Tuesday, November 27, 2012

Financial Calculators I Use to Help Us Save

I’ve been a long time fan of financial calculators. These helpful tools have led me find all sorts of valuable savings or ways to save, and they have assisted me in making a variety of financial decisions for our family. In fact, I’ll venture to say that various financial calculators have helped to save and/or make us thousands of extra dollars over the years.

The following are some of the financial calculators that we’ve used and how they’ve managed to save us some serious cash as well as helped us plan for the future.

Once we had obtained our mortgage, we could use the amortization sheet that our lender provided us with to help determine what we would pay over time. However, before this point, we wanted to know what we were looking at for costs when it came to different mortgage amounts, interest rates and time frames.

Utilizing mortgage calculators to figure out interest costs over time helped us cut thousands of dollars in interest off our loan amount. Rather than going for a 30-year, fixed-rate mortgage on a higher loan amount, we instead put more down on our home, and took on a 15-year mortgage.

While the monthly payment amounts were higher with this type of mortgage, by taking on a shorter term mortgage, we would effectively be able to cut the interest we owed over the course of the loan’s life in half. And knowing that by taking on a 15-year mortgage, we could cut our interest rate by nearly a full percent compared to a 30-year mortgage, we realized that we could shave thousands more off our mortgage costs over time.  Eventually, such knowledge allowed us to become mortgage free altogether.

Social Security
I’ve recently started a spreadsheet to track our annual earnings and in turn make keeping up on our Social Security estimated benefit calculator a little easier. The calculator into which I plug our income information is found at the Social Security Administration’s website (ssa.gov), and it requires data such as our dates of birth, age at retirement, how we’d like our estimates presented to us (either in today’s dollars or future dollars that have been adjusted for inflation), and income information.

This way we can get a good feel for what our benefits could be upon retirement, and plan for a reduction in those benefits by a possible 24 percent or more should the system not be “fixed” in several decades.

Self-Made Calculators
I have several calculators that I’ve created myself to help me determine and better plan for various aspects of our personal finances. The first of these calculators is a tax calculator. While this isn’t so important for my wife, it is important for me as a self-employed individual. Using this calculator allows me to keep an eye upon how much in self-employment taxes I owe at any given moment, and it keeps me from falling too far behind in accruing extra cash to make such payments.

The second self-made calculator is one that tracks our net worth. It not only breaks down available secure assets such as savings, bonds, certificates of deposit, and cash, but it also includes non-guaranteed assets such as our retirement accounts, loans to family members, and home equity (when we owned our home), and factors in any liabilities such as our mortgage (again, when we owned our home), and any outstanding debt.

The secured assets comprise one total, the non-guaranteed assets another, and then we have a combined total for an overall net worth once our assets totals are relieved of any liabilities. We update this calculator regularly, and it allows us to stay apprised of our overall financial situation at a moment’s notice.

Friday, November 23, 2012

Home Projects We Undertook Immediately After Buying our Home

Some things are just easier done before getting completely settled into a home. There were certain projects that we had on our “home to-do” list that we wanted to accomplish before we found our home spaces cluttered with boxes, furniture, and other furnishings that came with the move-in process.

Therefore, we took a couple days ahead of when all of our stuff arrived to knock out a few projects we wanted to undertake in the spaciousness of our new home.

Deep Cleaning
We certainly wanted to give the house a good going over cleanliness wise before we started to clutter up spaces with boxes, sofas, mattresses, and all the rest. Cleaning a home is just so much simpler when you don’t have to work around furnishings. We didn’t have to worry so much about spilling cleaning solution on upholstery, maneuvering around vases and dishware, moving certain items back and forth to clean behind them, and otherwise dealing with awkward cleaning situations.

We could just come in with our mops, buckets, sprayers, and rags, and have at it without having to fumble over and around all our possessions.

Carpet Removal
We had some less than favorable looking carpet in our master bedroom upon arrival. While I’ve got quite a bit of experience cleaning carpet from my time spent in the hotel business, I’m willing to admit when I’ve met my match. Seeing as how the carpet really wasn’t worth saving, and that it this bedroom was the only room on the first floor that didn’t have its hardwood floors exposed, it was an easy decision to pull it up.

