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Made first Bid on a House

January 21st, 2011 at 01:59 pm

They didn't accept the bid, but it was a good learning process.

The asking price was $65,000. The place needed a new roof, a slight upgrade in the electric, and a lot of cosmetic work. However, the structure was solid, we liked where it was, and we liked the house.

We offered $46,000, which is probably what it's actually worth. I proceeded to panic for two days because things like that stress me out.

We're pre-approved up to $65,000 on a 15-year fixed with 20% down, which means we can get something up to $80k give or take. We could definitely borrow more, but I have an obsessive fear of debt.

They countered at $60,900, which I took to mean that they weren't going to play ball, so we're letting it sit.

Buying a house is a bizarre process.

Major Update

January 14th, 2011 at 12:11 am

I forgot all about this place until Saving Advice sent me a birthday greeting in my email! Nice marketing, guys! I seriously need to update everything here.

I have been very, very blessed since I made my last entry in here. Here's the scoop:

1. My wife and I have absolutely zero debt! Debt free!

2. We drive a paid-for 2006 Saturn Vue.

3. We have $18,250 in a savings account for a down payment on a house. We just looked at a really cute house that's selling for $65,000, which is around the price that we want.

4. We have $10,000 in an emergency fund in addition to our other savings.

5. My wife gets to be a stay-at-home dog mom.

6. We tithe 10% of our gross income to our church. I'm just telling you guys because you don't know who I am. Tithing has been so amazing. If you don't do it, I challenge you to do it for a year.

7. We're making plans for baby #1.

8. We are contributing about 12% of our gross income to retirement. One of our goals for 2011 is to raise that to 15%.

9. We do all of this on one teacher's salary.

10. God is good. Sometimes I get scared that things are too good to be true, but we just keep having faith and pushing through hard times as they come.

Sim City and Loans

May 27th, 2008 at 07:29 pm

One of my best friends waltzed in to my apartment yesterday and showed me the most beautiful guitar I have ever seen. I don't know much about guitars since I am a drummer, but I do know an $1,800 Gibson guitar when I see one. It was dark with a burnt-orange sunburst in the middle of the body. Did I mention that he put $1,000 of it on a credit card that he won't be able to pay back for a LONG time?

I often wonder what makes one person borrow $1,000 for a guitar and another person put $1,000 in a savings account. I guess that there are several reasons that I am of the latter type, but one sticks out above the rest: Sim City.

Did any of you ever play the Sim City games? I first started with Sim City 2000. You started with a set amount of money. With that money, you paid for different types of zones: industrial, commercial, and residential. After you built roads and supplied power to the zones, citizens would start building houses, businesses, factories, and everything else that makes our civilization what it is.

As the mayor of your city, you had unlimited power to create and destroy. Well, you had unlimited power as long as you had the money. There was a budget to balance, and if you didn't have the money to build a road, you couldn't build a road.

Well, there was one way that you could temporarily get yourself out of a financial jam: you could take out a loan. I remember when I first discovered loans on Sim City 2000. I immediately took out as many loans as I could (Hey, free money!) and began building with reckless abandon. That lasted until the interest on the loans forced my little town in to bankruptcy.

I learned one very important lesson from Sim City 2000: do not take out loans. I don't know if the game designer was trying to teach a financial lesson, but it was impossible to pay off a loan once it was taken out. Through classical conditioning, my pre-pubescent brain associated loans with very bad things happening. I pulled every trick in the book to get through my undergrad with no loans, and it greatly pained me to take them out for my M.A.

I don't really know the point of this entry. With so many people in so much debt, maybe we could use a little more Sim City 2000 in our lives?

The Grand Plan: Part I

May 22nd, 2008 at 07:34 pm

I am getting married on May 31st. My fiancee and I are extremely excited, have known each other for a long time, have similar interests and values, and all of that other good stuff. One thing that I think is going to help us avoid a lot of fights is that we have similar values when it comes to money.

With that being said, I want to lay out our plan for the next five years to see what you all think. First, between the two of us, we have saved roughly $17,000 since we graduated from college. That is somewhere between nine months and a year of living expenses for us. With that safety net in place, we can proceed to debt.

