The State of Our Union 2012

(The State of Our Union 2011)

If this is boring to you, scroll to the bottom for a cute video of Liam!

All that math for a rather unexciting result. I added up the values of all of our assets and liabilities as of January 1st and it is within a few hundred dollars of our net worth in 2011. Not to say that there wasn't a good deal of change. The value of our retirement accounts increased by 1/3, we paid down our mortgage and Dan's student loans and increased our savings accounts. I also paid off my SUV. It was the single biggest transaction that I have ever made! All of that, however, was completely undone by the continuing decline in the value of our home. Blah!

I was really hoping for a positive number by this year, but that didn't happen. It would have if our house hadn't lost anymore of its value, but it did and there isn't a single thing that I can do about that. We discussed letting our house go back in 2009, but decided that it wasn't the best option for us.

The numbers remind me that we need to redouble our efforts to pay down our debt and save for the future. Since adding it all up, I increased our payment on Dan's student loans so that we will pay extra principal each month. I did that last year for our mortgage, but left the student loans at the default payment. Now that we are paying extra on both, we will be in an even better position by next year.

I am also hoping that Dan gets a nice raise this year after his review next month. If that comes to fruition, we will increase the percentage that he contributes to his 401(k). Other money things on our to do list this year: get our beneficiaries and will in order, roll over Dan's 401(k) from the jobs he had in 2007 and 2009 and correct our homestead exemption.

Liam is learning about money. He still loves emptying out my wallet.


He also knows how to put coins in his piggy bank.

Article: How to Live Within Your Means

(I came across this article from corporette.com  last night and liked it so much that I wanted to include it in my blog. I think her suitcase/budget analogy is really great. There's no secret to living within your means. You have to spend less than you make. That leaves 2 basic options: spend less or make more. )

I think living within your means is a bit like packing a suitcase: you have to edit and curate what you have in your life right now. Stick with me here — whenever I go to take a trip I pull out everything that I want to pack and have it sitting on the bed in one big pile, usually evoking at least a joke or two from my husband. And then I’ll keep adding things to the pile — a t-shirt here, a bathing suit, a dress, whatever — under the theory that hey, that thin t-shirt is just a little thing rolled up. Or that dress, you know, could just be folded in half and laid flat — it barely adds any bulk at all! And then I’ll go to put things in the suitcase, and the damned thing won’t close, so I have to remove things and figure out what I really want.  It doesn’t mean that I can’t have the things that come out of the suitcase: it just means that they can’t come with me on the trip.

So: in this analogy, your budget is the suitcase, and the idea of “living within your means” is what you can pack into your suitcase. That said, I think there are two big ways you can live within your means: the mechanical way and the more difficult study-your-budget way.  The mechanical way is pretty easy:  pay your planned expenses (bills, loan payments, etc) at the beginning of the month, and then put the amount of cash you have left in your wallet.  When it’s gone, it’s gone — time to shop your closet, eat from your kitchen cabinets, and suggest going to the free museum night with your friends rather than going out for dinner.

The more difficult way is to actually study where your money is going — analyze it, and make adjustments.  Ultimately, I think this is the more fruitful, useful way of living within your means — you end up with more money to spend on the things you want and need, with better habits for the long run, and without quite so many “deprivation” feelings.  (I’m a big fan of tracking your finances in general, whether on paper or through something likeMint.com, which is the free tracking software that I use.)

