Saving, Budgeting, and Marriage...

Heather and I were interviewed by Sue Stock from the N&O, our local newspaper here in Raleigh NC, about how we manage money as a fairly young married couple. The article is here at the N&O including a picture of us with our daughter Anna under More Photos on the right. The experience was great, Sue was nice as well as the photographer, Chris Seward, who spent 45 minutes at our house ot get some various photos of us.

Most of the interview we talked about our system of budgeting, called the envelope system. We didn't develop this system but were taught it by people related to the Crown Financial Ministries organization. Our church, Crossroads Fellowship, teaches part of the Crown curriculum as well as information from other popular financial freedom ministries and personalities like Dave Ramsey. As part of enforcing our envelope system, which I will describe in more detail in a second, we use Crown's Money Matters software which they now call Money Map software. They also have an online budgeting software package called Mvelopes which also budgets with an envelope system.

The first key concept in our system comes down to the order in which you handle your money. When we first receive money, Heather divides it into the envelopes immediately. First, we give back to God a portion of the income He has blessed us with in our tithes. Next, we save a portion of our income in a variety of ways, general savings, emergency savings, college savings, college investments, new car savings, general investments, and other such categories. This keeps savings as a priority in our lives and moves the money away from where we are likely to spend it on a whim. Next, the money gets allocated to the various other account "envelopes" we have. This includes things like our utility bills which can be static or dynamic as well as our grocery and gasoline envelopes which we can use throughout the month. There are other envelopes that gather money to be spent later in the year, like travel envelopes, gift envelopes, or our personal envelopes which Heather and I can use personally at our own discretion.

When the month is over, some envelopes may still have a balance and others may not. Things like our grocery and electric bill envelope both often may have balances. However, whereas the grocery bill envelope probably doesn't need a month to month balance carryover, the electric bill does so that there is more money available in a hot summer. The leftover money in the grocery bill may be carried over to spend on a fancy meal the next month or be pushed into general savings for usage elsewhere as needed.

Overall, this system has worked nicely for us. But, a budget system alone doesn't help people stay on budget. It also requires discipline which is the personal struggle for me. Heather is very disciplined but I am not. So, one of the useful tricks which is available with the envelope system is to not make it virtual in the areas where you are having problems staying on budget. For example, if you cannot stay on track with eating out because it just goes on your credit card, we would suggest you move to cash in an envelope to pay for all of your eating out. Its easy to tell if you have enough money when you just have cash in an envelope.

Thats all for now...I may write some more later...

Oh, the taxes you'll pay

Here is a great article from Steve Forbes reminding me why I voted for him in past presidential primaries. Check out this quote:

If you drive to work, you pay gasoline taxes and maybe a toll or two. You already paid fees on your license and registration, not to mention the sales tax when you bought the car, along with transfer fees and various add-ons devised by your local pols.

Then there's work. Politicians take gargantuan bites out of your pay: federal income taxes, state income taxes, Social Security taxes, Medicare taxes and, perhaps, local income taxes.

Anything you buy during the day has also been subjected to taxes. This doesn't mean that you pay all of them directly. When you buy, say, a new sweater, you're paying countless disguised taxes. These include the taxes that companies pay on their profits, along with workers' Social Security taxes, property taxes, utility taxes, corporate excise taxes, among others--all passed along to you in the form of higher prices.

But wait, your day isn't over. You return home--after more of those gas levies and tolls--and you go through the mail. Uh-oh. Your county or township has sent your property taxes. Have a pet? Probably time to renew the license on Fido.

Its amazing to think about...everything we do we end up paying taxes on. Even "tax free" purchases, we end up paying taxes on because the businesses we buy from pay taxes, pay social security for their employees, etc. Its amazing and horrible all at the same time.

Here is a great paragraph from Steve:

The inconvenient truth that politicians and others ignore is that taxes not only are a way for the government to raise revenue but are also a price and a burden. The tax you pay on income is the price you pay for working; the tax you pay on profit is the price you pay for being successful; the tax you pay on capital gains is the price you pay for taking risks that pan out. The principle is simple: If you lower the price and burden on good things, such as success, productive work and risk taking, you'll get more of them; raise the price, you'll get less.

And, finally, he points out the federal tax code is a burden on the citizens of the country.

"Abraham Lincoln's Gettysburg Address, which defined the character of the nation, is all of 268 words. The Declaration of Independence runs about 1,300 words. The Constitution, which has served us for more than two centuries, comes to some 5,000 words. The Holy Bible has 773,000 words. The federal income tax code and all of its attendant rules and regulations: 9 million words and rising. An appalling fact about the tax code is that no one really knows what's in it."

Brilliant. Thanks Steve for being honest and pointing out what escapes us in our day to day lives.

