Sick date night with Anna

Tonight Anna laid on me on the couch as we watched Max and Ruby on Noggin. She is still recovering from her stomach flu as am I, so neither of us were active. After an hour of that, at 7 PM, I asked her if she was ready for bed. She nodded and went right for the stairs, up the stairs, into her room, and onto the futon in her room to be read to before bed. I can't believe how much she has grown up to be able to put herself to bed when she is tired. Amazing...

Sickness

A couple days ago, Anna got a stomach flu that has lasted until yesterday. As of yesterday afternoon, I am now battling it. We haven't dealt with as much illness with Anna not in a day care. But, now I have it. My wonderful wife is taking care of Anna and I while 31 weeks pregnant...and is trying to keep well herself. This is why that all little things I can do to make her life easier are well worth it.

Its funny because one of Anna's favorite books is Mommies are for Counting Stars. The last page says, "Mommies take care of everybody" and I always add "including Daddy." Right now, that is very true.

Savings on cars is a great investment vehicle

In Fidelity Investment's quarterly magazine this month, they had an article entitled Rev up Your Retirement Savings. In this article, they declared that the average car loan is $479/mo and lasts 48 months based on information they had gotten from Edmunds. If people kept their car an extra year and invested that $479/mo with a 7% annual return, they would have $199,190 in 35 years. If they kept it two extra years, they would have $331,823 in 35 years. I set out to look closer at these numbers...

First, the data for their average expense of a vehicle comes from this article at msn.com called ABCs for a great car loan. That article says:

In the United States, the average down payment for a car is $2,400, the average amount financed is $24,864 and the average monthly payment is $479, according to Edmunds.com. The most popular loan term is now a payment-stretching six years. If you're "upside down" on your old car loan (you still owe money on it after the trade-in), it's no longer a deal breaker. In these days of easy credit, lenders will roll the old balance into the new. Nor are down payments de rigueur; you can finance up to 100% of the manufacturer's suggested retail price, plus taxes, tags and fees.

So, according to that the average car costs $27,264...but is 6 years and not the 4 years Fidelity uses. So, they already have a hole in their logic. Regardless, I think $27,264 is a bit high and I will use their numbers, $479 for 4 years making the total spent on the car $23,000 including interest.

By my calculations, at 4.8% this $479 payment for 48 months would let you buy $20,485 worth of a car. If I take that as your initial savings when you have a car loan and as not your initial savings when you don't have a car loan, than I can run some different numbers. SO, if you had $20,485 and got this 4 year loan at 4.8% interest but in the fifth year put all $479/mo ($5,748) towards your savings and got a 7% return, then you roughly would have $342,500 after 35 years. If you keep the car an extra year and put another $5,748 towards your savings with 7% return, you would have $430,500 roughly. If you paid off the car with your initial savings and bought a new car every 5 years, saving the rest, you would have $228,200 at the end of 35 years. That initial lump sum grows more quickly with compound interest than you can keep up. With buying a new car every 6 years debt free, you end up with $322,600 and every 7 years you end up with $390,000. All of this can be seen on the chart above.

Does this mean going debt free does not make sense when you run the numbers? Absolutely not. Because what is not shown, is the risk. Would you take a loan out at 4.8% per year to put it in mutual funds? Probably not...but thats essentially what you are doing. Because I had the spreadsheet made, I was able to play around in numerous what if sort of scenarios. What if interest rates on car loans go up or what if we hit a bad point in the economy where stocks go flat? That can't happen, could it? Of course it could and it is happening right now. In these cases, the no debt models win every time.

Feel free to email me if you want the spreadsheet to play around for it yourself...

N&O's battle to claim its a moderate

A word to Local Raleigh News and Observer editors, since you keep insisting in your blogs that you are a moderate newspaper, perhaps you should try harder in your articles. A simple example is in today's Sunday's newspaper, where they have an article on "What makes a perfect president?" To represent local opinions, they polled 5 people, one on page 1E and four on page 2E. Overall, they had 3 democrats, two independents, and a single republican. I doubt these proportions represent a moderate viewpoint or their local target readership.

