Fiscal Fitness

One thing that I need to do at some point is to rebalance my retirement portfolio. I have some money in an inherited IRA from my mother, and there's way too much cash in there to generate good growth (though I definitely won't liquidate all the cash--I'll leave enough in there to provide some liquidity in case of an emergency....my ultimate goal is to have 6 months' worth of living expenses in an emergency fund in cash outside of retirement accounts and a years' worth of living expenses in short-term bonds, CDs, and cash equivalents inside the retirement account just in case. But the amount of cash I currently have in retirement is more than that, so in the near future, I need to invest some of that, probably in an intermediate bond fund.

There is a cool tool that is useful in rebalancing that I discovered a couple of years ago. It is called "Financial Engines," and it was developed by Economics Nobel Prize winner Bill Sharpe, and they work with many of the big retirement plan companies and big corporations to provide advice, based on Monte Carlo similations, to employees. Now I'm not saying it's a perfect tool--it IS a bit of work initially to get set up, and there are things that it won't ask about...see

http://www.businessweek.com/technology/content/jan2002/tc200... for a good review...but it does a pretty good job of keeping up with how your account balances are changing IF you are not adding to them, and it provides easy access to research on various funds. This is a product that is typically offered free to employees of Fortune 500 companies as an employee benefit, or individuals can buy plans for themselves starting at $39/year, but you can get a free account at http://www.terrysavage.com--click the blue financial engines button . Once you sign up and input your data and goals, they'll mail you quarterly reports with a scorecard saying how likely their simulations say you are to reach your retirement goals. Anyways, I find it useful for taking a look at my accounts, and so I pass the information on to those of you who may find it useful as well.

The gold standard toward which I aim, as a disciple of YMOYL ("Your Money or Your Life," by Joe Dominguez & Vicki Robbins) is "F.I.," financial independence, the point at which you can live off your investment earnings (plus any Social Security that you qualify for, once you reach retirement age). That generally takes retirement savings (a.k.a. investment capital) of 12 to 15 times earnings...so that someone who earned 50,000 a year would need to have 600-750K in order to consider retiring.

So a useful year-end metric is not just to look at percentage earnings, but at how much money your money earned. That actually matters more than the percent. If that number looks like income that you could live off of (or could live off of supplemented by the social security you can expect to get), you have a sense of how close to F.I. you are.

I sat down and did that calculation. This past year, my investments (basically my retirement accounts) earned me about $5000. Not hardly enough to live on, but it's a start.

but I'm about to drag myself out to the two Christmas Eve parties I've been invited to.

I've spent most of the past two days reading "Your Money Ratios," analyzing my annual expenses, and thinking about refinancing, and the Scroogey part of me would be perfectly content to stay here doing that.

But I am forcing myself into a bit of congeniality, and even went and bought some small gifts for some of the neighbors and handed them out and did a little visiting this afternoon. Good for maintaining good relationships with the neighbors, which I value.

Tomorrow, I *will* have the day to myself, and I'm planning on *finally* putting this place in some decent order to give myself a little feeling of peace and refuge when I arrive home. At the moment, I have to put blinders on to get that.

I'm Jewish, so this holiday doesn't mean anything to me, and my focus is really on getting organized and motivated for the new year.

And maybe I'll treat myself to a movie tomorrow afternoon. We used to do that when we were kids sometimes on Christmas Day. Anyone know anything decent that's playing?

Last year, my mortgage company (Wells Fargo) called me and offered me an easy refinance...no appraisal, no cost (though I'm not sure what that means...I'll have to look at the documents I have from last year to be clear). Last year, even though I was approved for the loan, I didn't go through with it, because I was employed only part-time and still collecting unemployment, and I was worried that somehow things would come back to "bite" me.

Now that I'm employed full-time again, it makes sense to think about refinancing with the rates so low. So I googled "mortgage refinance calculator," pulled one up, filled it out, and, as typically happens with these, got a list of potential lenders to call me rather than an actual printout of an estimate.

I talked to two of them today. Seems like I can go from a 30-year mortgage with 24 years remaining at 5.875% to a 20-year mortgage at 3.75%, AND lower my monthly payment by about $50. Sweet.

And, of course, if I keep on paying the same amount, I lower the payoff date to about 17 years, which brings me to full retirement age (not that I plan to retire then, but I want to be ABLE to, debt free).

So I'm going to do it. Now I need to figure out who to do it with. I have two phone quotes (both of which agreed that I can get the 20 year 3.75% rate; one also offered a 15-year, 3.5% loan, but that takes my payment a little bit higher than I'd like it).

If I stay in the house, I'll save about $24,000 in interest over the life of the loan (less any points or closing costs, which still leaves savings of over $20,000). Even if I decide to move and even if there are points or closing costs, it would be worth it in just a year or two.

I know that with both of the lenders that I spoke to today, there'd be an appraisal to get. Don't yet have the details on other closing costs.

Now I need to contact Wells Fargo and get their rate and see if it is comparable, and weigh whatever that is against avoiding the hassle of getting another appraisal.

This is my first house and I've never refinanced before. Any words of wisdom on things I should look at for as I navigate this process?

Here's a summary. First the pictures, then the words; first the past four years and then the current one.


A look at the past four years shows that both my assets and my debts climbed (with the exception of the year when the recession hit, when my assets fell). On this balance sheet graph, which gives a sense of overall context. the debts line actually looks relatively stable, but the actual amount of debt increase was significant and scary. That comes through better on the income statement graph below.

The debt ratio, by the way, is total debt relative to total assets, and shows an increase for the first four years of the period. Currently it is at about 25%, down from a high of close to 40%. My goal for the next year is to bring this down below 20%, ideally to 18%.



On this graph, you can see that, for most of the time during this period, my expenses outpaced my income, due to a 2.5 year period of unemployment combined with unusual, large expenses.

No amount of emergency fund planning that I might have done prior to this period would have been sufficient, and the financial planning literature I've read tends to significantly underestimate emergency needs as people, pets, homes, and durable goods age. Of course, I haven't read much financial planning stuff the past two years as I've been focused on finishing the CPA. The literature that I'm familiar with is from before the recession and overestimates expected retirement returns and underestimates expenses. I'm hoping that the recent literature is more realistic. (Not unduly pessimistic--realistic.)