Underneath we had nice hardwood flooring that looked even better with a good cleaning and some polishing. The job was made easier by the fact that we didn’t have to work around the dressers, nightstands, and a king-sized bed that would soon arrive.

Carpet Cleaning
Speaking of carpets, we decided that we’d like to give the upstairs and finished basement carpets a good cleaning before we got settled in with all our furniture. Therefore, we spent about $35 to rent a carpet cleaner from the local grocery store, buy a little carpet shampoo, and I set to work giving the carpet a good going over, not having to worry about moving furniture back and forth, missing areas due to oversized furniture pieces, or hurrying the drying time of the carpet in order to be able to move furniture back into a more livable arrangement.

Monday, November 19, 2012

Adjustments that Made our Home More Marketable

When selling a home, it can be difficult to know where to start when trying to make it more marketable. Do you tackle the outside curb appeal? Do you focus on the interior spaces? Or do you work to accommodate some combination thereof?

Personally, we settled on the latter option, deciding to focus on several areas both inside and outside our home.

Mulch and Yard Maintenance
It doesn’t always take a huge investment to make a yard look presentable. In our case, some weed pulling, a bit of sidewalk edging, a good lawn cutting, a little shrub trimming, and 10 bags of mulch that we’d purchased on sale during the winter for $1 a bag, had our yard looking pretty darn good.

During the point at which we were preparing to put our home on the market, our back porch awning looked terrible. It was a canvas covering on a steel frame, but the canvas had torn at one side and the rip had progressively worked its way along the entire edge, making the canvas droop and all-in-all look pretty pitiful.

This was the entrance through which prospective buyers would be entering our home. Therefore, we paid $450 to have the structure removed, the steel sandblasted and repainted, and the cover replaced with new canvas.

Garage Roof Repair
When we bought our home, the inspector noted that the condition of the garage roof was less than favorable. It had three layers of shingles that were crumbling and in need of replacement.

While the roof managed to hang on until we decided to sell three years later, it was an eyesore and needed to be fixed. Therefore, before our home hit the market, we spent the money to have the existing layers of shingles ripped off and a fresh layer put back on. It cost us $1,340, but I think it could have cost us more should we have negotiated a credit for the repair during the sales process or should it have turned off potential buyers to the point that they never made an offer in the first place.

Paint Touchups
We didn’t do a ton of painting in preparation for our home hitting the market, but we did want to at least do a few paint touchups here and there. We really didn’t want to go repainting entire rooms since we couldn’t be sure if our paint selections would be more or less appealing to potential buyers. However, with extra paint we had leftover, we went around and touched up existing painted areas to cover scratches, dings, repair work we had done, and similar negative eye-catchers.

Window Treatments
One of the final adjustments we made to our home in an attempt to make it more marketable was to make some changes to our window areas. We spent a couple hundred dollars to buy several new, crisper, cleaner looking blinds for our bedroom and dining room areas and added some sheers in the master bedroom and a window treatment over the dining room window in an effort to add a little character to the spaces. We also removed the dated vertical blinds in the dining room to give the space a newer more updated feel.

Tuesday, November 13, 2012

5 Moves that bring us Financial Peace of Mind

Money can bring with it plenty of worries. But not having the proper financial safeguards in place can bring worries of its own. While we can’t prepare for every financial situation that may befall us, there are certainly ways that we can at least improve our financial peace of mind. And while achieving such peace of mind might not happen overnight, by working through certain steps or knowing what sorts of tools are at our disposal to better protect our financial lives and assets, we can help safeguard ourselves against a variety of potential issues.

Becoming Mortgage Free
I’m not a fan of debt. While I know that sometimes it’s tough to avoid, this doesn’t mean that we can’t try. A mortgage is the one aspect of our debt-related finances that is especially difficult to avoid due to the cost of many homes. However, I never liked the fact that such a payment was there whether we were able to afford it or not; therefore, we downsized our home and bought a space that we could afford outright. This allowed us to avoid mortgage payments and gave us a little breathing room and extra peace of mind in our financial lives.

