With 2007 coming to a close, I've spent some time looking over our family's finances. Well, I look often at our finances, but you know what I mean....
I updated my assets / liabilities information, and the first thing I noticed was that the amount I owe hasn't gone down at all from early this Spring. Even with making monthly payments on my 0% credit cards (car payments), my wife's student loan, and the mortgage, what we owe is still hovering around 240K, enough to make me want to duck my head underwater until I'm unconscious.
On the other hand, some good things have happened. I continued to add to our Roths (until recently, unfortunately), and our home equity has crossed the 20K threshold, over 11%. We've purchased or received almost $1000 in savings bonds and silver, and have increased our positions in several mutual funds through capital gain and dividend distributions, even though the market has been tough the last few months.
One main reason our debt has remained fixed is because we put on a roof this year and purchased a couple more windows for our daughter's room, pretty much finishing the entire second floor with energy-efficient windows. Total cost of roof and windows - $12,000. Also, since the summer, there have been a few months where we're spending more than we're making, sorry to say. Two kids in daycare can get mighty pricey, and the wife and I are not being super frugal...yet.
I do want to go into some more detail about the above happenings and some other financial matters.
Monday, December 31, 2007
Friday, March 2, 2007
My Federal Tax Refund was Direct Deposited Today!
As another workweek ends, there have been several financial developments. First, my federal tax refund already has come via direct deposit, about two and a half weeks after submitting it. The amount was pretty significant and I am almost ashamed to admit how much it was becuase I don't feel like hearing people go on about how I am giving Uncle Sam an interest free loan. I enjoy getting a big refund. Because my wife and I are teachers we need a sizable amount of money for the summer (even with me teaching summer school). The refund is a great way to take a chunk of cash around mid-March, drop it in Emigrant for a few months, and have money to pay bills when August comes around.
This year our refund is even more outrageous than usual. The federal came out to be $7260, while the State (not gotten yet) will be around $600. Why so much? Well, to begin with, I haven't contacted my Payroll department since I was hired to alter my allowances. According to them, I am still single and childless. Having our second child right at the end of 2006 was a nice financial move, just from the child tax credit standpoint. In New York, property and school taxes are off the charts, so that's a big deduction, along with our mortgage and student loan interest. Add in a pretty big donation of clothes and furniture to Salvation Army, contributions to our 529, and $500 in educator tax relief, and you have a fair amount of deductions. Our credits helped a lot as well. Besides the two kids, we had energy efficient windows put in ($200), purchased a new central air conditioning unit ($300), and my wife qualified for the Lifetime Learning Credit ($1000). Many of these credits and deductions are applicable only to this year unfortunately so I won't expect this same amount next year, but $5K+ should be well within reach.
In the past I've used some of the refund for funding our Roth accounts or contributing to our stock. But since both Roths are pretty close to being fully funded for 2006, it's probably wiser to pay down some of our 0% debt, especially since some of the debt and our refund are directly related.
Most of our $18000 in credit card debt came just over the past 12 months. November 2005 saw us having to replace our furnace (the house couldn't heat past 58; I could take it but we had a 6 month old and my wife threatened to move out). That was $2600 and what makes me more upset is that I couldn't take the new furnace as a deduction since only furnaces purchased and paid for in 2006 are eligible. The year 2006 started with us having to replace some windows that were falling apart (our house was built in 1911 and a lot of the windows are originals). $3600 later and two rooms upstairs (including the baby's of course) and one big window downstairs were finished. I then did a pretty foolish thing. After completing my first Application O Rama (AOR), Balance Transfer game, or whatever you want to call it (more on this later), I had close to $80K sitting in my savings account earning 5%. I got excited, took out $4K and funded my Roth for 2005. I shouldn't have done it, I know, but at least that $4K will grow to much more after all is said and done, and I will only have to pay $4K back and no more due to 0% interest.
So with the running total at $10200, my wife had to finish her Master's in 2006. Most of her tuition is being handled by loans. However, on two occasions, she took only one class and we had to pay out of pocket. The ridiculously overpriced and hated vampires at Nazareth College in Rochester sucked $3600 from us, the sum for two graduate level 3 credit courses The good news - my wife has her Master's and is being paid more by her employer, and I was able to put the tuition on our Discover and earn 5% cash back during a promotion they carried last year. The bad news - our debt shot up to $13800. Summer saw our air conditioning crap out ($1700) and a couple smaller, but necessary purchases - $700 for two really nice twin beds for the girls and $600 for a dresser with a mirror for our bedroom (it was about time we had some adult furniture). That pretty much takes us to $17K, and it's only been the extra income from interest on a large sum of 0% money that we aren't further in debt.