The profit margin is net income (income less expenses) divided by income; here I just include "operating" income, i.e., salary, unemployment, and gifts, but not the investment income that accrues in my retirement accounts. As you can see, I had losses rather than income for most of the period.

As for the past year, you can note a turn-around on both graphs. This reflects a "bad" (sad) reason and a good one. The big increase in my assets is because my mother died and I had a bit of an inheritance; the recent increase in net income is because I worked a full tax season (lots of hours) back last winter and because I landed a full-time job with benefits this fall.

Hopefully the next time I do a five-year assessment, I'll be able to show annual profits (ideally, 10% for this next year and 15-20% thereafter) and a big reduction in debt.

I drafted my 2012 goals--you'll see them in the sidebar.

The debt monster really ran amok in 2011 as I continued to run into emergency situations that were just not in the budget for a person surviving on unemployment, but now that I am employed, the extinction of the debt is in sight. As soon as I received my first full paycheck, I sat down and spent a day and budgeted and planned.

If I were paying off the debt based on my salary alone, it would take me 3-4 years, just as it did at the start of my career, when I got into debt the first time. I do expect to receive money from my mother's estate next year, however, and that will allow me to short-cut the process and pay off the debt all at once, as well as use the balance to establish the car and roof replacement and emergency funds I should have been building all this time had circumstances allowed.

Once the debt is paid off, I will increase my retirement contributions and think about other savings goals.

It is so nice to be able to plan again against a background of relative certainty compared to the planning with life-in-limbo that I've done since 2009.

Teddy, my last remaining pet of the three I had two years ago, was diagnosed with chronic renal failure after I came back from my weekend away at Thanksgiving. He's now on subcutaneous fluids twice daily, and hopefully can have 6-12 more months. He's only 10, and I thought I'd have him longer than that. Poor Teddy Bear.

I read an article recently about how much better pet insurance is now than it was a decade ago. Too late for Teddy, but has anyone had some good experiences with it? Something to look into before the *next* pet.

The past 2.5 years have had so many ups & downs, with a long bout of un/under-employment, two pet final illnesses and my mother's final illness, that I just gave up the ghost on trying to plan ahead, and I racked up a lot more credit card debt than I am comfortable with paying for veterinarian bills, some major plumbing & other house and car repairs, and travel between my east coast home and my mother's west coast home.

I've been at the new job three weeks, and today I logged in to the payroll company and got a sneak peek at my next paycheck, which will actually be direct deposited on Wednesday. Because I'm salaried, each of my future paychecks will be the same (except that health insurance contributions are likely to go up come January, and the Social Security tax withholding is scheduled to go back up to 6.2% from its current 4.2%.

Knowing what I'm making, what I own, what I owe, and what I expect to inherit when we close out and distribute the assets from my mother's trust next summer allowed me to actually make some reasonable plans for the first time in a long time.

The first year will be tight, because I have a lot of debt payment going on. Nonetheless, I'm contributing 5% of my pay to retirement because it feels so good to be able to contribute again after not having been able to for 2.5 years!

When the trust distributes next summer, I will be able to pay off the balance of the debt, and increase my retirement savings. I'm also going to take a chunk of the expected distribution to put away for a new car and roof replacement, both things I expect that I may have to do within the next 3-5 years. Plus I'll also leave some of it accessible in a taxable account as an emergency fund in case I become unemployed again. Anything that's left after that I'll probably put towards retirement.

I also downloaded a preview of the tax package that I use at home (TaxAct) and ran the numbers on this years' anticipated taxes. This year, I'm in the 15% tax bracket and next year I go back to the 25% bracket, so I need to think about whether there's anything that, given that fact, it would be advantageous to do this year rather than next (maybe a second pair of glasses, since I definitely was way over 7.5% on Schedule A for medical expenses, given the fact that I paid my own insurance for 11 out of the 12 months this year.

What a massive relief to know that there is light at the end of the debt tunnel. I've been hoping and praying that this would happen, but now is the first time that I actually can begin to *expect* that the nightmare of debt will end.

I started my new job on Nov. 1. The first day was quiet, as half the firm was off at a continuing education seminar. I spent the first couple of hours filling out paperwork and reading over the details of benefits information (health insurance--I'll save over $300 a month from what I was paying on my own, plus there's $0 copay for doctor visits and only a $500 deductible; and there's a SIMPLE IRA with a 3% company match). Then the two partners who were there took me out to lunch, so we got to know each other a bit better. I was pleased to find out that they are dog people, too. In the afternoon, I started working on my QuickBooks ProAdvisor Certification--there's a 16 hour CPE course (which takes more than twice that long to complete if you're relatively new to QB, as I am). Most of the rest of the first week was spend on this certification course, with one of the partners throwing little assignments at me for an hour or so each day. Next week, I learn the billing system, as that will become my responsibility. So far, so good--I am enjoying things so far, but definitely have to get used to being away from home for 9 or more consecutive hours a day. As a professor, I worked that much, but was able to do lots at home, so wasn't away from home that much. And even last tax season, when I was working about 65 hours a week, it was at two firms, one of which was near my house, so that I'd come home for lunch and dinner. The new firm is 15 miles away, so these days I go home for dinner, but come tax season, I won't. At least there's a refrigerator and microwave at work (though no sink in this "kitchen.")

Once I have my first paycheck in hand and verify my take home pay, I'll have to start putting together a plan to get myself out of debt. It will be such a relief to finally start turning that debt around!

I can check off (most) of my Goal #1 for 2011--in fact, I've made good progress on all four of my yearly goals!

I finally landed a salaried job with benefits at a small CPA firm that will allow me to finish the CPA license requirements, although I won't have the necessary 400 audit/assurance hours by year's end. I expect to be able to apply for my license next summer.

I'm very excited about the job--it seems a great fit, as it starts out at a junior level, which is appropriate for me as a career changer, but there's a lot of potential for moving up at a good pace, which fits my 20 years of professional experience in another business (I was a professor in an unrelated field.) It's that potential for moving up which I had lost with my last career which led me to change careers in the first place.

The job is also mostly tax with some audit, and that fits my interests as well. I'm very happy to have landed at a small firm, where you do more of a variety of tasks, than at a large one, where you specialize more.

As an entry level job, the position comes with a salary that is about $15K less than I once made, but also considerably more than I made while combining unemployment compensation with part-time income. This will allow me to stop going into debt and start getting out. I need to make a plan for getting out of debt and saving for both short-term goals (my car is a 1998 with 150K miles so I expect to have to replace it within a few years) and retirement.