The editors at the N&O have avidly claimed in their blog that they do not have any partisan view. But they are criticized by many people. Here is a recent article where yet another reader complain of them being liberal and taking a certain stance, and their common response is, we get complaints that we are too conservative. Well, choosing this proportion with 5 people is not the way to declare neutrality. I guess if I was an editor serious about trying to take a middle of the line approach, I would have chosen two democrats, two republicans, and an independent. But, thats just me.

My favorite line was where the one opinion was that President Clinton was the ideal president. Because he is smart. Wasn't he the one who had issues with basic definitions in his sex scandal?

FMLA after pregnancy

I thought this was an interesting article on babycenter.com about maternity leave. Check out these restrictions on page 2 as to whether your employer can deny FMLA:
1) You have worked for the last 12 months and at least 25 hrs for 50 weeks in those 12 months.
2) You are in the top 10% of paid in your company
3) You and your spouse work at the same company and both request FMLA

A lot more info on the article online.

**Have no fear if you work with me, I am not considering FMLA. I was just looking this up in case a friend asks :-)

Avoid 401k loans

There were two articles in the N&O this Sunday about 401k loans. The first was about them becoming increasingly prevalent and the other was a Q&A about 401k loans.

The net of these hopefully will be that while these might be a short term option, they carry tough and long term penalties. Sure, if you have a medical emergency or may lose your house, then these sorts of loans are not bad ideas. But do not make it a habit and use it to reset their lifestyle to be realistic.

The downfalls to 401k loans include that people typically will stop contributing to their 401k while they repay the loan. Plus, the repayment of the loan is with after-dollars. So, this can be a big loss overall.

Reset to Realism

I have been listening to the Dave Ramsey podcast for a couple weeks now and I definitely have noticed one consistent theme, which I think I will start calling, resetting to realism. It starts with a caller or individual stating they cannot afford something like paying off debt, doing something they want to do like take a vacation or buy a new car, becoming a stay at home mother, or just even survive. Dave asks them some simple questions about their lifestyle...how much debt do they have, how much is their rent or mortgage, and how much is their car loans or car worth. Invariably, it comes down to one of two major things:
1) Sell your house or car because you can't afford the lifestyle you are living
2) Pick a new job or extra work to get more money into the equation.

Then the real kicker is start living a lifestyle where you budget to live off less than you make AND stick to your budget. Give, Save, then Live.

Its a real epidemic in my generation...that is to live beyond your means. Dave often pleads with people to set a realistic budget based on what they make. But we don't want that realism, do we? Instead, we want what we can't have...and thats why so many people can't afford to do what they want. If you can't pay off your debt, maybe your lifestyle needs changed. If you can't afford that vacation you always wanted, then maybe your house is too expensive for what you make and if the vacations are really important to you, sell the house and live less expensively on a day to day basis while you save for those nice vacations.

Most callers to Dave's program have him give them the same equation. Reset your lifestyle to realism. This may mean driving a less fancy car or having a smaller or more out of the way house. Reset your budget to beneath that which you can afford...afford being that you still have the ability to GIVE and SAVE before the bills and entertainment and all of that is spent. That is what is realistic for your life. Reset those expectations and how you live.

Melissa and Doug Chunky Puzzles

Tonight for our date night, we went out and bought another Melissa and Doug Chunky Wooden Puzzle at BAM!. We had the Chunky Farm puzzle and added the Chunky shapes puzzle.



I love these puzzles because they are educational (shapes and animals), provide Anna with lots of entertainment, and get her brain to think. 90% of the time, she can get the shape or animal to the right spot and about 5% of the time she can get it in to that spot. We love them and highly recommend them.

Podcasts

I know podcasts in general are kind of old news, but I thought I would share the podcasts I am listening to and some advice on how to find good ones.

1) Free podcasts only. There are so many free ones, why pay?
2) Read each episode's synopsis and skip those that seem meaningless to your life. A great example is Focus on the Family had a recent podcast on "Hope For Your Marriage After Infidelity." I don't ever plan on needing this unless I need to pass it on to someone else. Another one was from Money Girl, "Will Marrying someone with a lower credit score hurt my credit?" Another one that didn't apply to me.
3) Don't make rash decisions based on advice from a podcast. I think you can find podcasts telling you to do this or that which may or may not make sense in your life. It also may not be the best thing for you life. If you get new advice from a podcast, think and pray about it before taking that advice.
4) People you know. There are lots of podcasts from people I have never heard of. Likewise, there are podcasts from people who I have heard of in a bad way. Be careful who you listen to :-)


Here are the ones I am currently listening to in alphabetical order:

• Bill O'Reilly's talking points -- Quickly (<5 mins) Covers the major issues of the day and some good insight on them.
  
