Everybody Loves Your Money

I thought this Saturday Night Live video was pretty humorous.  All that being said, remember what Warren Buffet says, "Be fearful when others are greedy and be greedy when others are fearful".

I think this is a pretty good article on credit unions.  It’s written by a Director of a credit union so it’s obviously biased but it does speak to the excesses of major commercial financial institutions and discusses the desire to profit as much as possible off of their customers.  Credit unions, on the other hand, are more devoted to their members and have used much more traditional operating guidelines to shelter them from the current economic issues.

http://seattlepi.nwsource.com/opinion/384494_creditunion23.html

I have to admit I’m still really enjoying Mint.com.  For the first time in many years, I’m tracking my actual expenses against my budgeted expenses.  The reason I’m doing this is because Mint has made it so easy.  As long as we use our credit or debit cards for purchases, they all automatically download in to Mint and are assigned in to the right category.  Mint does a great job of correctly assigning each expense to the right category.  I have had to change less than 10 items total.

What I really like is the “overview” screen that you see when you log in.  I have added a bunch of bars that show what I’ve budgeted each month for various expenses and Mint slowly fills in the bars as we spend money.  It’s a quick and easy way to see how we are doing each month and takes no effort at all.  Every time I have ever tried to use Quicken or MS Money, I’ve failed because of the amount of effort it took to keep the data current.  I’m guessing that those programs have improved a lot since I last checked them out so I’m sure you can probably do most of this in Quicken now but I’ll take the free online option.

The only complaint that I have about Mint at this point is that it doesn’t support manually adding in assets.  A friend of mine, who is also using Mint, sent an email to the company and they replied that is in the works and we should look for some additional functionality in the next month or so.  I’ll be waiting…….

On a completely unrelated note:

I’ve been enjoying the fading coverage of the financial crisis.  I definitely spend too much time reading the news online and find myself feeling overloaded with concern about where we are headed.  Make no mistake though, I’m still concerned.  What I am doing is reading enough of it that it keeps a little bit of fear in my head.  Every time I think about buying something new (like the Dell Mini 9 Inspiron), I do a bit of a reality check and it usually dampens the enthusiasm for the purchase.  Luckily my wife and I are savers already so all we’ve done is increase the amount we are saving.  As we get closer to our savings goal, we’ll slack off a bit on that.

And on another note:

It seems like we’ve been doing a lot of grocery shopping lately.  That might explain why our food budget is $17 over for the month.  The good news is that we may be a bit over budget for October, but we’ve got lots of food to get us through the end of the month and beyond.  We’ve been taking advantage of sales and coupons this month which has helped us stretch our food budget further.  All that being said, with the extra work of looking for the sales and clipping the extra coupons, I think we are still spending about the same amount on food that we have over the last couple years, due to increasing food prices.  I actually saw a 24 pack of Pepsi for $16.  Are you kidding me?  I don’t think I’ve ever paid full price for a case of soda before and I definitely won’t start now.  We are actually trying to reduce our soda intake for better health and to save some money.  Now seems like as good a time as any to quit buying it.  $16?  Geez.

I was reading MadameX’s post at My Open Wallet on the fact that she’s resorted to eating stale crackers with hummus in an attempt to get her food budget back in line.  As I read that, it occurred to me that she’s probably not the only one doing this.  I know that we are also cracking down on our food budget, and now that I’m using Mint to track our budget vs actuals on many things I’m more easily seeing where we need to crack down.  We have pretty much killed off the habit of eating out which is paying us dividends.  We are also being more careful to eat all of our leftovers and are definitely using coupons like we have never done before.

What is interesting about this is that, relative to most people, I think it’s safe to assume that neither MadameX, nor my family is destitute.  We are all still employed and making more than many other people in the country.  The fact that we are practicing these forms of frugality is really more of a frame of mind than it is being done out of necessity.  I’m sure that we all have similar goals in that we’d like to increase our cash on hand.  By forcing ourselves to commit to budgets/goals and then following through on those goals, even when it means eating stale crackers or cans of soup, we are making sure we are in control of the things that we CAN control.  I can’t change the current fiscal issues in the country, but I can drastically effect my own finances, just like MadameX knows she can.