First, however, I am going to go get myself new glasses, pay for minor roof repairs to be done before winter comes, and buy myself a second business suit in preparation for my first month at the job.

Question for you: Are there expenditures you make that you consider more as an "investment" than an expense?

I'm not talking traditional investments here, but things that you purchase that you believe will have the effect of saving you money in the long term.

I've made three such purchases in the past six months, and two other purchases from the past 3 years come to mind as well:


1. A new wool comforter. If I can stay warm at night, I can keep the house temperature cooler and save money on heating bills. My old down comforter actually kept me warm, but about 6 years ago, I was first diagnosed with asthma, and last year, I landed in the ER because of it, to the tune of $1500, currently the deductible on my health insurance. I had previously poo-pooed the idea that the down was making my allergies worse, but this year, the effect when I put the down comforter on my bed was striking and notable, requiring the use of my inhaler several nights in a row (normally, only exercise induces an attack). So the comforter went into storage and I researched replacements online. Wool appears warm, breathable, and dust-mite resistant, as well as natural, so I purchased a comforter made out of wool.

2. A Vita-Mix: If you haven't heard of these, these are basically blenders on steroids, and highly touted by many in the raw foods community. While I'm not raw, I do try to eat minimally processed whole foods as much as possible to cut down my grocery bills in the short term and my doctor's bills in the long term. I haven't owned this long enough to calculate the monthly grocery savings yet, but I am using it multiple times a day and eating more fruits and veggies than ever, which can only be good for my health. Today I ran out of soy milk and at first was tempted to go to the grocery store....then realized I still had a cup of raw almonds, so instead, using the Vita-Mix and a "nut-mylk bag," I made myself a quart of almond milk that will do for cereal and coffee for a few days...saving me a grocery store trip, which means saving money because I *know* I wouldn't just buy soy milk while I was there! Plus now instead of buying pre-minced garlic and prechopped onions, I'm buying them whole and chopping my own.

3. A Nu-Wave counter-top oven. Yes, I'm a kitchen-gadget queen. But I've never had good luck making meats in the traditional oven. Baked veggies and the yearly turkey, yes, but until now, I've only had good luck making chicken on the stove top in some kind of sauce, usually marsala or cacciatore...and most of the chicken I've bought has been in the form of boneless skinless chicken breasts. Now every week I'm buying a whole frying chicken (better size for one person thann a roasting bird) and making it in this baby....then using the drippings and carcass to make my own broth. This machine will also cook meat straight from frozen, and chicken breasts are done fast--15 minutes if thawed, 25 i frozen--so there goes one of my excuses for buying something out. I buy a big bag of turkey burgers from BJ's and keep those in the freezer for quick meals that save me from going to BK's!

4. Not a new purchase, but an old one that I hadn't used for a couple of years that I recently put into action again: my Food Saver. The bags are a bit pricey, but Ball Mason jars are reusable, and if you spend a few bucks extra for a jar sealer attachment, you can buy in bulk and have the food last longer--a good solution for someone who is single like me who cannot take advantage of buy-in-bulk deals without a long-lasting storage solution.

5. My rice cooker--this was the first kitchen gadget I bought with the intent of using it to cook more, and it definitely has helped. A "fuzzy logic" cooker with multiple functions can be used for much beyond basic grains! Mine has a soup and a slow cook function and will even bake bread! I love being able to dump my ingredients, press a button, go out for a walk and come home to a cooked meal! This is faster than a slow cooker but can act similarly, plus because it vents moisture, things will brown in it that won't brown in a slow cooker. Right now the teflon on the inner pan has begun to wear out, and I'm going to have to replace this....I'm considering a gadget by Fagor that has a pressure cooking function as well (unfortunately Panasonic does not seem to sell replacement liner pans).

So what purchases have you made recently with the intent of saving yourself money in the long term?

I see that I haven't written an entry here since New Years, so here's the quick update of my year to date:

January: Spent a lot of time with a close friend whose grandson died on the 24th.

February-April: Busy season; worked two jobs, 30-35 hours each--loved one job, hated the other. But neither morphed into anything more after tax-season; I still work occasionally and part-time at the job I love, but the firm is too small for that job to become more than it is. I get good experience, learn a lot, and can say that I am employed, plus earn a little money--all good. On the sad side, I lost my cat, Phoebe, the one I'd had since kittenhood, to kidney disease.

May: Went out to Los Angeles for two weeks to visit my mom; she was able to leave the house (in wheelchair) for excursions to places like the Farmer's Market; we videotaped a 3-hour oral history with her. When I returned from the trip, one of my clients had died and I was hired by his son to assist him with his executor duties. (Poor guy--he lost his mother in the middle of May and his father two weeks later.)

June: The first half I was busy helping my client with the executor work, plus arranging for my sidewalk to be replaced (it had been torn up in September with a sewer pipe replacement). I had a talk with my Mom on June 15, the day they were starting the work, and she seemed fine. The next morning, though, I get frantic text messages from my sister that my mom is in the ER. She is hospitalized for 8 days--I monitor the situation from afar. She is released on Friday the 24th and calls me on Sunday the 26th to ask me to fly out--she needs extra assistance now that she is home, hopefully for just a couple of weeks. I fly out on Monday. She improves for the first week I am there.

July: My mom continues to improve through July 3--a day during which she spent much of her time sitting in the wheelchair at the computer making stock transactions. July 4 she is tired and spends most of the day in bed. July 5 she is extremely week and we end up having to call the paramedics again. She lands in Intensive Care for five days and then back on the regular floor for five days. I was able to be with her 14 or so hours a day. During this time, after the treatment options that she was willing to try failed, my mom made the decision to go home on hospice. She was transfusion-dependent and this meant turning off the transfusions. She came home on Friday the 15th and died on Tuesday the 19th. I spent 3 more weeks in L.A. dealing with her executor stuff and being there as a support for my sister.

August: I returned home. I still had executor work to do for my client for the first week, and then two of the staff in my office were on vacation, so there was work for me the second week. But I haven't worked since last Monday. My birthday was last week so I took a day off with a friend to drive down the river; then Hurricane Irene was distracting with preparations for a few days. I was fortunate to escape damage-free, but my friend had water in the basement and a big tree fall on her garage. I am giving myself a couple of days to clean up and organize and then hit the ground running in terms of job hunting after Labor Day.