Induction cooktop or not

We are making plans to potentially refinish our kitchen. This means new cabinets (and a slightly different footprint), new countertops, new sink, and new appliances. We are pretty solid on the color/company of cabinets with Thomasville Cherry Brierwood and are also set on Quartz countertops although perhaps not yet set on the color. The sink is not a pretty exciting decision, but the appliances are...

I have a tendency to want to stay away from GE and Kenmore appliances...because they are fairly commonplace. But, I decided the first thing I would discover are which features I would like in each appliance. Most were pretty simple, but ranges have been giving me the toughest time.

The hottest topic of debate in my mind today is induction vs a regular smoothtop cooktop. Induction cooktops are the latest technology which uses electromagnetic energy to heat the pan while maintaining a cooler cooktop. Many popular things like electronic toothbrushed use induction to charge. The only thing heating a cooktop of an induction cooktop is the pan which has been heated. This means the cooktop doesn't get to "burn your hand" hot and kids are safer. But its expensive...add another $1500 compared to the cost of a freestanding range to get an induction cooktop AND a under counter convection oven. So, $2500 vs $1000...thats a pretty big deal. It uses less energy and won't burn someone.

If you told me today Anna would be burned by a smoothtop model..I would by the induction based cooktop in a heartbeat. But. since you don't hear of it happening too often, I am not sure I should worry about it. I wish I had statistics as to how many kids get burned by smoothtop models.

Brand names or products

Heather and I were considering how brand names infiltrate our lives...here are some brand names we use, even if we aren't using the brand in question...

Kleenex
Band-Aid
Q-tip
Saran wrap
Vaseline
Walkman

Modern day brands still coming up:
Google
iPod
Tivo

Other possibilities:
Coke
Pergo (I have noticed people use this for any fake hardwood flooring)

How did this start? We opened a new thing of Saran brand saran wrap and noticed it worked better than the knock off brands and we usually call the knock off brands Saran wrap...but they don't deserve that title :-)

Anyone have others?

My daughter..

I have yet to post the reason for my 4 month leave of absence from blogging or pictures of the beautiful girl who stole my heart. i think its about time to toss a couple of pictures out here.

This is the latest, from Thursday Feb 15:



And from the day before for Valentine's day:

Savings rate gets worse...

Sadly, the poor savings rate of the US public, a negative 0.4% in 2005, got even worse in 2006. It is now 1% according to the Commerce Department. The savings rate is typically, as I understand it, the amount of after tax income that people save. So, it being negative means the average person in the US is spending 1% more than their after tax income!

Here is an article on it. Here are some quotes from the AP article:

"[T]he Commerce Department reported Thursday that the nation’s personal savings rate for all of 2006 was a negative 1 percent, the worst showing in 73 years."

"The 1 percent negative savings rate in 2006 followed a 0.4 percent negative rate in 2005. There have been only four years in history that the savings rate has fallen into negative territory. The other two were 1932 and 1933 during the Great Depression."

Its funny, I don't remember seeing this make the headlines I would expect. This is a pretty serious problem....and sadly its our children who will pay for it.

Lending laws..more...

Wow, I missed this link in the mortgage nanny article I referenced from Forbes earlier. Check out some of these stats:

Countrywide Financial:
42% of its mortgage portfolio consists of pay-option adjustable-rate mortgages, in which borrowers decide each month how much to repay and can face negative amortization of the loan.

Washington Mutual:
33% of its loans through the third quarter of 2006 were pay-option or interest-only loans that tend to result in higher default and foreclosure rates.

Do either of those companies sound like they are focussed on helping people own homes? Maybe for the other 58-66% of the customers?

Frutmost, the best customer service ever

Upon reading this, I was reminded of the best customer service I ever received...

We had a wonderful experience with the owner of the company Frutmost. We had enjoyed their smoothies before from a Super Target, but one sunday when we bought one the thing had fermented, exploded over my wife in our car. We were so upset by the bad experience that my wife sent an email in to the company. Within a couple of hours, the owner of the company (on a Sunday, remember) had gotten the email on his blackberry, looked us up in the phone book, and called us to apologize and offer to send us free product, pay for dry cleaning, and pay for our car to be cleaned. Her clothes didn't need dry cleaned and the car was not so bad, but we took him up on the free product. On Tuesday we received, packed in dry ice, Multiple types of Frutmost and guacamole meals from the other food manufacturer he owned. It was the best customer service I had ever experienced or heard about.

Other issues with the lender laws changing..

Will any lender be able to give a 50 or 55 yr old anything but a 10-15 yr mortgage? Anything beyond that, they may sue and say it doesn't meet their retirement goals. So, I wonder if this will just give the lawyers more money and have all the lenders make you sign things that you understand what you are doing....or will the lenders reject certain people like the 50 to 55 yr old who wants to buy a new house. It sure will be interesting...