This might not be much of a revelation to many of you reading this as you are probably doing similar things.  (Are you?  Leave a comment!).  This is a completely foreign concept to one of my acquaintances.  When we occasionally talk about finances, I mention some of the ways we minimize expenses or spend some time looking for the best deal etc and he looks at me like I just landed from the planet ORB.  To him, it seems ludicrous that we would be scrimping or worrying about general purchases if we are both employed and have extra income each month.  To him, it is a waste of his time to spend time worrying about whether something is cheaper somewhere else.  He also doesn’t usually think about things like want vs need as he is gainfully employed and has no fear of losing his job.  So, what does that translate to?  He owns the largest DVD collection of anyone I’ve ever met.  He has a VERY nice wakeboard boat in his garage.  His wife drives a $45,000 car.  His kids wear the best clothes and have all the accessories teenagers would want.  I’m not criticizing his approach because we each have to make our own financial decisions but I am pointing out that the decisions we do make can have unintended consequences.  Because of his approach he couldn’t understand why my wife stayed home for the first three years of our daughter’s life.  It was incomprehensible to him that we could live on one income.  The fact of the matter was that we were very comfortable on one income, not because of an obscene income level, but due to limiting our expenses and debt.  The reality was that he made more money than I did at the time but he also had double, maybe even triple, the expenses that we did.  Needless to say, there are no stale crackers in his cupboard……..

The pull to spend money never ceases.  As concerned as I am about the overall economy, you’d think I’d be sitting in my home letting the cash pile up from cracking down on our spending.  It’s just not that easy.  I’ve been conditioned over a long period of time to crave things.  What kind of things?  The standard stuff.  I’d love to buy a new mini laptop to wander around the house with, as if being glued to the computer in my office for 12 hours a day isn’t enough.  I’d also love to upgrade my wife’s car.  We’ve owned it since 2000 (for the most part), and it is showing it’s age.  I’d also like to get the better gas mileage that a 4 cylinder Honda Accord would offer.  I bet I’ve looked at Craigslist about 20 times to see what’s out there.  The thing is, I’m not going to buy one.  It makes absolutely no sense to shell out $17-18K to buy a one year old Honda when we have a car that starts and runs just fine each day.  It’s really kind of pathetic that I’m still feeling the urge to upgrade.

Yesterday we had a new timing belt, water pump, fan belts, and front seals installed in the Honda.  It has 93,000 miles on it and it was overdue for the timing belt replacement.  Total cost for the repair work: $893.  Ouch.  Oh, we had the oil changed as well.  I also waxed both the cars last weekend so we should feel pretty good about driving these cars for the foreseeable future.  So, both our cars are running fine so why do I still feel the desire to drive a newer car?  Like I said, pathetic.

In general I’m starting to feel like a QVC addicted shopper except my addiction is the Internet.  (Gosh it’s easy to find stuff to "want" on the Internet)  I guess I should feel good that I’m at least recognizing the ridiculous thoughts I’m having.  The whole thing furthers my belief that, unchecked, we are all consumers and need to control what we consume for our own financial well being as well as for the good of the earth in general.  Anyway, just a bit of ranting for a Friday.

I don’t remember if I mentioned this or not previously, but our friends have decided to sell their house and buy a larger house that will accommodate their growing family.  When I first heard that they were going to sell I thought, "Those poor bastards.  In this market that’s going to be an ugly proposition."  Well, boy was I wrong.  They put a contingent offer in on a house and then immediately put their home on the market.  Incredibly they sold their house in one day and had to choose from two full price offers.  The amazing thing is that they got top dollar for it as well.  Apparently the neighborhood that they live in, in the north area of Seattle near the University of Washington is a very desirable place.  I had no idea.  So, if you are thinking about putting your house on the market and live in a high demand area, you just may be in luck.

Happy Friday!!

I’ve been sitting on the sideline when it comes to signing up for an online tool that allows me to get a consolidated view of all my investment and bank accounts.  The main reason is that I didn’t want to offer up my account logins for fear of creating extra drama in my life.  I finally bit the bullet yesterday and am somewhat surprised at how well mint.com works.