It's been two years of transitioning--two years since I left full-time employment in my previous career, two years since my wonderful Henry Hound was diagnosed with cancer, two years since my mom's diagnosis. The part-time employment has been wonderful in affording me flexibility as well as experience during this time, but now I desperately need a full-time job with benefits. I was so good for over 15 years about avoiding unnecessary debt; now I have over 10K on credit cards to pay off so I can get my financial house back in order.

I'll be back here more as my attention focuses more on that goal.

What I'd Change
1. I'd have a bit tighter rein over my spending. I'm not cutting back as much as I should given my part-time employed circumstance. There are a few expenses I regret, but most of them I don't...for many of them, I feel like I've been making investments in my future (spending about $500 on CPE units, spending about $200 on nutritional supplements and $100 on exercise equipment/gym fees/videotapes).

So I'm already on to
What I Would NOT Change
1. Money and time spent on my beloved Henry, even though the cancer beat us in the end.
2. Money spent on CPA review classes....got me through all the exams the first time around and saved on future exam fees (I think it's about 20% who pass all four on the first try)
3. For the most part, money and time spent on my health, though there are months I paid for the gym and didn't go.

What I'll Change in the Future
1. More focus on debt reduction. The past 18 months or so have been hard. I've been unemployed or part-time employed; my long-term relationship broke up; I lost my beloved dog to cancer; my mother is seriously ill and spent five months in a nursing home and while she's home and stable now, she does have a terminal illness; and my best friend's grandson has been dying of cancer...the last month we knew it was getting close to the end and I spent almost every evening with her so she wouldn't have to be alone with her thoughts; he finally passed last Monday. Because of all the hardship, I've fallen into debt whereas before I had none and needless to say, I haven't saved anything either. I need to focus on getting out of that debt...the credit card debt will be gone this year one way or another although some of that may be by transferring the debt to five-year loans I can take out at a low rate by borrowing against my retirement savings. Better five years at 5% that can be paid off early without penalty than 10% or more on credit cards.
2. I'm praying that my mom stays stable this year, both because I love her and want her around and because I really need to focus on completing my CPA license and getting a salaried job. It actually gave me leeway to be with her that I was only employed part-time last year. This year I really need to finish the license requirements (which means finding an auditing job after tax season) and find a salaried job one way or the other....so far I've only applied to CPA firm jobs and haven't tried for corporate jobs.

Goals & Results for 2010

Goal: 1. Finish the CPA exam and the EA exam. Find a real self-supporting accounting job. Results: CPA exam--passed! EA part 1, passed. Working part time at a CPA firm and for 4th quarter at a doctor's office too. But no job that is full-time and self-supporting yet.

Goal: 2. Continue regular exercise with an eye towards weight loss. I walked 285 fitness miles in 2009...hoping to increase this to 365 in 2010. Also need to add in strength training at least twice weekly. Results: Walked 205 miles (didn't walk during two crisis months with Henry & my mom). No real strength training effort.

Goal: 3. I will focus on eating fewer prepared foods and smaller portions with an eye to both losing weight and trimming my food budget. Results: I made progress here--switched to Dr Fuhrman's "Eat for Life" plan in mid-Sept and have lost 19 pounds since Jan. 1 of 2010. I'll have to check how this affected the food budget...I don't really think it is down substantially.

Goal: 4. Do my own "happiness project" to combat the depressive tendencies that come with long-term unemployment and dealing with two dear family members facing terminal illness. Results: I made sporadic efforts and have at least avoided outright depression--mostly because I have been working part-time all year, much better for my mental health than total unemployment. Also a friend of mine whose grandson is dying of cancer and I partnered to form a strong mutual support network and check in on each other regularly, especially when one of us knows that the other is dealing with a rough patch, and this helps.

Low points of 2010: Henry's death; mom's landing in the hospital and then nursing home and realizing how serious her illness was.

High points of 2010: Landing the part-time job at the CPA firm; passing the last of the four CPA exams.

Goals for 2011 are the same but the plans and strategies are different.

One of the things that I appreciate about David Bach is that he usually offers his latest book for free for one day each book release. Today's the day. His latest book is "Debt Free for Life." Go to http://www.walletpop.com/david-bach to get your copy.

I haven't read it but I have appreciated his advice in the past.

Still no word on the ideal full-time job I interviewed for Nov. 10. About two weeks ago I sent an email and learned that the person who was hiring me had been having health problems and gotten behind on the interviews. He sent me a very complimentary email, which was nice. Then about a week ago, he sent a two word email, "still interviewing." So I haven't closed the books on that opportunity but definitely as time goes by I get more discouraged about it.

I did get some reassuring news from my part-time CPA firm job in case this full-time opportunity doesn't work out...they'll be able to use me part-time, though with a lack of office space, it'll probably mean working 5-9 pm weekdays and all day on weekends for about 36 hours/week. Definitely better than nothing and I'll be doing a lot more corporate returns this year rather than individual, which is the kind of experience I need to make me a better candidate for the regional firm jobs I've been applying for.

I've been working part-time as a temp receptionist/office manager at a small (one-doctor) medical office. That job ends Dec. 30. The doctor is interviewing now for permanent replacements. While it's not a job I'd be interested in permanently, it still is disconcerting when sometimes she has me make interview calls to prospective job candidates.

At least it's been good for learning a bit more about health insurance and billing. I have to deal with that on two fronts now--I'm dealing with my mom's long-term care and catastrophic major medical insurances over her nursing home stay and subsequent home health care aide use, plus I'm right at the point where I need to buy an individual policy for myself.

I've been on COBRA since Sept 1, 2009. For 2009, with the 65% federal subsidy, I paid $164.50/month. In 2010, it went up to $189/month. As of December 1, I ran through the federal subsidy, so I had to pay the full amount, which was $540 for this month. On January 1, it goes up to $604.50/month, and then I'm off COBRA on March 1 but could buy an individual policy with the same firm with no pre-existing medical condition clauses, but I think that'd be about $700/month.

Not something that I can afford on my mix of unemployment and part-time temp income--that'd be over a quarter of my take-home, and nearly as much as my mortgage.

So I'm trying to get new health insurance in place by Jan 1. I'll be comparing plans this weekend and making phone calls during business days next week. I'm suspecting at this point that I'll end up with an HDHP/HSA combination and probably about a $300/month premium. I'll post the details of my decision process once I decide.