Raleigh, #1 city for jobs

Congratulations Raleigh...Forbes has released their annual best cities for jobs and Best first jobs for college grads They name Raleigh the #1 city for jobs and, my job, Software Engineer/Developer the #5 job. Awesome!

Lender (mortgage) laws reworked -- The mortgage nanny

Have I gone liberal? I read this article today and I am so glad that the Democrats are looking to rework the lending laws. This is great...but does it mean I have gone liberal?

Primarily, this bill will put responsibility on the lender to ensure the loan they are giving is suitable for the people. Normally I would disagree with a bill like this. Mainly, I would have, in the past, disagreed with this for two reasons:
1) I don't want the government interfering with private business with more laws.
2) This seems to open up for more potential lawsuits, which means we will all pay it in our mortgages.

Now, first let me say my mother was in the mortgage business for about 10 out of the last 11 years. So, nothing personal against the people...but the majority of mortgage brokers are all about one of two things:
1) Making as much money off people as possible.
2) Helping create an ownership society, where people can own a home instead of rent.

That may sound overly simplistic...but I honestly believe that is it. If a mortgage broker is in the latter category, they surprisingly align with many conservative values. Conservatives are about an ownership society...letting people have the money and developer wealth on an individual basis. If they are helping people, this won't be a burden to those people.

I believe that the majority of the mortgage brokers are in the first category...how can I make the most money off people. I have been appalled by stories from friends lately of what people are offered. Here are some examples:
- A friend was offered an 80/15 fixed/adjustable mortgage for 6/8% APR...when that fell through, the broker magically found a much better alternative... a 80/15 fixed/fixed for 6/7% APR. If you don't know what these mean, feel free to write me and I will clear it up.
- Another friend closed on a house a month later with a 75/20 fixed/adjustable for 6/9%. Why 75% and 20% instead of 80%/15%?? The only thing I can figure is the mortgage person found a way to make more money.
- Another friend thought they were getting their dream home....but after they closed on an interest only mortgage and can't afford to pay principal...they realized they all they can do is hope the house prices in the area go up.

I have noticed other tricks the more my friends by homes. One lender, Bank of America, is offering a 100% mortgage at 3/4 of a point over the going 30 yr rate...which means instead of paying PMI or a split mortgage until 20% is paid off...they will pay that 3/4 point for 30 yrs or until they refinance. How is that justice? Their monthly payment is lower...but the overall life of the mortgage is higher.

The bottom line is, as I see it as a late 20s guy whose friends come to him for financial advice from time to time...a lot of my friends have been or are potentially getting fleeced by the lending industry. This is not creating an ownership society.

So, back to my original question...am I becoming liberal? No, I don't believe I am. Like it or not, people are not well informed enough to know how the lending industry works and the lending industry does it on purpose. I support the current lawmakers making the government a bit bigger in this particular case because I believe that these laws may allow people to save and own more in the long run....and thats important to me so that when my generation is old, my daughter doesn't need to pay high taxes in order to support my generation which is blowing all of their money and won't have enough money or own enough later in life.

Social Security doesn't follow the CPI?

I decided to hunt for the changes to the social security amounts today and was intrugued to see that the amount at which you stop paying social security (for an individual mind you) is at now at $94,200 whereas it was at $90,000 last year. Thats just over a 4.6% increase year over year. Also, the amount an individual must pay for 1 work credit went from $920 to $970. Thats a 5.4% increase. Why don't these things follow the Consumer price index(CPI), also known as the inflation rate? They are never that high. My two thoughts as to the reasons are:
1) It wasn't indexed previously and now they are making up ground.
2) Its a means to make up for the under-funded future of Social Security. The 4.6% is higher to get more money from the rich and the 5.4% is higher to pay less out in the long run....thus allowing SS to be funded longer.

Here is the referenced government article on SS rates.

My favorite political statements yet

I hear these two things from Democrats on the news:
1. "President Bush tricked us into going into Iraq by saying they had WMDs" I assume this is from the MANY Democrats which supported going into Iraq.

2. "President Bush is dumb." I heard this the other night on O'Reilly factor from a prominent democrat.

Ok, so if a "dumb" guy "tricked" you...what does that make you? Ha!

I disagree with both of these statements. I think the evidence supported the Iraq war and everyone was fooled by incorrect evidence. I don't think it was Bush's fault. And, anyone that can win 2 presidential elections...isn't dumb. He seems quite intelligent to me. I do think he is a poor public speaker compared to some politicians...but he is better than me...so I have no room to talk.

Back in shape

With the goal to get back in shape, I am working out a lot again. A couple of observations:
1) Every year you wait it gets tougher.
2) My definition of "in shape" is different than it used to be.
3) I need to not stop again...

