It is always good to revisit your finances when changes in your life occur. In our case, we need to adjust for additions to the family, paycheck changes and school tuition increases.
Snowball Payments
Recently we bought a new house and set up snowball payments. Should these weekly payments be stopped because of a lack of paycheck? This dilemma is greater because this will affect when our home is paid off. My gut reaction is to definitely make the snowball payments because more interest accrues without the payments being made. Snowball payments are certainly voluntary but they are a form of debt reduction and still considered important to pay on a regular basis to pay off our house early.
Church Donations
If we regularly contribute a portion of our income (ex. 10%) to our church; what should we do during the weeks without a paycheck? Do we not make payments at all or do we reduce our payments by a percentage because our total income for the year has decreased? Our options are
A) No payments for 4 weeks
B) Reduced payments for the rest of the year
C) Combination of A and B
My instincts say that B is the best option. This way the church maintains a steady stream of income and there are no additional decisions to make such as when to start making the payments again.
Savings Transfers
We make 2 savings transfers each week. $40 for a savings account and $120 for future tuition payments, pool membership and funding a retirement account. Since the bills are going to be the same (no reduction); these transfers need to remain the same. The $120 amount needs to be revisited because this weekly amount was based on a lower tuition amount. Now we need to adjust the amount based on the higher tuition rates and based on additional students in school.
As we go further into this discussion, another item comes to mind. The reality of the downturn of the economy is that everything cost more. Many of us have broken the rule of spending less than we make. During this overall financial transformation we need to keep in mind that for the last year we have been regularly supplementing our income with our savings. Rather than waiting for the breaking point, lets prepare now for the ultimate goal.
Spend less than we make ALWAYS!
Saturday, August 29, 2009
Investments
A couple years back, Americans were afraid to open their retirement savings statements for fear of knowing how much they lost. Was that true? Wouldn't you want to know if your statement said zero? Is now the time to revisit those statements and try to pick up the pieces? Many people reported that their retirement accounts were not as much as they anticipated and they would need to work for a longer amount of time.
How can we learn from the turmoil of the last few years? Are we ready for more risky investments or should we stay with small but practically guaranteed returns? Should we continue to be risk averse?
Normally it is a good time to buy when markets are down if there is going to be an upswing in the near future. Has the economy rebounded enough to start investing again?
How can we learn from the turmoil of the last few years? Are we ready for more risky investments or should we stay with small but practically guaranteed returns? Should we continue to be risk averse?
Normally it is a good time to buy when markets are down if there is going to be an upswing in the near future. Has the economy rebounded enough to start investing again?
Monday, August 24, 2009
Brother John
Are you sleeping, are you sleeping
Brother John? Brother John?
Morning bells are ringing, morning bells are ringing
Ding, dong, ding. Ding, dong, ding!
We all love baby, yes we do. Yes we do.
We all love baby, yes we do. Yes we do.
Baby is going to sleep now.
Baby is going to sleep now.
His belly's full. His belly's full.
His diaper's clean. His diaper's clean.
Brother John? Brother John?
Morning bells are ringing, morning bells are ringing
Ding, dong, ding. Ding, dong, ding!
We all love baby, yes we do. Yes we do.
We all love baby, yes we do. Yes we do.
Baby is going to sleep now.
Baby is going to sleep now.
His belly's full. His belly's full.
His diaper's clean. His diaper's clean.
Sunday, July 26, 2009
Our 3 cribs
1st -over 15 years old
2nd -less than 10
3rd -unknown, 2nd hand
*all pass the soda can test for the bars
When you have three children under 3 more cribs become essential but how many do you actually need? Our two year old rolled over at a month in a half making her bassinet unsafe for her.
With our 1st child we had 1 crib and 1 bassinet. He slept overnight in the bassinet and took naps in his crib. The problem was where to put him during the day. Son 2 rec. his own crib which he stayed in until age three. Even though we had a convertible crib, he rec. a plastic toddler bed similar to his brother. That left an extra crib. Good thing that crib did not get purged since we are now in the market for a third crib.
Now we are the happy owners of 3 cribs, 1 of which is a convertible crib. I would estimate that we spent about $550 for all 3 cribs realizing that the 1st was passed down.
Conversion beds are helpful but not always practical. I doubt many children will want to admit that their college dorm bed has the bars from their crib as the headboard. I can see using a crib as a toddler bed but beyond that I think the child probably needs an upgrade.
Next step is to find some mattresses. One of the allergist's questions for my son was how old was his mattress. So I guess that is an item that is worth buying new or fairly new.
2nd -less than 10
3rd -unknown, 2nd hand
*all pass the soda can test for the bars
When you have three children under 3 more cribs become essential but how many do you actually need? Our two year old rolled over at a month in a half making her bassinet unsafe for her.
With our 1st child we had 1 crib and 1 bassinet. He slept overnight in the bassinet and took naps in his crib. The problem was where to put him during the day. Son 2 rec. his own crib which he stayed in until age three. Even though we had a convertible crib, he rec. a plastic toddler bed similar to his brother. That left an extra crib. Good thing that crib did not get purged since we are now in the market for a third crib.