I also decided to take out a substantial loan from my 403b plan to help pay down my credit card debt which has mounted substantially from zero to 14K during my 16 months of unemployment coupled with Henry's cancer and major capital repair expenses (about $3600 on plumbing and $3300 for car repairs during this interval...car has a relatively new engine (about 8 years) compared to age of the body (13 years) and things that are going wrong are just natural aging, e.g., replaced tires after 60K miles, replaced clutch mechanism after 125K, so I figure I'm justified in trying to avoid car payments until I get to the point where I have a salaried job and can save in advance to buy a new car). Between the loan and a substantial gift from my mother I'll be able to take most of that debt off of credit cards at 9.99% and leave myself with about $8000 in loan debt at 5.05%. There's still about $6000 in additional loan money that I could take if the car breaks down and I need to buy a cheap replacement before I find a real salaried job.

Progress, but certainly slower than I'd like!

I post rarely these days, so this is a catch-up post since July.

Life is calmer these days than it was early in the year, thank goodness. 2010 has definitely been a personal crisis year with Henry's dying and my mother's illness, but things have settled down for the moment.

I'm still on unemployment and still working part-time. I got cut way back on hours at the CPA firm for 4th quarter but found a temp job working as office manager in a doctor's office to fill in the gap until tax season. I've had some interviews at firms I'd really like to work for but haven't yet landed the salaried job with benefits that I crave. There are so many people with more experience than me out on the market that I lose out on the experience front. But at least this year I'm getting interviews--I wasn't last year. I'm crossing my fingers that if worst comes to worst I'll be back at the CPA firm that I've been at since April 1, and working more on corporate taxes this year, which is *exactly* the kind of experience that I'll need to get the kind of job I want. It's not a sure thing since office space is tight and the boss has another part-timer who he hired on after me who has nine years of experience...but if they can make the office space work I have a pretty good shot at having the job I need this tax season to get the job I want in a year or so, so I'm being optimistic.

The biggest thing since July is that I've actually made some progress for once on my weight loss goal. The last time I made any progress here was in 2008, when I joined Weight Watchers and lost 25 pounds in 3 months...and then slowly gained back nearly 20 of it during the intervening time. I turned 50 in August and that lit a fire under me to make a serious effort to lose the weight before menopause hits and makes it harder.

I had read Joel Fuhrman's "Eat for Life" about 5 years ago and thought it too extreme, but that's the plan I've ended up using. His advice is to have a pound of raw greens, a pound of cooked greens, any other assorted veggies you want, 3 or 4 pieces of fruit, a cup of beans, and a cup of whole grains a day--and that's 90% of what you eat. I doubt I get quite that many greens, but I have increased my intake of them significantly, mostly by becoming a fan of the "green smoothie." I have one or two of those a day. I ate a lot of salads in the summer, and now with winter it's more veggie-bean soups--and by upping my intake of vegetables and fruit significantly and limiting my grain intake to a cup a day, I've lost 14 pounds since mid-September, bringing me to my lowest weight in about 5 years. There's still a lot to lose (about another 50 pounds) but I'm finally making progress.

Where I'm not making progress is on cutting the debt. My income is currently about 50% of what it was when I had a full-time professional job, and that combined with this years' health crises with Henry and my mom put me into credit card debt for the first time in 15 years. Then in September I had a water pipe burst (about a $3000 repair), and various assorted larger expenses--this month it's going to be tires (on Subarus you have to replace all four at once so that's about $400 to get tires that will last the remaining life of the car--I hope to eek another 5 years out of it and get it to 200K miles), plus I need new eyeglasses before tax season again, and that will be another $200 to $400. As Gilda Radner playing Roseann Rosanadanna said, "It's always something."

But all things considered, I'm on an upswing emotionally relative to the beginning of the year and I hope to savor this period of relative calm for quite a while until the next crisis.

(That's Henry in the picture. His six-month yahrzeit is Nov 30)

I haven't blogged here in ages, but I thought I'd update.

Those of you who know me from my earlier posts (most active about 3 years ago) know that I have spent a lot of time and money on behalf of my beloved basset hound, Henry. Henry developed cancer just about a year ago, and during the past year I got myself back into debt trying to save him. It didn't work--I had to have my beloved baby put to sleep on May 30--but I bought him about six months, during four of which he felt really good, acting years younger. I have no regrets about the debt. But it will be a while before I adopt another dog. I'll do some fostering and other work for basset hound rescue in the meantime, though.

My mother has also been diagnosed with a life-threatening illness this year. She spent five months in a nursing home and only just returned home, where she needs a home health aide much of the time. I've had two visits out to see her and that has also cost some money, time and grief.

On the positive front, I'm making good progress on my career goals. I've now passed all four CPA exams and have completed about 20% of the experience requirement (one year of full-time work) working at a CPA firm. I still need a full-time permanent job, but I'm happy with where I am. Good thing, too--I turn 50 in a month, and making the career change successfully was a goal I set for myself when I turned 40. I'm not 100% to where I wanted to be, but I'm 90% there and feel fairly confident that I'll be where I wanted to be (full-time regular staff accountant position) during the year that I am 50.

I had also set some health goals this year, and could make better progress on those. The triple whammy stress of two family illnesses and being unemployed for much of the year definitely worked against me here! But I've lost a couple of pounds and maintained my walking schedule up until the last month of Henry's life, and am getting ready to get back to more of a focus on fitness now.

Every "decade" year of my adult life (20, 30, 40, 50) has had a major life crisis, but in each case, the crisis has been over by my actual birthday. I'm hoping that I'm done with crises for the year and can go back to focusing on more ordinary life goals--getting the full-time job I want, keeping fit and happy, and getting out of debt yet again.

Your Money or Your Life (YMOYL) is the book that changed my life when I first read it back in about 1992. Even though I never followed completely through the program, I did several of the "9 steps," and just reading the book helped me move from being "mindless" about money to "mindful." It also started me on a path to become educated about personal finances, which has lead to my currently in-progress career change.