In terms of debt, all we owe is for student loans. I currently have $9,200 and will only have a few thousand more to complete my M.A. I get a $4,000 raise when I complete my M.A., so we plan to throw all of that on to student loans until they are paid off. DF, soon to be DW, (If I understand correctly, DW means "Dear Wife"? Going on this assumption, DF is "Dear Fiancee.") is starting an M.A. in college administration, so that will ultimately throw $18,000 to $20,000 more in student loans on top of that.

Our plan is to live only on my salary and save all of DF/DW's salary. Assuming she makes somewhere around $30,000 each year, which is low-balling it, we could have $80,000-$100,000 saved up in five years.

If this does come to pass as planned, we have a couple options. The first option is to throw all of it on a house. The second option is to max out a Roth IRA and throw that rest on house. Beyond that, I don't really know. Any suggestions? Is this plan feasible?

Make Money from $4 Gas

May 21st, 2008 at 05:46 pm

Most of us are seeing the effects of $4 gasoline. I have a 30-mile commute to work each day, so on Quicken, I keep seeing the "Fuel" section of the pie chart gradually eat up the other pieces of the pie. While this may seem like a bad thing, it has the potential to shower financial benefits.

Okay, maybe "shower financial benefits" is a bit too strong, but I believe that we can make money or at least pay less for gas now than we were a year ago. $3.30 seemed to be the tipping point for me. When gas rose above that price, a fellow teacher and I decided we would start carpooling. With gas around $4 per gallon, carpooling drops that price to $2 per gallon for my friend and me.

What are some other ways that we can benefit financially from $4 gas? Carpooling is an obvious choice, but I'd like to hear some creative ideas from you all.

Lord of the Rings and Personal Finance

April 30th, 2008 at 08:32 pm

Lord of the Rings and personal finance may not seem like they have a lot in common at first. You might be wondering, "What analogy could this guy possibly draw?" Is the Ring of Power similar to debt (something that you may want to use for good but is ultimately corrupting)? Are Orcs similar to the barbarians and pirates that assail people who do not use Capital One credit cards? Maybe, but it's not quite as exciting as all of that.

When I think of Lord of the Rings, one thing sticks out in my mind above all else: Frodo and Sam endlessly plodding toward Mordor. This long leg of the journey that Frodo and Sam take has many themes intertwined: friendship, bravery, cowardice, and many others. In terms of personal finance, however, I think of the dogged progress that they ever so slowly make.

2008 has been a year of plodding progress for me. I faithfully shovel money in my 401k and Roth IRA. I throw 20% of my income in my savings account. Furthermore, I budget and keep track of my money.

I am happy with the progress that I am making, but it is odd at times to think of the huge amount of time it takes pay down debts and save up money. That's what makes me think of Sam and Frodo's journey.

I think J.R.R. Tolkien was telling us something by having the little Hobbits from the Shire actually take the Ring to the heart of Mount Doom. He could have cooked up some hero or another, but he choose Sam and Frodo. I think that all of us have a corrupting Ring to destroy. For some of us, it's debt. For others, addiction to drugs, violence, or whatever else.

Like Sam and Frodo, we all need help along the way. We need the help and joy that comes from being in community with other people on the same path. I think that Saving Advice helps a bit with the community aspect. However, I hope all of you have several Sams in your lives to help you out along the way.

Safe Travels...

Save Money: Fix Your Own Car

April 24th, 2008 at 11:29 am

I briefly mentioned my '98 Mercury Sable in yesterday's entry. It currently has 120,000 miles on it, and my goal is to get it to at least 200,000. Since Q and I lovingly refer to it as the Stingray, it's extra important that it continues to run.

Well, I quickly discovered that I was going to need to learn more about fixing cars for it to be cost-effective to keep the Stingray until 200,000. What really put me over the edge was when my wiper-motor linkage went out (The wiper-motor linkage is found, in most vehicles, right below the windshield. It's a very small motor and an assembly of bars that force both wiper blades to move when the motor moves one of them.). The dealership was going to charge me more than $200 for parts and labor.

I have never been particularly fascinated with mechanical things. I appreciate and respect engines, computers, other technological; however, I've always been more interested in language. While that has been good in many ways (the ladies love it), the downside is that I don't know a lot about fixing cars.