Now we are the happy owners of 3 cribs, 1 of which is a convertible crib. I would estimate that we spent about $550 for all 3 cribs realizing that the 1st was passed down.
Conversion beds are helpful but not always practical. I doubt many children will want to admit that their college dorm bed has the bars from their crib as the headboard. I can see using a crib as a toddler bed but beyond that I think the child probably needs an upgrade.
Next step is to find some mattresses. One of the allergist's questions for my son was how old was his mattress. So I guess that is an item that is worth buying new or fairly new.
Tuesday, July 7, 2009
Switching to a Cash System
1) Spend existing dollars
2) Save more because you see the dollars leaving your hands
3) Do not need to worry about interest rates and finance charges increasing
4) Some stores offer discounts for paying with cash
Downsides for a cash system
1) Harder to track because a person needs to make an effort to track cash
2) Don't have the credit card warranties
3) Can't use cash for internet transactions
4) Need to visit the bank to obtain the cash
Compromise -Debit card for your bank
1) Most establishments accept debit cards
2) Should be easy to track the transactions
3) Same benefits as the cash system # 1 and 3
Downsides for using a debit card
1) Not recommended for internet transactions
2) Hotels put a hold on a significant amount of funds if you use at registration
3) Some point of purchase sales do not have the ability to put in a pin number
4) Using at a restaurant looks questionable because your pin # might need to be disclosed
Any tips on using debit cards?
2) Save more because you see the dollars leaving your hands
3) Do not need to worry about interest rates and finance charges increasing
4) Some stores offer discounts for paying with cash
Downsides for a cash system
1) Harder to track because a person needs to make an effort to track cash
2) Don't have the credit card warranties
3) Can't use cash for internet transactions
4) Need to visit the bank to obtain the cash
Compromise -Debit card for your bank
1) Most establishments accept debit cards
2) Should be easy to track the transactions
3) Same benefits as the cash system # 1 and 3
Downsides for using a debit card
1) Not recommended for internet transactions
2) Hotels put a hold on a significant amount of funds if you use at registration
3) Some point of purchase sales do not have the ability to put in a pin number
4) Using at a restaurant looks questionable because your pin # might need to be disclosed
Any tips on using debit cards?
Sunday, June 14, 2009
Back to Square 1
Our new mortgage needs to have a snowball payment otherwise we will not have our house paid off until 2038. Ouch! Ideally we could pay off our current mortgage in 10 years.
Here are the different choices.
This needs to be a substantial enough goal that we will be willing to make the payment each month. I found with our previous mortgage that the best way to do the snowball payment was automatic transfers in weekly installments for 52 weeks each year. This way there is no monthly decisions to make each month.
Refinance
In the past, we have not been in favor of refinances. Closing costs were too substantial. I would rather see a large chunk of money like that go to pay down the principal.
The other item to look at to boast moral is how much interest will be saved by paying off early. Let's assume that 2026 would be the longest we would consider going on this loan.
Our amortization schedule from the mortgage company has the finance charge for a 30 year loan at $340,000.
Here are the different choices.
This needs to be a substantial enough goal that we will be willing to make the payment each month. I found with our previous mortgage that the best way to do the snowball payment was automatic transfers in weekly installments for 52 weeks each year. This way there is no monthly decisions to make each month.
Refinance
In the past, we have not been in favor of refinances. Closing costs were too substantial. I would rather see a large chunk of money like that go to pay down the principal.
The other item to look at to boast moral is how much interest will be saved by paying off early. Let's assume that 2026 would be the longest we would consider going on this loan.
Our amortization schedule from the mortgage company has the finance charge for a 30 year loan at $340,000.
Friday, May 22, 2009
The Power of Technology
Many changes in technology affects communication. Teleconferences, web conferences, smaller and smaller cell phones, email, voice recognition, live video from around the world and from outer space. The internet brought the world to our fingertips. You can purchase or sell anything without leaving your home.
When the internet first starting coming into our homes I saw it as a threat to have misinformation too readily available and it stealing time from individuals. People need to be disciplined not let computer use overwhelm and take over their lives.
Can you get thru a church service, a meal or a trip to the grocery store without your cell phone ringing. Some people complain that their spouse is not really on vacation if the pager, cell phone and laptop are along for the trip.
Technology is a tool to improve our lives. We just need to balance this part of our life with everything else we need to do in our daily lives. Parents limit their children's tv usage to create well rounded children. Do we limit our technology use so we can help show the next generation that there is more to life than the internet and cell phones?
When the internet first starting coming into our homes I saw it as a threat to have misinformation too readily available and it stealing time from individuals. People need to be disciplined not let computer use overwhelm and take over their lives.
Can you get thru a church service, a meal or a trip to the grocery store without your cell phone ringing. Some people complain that their spouse is not really on vacation if the pager, cell phone and laptop are along for the trip.
Technology is a tool to improve our lives. We just need to balance this part of our life with everything else we need to do in our daily lives. Parents limit their children's tv usage to create well rounded children. Do we limit our technology use so we can help show the next generation that there is more to life than the internet and cell phones?
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