Tuesday, July 31, 2007

Oops...it makes sense to go back and read my own BLOG posts!

It never even occurs to me to go back and read my own BLOG for good ideas!

Well, I was looking back at postings from March and I found one reminding myself that the girls have some US Government Bonds that are in their name that they can get tax benefit from if they utilize them for education.

In fact, this is exactly why my mother gave them.....for college!

Now that Kim is a senior, she needs to spend them this year on school.....or pay taxes on them when she ultimately cashes them in. I will have to talk to our accountant (Terry Strout) and ask him how we have to document their use as being for education. (Can we cash them in and just dump the money into checking and then write checks of an equal or greater amount for education expenses....and how do they define those anyways?)

So I guess I've learned something by reading my own BLOG.......if others come out with even a small bit of insight, I suppose I am doing something good. (at least I would like to hope so)

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Mom's Money Podcast.......

I discovered this Podcast while surfing the Personal Finance BLOG world, and I listened to Podcast #7 about 1/2 way through and found it kind of interesting. I think I'll at least sample the other 6 shows and perhaps subscribe to it if I continue to like it.

It seems to be a fairly common and average person who discusses personal finance questions that most people will have, but don't feel comfortable talking about. She drags those topics right out and bares her soul.

As I said, I just scratched the surface with the small segment of show I heard....but I think I liked what I heard enough to suggest that you might want to give it a listen.

The web address is:

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Useful Websites.......Compare Home Heating Oil and Auto Fuel Prices online

The internet has made communications so much better.....from person to person, and especially from customer to business.

The internet is a force multiplier.....it makes competition stronger because it allows people to have a lot longer "reach" out to even more suppliers.

The New England Oil website allows you to look up the prices charged by home fuel oil suppliers in New England. I have not used it, but if the numbers are at all current, it sounds like a great idea.

GasBuddy.com does the same thing for gasoline prices, and I have used that site a lot...and it works well.

But this depends on you and all the other users.....we all put the prices in....so if it isn't right we can all collectively look in the mirror for the reason.

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Wednesday, July 25, 2007

My mistake....feels like FREE money! (how stupid of me!)

If it were not due to my own stupidity, I would have considered myself double lucky today.

You see I have been looking at this "bill" I had in the kitchen for Spring classes at Rivier College. The bill was for $2550, and was due on June 6th, 2007.

At about that point, I was looking at my bank account level and knowing I just didn't have the money to pay that....so I was going to defer it as long as I could.

I was going to put it on a credit card, except I really only have an American Express card...my Mastercard is really a DEBIT....so that wasn't going to work.

Well, I put it off until today, when I found that I had just enough money to pay it off. I called up with my Debit card in mind and was ready to pay the late interest fee.....but guess what? I had apparently paid this bill in May!


That's that they told me....my current balance was ZERO. I own nothing......so I instantly felt a shot of happiness travel up my spine.
(forgetting about how DUMB I was to not have accounted for all that properly for the past couple of months)

Anyways.....even though it was the result of my own mistake, I feel lucky today! I feel almost as though I just won free money!

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College Tuition Time of Year again

Well, it is that time of year again......no, I'm not rushing it, I'm talking about August...the time college starts again after summer break.

But right now is when the thoughts of paying the bills come to mind. I received the $17,500 (or so) bill from Pratt and it is due by August 24th. I have not yet received the bill from the University of Tennessee (UTK), but I'm sure it is "in the mail".

In the long term, Cheryl and I had prepared to pay these by saving money, and I have that fact placed solidly in my head.....but still, when that bill shows up with all those zeros......it is a bit of a sticker shock.

I just don't have a checking or savings account with that kind of bread in it......so it's always an investment transfer, which sort of puts it all into perspective. I normally slap it down on my AMEX for a month so that I can use that time to transfer the money from a mutual fund. (and get the total costs figured so that I only do the transfer once)

This year has the added complication of Kristen transfering to UTK and Kimberly moving off-campus to an apartment. All of those costs are "new" and as of this moment, not fully understood. We had the loans and monthly payment plans figured out for Hofstra, and that is all up in the air for UTK as of now.