Anyway, to make a long story short, I have been learning a lot about fixing cars by trying to work on my car myself instead of immediately taking it to the dealership or to a garage. Also, I have been saving lots of money, and I think the Stingray just might make it to 200,000 miles.

Still Rollin'

April 23rd, 2008 at 05:49 pm

Well, I haven't made an entry on here in a while. I'm still plugging away at my emergency fund ($6500 currently with the goal of $10000).

I opened a Roth IRA through T. Rowe Price last month. I am now putting 5% of my income in my 401k and 5% in the Roth. I'm gradually going to move toward funding only the Roth and let the 401k funding go to virtually nothing because I don't get a company match.

My 1998 Mercury Sable is still serving me well. I have had to learn a bit about fixing cars in the process, but that's just an extra perk.

Ok, I need to go for now.

ING Direct - How Exactly Does the Interest Work?

January 17th, 2008 at 01:02 am

Ahhh, 4.10% interest on my savings account feels good! Thank you to everyone who helped me see the light on this issue.

I have a question, however. I am under the impression that interest accrues daily and is credited to my account monthly. Hmmm. If I had $100 in savings today, would I have $104 tomorrow at 4% interest? And then would that $104 be $108.50 (or somewhere close) the next day?

That seems too good to be true.

State Budget Cuts = My Job in Danger

January 10th, 2008 at 12:40 am

Well, Kentucky needs to balance its budget. That means education funding is about to be cut. Potential staff layoffs, hiring freezes, and other such wonderful things are on the horizon. Letters and memos have already been flooding through the state everywhere from community colleges, to state universities, to high schools: funding is being cut.

I pride myself on being an advocate of the free market. If a company can't compete, it shouldn't receive any help. The people who work in those careers should move on to more productive positions in the economy.

I may be faced with that now. The claim is art, business, home economics, and PE will be cut. Furthermore, I find it hard to believe that the 800+ students in my high school are going to receive English instruction unless there are the same number of English teachers as there are now. I guess I'm trying to say that I'm 70% sure that I'll have a teaching job this coming fall.

I don't like those odds one bit. Maybe I'm completely wrong. Maybe the last thing on anyone's mind is cutting English positions, but I'm the new guy. Other teachers there have houses and kids and tenure.

As I said before, I'm an advocate of the free market. I'll move on if I have to, but I'm not going to fib: it's going to hurt a bit.

This is why I save money. This is why I can't imagine living paycheck to paycheck. I currently have three month's living expenses saved up. With the three months of summer that I'll still have paychecks and insurance IF I don't have a job next year, that's at least six months of living expenses. I could feasibly have ten months in my emergency fund by the time next August rolls around.

It may seem like I'm blowing things out of proportion. I'm just saying that I see a storm coming, and I'm going to be caught right in the middle of it. I stand by my 70% chance of having the same teaching job next year. If I don't get rehired, I'll have plenty of money saved up. I'll easily find employment somewhere else.

Like I said, though, it's not going to be painless.

Wesabe

January 6th, 2008 at 09:01 pm

Does anyone here have experience with Wesabe?

The Calm Before the Storm

January 6th, 2008 at 04:16 am

The sky was overcast today, or at least, I think it was. I ventured outside once...maybe twice. I don't really know. I spent all day talking with friends in my apartment, playing drums, reading, surfing the internet, cooking, listening to music, and watching the presidential debates online.

It's been such a relaxing day. I hope tomorrow will be as well because Monday is the continuation of the craziness of last year.

Today was a no spend day, and it felt good.

Teachers, Student Loans, and Salary

January 5th, 2008 at 12:52 am

I came across an interesting article in a National Education Association magazine. It was all about how the rising price of college tuition is impacting teachers and those who are considering going into teaching. Horror stories of people having up to 80k in student loans and being afraid of going into teaching were plastered all across the pages.

It's no secret that teachers don't make millions of dollars; however, we make a decent living. My starting pay this year was $34,500. If you're not too extravagant, that's a respectable starting salary. After I get my master's degree, I'll be making somewhere around $41,000, with salary for a classroom teacher topping out in the vicinity of $60,000.