Hopefully, we can get through 2007 without as many financial headaches although the rest of the windows will eventually need replacing and the roof is looking its age.
This year our refund is even more outrageous than usual. The federal came out to be $7260, while the State (not gotten yet) will be around $600. Why so much? Well, to begin with, I haven't contacted my Payroll department since I was hired to alter my allowances. According to them, I am still single and childless. Having our second child right at the end of 2006 was a nice financial move, just from the child tax credit standpoint. In New York, property and school taxes are off the charts, so that's a big deduction, along with our mortgage and student loan interest. Add in a pretty big donation of clothes and furniture to Salvation Army, contributions to our 529, and $500 in educator tax relief, and you have a fair amount of deductions. Our credits helped a lot as well. Besides the two kids, we had energy efficient windows put in ($200), purchased a new central air conditioning unit ($300), and my wife qualified for the Lifetime Learning Credit ($1000). Many of these credits and deductions are applicable only to this year unfortunately so I won't expect this same amount next year, but $5K+ should be well within reach.
In the past I've used some of the refund for funding our Roth accounts or contributing to our stock. But since both Roths are pretty close to being fully funded for 2006, it's probably wiser to pay down some of our 0% debt, especially since some of the debt and our refund are directly related.
Most of our $18000 in credit card debt came just over the past 12 months. November 2005 saw us having to replace our furnace (the house couldn't heat past 58; I could take it but we had a 6 month old and my wife threatened to move out). That was $2600 and what makes me more upset is that I couldn't take the new furnace as a deduction since only furnaces purchased and paid for in 2006 are eligible. The year 2006 started with us having to replace some windows that were falling apart (our house was built in 1911 and a lot of the windows are originals). $3600 later and two rooms upstairs (including the baby's of course) and one big window downstairs were finished. I then did a pretty foolish thing. After completing my first Application O Rama (AOR), Balance Transfer game, or whatever you want to call it (more on this later), I had close to $80K sitting in my savings account earning 5%. I got excited, took out $4K and funded my Roth for 2005. I shouldn't have done it, I know, but at least that $4K will grow to much more after all is said and done, and I will only have to pay $4K back and no more due to 0% interest.
So with the running total at $10200, my wife had to finish her Master's in 2006. Most of her tuition is being handled by loans. However, on two occasions, she took only one class and we had to pay out of pocket. The ridiculously overpriced and hated vampires at Nazareth College in Rochester sucked $3600 from us, the sum for two graduate level 3 credit courses The good news - my wife has her Master's and is being paid more by her employer, and I was able to put the tuition on our Discover and earn 5% cash back during a promotion they carried last year. The bad news - our debt shot up to $13800. Summer saw our air conditioning crap out ($1700) and a couple smaller, but necessary purchases - $700 for two really nice twin beds for the girls and $600 for a dresser with a mirror for our bedroom (it was about time we had some adult furniture). That pretty much takes us to $17K, and it's only been the extra income from interest on a large sum of 0% money that we aren't further in debt.
Hopefully, we can get through 2007 without as many financial headaches although the rest of the windows will eventually need replacing and the roof is looking its age.
Wednesday, February 28, 2007
Investments for the Girls
To this point, I have focused on what my wife and I are doing to secure our financial future. Since our first child was born in 2005, I have dedicated time trying to find safe yet lucrative investments for the kids, with an eye on college in about 20 years.
With the few hundred dollars in cash they both received upon being born, I opened up savings accounts at Ing, where they would each get a $25 bonus (and I would get $10!) These have become their main accounts, where cash gifts usually go first.
With some searching, you will find savings accounts geared towards children. A couple of the best ones I've found include the Kids Only Savings Account at Affinity Bank. This bank account pays a whopping 10%, but only on the first $500 you deposit. Even so, an investment of $500 at birth will triple by the time your child is college age. It was tought to pass up so both my girls have one. The stipulation "Available to California residents only" has just been added and may be worked around.
Another great offer, although targeted to residents or family of residents in Washington state, is the Early Saver Account from BECU. This account, which I have not opened (but may because we have family in Seattle), pays a nice 7.5% APY on deposits up to $500 for children under 18. Balances over $500 earn their normal savings rate of 1.75%.
There are other special rates out there like this. However, like the two above, they are usually targeted to specific locations. Check your local credit unions. They may offer unadvertised special rates for children who open savings accounts with them.
Of course, no conversation about investment vehicles for children would be complete without mentioning 529 College Savings Plans. From the most comprehensive website on this topic, Savingforcollege.com, a 529 plan is "an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. As long as the plan satisfies a few basic requirements, the federal tax law provides special tax benefits to you, the plan participant (Section 529 of the Internal Revenue Code)." Please research the Savingforcollege.com website for the specific requirements and benefits of this kind of plan.