The other problem is that it looks as thought the loans taken while at Hofstra basically "come due" 6 months after she leaves the school because the loans appear to be connected to the school and not the student. (I guess this keeps people from going on and on as "professional students" and never paying off their loans) I have no clue as to how much those loans might be...I think they were small though....like $3500 per semester.

So writing this is probably less interesting for you the reader, but it helps me get my mind around the money that I will have to be paying out in the next month or two. At least it will
cause me to go and look at my investment accounts and get a mental sense of where I will have to "dip in" to get this money.

Education is a good investment......I know that, so I'm not in the least upset. Also, Cheryl and I had planned this pretty well, so other than a few small expenses we never thought of, everything has been OK to plan so far.

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Friday, July 06, 2007

How is our economy doing?

Warren Brussee wrote a book called The Next Great Depression 2007, and I reviewed it a while back in this BLOG.

I thought it was an interesting analysis of what was going on, and I wasn't sure whether it was correctly viewing the future.

You see, I think the world and US economies are very complex things. They are hardly the simple supply and demand curves we all learned about in our Macro-Economics classes. They have all sorts of active influences that are not always logical....but often emotional and irrational too.

But the two things that have struck me personally in the last few years are the lack of savings (we have become a credit culture) and the various bubbles that seem to have grown and at times burst.

The savings rate is documented in the graph in this post. It has now been negative for a couple of years.....and I don't think this can be sustained forever.

The latest bubble that is slowly deflating is the housing bubble. Over prices houses....but this is a huge problem......people rely on those increasing values to fund all kinds of things. They take out second mortgages to spend the money. The other problem is that when people get "upside-down" on a house, they can't sell it for they have no savings anywhere else to pay the loss they have.

ARM loans adjustments have been going up with the interest rates these days, and people often find their monthly payments going way past what they planned.....making them cut back in other areas.

A full 70-785 of our economic activity is based on spending.....with depressed spending levels comes dramastic decreases in economic health. So we are encouraged to spend.....new financing techniques are invented when the old one's become impossible to use.

But we are only delaying the inevidable slide....would it not be better to slide than to "fall"?

Oh well....I suggest people save. Save for a rainy day, and do so with great diversification, because if things begin to slide...or God help us FALL, we will want to make sure at least a part of our money is in a place that is not affected. (lest we lose everything...as some did in the '29 Depression)

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The importance of Cash Flow....

These past two months have taught me the importance of having a reserve of money at the ready because at times it is all about cash flow.

That's right, I had a few unexpected bills pop-up last month that centered around the girls trips to school this summer. I thought I had enough money in the bank to cover it all fairly comfortably, but this month the problem came to roost.

You see I had not considered the increased costs associated with the girls coming home. My weekly food bill rose from about $40 per week to over $100. I even saw an increase in my water and electric bill. (I have only one light on at any moment...)

Anyways, the budget I have crafted has very little wiggle room in it. In fact, if I go by the expected expense levels, I am in the hole at the end of the year. (but I have not gotten to things like paying my house and vehicle insurance....things like that will be what drives the account into the red and will require the selling of a longer term asset)

But those have not come due....and the main issue was not that the expenses I came across were totally unexpected....but they were unexpected in that month....certainly all at one time.

Cash flow....the flow turned into a drip....barely enough to feed the need. Thanksfully, I have not had any emergency expenses.....nothing large anyways. I have had a few unexpected things, but that went on the credit card....which only delays the problem until 30 days from now.

I need to build up my buffer again......so I can survive the ebb and flow of money.

I am going to cut back big time where ever I can.....food is the first thing. I am going to try to go a month without buying any food.....basically eat from the cabinets and freezer.

Sound impossible.....not really. I have a number of things in the freezer, and in the cabinets. I might not be eating exactly what strikes my fancy every night....but the checking account will benefit and my fear of balancing the budget week after week will get better. (a small price to pay for lower stress)

Here is a BLOG with good ideas on cash flow. It is written for small business, but many of the concepts are valid for household finance too!

Cash flow is king.....

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