Now, we've established that teachers do not make gobs of money, but they definitely don't make rabbit feed. This still leaves the question hanging, however: is it not enough money? Should teachers make more money?

Here's the simple answer: we'll see.

If teachers really are making too little money, fewer people will go into teaching. More current teachers will leave. Teacher quality will depreciate.

Now, this may lead us all to think that this will bring teachers' salaries up. That is not necessarily the outcome. While having fewer quality teachers will definitely harm our civilization, we may allow that to happen. What will determine our teacher quality is what our society ultimately values.

If we truly value education, we will fund it adequately. If we do not value education, no matter what we may claim, we will not fund it adequately.

As an educator, I don't really care which way things go. I love teaching, but if I didn't think I was making enough money, I'd go do something else. How much money I make from teaching is not something I get to decide. For the time being, I'm happy with my lot.

To bring things full circle, I don't think improving teachers' salaries is the answer to student loan debt. It is possible to get a quality and affordable education. I don't know why people are shocked that you can't be a teacher when you have $100,000 in student loans. There are a lot of things you can't do if you have that much in student loans.

DISCLAIMER (to be read aloud so quickly that the words blur together in one fine-print mumble): The above statement in no way means that the author does not appreciate the actions of the wise and venerable NEA in terms of fighting to put more cold hard cash in his pockets. Actually, the author applauds all such efforts and heartily wishes the NEA and all of its member-affiliates the best of luck in every valiant and noble quest they decide to undertake.

Does Index Fund = Eggs in One Basket?

January 3rd, 2008 at 03:17 pm

As of now, my plan is to put 80% of my retirement in Vanguard's Total Stock Market Index Fund. That particular fund tracks every single American stock on the market. I plan to put the remaining 20% in Vanguard's Total International Stock Index Fund, which is a broad international fund spread among Europe, Asia, Africa, and some emerging markets.

This strategy comes straight from Suze Orman, and it makes a lot of sense to me. Suze makes the point that I can invest $300 per month for 15 years starting at age 25 and it will be worth more than a million dollars when I am 70. This assumes an average return of 8%, which is quite reasonable.

Now, I just finished Howard Dayton's _Your Money Map_. He has quite a different take on investing. I love Howard Dayton's advice, and I am following the Crown Money Map, which I would suggest everyone go check out at www.crownmoneymap.org

As I was saying, he has a different take on investing, or at least I think he does. It seems much more conservative. Basically, he advocates keeping 25% of your retirement in liquid or semi-liquid form by way of CDs, money market funds, etc. The remainder is put in index funds with more being put towards higher-risk investments as your money grows and eventually into a variety of different things such as real estate, etc. While this doesn't seem to offer the outstanding returns of Suze's approach, it does seem more diverse and safe.

Suze Orman's strategy is far simpler: just put it all in a broad index fund. I like the idea of just throwing $300 per month into an index fund for the next fifteen years and retiring a millionaire, but I don't know if that is putting all of my eggs in one basket.

You may be asking, "How is investing in a fund that tracks every stock on the market putting your eggs in one basket?". Well, that's what I am asking. Is investing in ONE fund, whether it tracks the whole market or not, not being diversified enough? In light of the mammoth financial problems the U.S. is facing now and will be facing in the future, is there any way to protect myself? Should I simply throw all of my money into the whole market and hope for the best?

P.S. Today was another snow day! Woo!

Of Sickness and Snowdays

January 2nd, 2008 at 05:06 pm

I had a wonderful New Year's Eve party. My home was filled with friends and family. We laughed, played games, and...ate pizza.

I had a dream in the wee hours of January 1st that had something to do with my stomach being upset. I woke up to find that my stomach really was upset. I proceeded to do the things people do when their stomachs are severely upset for the next day. This included a sustained fever of 103 degrees.

While I haven't missed a day of school all year, I was going to have to call in because I have been visiting family some three hours from where I work. I simply could not drive under the circumstances, including a sever snow advisory.

Right as I was going to call in sick, I received an automated message from our superintendant. School was cancelled as a result of snow! Yay! I feel well enough today to make the three hour drive. Reason #548 why teaching is a wonderful profession: snow days!

Can You Feel It?