Every state has their own plan, but be careful - some states charge pretty high fees to manage your account. Do some research to make sure you make the right choice. Personally, it was an easy decision. The New York State plan is highly respected, both for its low fees and its affiliation with Upromise and Vanguard. I am able to invest $25 a month into both of the girls' accounts. In addition to the money I put in, Upromise deposits money quarterly to give the account a little boost, $450 so far since 2003. Another positive about contributing to a 529, especially in NY, is the state tax deduction you receive. Contributing $25 per month is not going to pay for an Ivy League education in 18 years. My plan, though, is to increase the contributions as the girls get older and my long term goal is to be able to pay for half of their education, not all of it.
There are other things parents can do to help pay for their children's education and financial future. One that I like but haven't opened is a Coverdell Savings Account (CSA). The maximim yearly contribution is $2K per year, but what makes it different is that it can be used for any education related expense, not just for college. Textbooks, SAT prep courses, and private high school tuition are all examples of how a CSA can be used. When I realized I was having two girls (with no more children coming, trust me) a Coverdell became a less-appealing option. The reason is that if I had a boy, I would want him to go to my alma mater, a very expensive Jesuit high school. With two girls, though, this isn't an option and I'm fine with that!
With the few hundred dollars in cash they both received upon being born, I opened up savings accounts at Ing, where they would each get a $25 bonus (and I would get $10!) These have become their main accounts, where cash gifts usually go first.
With some searching, you will find savings accounts geared towards children. A couple of the best ones I've found include the Kids Only Savings Account at Affinity Bank. This bank account pays a whopping 10%, but only on the first $500 you deposit. Even so, an investment of $500 at birth will triple by the time your child is college age. It was tought to pass up so both my girls have one. The stipulation "Available to California residents only" has just been added and may be worked around.
Another great offer, although targeted to residents or family of residents in Washington state, is the Early Saver Account from BECU. This account, which I have not opened (but may because we have family in Seattle), pays a nice 7.5% APY on deposits up to $500 for children under 18. Balances over $500 earn their normal savings rate of 1.75%.
There are other special rates out there like this. However, like the two above, they are usually targeted to specific locations. Check your local credit unions. They may offer unadvertised special rates for children who open savings accounts with them.
Of course, no conversation about investment vehicles for children would be complete without mentioning 529 College Savings Plans. From the most comprehensive website on this topic, Savingforcollege.com, a 529 plan is "an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. As long as the plan satisfies a few basic requirements, the federal tax law provides special tax benefits to you, the plan participant (Section 529 of the Internal Revenue Code)." Please research the Savingforcollege.com website for the specific requirements and benefits of this kind of plan.
Every state has their own plan, but be careful - some states charge pretty high fees to manage your account. Do some research to make sure you make the right choice. Personally, it was an easy decision. The New York State plan is highly respected, both for its low fees and its affiliation with Upromise and Vanguard. I am able to invest $25 a month into both of the girls' accounts. In addition to the money I put in, Upromise deposits money quarterly to give the account a little boost, $450 so far since 2003. Another positive about contributing to a 529, especially in NY, is the state tax deduction you receive. Contributing $25 per month is not going to pay for an Ivy League education in 18 years. My plan, though, is to increase the contributions as the girls get older and my long term goal is to be able to pay for half of their education, not all of it.
There are other things parents can do to help pay for their children's education and financial future. One that I like but haven't opened is a Coverdell Savings Account (CSA). The maximim yearly contribution is $2K per year, but what makes it different is that it can be used for any education related expense, not just for college. Textbooks, SAT prep courses, and private high school tuition are all examples of how a CSA can be used. When I realized I was having two girls (with no more children coming, trust me) a Coverdell became a less-appealing option. The reason is that if I had a boy, I would want him to go to my alma mater, a very expensive Jesuit high school. With two girls, though, this isn't an option and I'm fine with that!
Sunday, February 25, 2007
Savings Bonds
When I was growing up, I didn't receive Savings Bonds as gifts. I did know some friends that had a few thousand dollars worth in a safe somewhere, but that was pretty much the extent of my exposure to them. Then a couple years ago, on my first wedding anniversary, my mother-in-law gave us (me) a $100 EE bond. She knew I was getting more involved into personal finance, and she thought this would be a good gift. Her rationale is that in about 20 years when our children are off to college, my wife and I can take this and other Savings Bonds, cash them in, and take a vacation someplace. Sounds good to me. So since then, she has given us (me) a bond every anniversary (we've had four in all) and most of my birthdays. Over $1000 in Savings Bonds is sitting in my safe right now. Of course, at this moment they are not worth $1000, probably closer to $500. Let me explain.