Along the way from academic psychologist to financial professional, I developed two courses, "Simplicity and Sustainability" and "Money and Happiness." These were academic courses oriented to college undergraduates with no particular financial expertise and involved reading, discussing, and writing about a series of books written for intelligent laypeople. Several of the authors whose books I read myself along the way are featured in a tele-seminar series organized by Vicky Robin herself. The first introductory class was last night, and I actually got to thank Vicky personally for her work, though I didn't get to elaborate on what a difference it made in my life. She's having a second introductory tele-class tonight and the series starts "for real" next Monday. You can read more about it here:

http://yourmoneyoryourlife.info/?page_id=1815&preview=true, and the link if you want to attend tonight's intro is here: http://myaccount.maestroconference.com/conference/register/Q...

The intro class is free, and if tonight is like last night, she'll discuss YMOYL--which even as someone who has read the book 3 or 4 times, I found useful. The speaker series does charge, however. Since I'm currently unemployed, I'm debating whether to attend myself or not--especially since I think I'll be taking a class at the local college, and much as I could easily spend all the money I don't spend on Henry on education, one does have to make choices. She says she's currently planning to repeat the series a second time, so possibly I'll wait until the repeat. But it was a real honor just to be able to thank the person who co-authored the book that changed my life.

Goals & Results for 2009

1. Find a job in accounting (new career field) and study for the CPA exam. Well, I have a tax-season job at H&R Block, and I've passed 3 of the 4 CPA exams. Still need a "real" job, but I've made definite progress.

2. Work to further develop my Money & Happiness class. I did this a bit, but not as much as I'd hoped.

3. Lose weight. Alas, no. I did lose weight the very beginning of the year, but I've put it back on again during the past month that Henry has required daily radiation treatments. Start all over again. At least it was stable most of the year.

4. Have at least $10K in savings (ideally $12K) by September 1. Well, I actually got it up to $12K by June...and then all the big expenses started coming: Henry's medical bills, major car repairs, and my CPA exam & preparation fees. I'd hoped to be able to have a cushion to live off of, but right now my credit card bills exceed the amount I have in savings, so I'm in debt for the first time in 15 years (not counting the mortgage) and terribly fearful of going deeper before I land a real, self-supporting job.


Goals for 2010
1. Finish the CPA exam and the EA exam. Find a real self-supporting accounting job.

2. Continue regular exercise with an eye towards weight loss. I walked 285 fitness miles in 2009...hoping to increase this to 365 in 2010. Also need to add in strength training at least twice weekly.

3. I will focus on eating fewer prepared foods and smaller portions with an eye to both losing weight and trimming my food budget.

4. Do my own "happiness project" to combat the depressive tendencies that come with long-term unemployment.

Around 20 years ago, I got myself seriously in debt--about $13,000 worth. To some, that may not sound like much, but my income at the time was about $16,000 and my assets were nonexistent, so percentage-wise, it was serious. It took a few years to get myself out of that debt--about 4 years to wake up to my poor money-management habits and about 3 years after that to nix the debt. Since that time, I have remained debt-free--other than acquiring a mortgage, which at least comes along with a substantial asset.

I'm getting dangerously close to crossing the line right now, however. The amount of my total cash balance is close to the amount of my credit card bills, and for the first time in years, I will be carrying a balance on a credit card that isn't paid off within a month or so.

I hate that I've had to put so much on credit cards, but $3500 worth of car repairs on a car that is generally in good shape and $5000 worth of vet bills for the hound who gives me a reason to wake up in the morning were non-negotiable expenses. (I'm afraid Henry will be my last dog for a while, though--this is his second costly medical crisis in the 3.5 years I've had him, and odds being what they are, he'll have at least one more costly crisis before he goes.) I paid much of that out of savings, but now I am getting to the point where I am reluctant to completely empty the coffers in order to pay the bills.

At least at this point, I am much more financially aware, and I have a positive net worth. But I am unemployed, the job market is tight; I am looking for entry-level work in a career field new to me that will mean that my first year's income will be relatively low (although the potential for growth in income is
much greater once I am established).

This is a real tipping point, and it scares me.

Happy 5770! It's the Jewish New Year, and New Years is always a good time for a new start.

I haven't posted here in over six months but will try to post more regularly as I am struggling financially, and otherwise, right now. So far there's still money in the bank, and I have my health, so things could be a lot worse. But I am hoping for a turnaround in my fortunes this year, and in particular, successful entry into a new career. This is NOT the job market that existed when I first went back to school 5 years ago to get training in a different field, but it IS the job market I have to deal with today, so I'm busy trying to figure out networking, and still in shock over the reality of being unemployed.

Hopefully the new year will bring some positive changes.

The New York Times website added a useful (if oversimplified) link today to help you calculate how long it will take your 401K/403B/pension funds to return to where they once were. You need to enter their value at peak, their current value, your yearly contribution, and then calculate. Play with the slider to see how your funds will do at various levels of future return--the default value they have it set for is 4%, which is conservative given market performance over time, but reasonable as an estimate for the next decade or so. The calculator is here:

http://www.nytimes.com/interactive/2009/01/06/business/20090.... Play around with various contributions and estimates of market return. The assumptions of the calculator are oversimplified--you'll change your annual contribution over time, market return will fluctuate--but it's good as a starting point for sitting and saying, "now what do I have to do?"

Since February is the shortest month of the year, it's a month that I try to do as much of a "fiscal fast" as possible. No extras, but I still go to the grocery store weekly, take the furkids to the vet if they need it, etc. Last year I was able to keep my monthly expenses down to $2200. This year, I'm budgeting for $2400. Weight Watchers is running a promotion starting Feb 2 and running for 2 weeks that allows you to save about 15% over their weekly fee. They'll allow you to pay up to 16 weeks in advance, so I'm going to do that. I still have 3 weekly coupons left, so if I pay for that next week, I'll have my Weight Watchers paid for through June 13. So far I've lost 12 pounds, and am hoping to at least double that by the time those new coupons run out.

Better late than never.

Here are my goals from 2008 with a report on how I fared.

1. Continue to save 15% of earnings (ideally 20%). To do this, I will make special effort this year towards cutting food costs. Not able to do so. I had a major pay cut that occurred in Sept, 2007, and most of my savings from 2007 were from the beginning of that year. At my current income, my expenses match my earnings, and I have not been able to save, nor have I done a good job on cutting expenses, other than sporadically.