December 31st, 2007 at 05:16 pm

2007 has been a year of changes for me. Like any year, it has had its ups and downs, but it seems that they were more drastic. The ups were really up; the downs were really down.

I went from being a student to being a teacher. I went from undergraduate classes to graduate classes. I saw the end of my competitive running career with my graduation from college. I went from having no money and little responsibilities to fully steering my life and managing my own assets.

Like most years of my life, 2007 had a distinctive "feel" to it. It felt like a plant that dies and is absorbed into the ground before it bursts back to life more full and powerful than it was before. That's what 2007 was to me. Many things in my life came to an end. Many of those things were good and brought my great joy, but they had to end to make room for the future.

As we press onward into another year, I wish you all the very best. I hope you are surrounded by your friends and family tonight. I will be. Any year that ends in such a way can be nothing but wonderful.

Wedding Bands

December 30th, 2007 at 04:18 am

Q and I bought our wedding bands today. I ended up spending $500. It felt really good to have the money readily available with no strain put on any of my savings accounts or bills. Managing money well takes such an incredible amount of stress out of life.

Good News with my Car! Yay!

December 28th, 2007 at 04:19 pm

Some of you probably heard my lamenting over how much I expected to pay to fix my car. I was expecting a bill in the vicinity of $400. Well, it turned out to be $158!

I didn't even have to tap my emergency fund. Now, I will most likely have some other car trouble in the near or semi-near future, which will cause the cycle of lamentation and rejoicing to repeat. That's fine; that's life.

After receiving excellent advice from several of you, I have started a Car Fund and Car Repairs section of my savings. I will soon begin funneling money into those two accounts, which will hopefully have time to accumulate significant amounts of money before I need them.

Having money saved away for various purposes feels so good!

Farewell Benazir Bhutto

December 27th, 2007 at 09:35 pm

I am shocked. Benazir Bhutto, former prime minister of Pakistan, was assassinated and declared dead at 6:16 p.m. Pakistan time.

I am shocked and saddened by this event. Benazir Bhutto was a moderate Pakistani politician. She was a strong female leader in a part of the world beseiged with prejudice and persecution.

As she was a politician, I am quite sure that she was no saint. Nevertheless, she was a voice of moderation and reason in Pakistan, a place that cannot afford to lose its intelligent, semi-honest leaders.

While everything I write about on here does not have to tie in to personal finance, the assassination of Benazir Bhutto ties in as much as anything else. An unstable Pakistan equals a world market that is less stable than it could be. An unstable world economy directly affects me.

I am not shocked and saddened by the world economy at the moment, however. I am hurt that this has happened. I am sad that such hate and violence exist in the world that a leader like Bhutto is not safe to seek democratic election.

This is a loss to Pakistan. This is a loss to women. This is a loss to democracy. This is a loss to capitalism. This is a victory for terrorists and religious fanatics. God be with Bhutto.

0.5% Interest on My Savings Account??? HELP!

December 26th, 2007 at 05:24 pm

In lieu of my needing to tap my emergency fund to pay for car repairs, I called my bank to make sure that money would instantly be available in my checking account as soon as I transfered it to checking via online banking. They said it would be. Then, it popped into my head to check the interest rate on their savings accounts.

SHE SAID THEIR SAVINGS ACCOUNTS GET 0.5% INTEREST!

What!

0.5% interest??????

Is this normal? I was under the impression that interest rates should at least be 2%.

New brakes and tires. =(

December 26th, 2007 at 03:31 pm

I knew this day would come. I drive a 1998 Mercury Sable, and it is paid off. It's had some problems over the past year with not starting; however, I haven't had to put any cash into it. That is about to change.

The good ole Mercury probably needs new brake pads and new tires. This is all going to set me back somewhere around $410. That's not terrible, but it's the first major repair bill I've had to pay since I've been out in the world on my own.

My emergency fund can easily absorb this, but it's the principle of the thing. Overall, however, the Mercury is being good to me. As long as I'm not pumping thousands of dollars into it a year, it's saving me cash. I don't want to make a car payment any time soon. Roll on, Mercury! Roll on!

Christmas! (Part II)

December 25th, 2007 at 04:25 pm

Merry Christmas to everyone! Enjoy all the food, friends, and family!