• Choose a place to live that is within your means. This is a huge subject, and one we’ll talk about more in depth in the months to come, but for now: don’t rent or buy more of an apartment or house than you can afford.
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• Study your bills. Sure, you may have had HBO and Showtime (and ….) for as long as you can remember — but how much do you really watch them? Similarly, your landline: do you use it? After 9/11, I insisted on having a landline — but after a few years I realized that the primary thing I was using it for was to call myself from work and leave “don’t forget X” messages. Helpful, but not worth the $50 or so I was paying to Verizon on a monthly basis. Ditto the gym: how often do you really go?
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• Avoid temptation. If your “going home” route takes you past your favorite store — maybe only take that route home once a week (if at all). If you regularly buy stuff online, leave your credit card at home, or leave it in a drawer at the office that requires you to get up to get it. If you’ve memorized your card number, get a new one. (Is it a bad thing that I have memorized my card number? Sigh.)  Sometimes, “temptation” can even take the form of certain friendships — we all have that one friend who insists on going to the $21 martini place to “settle in” for the night, or that friend who insists on ordering a bottle of wine “for the table” and then drinks most of it.  You don’t have to stop seeing that person, but you can’t turn a blind eye to your budget when you do see them — so either tell yourself you’ll only see them once a month, or insist on choosing the place when you go out.
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• Finally, study the little things — this is kind of like that collection of thin t-shirts in your suitcase; one of them won’t break the bank but they really do add up in the aggregate.  So consider this: Do you regularly pay $1.50 for a soda at lunch when you could buy a 6-pack at the store for $3 (or drink water)? Do you have a Starbucks habit? Look at how much you’re really spending on lunch on a daily basis — can you cut that by even a little bit?

The State of Our Union

I love money.

Not in the greedy, Scrooge McDuck kind of way. I love to count it and track it and see where it goes. I have spreadsheets to show me where all of our money has gone since right after we got married. It's a sickness from which I have no desire to be cured.

Every now and then, I add up the value of our assets and debts to see where we are financially. I've decided to do so annually (maybe even semi-annually) to track our progress and make sure we are moving forward. This numbers is negative, due largely to the fact that the value of our home has dropped about $100,000 since we bought it. Writing that out makes me throw up in my mouth a little.

We made quite a bit of progress last year though. After the emergency that was 2009, we rebuilt our emergency saving account to a comfortable amount. We more than doubled the value of our retirement accounts (the up turn in the market definitely helped with that.) We started making payments on Dan's student loans again (since he is back in school for his masters degree, we deferred them in 2009 when he was laid off). The only negative was the fact that we financed part of the purchase of my SUV we bought last year.

What good does it do to add these numbers up? Why is this a valuable use of my time? First of all, because it is interesting information for me. It also helps us plan for our future spending & savings and helps us allocate any money we have left over.

We are going to start savings for Liam's future this year. I'm planning on an entire post later though.

We have a lot of vacation plans in the works that we will begin saving for this year. Dan's family has a reunion at a lake house every other summer, which will occur this year. They are also planning a big ski trip in Utah in the winter of 2012/2013. That will be a pricey trip, so we are going to start putting money away for it this year. Dan and I also have a dream vacation of going to the Olympics in Brazil in 2016. That will be a very expensive trip, so we will start saving for it now and only have to put a little away each month.

Dan will upgrade his car in the next few years, so we will start saving now so that we can pay cash for his next car instead of taking out a loan.

We have decided to start paying extra toward the principle on our mortgage. It isn't very much, but it will decrease the life of our loan by almost 5 years and save us over $50,000 in interest. We decided to pay extra on the mortgage instead of my SUV or Dan's student loans because it has the highest effective interest rate (the interest rate once you take into account the tax breaks of paying interest on a mortgage) and because we are underwater on our home. Paying it down will save us the most money in interest and allow us to have more options. When Dan was laid off, we had to rent the house out at a loss instead of selling it. I want selling it to be a viable option again to give us flexibility.

There are aspects that we cannot control: Will the the values of our investments go up or down? Will the value of our house rise or continue to fall? If nothing goes terribly wrong, our efforts should result in a positive net worth by the end of this year. It will be a happy day in spreadsheet land for sure.

The (medical) Costs of Having a Baby

This is a post that I have been meaning to do for a while. Perhaps I am a bit masochistic, but I checked out the total cost of my prenatal and delivery medical care. This doesn't even include Liam's care in the hospital, just mine.

It's shocking.

Sorry, I still suck at blogger. Click to open full sized image in a new window.

I should mention that my pregnancy and delivery were completely uneventful. The only items on this list that are unusual are the Rhogam shot (only O- blood types get this), the ultrasound for growth (because my belly was measuring a little small) and the ultrasound for low fluid levels (I told them my water broke, but they didn't believe me.) I could have opted not to have the epidural, though the cost was the last thing on my mind when I requested it.

I should also say, it was worth every penny.