2. For 2008 only, put most of that towards short-term savings (CD ladder) to give myself sufficient liquidity during a career change.
Jan 1, 2008 cash balance: $8023
Mar 31, 2008 balance: $8200
June 30, 2008 balance: $8606
Jan 1, 2009 cash balance: $7785 (I had a $1000 home repair back in July)

3. Do everything possible to make that career change happen! Planning to do an internship this summer and apply for jobs in the fall. Although I'm not a traditional college student, that's what the market is geared for, so I expect the career changeover to occur in June 2009. I am set with employment until then (phew!) I did not do the internship (couldn't manage that and completing the coursework simultaneously) but I completed 3 classes for credit and audited a fourth, completing my accounting degree. My paycheck continues through August, and I am getting serious about the job hunt now.

4. Continue paying extra on the mortgage. Goal is to cut my payoff date down to 22 years total (age 67) or ideally 20 (age 65).
Jan 1, 2008 balance: $89,300.
Mar 31, 2008 balance: $89,000
Jun 30, 2008 balance: $88,560
Jan 1, 2009 balance: $87,500

5. Continue investing for retirement--at least 1 million. Goal is to get there by no later than age 65, ideally age 60. Currently I'm on track to do so, as long as I can (1) earn an average of 8%/year on my retirement savings and (2) get some contributions towards my retirement from my employer.
balance 1/1/08: $127K
balance 6/30/08: $121K (market drop)
Balance: 1/1/09: $99K (market drop)

6. Nonfinancial goals: Lost at least 15% of my weight, exercise daily, and maintain at least a semblance of a social life. Well, I lost weight, gained weight, and lost weight to end the year 3 pounds below where I started. I did ok at exercising regularly, though not daily, until sometime into November. Social life was pretty minimal but I did see my boyfriend once a week, had friends visit from out of town twice, and had about one get-together with friends a month, so at least the minimal semblance of a social life was maintained.

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My goals for 2009 are listed under author info. The main goal is to finally make the jump to a new career. Pretty much everything else is secondary. I'm also working on losing weight--I joined Weight Watchers right after Thanksgiving and have taken off 12 pounds so far. I'll have to keep up the exercise to keep losing, and by eating fewer calories, I'll eat less and eat out less often, so that will help keep food costs in check.

Yes, I've actually been buying coupons--but coming out better for it in the end, as long as I remember to use them--which I will.

Before I started couponing about a month ago, I never realized that people actually sell coupons on ebay. Actually, they don't sell the coupons themselves (I guess that is illegal)--all the sellers say that the coupons are free but you are paying for their time in clipping the coupons.

Buying coupons actually makes sense if you have a product that you use that (a) you won't accept a substitute brand for; (b) the product is relatively expensive; (c) you buy a large quantity of the product; and (d) either the coupons have no expiration date OR the product is non-perishable and you have storage room. The latter two requirements are because the sellers sell the coupons in batches, typically six or ten or twenty of the same coupon. Also, (e) the coupon should be for a high amount off.

I've done this for 3 products: my brand of soymilk (I drink Silk Unsweetened and will ONLY drink that brand; all the others taste bad to me; also, I drink at least a gallon of it a week); my dog's brand of premium dog food; and my brand of tampons (again, I'll ONLY use that brand). In each case, the coupons I bought were for either 1.50 or 2.00 off, so the discount is substantial. The soy milk coupons have no expiration date, and the other two have expiration dates but my dog eats a can of dog food a day, and the tampons will last ad infinitem so can be stockpiled. In buying coupons for a month's worth of dog food, a year's worth of soy milk, and a year-plus worth of tampons, I've saved--after the cost of the coupons--about $150. If I can couple the coupons with a sale (which I can in the case of the tampons), the savings will be even more. Not a bad profit for an hour's effort--once I figured the strategy out!

I'm getting ready to travel to my mother's this week--my first plane trip in two years. My sister has flown recently, so she brought me up to date on all the new carry-on regulations--glad I learned about that *before* going to the airport.

I also checked out the size of my old carry-on and found that it was a couple of inches bigger than regulation. Most of the time that might not matter, but I figure in this day of packed flights and charging for baggage, they'll be more likely to check. Anyway, I found a carry-on that's within limits on sale for 51% off at the LL Bean outlet--because the color is being discontinued. So I was happy with that find, especially as my mother is aging, and I figure that at some point in the foreseeable future I will probably have to do a great deal of cross-country flying back and forth.

That's on my mind as I've been witnessing first-hand the decline of an elderly man in my congregation who has been ill this year. I had visited him (and his wife, who was also hospitalized at the time) in hospital on New Years, and then three weeks ago heard that he was in hospice. So I was very surprised a few days ago to hear that he and his wife would be hosting Shabbat services at their assisted living facility this past Friday night.

I went, and Frank was in much better shape than he had been the last I saw him, though the change in his appearance was shocking compared to that of just a year ago before illness took its toll. He seemed in good spirits, and I was hopeful that he would have a while yet.

But it turns out that that Shabbat service was a good-bye. I received word by email that he died in his sleep last night. I know that he suffered a lot this last year, but I'm glad that his last Shabbat was such a pleasant one.

It seems so odd, to be going to a service hosted by a fellow on Friday and then to his funeral on Monday.

I've spent some time the past couple of days looking at some of the coupon sites and trying to learn how to use coupons intelligently and without an extensive waste of time. Here's a brief summary of what I've learned. Lots more detail available at www.couponmom.com and hotcouponworld.com, the primary sites I've been learning from.

1. General goal in couponing: buy when the price is at its lowest, and stockpile anything that you regularly use that's nonperishable. To know when prices are low, keep a price book where you track prices by date, store, and price per quantity.

2. To make it easy, don't clip coupons right away. Just save and date the inserts and file them.

3. There are two separate types of coupons: manufacturer and store. While you can't use two manufacturer or two store coupons on the same item, you *can* combine a store coupon with a manufacturer coupon for increased discount.

4. Some store will double the value of coupons. Know your store's doubling policy. If you can combine a double coupon with a sale, you might even get an item for free!

5. You generally get the best deals by combining a coupon or coupons with a store sale. To match up sales with coupons, there are a couple of options. Both start with pulling the weekly grocery circulars from those stores you frequent (usually published in the Sunday paper) and browsing through them for sales on items you buy. Then either (a)search though CouponMom's grocery database to find if there are current coupons for those items; or (b) look at the Grocery Game section of Hot Coupon World, which is organized by store and shows the week's sales. On the right is a "find coupon" button that will tell you if there's a coupon to be had in a recent weekly circular. On both sites, the coupons are listed by source (SmartSource, RedPlum, or PG&E) and date, so if you've saved the inserts and dated them, it will be easy to pull the coupons you'll need right before you go shopping.