I started by creating a personal unique login and password to the site.  Once I was in, it was incredibly easy to see how you add accounts.  There are large boxes on the screen that say, "Add an account".  In most cases, adding an account is as easy as choosing your bank or financial institution and inputting your username and password.  If your bank utilizes "challenge" questions for security, Mint gives you a drop down to choose which questions they ask.  I was absolutely amazed to find that Mint supported both my company 401k and also my credit union.  Wow.

Once I had all of my accounts linked up I spent some time wandering around the various report screens.  It was great to automatically see where I spend my money and on what categories.  Mint automatically assigned about 95% of my expenses to the correct categories.  I spent about 10 minutes assigning the rest of them and asked Mint to remember how I categorized these expenses in the future.  I’m guessing that I won’t have to do that much, except for the rare check that I write.

Overall, I’m very impressed with Mint.  I’ll definitely use it.

So, what are it’s weaknesses?  Well, I would really like to see them give users the ability to manually add in assets.  At this point, it figures my net worth based on my investment balances and my mortgage balance.  It doesn’t give me the ability to add the estimated value of my home or second home so I can’t see how my real estate holdings play in to my overall net worth.  Hopefully they’ll add that feature in the future.

Is it safe?  Based on what Mint.com says about privacy, I’m pretty comfortable with the security they have in place.  They have multiple layers of protection including using encryption, and multiple third parties to validate their site security.  Another reason I’m comfortable is that they don’t associate my name or other personal information with my account and don’t store that information on their servers.  If someone gains access to my account, the only thing they can really do is see what I have in the accounts.  They can’t even see the account numbers.  You can read more about their privacy and security at: http://www.mint.com/privacy/

If you are looking for one place to aggregate your financial information, you should check out mint.com.

Disclosure:

(I’m a new user of Mint but I am not affiliated with them and do not receive any referral or kick back if you choose to use their site.  I’m only giving you this information because I like the site.  Everybody Loves Your Money is not responsible for your use of their site and takes no responsibility for your experience on mint.com)

This is pretty interesting to watch.  Peter Schiff gave this at a mortgage bankers conference in Las Vegas.  The funny thing is that everything he says is pretty darned basic.  Well worth watching:

A couple interesting points:

• It was easier to get a house than it was to rent because the landlords actually checked your credit and income for a rental
• Home prices have traditionally tracked to CPI and only if homeowners kept them up
• Speculators got lots of homes and listed them all as "owner occupied" spread across multiple states

Okay, so the title is probably a little bit inflammatory.  I’ve heard more than a few people talking about what they should do with their money during an economic downturn.  Of course there probably isn’t any one answer to this depending on your circumstances but I am doing a couple things to give myself some peace of mind.

Step 1:

We keep about $1000 in cash on hand.  I keep this in a safe and don’t use it to "loan" myself money etc.  It pretty much just sits there.  The main motivation for keeping this money on hand is to use it during a natural disaster if I’m not able to access my bank accounts.  The recent economic issues have only strengthened this strategy for us.  If there was a massive run on the banks, it’s nice to know that I’ve got a little bit of cash available to cover food and essentials for a week or two.

Step 2:

We keep our money in a credit union.  If you’ve been a reader for very long here, you know that I’m a big fan of credit unions.  My experiences with them have shown me that I’d much rather do business with an organization that is not trying to make a profit from my deposits.  The bottom line is that I receive better rates on my savings and also get lower loan rates if I need a loan.  Their fees are much lower than traditional banks as well.

With the recent economic issues, I’m feeling even better about my decision to exclusively use a credit union.  Our credit union didn’t take on any risks with subprime mortgages and they service all the loans they make.  Because they service their loans and keep them on their books, they applied much stricter guidelines for getting a loan in the first place.  That discipline has kept them financially strong during these times.  In the end, it’s something that’s worth looking in to if you have any concerns about your current bank.

We received a letter today from our credit union telling us that the recent legislation that was passed included additional protections for our savings accounts at the credit union.  Our insurance limits have been raised to $250,000 on each of our accounts.  This insurance is provided by the National Credit Union Administration (NCUA) and is basically just like the FDIC insurance at normal banks.

Step 3:

We are keeping our HELOC open in case we need to draw on that money in a long term emergency.  Of course that assumes that the credit union will continue to leave the line of credit open to us.  So far it’s still there and I would have thought they would have yanked it by now if they were going to.