• Coffee Cup Apologetics -- I am still evaluating this...but it seems to have some interesting apologetics insights.
  
• The Dave Ramsey Show -- Talks about money management, living debt free, investing, and many other topics about personal finances.
  
• Denton Bible Church Recent Sermons -- Sermons from Tommy Nelson
  
• ESPN: PTI -- Pardon the interruption, probably my favorite sports talk analysis program.
  
• Focus on the Family -- Dr James Dobson and others give practical advice on marriage, parenting, and other issues in daily life.
  
• How to Manage Your Money -- Quick 3 minute blurbs giving practical money management advice from Crown Ministries
  
• InTouch with Charles Stanley -- Sermons from Dr Charles Stanley
  
• Money Girl's Quick and Dirty Tips for a Richer Life -- Quick (<5 mins) blurbs on finance..probably about 25% useful.
  
• Money Matters -- Crown Financial Ministries call in program with Howard Dayton
  
• NPR: Business Story of the Day
  
• Wall Street Journal's Your Money Matters -- personal finances
  

Raleigh, #2 city for bargain house hunters

Having seen this article in Forbes, I wasn't sure that this was a title that Raleigh wanted to win. At first, I thought that whoever got this title had the housing market that had done the worst. Imagine my surprise when I saw Raleigh as #2! So, I read what made a city a bargain according to Forbes. It seems to have come down to a handful of factors and my take on why it was a factor:
1) Strong Job Growth -- Lots of people available to buy now and later
2) Foreclosures low -- No extremely cheap homes being pushed off by banks
3) Inventory is high -- Buyers can dictate terms of sale

With these factors in place, buyers can still dictate terms of sale and negotiate prices, but aren't as exposed to the economic and lending risk problems that have sunk many markets around the country.

I guess its not horrible to have Raleigh listed here...but the one I would wiling give up is our inventory being high. Interestingly enough, thats what made Raleigh #2 instead of #1:

The inventory of homes available is slightly lower than Salt Lake City (No. 1 on our list), at 14,764, despite Raleigh's larger population of 408,985 people.

10 weeks til life changes again

Yes, that is right...in 10 weeks Heather is due with another little baby girl. Our lives will completely change...again. :-) When alone, we go from man to man coverage to zone coverage. If I think about it too much, all I can think is "18 months apart..what were we thinking? Anna's isn't ready, I'm not ready, Heather isn't ready, I'm not ready" Whew! Its times like this that I have to recall one of my favorite quotes, "Fear is the opposite of faith." I don't take all fear as being that way, its much too broad of a word. But, in this case it would be worrying. Matthew Chapter 6:33-34 says

But seek first his kingdom and his righteousness, and all these things will be given to you as well. Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own.

Read the rest of Matthew 6 to know that worrying is not a good thing. I need to practice that a bit in the next 10 weeks...until then...let's see how Anna changes. She is rapidly growing up...I don't want to hope she grows up more just so my life is easier...but a couple little things wouldn't hurt ;-)

The number 2 girl in my life

Yesterday, I came home to this picture from the #2 girl in my life:


Along with a great gift from my wife to her techie husband who works out every morning, an iPod shuffle, so I don't have to lug around my much larger video iPod when lifting weights. I am extremely blessed to have two wonderful women that I get to spend time with most every day in my life.

Last night, I cooked a dinner and the three of us had a "romantic" candlelight dinner. I put quotes around it because I am not sure any meal can truly be romantic with a 15 month old, but it was very nice. Heather and I are going to share a romantic meal this weekend while Heather's best friend, Suzanne, and her husband watch Anna. We did have a nice Valentine's day, and I hope you did as well!

