What about personal accountability?

I am constantly amazed by the stories of people who get themselves into incredible amounts of debt but blame the credit card companies for making it too easy. That is like blaming McDonald's because you are overweight.

There is an article in today's USA Today that demonstrates my point. Yes, people were granted more credit but just like the 400 lb man driving past the fast food restaurant...he doesn't have to stop and eat.

See the excerpt below.

"Kenna and Richard Baker of Des Moines say that as their home's value rose, they were barraged with offers for home equity loans and credit cards. They opened up new credit cards.
They also refinanced their mortgage twice and withdrew cash to pay off existing card bills and make home improvements.
But as the economy weakened and Richard's pay as a delivery driver fell, they used their cards again for necessities. "We had to pay the gas bill on cards one month or we'd get cut off," says Kenna Baker, 44.
Today, the Bakers owe $30,000 on credit cards and $105,000 on a home worth only $63,000. They blame themselves but also say lenders share responsibility for "making it so easy" to borrow."

My Upromise account update

I joined the Upromise program in April 2007 with the hopes of helping to pay down my student loan. In the 14 months since joining I have earned $10.77 with another $3.00 not yet posted. I am earning less than $1 per month but I get that is better than nothing.

I do not use the Upromise branded credit card and that appears to be a way to accumuluate a lot more in an account. Hopefully within the next year some of my savings will transfer to my loan account.

A weekend of spending out of control

This weekend I felt like I had no control over my spending. It was my onw fault really and I need to learn from it.

The problem started on Friday morning when I decided that I "needed" to buy 2 new pairs of jeans because they were half-price at $29.50.

Later that day I bought a $149 subscription for the local Broadway series. Admittedly, the $149 covers 6 shows over the next year and will get me in to shows for less than $25 a ticket. Maybe that was not such a bad purchase.

Friday night my girlfriend treated me to a concert at which I purchased a bottle of wine and two bottles of water. In retrospect, I could have done without the wine.

On Saturday, we used gift cards to to get into see the movie Ironman and then I felt I "needed" a soda and popcorn for another $10. I could have done without them. We then went to the mall where I spent $30 on a case for my iPod. I didn't really need it but I may protect it from damage. After the mall we went over to a friends house and I brought side items for $5. The $5 in side items were not an issue because I did not have to purchase my dinner.

On Sunday I had lunch at a local eatery for $9. I guess that is not a problem either as I had just been on a long bike ride and was 20 miles from home.

As I write this post I see that I should have saved the $22 from the concert and the $10 from the movies, and the $30 iPod case. The jeans will last me for several years and I really did get a good deal on them. $62 of questionable spending. I need to get these kinds of spending leaks under better control. Feeling bad about the spending is a good sign to me though because there was a time in my life when I would not have thought twice about it.

T. Rowe Price Familiy Organizer Offer

I do not have my retirement accounts or any other account at T. Row Price but I have taken advantage of their generous offer to send out a Family Records Organizer CD-Rom.

It can be used with a PC or a Mac. Basically, it is a great tool to organize your financial and medical records in one place. It also lets you store online user names and passwords so that if anything were to happen to you your family members could access your accounts.

This tool is not a replacement for a will or anything of that sort but I have found it to be useful.

Click on the link and order one for yourself if you are interested.

Real estate values

As I have mentioned in this blog before, I plan to sell my townhouse early next year. My next door neighbor has hers on the market right now. She originally listed it at $270,000 but now it is sitting at $265,000. I am keeping my fingers crossed that she doesn't have to go much lower.

We both bought our places in early 2006 for $247,500. We live close to downtown in a desirable historic neighborhood. Those are pluses in this market especially with gas at $4 a gallon.

I am being pessimistic with my anticipated sales price and figuring out how much I will lose when I sell it. On the bright side, when I move into my girlfriend's house, my monthly housing costs will decrease by about $1,200 per month. That will make the loss on the townhouse a little easier to swallow.

My car value

I have recently updated the value of my car in my net worth schedule. According to Edmunds.com my car is worth about $15,400 in its current condition and with its current mileage. I have rounded the figure down to an even $15,000. That is about $1,000 lower than last time I checked the value about 9 months ago.

I owe less than $7,400 on the car and plan to pay it off when I get my federal tax refund early next year. The scheduled pay off date is October 2009 so I will be paying it off about 7 months early.

Many people do not include the value of their cars in their net worth due to the fact that cars are depreciating assets. My feelings are that yes they do depreciate and wear out but it is still something that I could sell for cash if I needed to. I plan to keep this car for quite a while. I am looking forward to not having a $510 monthly car payment!

