A tax refund already!!!

This morning when I went online to check my bank account I saw that my state income tax refund of $1,215 had posted to my account. Hooray!

I promptly went online and made a $1,215 payment on the cash advance from my Citibank credit card. I double checked the status of my federal refund and the IRS website stated that I should receive it by February 12, 2008. That is pretty quick as I filed both my federal and state taxes less than one week ago. I am hoping to completely pay off the 0% balance on my Discover card and most of the remaining balance on my Citibank card this month.

For the first time since I can remember, I will have NO credit card debt and a little cushion in the bank.

Free Cereal Offer

Click HERE to be directed to the website.

WAMU dropped its Online Savings Rate

Yes, it finally happened. WAMU dropped its online savings rate from 4.75% APY to 4.25% APY. I had not paid attention so I am not sure when it dropped but I think it was within the past week or so. It is still not a bad rate, just not as good as it used to be.

Consumer Confidence drops

Well I know my confidence has dropped. I am reining in any unneccesary spending. I don't feel my livelihood is threatened but in this uncertain environment it can never hurt you to have too much cash in the bank. I think a lot of people probably feel the same way I do. We don't live paycheck to paycheck but we are not comfortable with our level of cushion. Right now I only have about 1.5 months of expenses as a cushion. I am trying to get that up to a 6 month cushion.

See the related story below on Yahoo Finance. Speaking of Yahoo, they are planning jobb cuts of their own.

Consumer Confidence Drops in January

My escrow refund arrived!

Hooray! Today the mailman brought me my $1,592.18 escrow refund check. I am going to use it to pay down the cash advance on my credit card. My new escrow payment is about $85 less than it was before the last escrow analysis. I plan to save the difference in my emergency fund.

It is going to be such a relief to get my credit card debts paid off! I think I will e completely credit card debt free , with the exception of the monthly charges on my Amex that I pay off monthly, by mid-March. Wow! Less than two months away. Ever since I got my very first credit card in 1990, I have had a balance that I could not pay off. Finally, after 18 years I will be free!

Competitive CD Rates

With interest rates dropping I decided to compare CD rates from a few national banks. These rates are as of January 27, 2008 and of course are subject to change. Additionally, each of the bank may be running specials that are not considered here.

For those with $10,000 or more to invest, the E-Loan CD is a pretty good deal. If like me you only have small amounts to invest then ING Direct or Washington Mutual may make the most sense. I currently have two different $1,500 6 Month CDs. One with ING Direct at 5.15% and the other with Washington Mutual at 5.10%. Earlier this month I signed up for the Washington Mutual Savings for Success account that earns 6.50% that is essentially a CD that you can invest $25 to $500 in every month for 12 twelve months before it matures.

It would seem that in hindsight, I should have signed up for longer terms, but if I recall correctly the 6 month terms offered the highest interest rates. The banks probably were well aware that rates were going to be dropping. My ING Direct CD matures in March and my plan is to add another $1,000 to it and roll it into another CD. I need to do some more homework to determine where is the best place to put my $2,500 and for how long.

I just filed my taxes electronically

This morning I was able to complete my federal and state income taxes in TaxCut and got them filed. I am expecting a $5,366 refund from my federal return and $1,215 from my state return. With all of the issues surrounding the AMT rules and how that may delay refunds I am curious how quickly I will see the money. I have every bit of it earmarked to pay off debt.

In trying to get to my Delta $25,000 threshold I spent more than normal in December and now the bill is coming due. In order to avoid the double billing interest hit that I would pay with Amex because I didn't pay off my full balance I took did a balance transfer from my Citibank MC. It cost me $75 but I figured that it was less than 2 months of interest on a high Amex balance. I will pay off my full Discover card balance and most of my Citibank balance by the end of February. I will still owe $845 on Citibank but I think I will be able to pay that off in March.

On another note I will be getting a refund of about $1,200 because I am having to cancel the vacation that I had already paid for due to personal reasons. I am still out the airfare but I can use my ticket for another trip less the $50 change fee. I am completely out of the other person's ticket. I may take that money and buy a new Apple laptop. I am not sure yet.

ING Direct has dropped its savings rate

In response to the .75% drop by the Fed, ING Direct has dropped its savings rate to 3.65%. Their CD rates have not dropped as much. As of this morning WAMU has not changed its online savings rate from 4.75%.I figures...now that I am actively saving money in an emergency fund, the rates start dropping.

A bad day on Wall Street?

Well if the news is any indication today will be ugly. I am going to sit tight. I think if I were to try to move money somewhere else it would just be even uglier for me. I have a long time horizon so I should be okay in the long run. My net worth is going to suffer in the short term.

All I can say is to buckle up and hang on for what promises to be a bumpy ride.

To eBay or not to eBay?

Several years ago I received a Tiffany diamond band that cost about $3,500 when it was brand new. I know the cost because I was there when it was purchased. Needless to say the relationship did not last as long as the ring and it has been sitting in my jewelry box ever since.