6. If a coupon + sale leads to a good deal, that's the time to stock up--which means you'll need to get multiple coupons. You can subscribe to the Sunday edition of many newspapers for $1/week (there's a link to subscription savings on the coupon mom site), or ask friends and relatives who don't coupon to save them for you. There are also lots of coupons you can print from your computer; check your store's policy about accepting these.

There's lots more to learn on these sites and I'll explore them more eventually, but I've learned enough for a start. I'll be documenting my savings and putting them towards my $20 Challenge and seeing if I can break the back of the Grocery Monster!

Day 1 Efforts:
Grocery store sale: Buy 4 boxes of GM cereal, get $4 off, + two coupons for same cereals, each offering $1 off of two boxes --> $6 off cereals whose full price would be $15.56. That's a 38.6% savings, and $6 to my $20 Challenge (which I've not been pursuing so far this year).

A good start--we'll see if I can do better the next time!

I found an old file last night that contained a summary of my expenses that I created in August 2003, so almost exactly 5 years ago. I pulled out the current data and compared the two. Here's how my expenses have changed, and why:

First, there are two categories of expenses I have now that I didn't have in 2003: school books (fortunately work pays for tuition) and home maintenance, as I'm now an owner.

Biggest increase is eating out, up 193%, or 24%/year. Why? Call it either laziness or busyness. The past two years, I've been working a full-time job, a part-time job, and going to school part-time. Cooking is fairly low on the priority list at the moment. Going to work on this.

Next is work-related expenses (books and films I use in teaching, software that I use that's not paid for by work, and office supplies, up 145%, or 18%/year. That figure is somewhat distorted. Back in 2002 and 2003, I was at my poorest in my adult life, patching together a series of part-time jobs rather than having a full-time job (the full-time job I have now began in Sept. 2003). So the August 2003 figure is low; the current figure reflects more of what I tend to spend when I do have a full-time job.

Personal Expenses: up 103%, or 13%/year--mostly because I recently spent about $500 to buy a few professional wardrobe pieces in preparation for job interviews as I change careers.

Medical Expenses: up 71%, or 9%/year

Rent/Mortgage: up 67%, or 8%/year. But back then, I rented. Now I own. So I pay $300/month more, but that includes not just the mortage but homeowner's insurance, property taxes, and an extra 5% that I pay each month towards the principal.

Transportation: up 64%, or 8%/year. Inflation.

Household: up 58%, or 7%/year. Now that I own, I buy a few more things 'for the home' than I did when I rented.

Groceries: up 55%, or 7%/year.

Gifts & Donations: up 24%, or 3%/year.

Utilities: up 20%, or 3%/year. I expect these to soar in 2010 when the rate caps come off in the state (PA). Meanwhile, I've actually managed to cut my phone bill by savvy shopping.

Decreased expenditures:

Pets: Down 6%. Distorted comparison--my Simon was terminally ill June-Aug 2003, so the expenses for 2003 were quite high. He was less expensive to care for for most of his life, and generally Henry has been more so--Henry has more chronic problems.

Entertainment: down 33%. With the increased workload, I've pretty much given up any entertainment other than paying the minimal Netflix fee most months (although I actually have Netflix on hold for the summer), and paying the most basic cable TV bill ($15/month). (I didn't even have cable TV back in '03.)

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Going through this has been educational. I had no idea that my eating out expenses had gone up so drastically, and actually, I thought my grocery expenses had gone up more, but on a per-annum basis, it's about 7%, which is what the inflation on food has been of late. (That doesn't mean there's no need to cut, though; I'm just routinely a fairly high spender in this area and really could stand to get these expenses down.)

The categories where my increased spending far outweighs inflation are the first three. I'm hoping the personal care expense is temporary because of the big clothing outlay. Two years ago, I managed to spend only about $200 for the year on clothes, for two new pair of athletic shoes, so I know it is possible to pull my expenses her way down.

I need to be more cautious on work-related expenses--it's way too easy to give myself work as an excuse for buying a book, and particularly on eating out. Eating out so much has just become a bad habit. And it's very rarely eating out at a sit-down restaurant--it's grabbing a sandwich and a cup of coffee at the convenience store more often than I should that adds up--not the kind of dining out that one gets special pleasure from, but just the convenience of having someone else prepare the food and not having to remember to take it with you.

Two years ago, during the summer I had no income coming in, I signed up for a couple of market research panels (e.g., Pinecone), after researching which ones seemed reliable and didn't ask you to buy products upfront (which lots of the survey sites do--they promise money back, but you have to give some upfront). I've been making about a couple of hundred dollars a year from this side venture.

One of the panels I ended up on (by invitation actually, this one I don't think you can volunteer for) is run by my local grocery store--actually by the store that *used* to be my main store, before I "defected" and started spending most of my grocery money at a more upscale chain.

The store whose panel I am on is trying to develop more of an image as a health & wellness-conscious store. They've definitely shown great improvement on this front in the years I've been shopping there. But a couple of weeks ago, they recruited volunteers for a special "health and wellness" assignment. I signed up.

Part one was keeping a journal for a week, recording all activities that I did that I personally considered "health and wellness" related and answering some questions about each. Based on the journals, they selected a dozen people to participate in Part two. I was chosen. So on Wednesday morning, two market researchers came to my house and interviewed me for three hours, video taping the interview and a tour of my house, with focus on things in my house that were health and wellness related. The research interview was really pretty in depth, and not very scripted--mostly the interviewers asked me to elaborate on things that I had brought up, rather than asking me a series of "canned" questions.

After the interview, they went with me on a shopping trip to the grocery store that sponsored the research, and followed me around the store videotaping my trip and commentary.

During the interview, I had waxed so enthusiastic about the store that has become my new "store of choice" that they actually came back and went with me on a shopping trip to *that* store, too (though that one wasn't videotaped, as they didn't have permission--they just snapped a few pictures with a cell-phone camera).

All told, I spent about 8 hours with the team, and got to ask them some questions, too (one has a masters in cultural anthropology, the other background in neuro-linguistic programming and design). And I was paid $250, to boot. So I brought in a wee bit of income and had an interesting experience. I'll be curious what comes of the study in terms of how the initiating store changes in the future!