Debt Avoidance
Debt is one of those things that can not only weigh on our minds but can eat into the strength of our financial resources. Unlike a mortgage, items like credit card debt may have little positive outcome other than enabling users to delay the eventual payment for purchases. The problem is that this delay can come with excessive interest payments and worry over the making of those payments. We’ve been debt free since we paid off my wife’s student loans several years ago. It’s a wonderful feeling and provides peace of mind as well as other options to consider for how to make use of our money in more productive and positive ways.

Emergency Fund
We just never know what kind of curve balls life is going to throw us, and having an emergency fund in place can help us deal with those curve balls. Our family tends to at least try to keep an emergency fund of $5,000 available, which has helped us deal with everything from a broken flood control pump and preparing our home for sale, to purchasing our new home and helping to cover the birthing costs of both our children. Having that backup fund has come in handy in a number of instances and it provides us with a little extra peace of mind even when we don’t need it.

Insurance Coverage
The thing about insurance is that it’s one of those costs we hate to pay and may rarely use, but it sure is nice to have when we really need it. From automobile coverage to health, dental, vision, and even identity theft insurance, our insurance makes a huge difference in the amount that we might have to pay for such items otherwise. For example, our last family dental bill would have been almost $1,000, but with our insurance coverage, we paid $0. A car accident that would have cost us over $5,000 in repairs ended up costing us just the $500 insurance deductible.

Emergency Supplies
From extra food and water to a propane fueled cook stove, batteries, flashlights, and similar items, we’ve found that spending a little extra cash to provide us some emergency supplies helps make us feel better about the future. It didn’t take much -- only about $300 in fact -- to get a multi-month supply of food, water, and additional supplies added to items we already had on hand and that set us up comfortably should an emergency of some sort befall our area. It wasn’t a big investment to make to ensure a more comfortable sleep at night through additional peace of mind.

Wednesday, November 7, 2012

Pulling Double Duty Until Ready to Pull the Self-employment Trigger

There was no one there to tell me whether I was ready to make the move to self-employment. There were no set guidelines or rules in place to indicate if I was indeed as prepared to make the move as I needed to be. And there was no practice run to see if I had what it took to do the job until I pulled the trigger…or was there?

While I had taken the time before I left my regular employment to budget, develop a multi-year business plan, and save an emergency fund to allow myself to make the transition to self-employment, there was another move I made to ensure that I was as prepared as possible to make the self-employment leap. This move consisted of pulling double duty for several years before actually making the transition.

Here’s how I did it.

Train Ride to the Future
I didn’t make the move into self-employment as a freelance writer until late 2007. However, I started writing well before then. I actually began writing as a way to work on a book idea I’d had and fill time spent on Chicago’s commuter rail system on the way in to work back in 2005.

My morning commute actually started at night (since I worked the third shift at the time), but that’s neither hear nor there. I would use the time to write (yes, I actually wrote longhand since I didn’t have a laptop at the time) and practice my trade.

While that book never came to fruition, I look back at it now and realize that it was the spark I needed to light the fire that eventually became my self-employment passion.

Using Regular Work as a Resource
I didn’t let on to the fact that I was interested in becoming a writer to many -- if any of my co-workers -- until I knew for a fact that I was making the transition. First off, I didn’t feel it was a great idea letting people at work know that I was interested in pursuing a career other than the one in which I was currently employed. Second, I certainly didn’t want to count my chickens before they were hatched. And third, I really didn’t want people asking me about my writing all the time. Therefore, I largely kept my self-employment dreams to myself.

This didn’t mean though, that I didn’t use my workplace as a valuable resource while I was there. I did this in several ways:

• As a steady source of income necessary to eventually fund my self-employment efforts.
• As a source of information from co-workers and clients to be used as fodder for my writing career.
• As a foundation and credential (since I worked in finance at the time) for my future as a personal finance writer.