First, every year it gets tougher. Its true..your body just can't recover from muscle pulls, cramps, and just from the overall stress of working out. I remember when i started working out again after about a 3 yr hiatis (sp?) when I was 21. In 2 weeks, I was on my my way. Now that I am 27 and have had a 3 yr hiatis again, I am still struggling to get a second set of any muscle group in. The wall is a lot closer.

The other thing is my definition of in shape has definitely changed. It used to be, "muscles, muscles, muscles." And, I had them. But now, whether it is my age, maturity, or fact I have a wife and a kid on the way, the bigger concentration is now "cardio, cardio, muscles." Why cardio? Well, for me its not so much about losing weight, although that would be nice. For me its about health. I am a big built guy, always have been and as far as I can figure it, always will be. Even in my worst shape, I had to wear "athletic cut" suit/tux jackets because my shoulders were so much bigger than my gut. While my frame/bone structure can handle me being bigger, the reality for me is that my heart may not be able to. I need to keep it in shape.

Finally, I need to keep the momentum going and not stop. This has been painful and every time I do it it gets worse. I need to keep going...and hopefully, Lord willing, I will be able to.

Getting closer

Well..we are within 3 weeks of the baby's due date...Everything was progressing well as of our doctor's apptmt Friday...we are ready for the little one to come bless our life :-) We had our second and final baby shower on Saturday in Heather's hometown, Burlington. I spent the afternoon with Heather's dad and had some great conversations and watched football. We got a lot of wonderful gifts at all of our showers. I think the majority of the gifts were clothes. Heather and I shouldn't have to buy clothes for the first 6 months. :-)

On Saturday, our neighborhood had a yard sale. Typically they are well attended, but Saturday was cold (high of 60) and misty all day, so not a lot of people came by. We did sell $25 worth of stuff we didn't want and gave away a lot more! :-) I am going to spend some time on Craigslist trying to give away some of the other stuff. We need to get it out of the house!

Bad news in Apex

If you have seen the news this morning, there was a large fire at a hazardous waste plant in Apex. Here it is on fox news. I am slightly worried about it all for my coworkers. A lot of my coworkers are in Apex since it is about as close to our work as I am. Here is a map of my work (NorthWest on this map), Apex (SouthWest), and my home (NorthEast):

Personally, we aren't downwind of Apex..so I am not too worried for my house...but this affects people I know and care about as well as the local environment. :-( Keep Apex in your prayers today.

Awesome dilbert

This is hilarious. What, my coworker has a life outside of work? who knew?

How much is popularity of football teams affected by Superbowls?

Check out this page from Google Trends showing the differences in searches and news from teams. I picked the Steelers, Cowboys, Patriots, Redskins, and Seahawks. Popular teams today, and watch how much the Superbowl spike effects things...or the TO hype in Dallas. Pretty cool.

The other thing to check out is the difference between the Superbowl winner and loser, Steelers vs Seahawks.

baby craziness

Well, we are 6 weeks away from when my life is scheduled to be flipped upside down. People are beginning to send us gifts as Heather has her first baby shower soon. Thats a huge blessing and has me less worried about all this stuff we have to buy. We have the swing, a rocker, and a high chair out for Cassie to start to get used to it.

Heather and I finished the 5 birth classes and 1 breastfeeding course. We are signing up for an Infant CPR course that is happening at our Y next Tuesday. Then, the following week we have a free class from the Family Paws folks on how to train our dog to deal with a new baby. I am excited about both of those classes...but I guess I feel more ready now overall.

Sorry I haven't updated this in a couple weeks, we have been stormed with stuff to do.

To DirectTV, or not to DirectTV

I have been recently again angered by the NFL. I am a huge NFL fan, but do not have DirectTV so I can't get NFL Sunday Ticket and now for now, Time Warner Cable does not offer the NFL Network...so there goes another NFL.

Reasons to go DirectTV:
1) NFL Sunday Ticket is exclusive to DirectTV.

Reasons not to go DirectTV:
1) They don't have low profile receivers or CableCards...which means my LCD TV would need a BIG KLUNKY receiver...or the BIGGER KLUNKY receiver with a hard drive aka a DVR.
2) They still expect you to have a phone line, which means I have to wire a phone line.
3) Dishes on the roof don't help make a house look attractive.
4) I'd have to pay for HD in each room, I get HD for free with the TWC basic package now.

Also, they don't let you purchase NFL Sunday Ticket without a full package, monopolistic jerks. Since I am paying for cable already, I guess I can deal with this for now.

Yea, I will admit the only thing stopping me is #1 up there...if they fix that, I would probably go to direct TV. But, for now, I am waiting for IPTV to take off.