I know that if I were to sell it at a pawn shop I would not get very much for it. I am wondering what I could get for it if I were to sell it on eBay. I do not regularly buy or sell from eBay. There is no longer any sentimental value in the ring so anything I could get would just be gravy for me. I need to figure out what to do so I can at least get some value for it. Any ideas?

Compact fluorescent light bulbs

According to the Energy Star website

"If every American home replaced just one light bulb with an ENERGY STARqualified bulb, we would save enough energy to light more than 3 million homes for a year, more than $600 million in annual energy costs, and prevent greenhouse gases equivalent to the emissions of more than 800,000 cars."

In my own home I have replaced 10 regular light bulbs with compact fluorescent bulbs. I am sure that i am not only saving energy but I am also saving time by not having to replace the light bulbs as often. My experience has been that the compact fluorescent bulbs last at least 5 times longer and probably even more than that. I use the equivalent of 60 watt bulbs in my home but they come with a variety of light outputs. I expect that these bulbs will become even more popular as the price of energy rises. These bulbs are more expensive than regular incandescent bulbs but the energy cost savings is worth it to me. A compact fluorescent bulb will run you around $3.50-$4.00 in comparison to an incandescent bulb costing 50 cents.

Keeping on budget

Almost two-thirds of the way through January and I am keeping on budget. In fact, so far my spending for my allowance which is basically all discretionary spending categories (dining out, personal care, entertainment, etc.) has been about $180. Typically I would have spent at least $225 or more by now. The biggest splurge in there is my purchase of my TaxCut software which is a non-recurring expense and I will get a $10 rebate.

This month I also earned my first $10 from MySurvey.com. I will receive a check in 8 to 10 weeks. Earlier this week I was at a corporate event in Florida where I stayed at a nice hotel and ate very well. I did not spend one dime of my own money while I was there. I did however have to pay for a pet sitter ($74 including tip). Instead of using my corporate credit card to pay for the hotel, I used my Discover card to take advantage of the 5% rebates on travel expenses during the months of January through March. I figure I will earn $35 in rebates to help offset the pet sitting fees.

Mayhem in the stock markets

I have not been able to bring myself to look at my retirement investments since the stock market plunge started earlier this month. I know my net worth is going to take a major hit. Fortunately, my time horizon for retirement is several decades away. I do feel for those folks who will be retiring in the near term. The recent market volatility is not a good thing for them.

On the bright side, I will be able to buy more shares of my mutual funds with the lower prices. It is just hard to see my hard earned savings take such a big hit.

I am sorry, what was your name again?

I had the pleasure of attending a corporate event where Benjamin Levy was the entertainment. He wowed us with his skills as a magician but I was even more impressed with his ability to remember names. I was so happy to hear that he has written a book, "Remember Every Name Every Time". I am terrible at remembering names and it is to the point that it is an embarrassment.

I am going to spend some of my allowance budget on this book to better myself.

The subprime woes continue on...

n this day and age a college education is the key to a middle class lifestyle and now I read that the subprime crises is going to effect student loan lending.

CnnMoney.com has an eye opening article...Subprime woes to hit student loans

Students relying on college loans will soon feel the pinch from the subprime
mortgage crisis, according to a report by financial aid guide FinAid this week.
Not only will subprime borrowers have more trouble securing a student loan,
but all student borrowers will be subject to stricter lending practices,
according to the financial aid adviser.

I cannot wait until this whole subprime debacle resolves itself. Not that I wrote "resolves itself" because I don't think our federal or state governments have the guts to fix the system.

Annual mortgage escrow analysis

Once every year mortgage lenders do an escrow analysis to determine if the escrow payments have accumulated the proper amount to pay future taxes and insurance. My first escrow analysis was done at the end of December 2007 and the results showed that I had an overage of $1,592 in my account. The mortgage lender will be mailing me a refund check and, in addition, my monthly mortgage payment is going to decrease by about $85. I plan to use that extra money to build up my emergency fund with I have decided is woefully underfunded at the moment.

My mortgage lender includes an escrow cushion equal to 1/6 of my projected taxes and insurance. I used to think that some sort of state law required that but an escrow cushion is held at the discretion of the lender. Housing and Urban Deveopment (HUD) regulations limit the amount that a lender can hold in escrow. A few states require that interest be paid on escrow accounts, unfortunately my state does not.

What is an adequate emergency fund?

The news is full of stories that we are heading into a recession so what constitutes an adequate emergency fund in such uncertain times? I have read that 3 months is a good cushion but I am pretty sure that 3 months is not nearly enough to keep you sleeping well in a full blown recession. Currently, I only have a little over a one month cushion in my emergency fund. I am fortunate to have a stable job but I still realize that one month is no where near enough.

Should I focus on my emergency fund at the expense of contributing to my 401k? My gut is telling me to continue to build both at the same time. Once I get a 6 month cushion (in about 15 months) I will save less cash and fully fund my 401k and Roth IRA. I believe my modified adjusted gross income will still be under the limits so I can still fully fund it in 2009.

