly.

Who is the Scrooge? The outgoing Mayor of the District of Columbia, Adrian Fenty. What has he done?

As reported on yesterday, two council members (no, Jack Evans is not one of them) have asked Mayor Fenty to restore funds for job training. The WTOP article is entitled, “Fenty transfers DC jobs money to pay staff.”

According to the two council members, Fenty has redirected $495,000 from job training to cover separation pay for his political appointees. (as my brother-in-law stated, wow, what a Christmas bonus).

A Fenty spokesperson responded, the “surplus” $495,000 has not been taken from job training, BUT from that portion of the job training budget designated for monitoring the job training program’s performance.

Here’s a word apparently unfamiliar to Fenty and his spokesperson: DEFICIT.

Fenty will leave office soon and the District of Columbia has about a $118 million deficit.

One way Fenty attempted to close the deficit was to cut the Healthy Food program for DC Public Schools and redirect those funds elsewhere. Advocates worked hard to get such a program implemented & the Council, particularly CM Cheh, worked hard to find funds to support the program (essentially serving healthy meals at schools using local produce when possible, eliminating sugary drinks, etc. For more details, see Ed Burske’s blog, The Slow Cook). Fortunately advocates and citizens pushed back and the Healthy Food program has been saved.

Political appointees should be well aware their positions are not guaranteed. They could be let go at any moment.

The fact that Fenty is more concerned about his political appointees versus the health of children in the District of Columbia speaks VOLUMES.

I hope there will be sufficient pressure to force Fenty to change his mind. And why only 2 council members “raising cane”?

Thanks, Dear Scrooge Fenty for the lump of coal you dropped into the stockings of all DC residents.

Maybe Scrooge isn’t the right word.

More appropriate words are “thief” or “crook” (as noted by individuals posting comments in response to the story).

Merry Christmas, readers of The Money Heifer!

Sending Christmas Greetings

I wonder how many individuals are still “snail-mailing” Christmas cards. I know the U.S. Postal Service has a good idea.

For the most part I’ve stopped mailing Christmas cards. But depending on
the age and/or level of comfort with technology, I will send cards via snail mail.

Of course there a few benefits of sending Christmas greetings electronically: cheaper, quicker, & more environmentally friendly.

Even if an individual is comfortable with technology, some individuals prefer receiving that card in the mail. They may believe snail mailing a Christmas card is more personal.

Whichever method, don’t forget to send Christmas greetings.

Darn it, not in my budget

I usually have a good grasp of upcoming expenses and when they will occur. But I forgot about the McAfee protection for both my PC and my laptop.

For the PC, I last purchased a protection plan three-years ago (and forgot this year was the end of the three-year period). Since money is so tight, I don’t have sufficient disposable funds to cover an unanticipated three-year plan. So this evening I purchased the one year plan. With sales tax [wish those online transactions were free of sales tax] it set me back $84.79. Now I need to find money out of my next paycheck to cover this expense.

And there’s still the cost for the laptop. I know I need to renew before the end of the year. I will also select a one year plan. And I again must somehow find money in the budget to cover this unanticipated expense.

Wouldn’t it be nice if you didn’t have to worry about viruses, etc. and thus wouldn’t need to buy an anti-virus product. I know, that’s not the real world.

This won’t happen again. Will add McAfee to my list of yearly expenses.

Why are we listening to those rating agencies

Remember the financial crisis of 2008? I know for a good number of Americans, hey that’s old news. These Americans prefer to watch sports or watch certain “stars” implode (Mel Gibson is the latest).

So, for those of you who remember the financial crisis & the post analysis of the crisis, you may recall the rating agencies – Moody’s, Standard & Poor (S&P) and Fitch (I believe) played a role in the financial crisis. What role was that? Oh, they gave AAA ratings (the highest) to the CDOs (collateralized debt obligations) that those investment banks such as Lehman sold to investors. And what did those CDOs consist of? Mortgages, especially those risky mortgages which have since imploded because homeowners for one reason or another could not make the mortgage payments as promised.

The rating agencies didn’t independently assess the viability of the CDOs. They just raked in the money. Hey thanks for NOT doing your job.

Thus my distrust of those rating agencies.

Apparently Wall Street and such equivalents around the world have forgotten.

Read a story the other day on the BBC app about how Moody’s has downgraded the Republic of Ireland and Moody’s was further hinting about another downgrade. Of course the rating agencies’ comments about downgrading Spain are fueling speculation that Spain will have to be bailed out next. And let’s not forget that the rating agencies downgrading Greece was paramount in the EU bailing out Greece. Now I do recognize these countries are carrying too much debt. But, IMHO, the rating agencies kicked these countries while they were already down on the ground.

You may think, well, that’s a European issue. Hold your horses. Because of the recent law signed by the President whereby the Bush era tax cuts are extended for an additional two years for ALL income levels plus the one year cut in the rate of Social Security tax collected from workers, the rating agencies are concerned that the debt at the federal level is TOO HIGH and have hinted the US may be downgraded.