My emergency fund

I hate to even admit it but I have nowhere near 3 to 6 months of expenses in my emergency fund. In fact, I only have about 1 month of expenses in it. For the past year I have been trying to stash money away somewhat unsuccessfully. I have managed to payoff my credit cards so now I need to focus on my emergency fund.

This needs to be a priority of all of us who do not have adequate funds set aside n the event of a sudden expense. I need to talk to my girlfriend and tell her of my goal so that she will understand if I am reluctant to spend money. One thing I need to do is to get my spending under control. I seem to regularly exceed my monthly allowance. Spending and saving are all inter-related..

The $5 Plan

I recently read about a couple that saves every $5 bill that comes in to their possession. I think that is a great idea and I am considering doing the same. My only issue is that I feel strapped right now as it is between the $1,210 every 4 weeks that goes into my 401K, the $100 a month that I put in my Roth IRA and the $600 a month I am trying to put in my emergency fund.

You would think that an income of over $100,000 per year would make it easy to save. It is so true...it is not what you make, but what you save. I have an expensive (by my standards) mortgage of $1,843 per month including homeowner dues and taxes and a car payment of $510 per month along with a student loan payment of $140 per month. It all adds up.

Anyway, the $5 idea is something to strive for so I am going to give it a try.

Are we headed for a recession or already in one?

The news is so mixed on this subject. Economists say we are not in a recession but the average American is feeling it. As for myself, I feel a general unease about the price of gas, the housing market, and job losses. I feel my own job is not at risk but that does not put me out of the woods.

The stock market has been very rough the past week and I am not hearing anything positive in the news. I do know that I need to buckle down and save more for a rainy day. I don't have any revolving credit card debt but without an adequate emergency fund that could change in an instant.

I think most Americans are feeling the unease that I feel. I drove my car to work today but I have been riding the train once or twice a week to save gas. CNN has an article on their website today discussing how more people are using public transportation at anytime since 1957. The $75 a month I budget for gas will now only let me fill up less than 1.5 times per month.

My current living arrangements

I have been dating someone for several months now and at the present we spend most every night together if we are not traveling for work. Basically, I spend my time at her house for a variety of reasons and I am fine with that. I am still having to pay a mortgage and utilities at my own place though. I have raised the thermostat and unplugged the televisions to save electricity.

The plan is to eventually move in together in 8 months or so. I am going to have to sell my townhouse and I will probably take a loss on the sale. I am fine with that because once I do sell my place and start paying half of her mortgage my housing costs will decrease about $1,200 per month not including utilities. It will take my about a year to recoup a $15,000 loss at that rate.

I am keeping my fingers crossed with the housing crisis. My townhouse is in a historic neighborhood close to downtown and that should be a plus with the price of gas. I am able to take the train to downtown from where my girlfriend lives and that is a really good thing with $4.00 gas. I am thinking about canceling my monthly parking which should save me the $110 monthly parking fees less the daily cost of parking at $4.00 a day if I drive. The train cost $3.50 round-trip. I have to admit I have gottne spoiled with the in-out priveledges of the monthly parkers.

May 2008 Spending

My income for the month was higher due to having 3 paychecks in the month as apposed to the usual two paychecks per month. My father also sent me a $25 check for my birthday. The big category for the month was Pets. Due to my travel I had to spend $396 to have my cats boarded and I also had to refill the insulin Rx for my diabetic cat ($156 for insulin and syringes). My car expenses were higher than normal due to my having to renew my car tag.

I am still spending too much in the allowance category and I am not sure what to do about it. I spent less than I brought home for the month but my year to date spending exceeds what I have brought home on a year to date basis. I have a ways to go. My savings is really suffering too. I really need to revamp my thoughts on what is important to me as far as spending goes.

Here today gone tomorrow

Thanks to the 394 point drop in the Dow on Friday, I am sure my net worth has dropped off dramitically. I am afraid to even look at it. I will wait until the end of the month to tally up the damage.

Transportation costs

At $4.00 for a gallon of gas I have been finding alternative ways to work. Twice this week I have worked from home and once I have taken public transportation at $3.50 a day. Due to travel last month I only had to fill my tank once and spent $50 on gas for the whole month. My current budget calls for $75 per month on gas. The only way I will be able to comply with that is to continue to take public transportation and work from home whenever possible.

May 2008 Net Worth

What a jump in my net worth in May. The primary reasons are the improvement in the stock market, my annual 401k match was added (approximately $1,600), and the gradual pay down of my outstanding loans. At this rate I may actually reach my year end goal of $135,000 in net worth. I will keep my fingers crossed.