Sell Sell Sell...then Buy back if you want to

If you make an Adjusted Gross Income less than $65,100 for couples and $32,550 for singles...read on. Otherwise, this probably won't be too exciting for you. The last Bush Tax Cut to go into effect allows for those with the income levels stated above to skip capital gains taxes on the sale of Stocks, Funds, and other assets like Vacation homes so long as you have owed it for less than one year. You would pay 0% tax on the amount up to that limit...so let's say you made $55,100 as a couple...your first $10,000 would be tax free in the sale.

Don't want to sell that investment, here is a quote from the above references Forbes article:

What if you qualify for the 0% gains rate but don't want to sell your stock now? Maybe you don't need the cash. Or maybe you think that the stock will go higher? Not to worry, you can sell shares at a profit and buy back the same stock immediately, replacing your old holdings with new stock with a higher basis. (No, the "wash sale" rules, which make you wait 31 days to replace stocks, don't apply if you're selling for a gain.) "It's a great hedge against higher capital gains tax rates in the future, says Marc Soss, a tax lawyer in Tampa, Fla.

Stimulus spelled out

Wondering how this complicated rebate scheme attached to the economic stimulus plan works? This Forbes article does a good job of explaining. They break it out into 3 main rebates so long as your 2007 and 2008 adjusted gross income (AGI) is less than $75,000 for individuals and $150,000 for couples:

1) Any adult with an AGI of $8,750 for single or $17,500 for a couple will get a $300 per adult rebate.
2) Each child earns the adult $300 so long as the child is 17 yrs of age or younger the whole year (2007 is the assumed year)
3) An extra $300 per adult so long as that adult owed at least $600 in taxes. Couples would have to owe $1200 together. The example given is that if the couple only owes $900, they will only get an extra $150 per adult for a grand total of $900 back.

Here is the real crazy piece of information:

The rebate is technically a credit against your 2008 tax bill that is being paid (in most cases) as what we'll call a "prebate." This prebate is based on your 2007 income tax return. The actual credit is based on your 2008 tax return. Whichever year produces the bigger check for your family is the year that counts.

So, I guess if you can't earn the rebate on your 2007 taxes you might be able to still earn it for 2008. This is so confusing, no wonder it took Congress so long to pass it. Here is the closing line which is all too true:

Got all that? A true stimulus bill--for accountants, that is.

I guess those who have accountants or use tax software will be getting their money's worth.

Google Maps Street View

If you haven't checked it out, its worth a look. Google Maps added a street view tab which allows you to look at things as you would at the street level. For example, here is our house on street view (click for bigger size):


Very cool feature Google. Try it out for yourself!

BTW, this picture was taken on a Wednesday (trash day) in the afternoon (Shadows), probably 3-4 months ago (based on landscaping in our yard and leaves on the trees).

Stimulate my economy

I think its interesting where Congress drew the line in the sand between the too rich and those that need to help the economy survive. As far as I understand it, the desire is to get money in the hands of the people so that they spend it and by spending it, push more money into the economy. I think the unfortunate thing is the line in the sand. Those making more than $75,000 as a single person or $150,000 for married couples do not see a dime (depending on how the money is phased out). This says either of two things:
1. Those making above that amount do not need extra money to pump into the economy.
2. Those making above that amount would not use the money to stimulate the economy anyway.

If Congress made the first assumption, it seems that the amount was a bit low to declare that those people do not need the extra money. Those people are the ones that pump money into the expensive coffee drinks, upgrades to their homes, and other services which have a great trickle down effect. They also typically have money tied up in investments, which right now have been doing poorly and are less likely to spend their money when investments are not doing well. So, I guess I would say that giving them some extra money to pump into the system would have been a good idea.

If Congress made the second assumption, I am not sure I can argue that as well. Those people with money tend to be some of the less likely people to frivolously spend it since they have many of the nice amenities in life already. That said, they also know how to spend the money and often it can be on services rather than goods which generally keep more money in the US economy. For example, buying that expensive TV may siphon the money out of the US economy quickly as its not made in the US and the company who makes it is not often a US based company...so profits leave the US quickly. However, if you have a service like a landscaping service, everything from the plants to the laborers should be US tax paying individuals.