Christmas!

December 24th, 2007 at 04:48 pm

This Christmas has been good to me. I have all of my shopping done, and I've spent less than $200 on gifts. I'm fortunate to have people in my life who don't overemphasize expensive gifts.

Q and I decided to set a $100 spending limit this year, and it has worked out quite well. It makes you think of creative ways to give to the other person, but it's not so frugal as to completely omit fun things.

So I spent $100 on Q, and I spread the other $100 out on my family. I already received $100 from my grandmother, so I'm pretty close to breaking even!

Now, changing the subject, I received some excellent advice in posts over the past couple days. One of my favorites is the "car fund." I think I'm going to begin putting $100 per month in my car fund. That way, when I do need to buy a car, I'll already have a nice down-payment ready without having to dip into my emergency savings.

In response to how I became so financially conscious at 22, I'm not sure. Both of my parents came from poverty and made it into the middle class. They made it by being extremely good with money. While we have only recently had formal "financial talks," their money skills rubbed off over the years. If I'm half as good as they are, I'll be lucky.

I hope everyone has a wonderful Christmas!

Long-Term Financial Goals

December 22nd, 2007 at 02:57 pm

Wow, thanks so much to everyone who posted on my first entry. It really means a lot to feel welcome right from the start.

I guess a good second entry might be to set some tentative financial goals. I'm open to any suggestions and feedback on these.

Goal #1: Have enough money in my 401k and Roth IRA to live on for the rest of my life when I retire.

Kentucky teachers draw a pension after they have taught for 27 years. The pension system is a pretty good deal; you draw 60% of your max salary for the rest of your life. If I stay in the classroom, I'll draw somewhere around $40,000 a year from my pension for the rest of my life. Now, that seems like a good deal, especially if you have a nice stash in your 401k and Roth IRA, but I know enough to know that I should NEVER bank on a pension system of other form of group benefits. Those things are at the mercy of politicians and other types who wield far more power than I do. I need to be prepared to financially stand on my own two feet when I need to retire.

Goal #2: Figure out how much money I will need in my 401k and Roth IRA to meet Goal #1.

Does anyone know how I can go about doing this?

Goal #3) Have absolutely no debt.

This is a really long-term financial goal for me because I have just started accumulating debt. I got through my undergrad without acquiring any debt, but I have had to start taking on some since I started my M.A. I am nursing a car that my parents gave me a long time ago, a 1997 Mercury Sable, so I'm going to need a new car within a year or two (I'm thinking of buying a certified, pre-owned Honda Civic). That will put me farther in debt. Then, I'd imagine that Q (let Q = my fiancee) and I will be looking for a house within five years or so. All of these things are not bad debt. Still, they are debt.

Many of you have much more experience with this stuff than I do; please let me know what you think. Offer suggestions because they are more than welcome.

Hello!

December 21st, 2007 at 11:13 pm

I'd imagine that I'm somewhere around the billionth person to cast a puny "hello!" out into the vast abyss of the internet. Judging by the other blogs on Saving Advice that I've read, however, I'd imagine that several helpful, intelligent, and kind people will stumble by here before long.

As you can see by reading my bio, I am 22 years old. I just finished my first semester teaching high school English in south-eastern Kentucky, and so far I have had a blast with it. The kids are great, and being not much more than a kid myself, I really enjoy what I do.

I am very passionate about literature and language. That being said, I don't fall within the typical mold of literary/humanist types. I am a fiscal Republican. I believe in the free market. I believe that competition ultimately is good for everyone.

My career has nothing directly to do with managing money. In fact, I never even considered a career in banking, finance, or business; however, I absolutely love to manage my own finances. I am more frugal than most, but I am not an extreme penny-pincher. I like to buy things for my fiancee. I love going out with my friends and having a few drinks. I LOVE Wal-Mart! I feel that I have a healthy respect for where money comes from and what it does for us.

When I stumbled across this web site, I knew that it was a place that I would enjoy frequenting. After reading several blogs and seeing the positive, encouraging environment in place here, I hope to become a part of that. Please drop me a line. I'd love to read your blog, have you read mine, and hopefully, we can all help each other on the road to financial freedom.