Finding Extra Work Hours
Coming home at night from a long day at work meant that I wasn’t always in the mood to write…but I did. Add into this mix a newborn son and you can imagine that the circumstances surrounding the time in which I was preparing to move into the self-employed world were certainly hectic. In fact, if you throw becoming a new father into the mix, I was actually pulling triple duty in an effort to enter the world of writing.

However, each night (once I switched to the day-shift) after I got home from work, before we ate dinner and gave our baby son his nightly bath, I would spend and hour or so working on writing projects. My grandfather used to do this in the morning, getting up at around 4 a.m. to write before going in to work when he was struggling to make it as a writer himself.

While this schedule wasn’t easy, it prepared me in the years leading up to my self-employment move for what was to come, and it helped me ensure that I had what it took to make a career out of writing and that it wasn’t just some phase or passing interest.

Saturday, November 3, 2012

Our FEMA Experience

When our area was hit by eight inches of rain in one night and was declared a disaster area, the last thing on my mind was looking for help from the government.  Thankfully, our home didn’t suffer much damage from the storm, but the pump for our flood control system had burned out (an $800 repair) due to the beating it took during the storm.

At the urging of others though, and even our local officials, who said that anyone who experienced any storm-related damage should talk to FEMA (it turns out, the more damage reported by residents, the more the municipality would receive in federal money, or something along those lines), we decided we should go and actually hear FEMA tell us “no” so that we could get everyone off our back.

We Just Had One Simple Question
We thought our trip to see FEMA officials would last about five minutes.  We had one simple question, and we thought we already knew the answer.  We just wanted to see if the replacement cost for our pump would be covered, since it was indeed storm-related damage.

So we figured we’d just go in, ask our question, and likely be on our way, since we guessed the answer would be “no”. 

But it wasn’t that simple.

The Process
When we arrived to the area school where the temporary FEMA offices were located, we were directed to a waiting area where we sat for about 10 minutes.  Then we were shuffled off to an area with a row of telephones where we had to register with FEMA.

I told the person taking our information over the phone that we just had one quick question, but this revelation didn’t stop the registration process, which lasted about 15 minutes.  We were given a FEMA registration number (or something to that effect) and told to see the next person at a series of stations that were set up around the room.  This station, as I recall, did something along the lines of explaining all sorts of inapplicable information to us over the next 10-15 minutes, before sending us on to the low-interest loan lady.  

A Loan Interest Loan?  What? Why?
We spent the next 15 minutes listening to what seemed to be a sales pitch regarding low-interest government loans.  We told the lady we didn’t need a loan, but she proceeded to tell us that her mother always said, “Even though you don’t need it, you might want to take it just in case.  It’s better to have it and not need it, than the other way around,” or something like that, I’m really not sure since I wasn’t listening very closely by that point.  

She said these loans were great deals with interest rates in the two to three percent range and that we might want to do some updating to our home with the money even if we didn’t have any storm damage.

We finally escaped the “loan lady” by adamantly telling her we really weren’t interested and didn’t need or want a loan.  We then got to move on to the next station in line, which was manned by the guy that dealt with water-related damage.

The Final Answer…Frustration and Waste
Finally!  We had someone who would listen to our one simple question: Was the cost of our pump replacement covered by FEMA?

His first question was whether we had taken the repair to our insurance company, which we hadn’t.  First off, I was just planning to eat the cost of the repair in the first place, and secondly, we had a $500 deductible on our homeowners insurance.  For an $800 repair -- and the cost of the likely resulting associated rise in insurance premiums -- I didn’t think filing a claim was worthwhile.

The FEMA representative then explained that FEMA covered dwelling issues and didn’t really handle exterior damages or something to that effect since again, I wasn’t really listening by this point.

But he didn’t stop there?  Oh no.  He told us that he could have an inspector stop by if we liked.

“Why?” I asked.  “Wouldn’t it just be a waste of everyone’s time?”
He replied that more than likely it wouldn’t do any good, but just to double check, he could have it done.

I assured him that it wasn’t worth it.  But our hour spent exploring the wacky world of FEMA wasn’t a complete loss.  It was certainly a learning experience and the representative gave us several plastic FEMA cups and a FEMA activity book for our son.  Hot damn!