Either way, I guess I just wonder how the majority of people will spend this money which will only go to the lower class and most of the middle class. (All of the middle class by some definitions). Its about 1 month after the Christmas spending cycle and there is problems in the housing market. How many people will use this to help with their mortgages or pay off credit card debts racked up from Christmas? I personally hope that many will. But, that doesn't stimulate the economy.

Don't get me wrong by this posting, I don't believe the upper class at this point needs the money. I just think that the theory for how this money is going to get pumped into the economy isn't one that scales. How about tell the upper class that if they pull money out of their investments and spend it all on services, they can not pay tax on those investments. That seems like a way to get the rich to put some more money into the economy :-)

Write down those check numbers

As I wrote about a few weeks ago, there have been some significant changes for the rules about what documentation you must have for 2007 tax deductions to charities. Because of these rules, we have over $100 in tax deductions we will miss because we don't know the check number and we did not receive a receipt in the mail for the charity or because we know the check number but the small amount of the check does not warrant the $1 charge our bank charges per official copy of the check. Each of the amounts we did not get back were checks given to a friend raising money for a trip or for a charity. One friend's children whose father died of cancer in 2006 decided to raise money for St. Jude's. We sent them a check which was made out to St. Jude's...but did not receive a receipt and can't find the check number :-( Another friend was going on a mission trip to a foreign country through a local church. We made the check out to Providence, one of the largest churches in the area, but haven't seen a receipt from them either. There are a couple of other examples, but clearly this is our fault for not tracking check numbers early in the year. All total, we needed about 7 canceled checks but ended up only getting two of them.

While this sounds like a complaint, I did intend this to be informational for people to learn from our mistake. If your bank is like our credit union and does not make canceled checks viewable online (Bank of America makes the checks viewable online for free) or sends you canceled checks, make sure you record the check number of every contribution you make next year. If its a $250 or larger contribution, you have to have a receipt from the charity anyway. But if its smaller, write down the check number now and plan on getting that canceled check.

Fidelity Full View

Heather and I have two places to look at the full view of our financial health, one at Mvelopes.com and one at Fidelity. For those that know me, you know I am a loyal Fidelity customer. Heather worked there for a couple of years and the company was just that good, we couldn't help but love them. Well, I was surfing in our Fidelity account yesterday and saw what they call Fidelity Full View. The idea is that you can tie your credit cards, bank accounts, and mortgages/loans together to see a full view of your financial health. Mvelopes.com has this same feature, but for those that have a Fidelity account with no Mvelopes account, I thought this may be useful to see a total picture of your financial health.

Fidelity's Full View goes beyond just the finaicial health to give other information, such as aggregate your awards accounts (airlines, hotels, etc) and show you your email. It will bundle in a calendar and bill pay sites as well if you configure it all. I think this is a very cool full featured product if you have a Fidelity account and want to look into it further. Click below to see an larger image of the Fidelity Full View Portal.

Anna coloring

This morning Heather had a seminar at our church she does the first Saturday of every month. During that, I get to watch my darling little girl who has not been feeling so well. So, I decided we would take a trip to Target first to handle some of the odds and ends that I knew we needed to do. Also, I was intending to look for something relaxing she and I could do together this morning. The relaxing thing I picked was to try coloring. As far as I know, this was Anna's first real time coloring. So, I bought some Crayola Beginnings Tadoodles Crayon Buddies. We had a blast and here are the pictures to show her drawing. She overall preferred her left hand again, making us think she is a leftie like her Mimi.

Ben Stein on investing

Sorry I have been out all week, I have been in the City of Angels and my laptop crashed while out there. I don't have too much to talk about right now but I wanted to suggest that you all check out this article from Ben Stein on investing. Ben Stein has been an actor and lawyer and is considered an expert on politics and economics. I think he is a brilliant man who I'd love to learn more from, hence the reason when I saw this article I jumped on the chance to read it. Some interesting tidbits according to Ben:

• Index Funds and ETFs are big winners
  
• Investing 40% in international isn't unreasonable and is perhaps desirable
  
• Stay away from Bond funds when you are young
  
• Don't rebalance
  

Read the article for more details and his book, Yes You Can Supercharge Your Portfolio!, for even more info.

Here are more of Ben's writings and commentaries.