Step 4:

We are paying off our credit cards each month and have very high limits on them in case we need it.  The only time I think I’d resort to that is if we hit total Armageddon in America.  I absolutely despise the idea of having any credit card debt.  It’s just one more tool in our bag of tricks.

So, these are a few of the things that we are doing to help us feel in control of our finances during these unstable times.  We feel that the steps we are taking are giving us the security we need to weather this storm and provide us with money in any scenario we can imagine.

I’ve mentioned before how much I like the "deal".  For me, the "deal" is anything that I can do to get a better price on something.  I absolutely hate paying retail for something.  When I do have to pay retail for something I find myself feeling a bit of dread as I pay the cashier.  Whether I’m at the department store buying new clothes, or at the grocery store buying food, I always prefer to buy the product that is on sale.  Here are a few examples of how I shop:

Awhile back, we needed a new digital camera.  Rather than just drop in to the first store I came across, I spent a little time researching prices.  I had previously seen the camera I wanted while I was shopping at a store so I knew exactly what I was after.  Once I decided I wanted to purchase it, I checked Amazon, Buy.com, Ebay and Pricewatch to try to get a sense for what the "going rate" was online.  Once I knew what that cost was (incl shipping) I then searched through all the potential stores that I could buy it at (online at their websites) Ultimately I ended up buying the camera from a store that had a 10% coupon off all electronics.  While it may sound like it took a lot of effort, I’d say I put in about 15 minutes total to find the best deal.

The latest thing I need is a new pair of shoes.  I have been wearing the same type of casual shoe for a few years now and absolutely love how they fit so there was no question which kind of shoe I’d like.  They are made by Georgia Boot and are called Romeos.  There are some off brands that look similiar but they are not nearly as comfortable and are not as high quality.  I know where to buy these and their cost is always regularly $59.99.  Every month or two, I notice that they go on sale when I’m looking through the Sunday ads.  I’m currently waiting for their sale again and then I’ll pick them up.  I can do this because I haven’t waited until my current pair is completely falling apart which gives me a bit of flexibility.  My brother in law thinks I’m crazy.  He says, "For crying out loud, just buy the shoes!"  Naaah.  I’ll wait until they are on sale and will save myself $20.  Over the course of a year, I will save hundreds and hundreds of dollars by having a little patience and not being quite so quick to pull the trigger on purchases.

It doesn’t really matter what you are buying.  This same approach works for everything.  We saved over $20,000 when we bought our house because we were patient and didn’t jump at buying it the second that we knew it was for sale.  By having a little patience and doing a bit of negotiating we saved thousands.  (It helped that the owner was trying to sell it by word of mouth.  If he had listed it in the MLS I wouldn’t have been so lucky).

Different family members have made comments over the years that I always seem to be able to find the good deals.  It’s really not too hard to find those good deals if you are looking in the first place.  The key is to give yourself time to find the deals as opposed to just handing the cash out the second you want something.  By planning ahead a little bit you can really reduce your annual costs for the things you buy.

Here’s an interesting article that talks a bit about the current financial state of America but also looks at the ongoing strategy of spreading capitalism around the world.  I have to agree with this guy.  I think it’s time we all look inward both at a personal level, by living below our means, and as a country by starting to look inward to increase domestic production of goods and services and by working to bring our imports down and our exports up.  We can only sustain a trade deficit and massive budget deficit for so long.  At some point we have to recognize that it’s time to get our own books in order.

http://www.bu.edu/today/campus-life/2008/10/07/end-america

Anyway, you can certainly disagree with me but I think most of us agree on at least the fact that we should all practice some fiscal conservatism by living below our means and buying only the things that we can truly afford.  I particularly liked the quote:

The American economy has since become import- and credit-driven, he said, drawing on outside forces to support an increasingly consumeristic lifestyle. Bacevich said that he felt this distinct shift in values when Black Friday, the first day of the holiday shopping season, became a prime indicator of economic health rather than exports and savings accounts.

and

“We need to live within our means, as individuals in our households and in terms of the services provided for by government at various levels,” he answered. “I’m no economist, but I do believe there is no free lunch. Everything has to be paid for.”