In case this discussion seems way above your pay grade, think of it this way. The rating agencies are like the credit card companies. Before the financial crisis of 2008, the credit card companies extended huge lines of credit to you at very low interest rates. Post economic crisis, your interest rate has been jacked up and your credit line reduced, often significantly. Your credit utilization has jumped to above 30% because you were carrying debt but once the credit card company sliced your line of credit in half, the amount you owe is much higher. Of course this higher credit utilization negatively impacts your credit. Now, you understand what’s facing Greece, Ireland & likely Spain.

Face of the unemployed

You can’t tell who is unemployed just by looking at someone (at least I don’t believe so). This evening I got on the bus to go to the Greenbelt Metro Station. At one point a female passenger began speaking to the bus driver. I looked up and didn’t recognize this passenger. I returned my attention to my iPhone.

Upon arriving at the Greenbelt Metro Station I took the escalator to the platform. A train arrived. It’s rush hour and I don’t know if the train will depart momentarily or depart in a few minutes. If I want to get off by the elevators at my metro stop, I need to board a car towards the end of the train. I begin the practice of entering a car,walking to the end, then moving to the next car, repeating the sequence until I reached my desired car.

I followed the woman in front of me. Enter a car, walk through and exit. We did this twice. Then we both sat down. She commented about being followed. I recognized her, the same woman from the bus.

She told me she had a job interview today. She then told me she has been unemployed for two years. She is 52 years old, divorced with no children. She does temporary work when it is available and some bookkeeping from home. She told me she has experience but not the degree.

I asked her if she is receiving unemployment insurance. She answers no. The unemployment insurance stopped in September. Sad to learn, though she is chronically unemployed, she has “maxed out” the unemployment benefits.

She tells me she wants to work. That she is constantly looking for employment to no avail. My heart ached for her.

She concerned about paying her bills. She recognizes she is fortunate because she still has a place to live. But she knows, without a job soon, she may be on the street.

She told me she doesn’t own a car. There are job opportunities in places in Virginia, but she said she would need a car to get to those jobs. She trying to find employment that is accessible to public transportation.

Meanwhile, her father, who lives in Austin, has a brain tumor. Some relatives in Austin were concerned that her father wouldn’t survive for long so this woman used some money to fly to Austin.

Earlier this year her mother was diagnosed with cancer. She is taking care of her mother (her siblings assume, since she’s not working, not married and no kids, that, well, she has PLENTY of time to take care of mom).

This woman told me she remains upbeat. She leaves it in God’s hands. She doesn’t want to wallow in a depressed state. She remained me of those news stories a couple of years ago when a breadwinner was laid off work, and became so depressed that he killed his wife, children and himself. I remember at least two or three of those news stories.

I have read and heard news accounts about the chronically unemployed but this is the first time I’ve met such an individual.

I felt bad for this woman. I wish there was something I could do for her.

I also recognized how fortunate I am.

I pray she finds employment soon.

Do you recognize the face of the unemployed?

Still receiving mortgage coupon book

I like my credit union. I really do. But there are times when I questioned the competencies of the employees.

A case in point, yesterday I received in the mail a mortgage payment (coupon) book. I presume there are still plenty of individuals writing a check for the mortgage each month and mailing that check with the coupon. I am not one of those individuals. I pay online each month. That’s why I’m scratching my head about the coupon book.

Let me explain further.

In September 2005 I refinanced my house, both 1st & 2nd mortgages. I got rid of an interest only 1st mortgage fixed at 5% for the 1st five years and a variable interest rate for the 2nd mortgage.

What motivated me to refinance my mortgages? First, the variable rate on the 2nd was going steadily upward. Second, I had sort of buyer’s remorse because I didn’t listen to my mother and thus opted for the interest only mortgage rather than a fixed rate mortgage at a slightly higher interest rate (I believe 5.4%). Third, because I opted for the interest only mortgage I was not acquiring any equity in my home. Okay, I realized, I am smarter than that. So I began looking for refinance opportunities.

Although I purchased the house in January 2005, I was able to refinance in September 2005 in part because a house two doors from mine sold for $440,000 (unfortunately that homeowner lost his house two years ago; after some recent renovations, it is back on the market for sale).

The credit union offered to refinance both mortgages with fixed rates. Yeah! The 1st mortgage is for a 30 year period; the 2nd mortgage for a 15 year period. Of course the rate is higher on the 2nd trust but it is fixed so I am satisfied.

I set up with the credit union to have payments for the 1st mortgage debited from my checking account. For some reason I cannot make the same arrangements for the 2nd mortgage. I ask the credit union employee, may I make payments for the 2nd mortgage online? He replies, of course.

I make that 1st payment online. Then I received in the mail a mortgage payment book. Well, I presume, the credit union did not know how I would make payment.

But what’s the rationale five years later?

You would think someone at the credit union would realize by NOW that I make payments online only. The credit union is wasting money sending me each year a mortgage payment book.

I guess I will have to call & request the credit union cease sending the mortgage payment book.

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