In 2008 my budget calls for me to contribute $15,750 to my 401k and $1,200 to my Roth IRA. Saving for retirement and building my emergency fund are the two most important goals I have for the foreseeable future.

South Beach Diet Bars Sample

This free sample of South Beach Granola Clusters and Drink Mix looks like a good deal.

WAMU Saving for Success

I noticed a full page ad on the back of the business section of last week's Sunday paper for a WAMU Savings for Success account earning 6.5%. I went online to WAMU.com and found no trace of such an account, so today I went to a branch location and asked about it.

Here is the fine print:

• Only offered in Georgia, Illinois, and Texas
• Minimum $1 deposit/Maximum $500 to open the account
• Must have automatic monthly transfers of $25 to $500 from your WAMU checking account
• You have to open the account at a bank branch

Basically it sounds like a 1 year CD. There is a penalty if you withdraw the money before 1 year maturity date. Once the year is over the money sweeps into an account that earns 2%. You can renew the CD after 1 year but the rate is subject to change.

I think this is a great deal and promptly signed up.

Recap of 2007 income and expenses

My 2007 income and spending is above. I have the information more granular but for the sake of space I combined some spending categories. Specifically, the allowance category is made up of dining, personal care, clothing, and most other spending that was totally discretionary.

My 2007 spending was the basis for my 2008 budget. In 2008 I am hoping to increase my salary and interest income as well as decrease my allowance expense and interest expense. I should be able to save more if I keep some discipline in my life.

Still not done with Wachovia

Last month I thought I had completely washed my hands of Wachovia and their ridiculous charges for downloading Quicken. In my haste to rid myself of Wachovia I inadvertently forgotten to change the bank account that my car insurance is debited from so apparently according to the Wachovia customer service representative they did not close the account due to an upcoming scheduled debit. I was charged a $22 overdraft fee for this. I wish they would have just closed the account and I could have dealt with State Farm for the consequences. I have transferred funds from Wamu to Wachovia to cover the charge and hopefully it will go through later today. I just checked the Wachovia balance online and saw that I was hit with yet another $5.95 Quicken download fee because the account is still open. This has been so frustrating for me. I will NEVER do business with Wachovia again.

Estimated 2007 tax refunds

I have purchased Tax Cut and input the initial information that shows that my federal tax refund will be approximately $5,300. The state forms are not updated in Tax Cut yet but I went on the Georgia Department of revenue website and was able to determine that my state refund will be approximately $1,200. Both amounts are larger than last year’s refunds. I plan to use the entire amount to pay down debt. Most will go to the 0% balance on my Discover card but some will go to pay down my Amex. I loaded the Amex up to try to get the Medallion awards from Delta so my balance is $4,000.

I am disappointed about the possible delays in refunds this year due to the last minute changes to the AMT tax. I am really looking forward to paying down the credit card debt. I have written about tis before but I still considering changing my withholding so that I don’t give the free loan to Uncle Sam. I am going to run some numbers to see what my tax situation for 2008 looks like. It is nice to get those nice refunds but from a monthly budgeting perspective I could use the money in my paychecks. Having less withhold would let me save more each month in my emergency fund. My goal is to increase it to $15,000 by the end of 2008.

If I had only bought these stocks

Hindsight is always 20/20 but USA Today has listed 25 Stocks You Should Have Bought which shows that “A $100 investment in each of these in their infancy would have turned $2,500 into $650,000. Of course that would have meant being wise enough to recognize the vision of Microsoft’s Bill Gates and Oracle’s Larry Ellison; the promise of products such as motorcycles and pork; and the big profits in money management.”

I wonder what I am missing out on today that will be worth a gold mine in 25 years.

Gym membership

I have decided to cancel my gym membership. My company subsidizes the monthly fee so it only cost me $17.50 per month but I haven’t used it in a few months and it is a waste of money right now. I wonder what portion of gym memberships go unused? I prefer to exercise outside to being on a treadmill anyway.

Recap of 2007 goals and new 2008 goals

I started this blog during summer 2007 and my goals for the end of the year were as follows:

Max out 401k contributions
$5,000 in emergency fund
$100,000 of net worth

The only goal I reached was my net worth goal. My December 31, 2007 net worth was $101,286. The downturn in the stock market even put reaching that goal in jeopardy. My emergency fund only has $4,022 in it but that is an improvement over the prior year when I only had an emergency fund of $410. I did try to max out my 401k contributions but my spending habits got in the way. I only contributed $6,934 to my 401k and $1,200 to my Roth IRA. Those numbers are improvements over the prior year though.

My 2008 goals are:

Max out 401k contributions
Pay off all credit card debt
$135,000 in net worth
$15,000 in my emergency fund
Contribute $1,200 to my Roth IRA
Some of these goals are stretch goals but I am going to do my best to reach them.