I have bought a few of these bonds as gifts over the past couple years because I thought the idea was a good one. First of all, I purchase mine at my local checking account branch. There's a form that has to be filled out, including S.S. #'s of the giver and recipient, address where the bond will be sent and so forth. The amount of the bond you are purchasing is exactly half of the value of the bond upon maturity (likely between 15-20 years away). The interest rate on the EE bonds is not so great - 3.6% right now - and that is why it takes so long to double. So if you plunk down $25 on the kid, the bond their parents will receive in the mail in a couple weeks will say $50 (and gives you an elevated sense of generosity!) A couple families I've given bonds to have really been grateful and one or two others have looked at it like "What am I going to do with this for the next 20 years?" Personally, if the kid is old enough to talk and play around, I go with a toy instead of the bond. But with my Godson, he gets both...
Another way to go if you are interested in Savings Bonds is to purchase them directly from TreasuryDirect. A pretty cool site with a lot of interesting information, and even step-by-step instructions on how to convert paper bonds to electronic, where you can keep tabs on how much interest your bonds have accumulated. At some point, I have to look into doing this for our bonds.
There are other investments you can purchase at Treasury Direct besides EE Savings Bonds, like I Bonds. I Bonds are different because they are not at a fixed interest rate for the entire time you own them. Instead, the rate takes a fixed rate (1.4% right now) and the inflation rate (1.55%) set every May and November, and then creates a composite rate based on these two figures (4.52%). The formula is explained at the site.
For the last 18 months, I have invested $25/month to I Bonds as a way to add some variety to our portfolio and because the rates have been so good compared to the EE bonds. I figure with all the different things I spend $25 in a month, this one should continue to grow, and maybe in 5-10 years, will pay for a nice toy or vacation.
I have bought a few of these bonds as gifts over the past couple years because I thought the idea was a good one. First of all, I purchase mine at my local checking account branch. There's a form that has to be filled out, including S.S. #'s of the giver and recipient, address where the bond will be sent and so forth. The amount of the bond you are purchasing is exactly half of the value of the bond upon maturity (likely between 15-20 years away). The interest rate on the EE bonds is not so great - 3.6% right now - and that is why it takes so long to double. So if you plunk down $25 on the kid, the bond their parents will receive in the mail in a couple weeks will say $50 (and gives you an elevated sense of generosity!) A couple families I've given bonds to have really been grateful and one or two others have looked at it like "What am I going to do with this for the next 20 years?" Personally, if the kid is old enough to talk and play around, I go with a toy instead of the bond. But with my Godson, he gets both...
Another way to go if you are interested in Savings Bonds is to purchase them directly from TreasuryDirect. A pretty cool site with a lot of interesting information, and even step-by-step instructions on how to convert paper bonds to electronic, where you can keep tabs on how much interest your bonds have accumulated. At some point, I have to look into doing this for our bonds.
There are other investments you can purchase at Treasury Direct besides EE Savings Bonds, like I Bonds. I Bonds are different because they are not at a fixed interest rate for the entire time you own them. Instead, the rate takes a fixed rate (1.4% right now) and the inflation rate (1.55%) set every May and November, and then creates a composite rate based on these two figures (4.52%). The formula is explained at the site.
For the last 18 months, I have invested $25/month to I Bonds as a way to add some variety to our portfolio and because the rates have been so good compared to the EE bonds. I figure with all the different things I spend $25 in a month, this one should continue to grow, and maybe in 5-10 years, will pay for a nice toy or vacation.
Saturday, February 24, 2007
Roth Accounts
Roth accounts have been around since 1998 and they are probably my favorite type of investment. The cool thing about them is that even though they must be funded with after tax dollars now, withdrawals (only after reaching 59.5 years) will not affect your income tax. This is especially good for the wife and me because by the time we are old enough to begin emptying our Roths, we will already be earning incomes from our pensions and some non-taxable income will be beneficial. Some other noteworthy facts about the Roth include the contribution limits - $4K for 2006 (until April 17) and $4K for 2007, and then it jumps to $5K in 2008. If you are age 50 or older, you may contribute an additional $1K each year. After 2008, the Roth contribution limits will increase by $500 a year for as long as Congress allows this investment vehicle to roll. By the way, both working spouses can open up and contribute to a Roth, and there are several other options and guidelines for non-working spouses and children that might be worth investigating.
For a couple years when the limit was $3K, I contributed to my Roth in a lump sum (usually with my oversize tax refund). It was a little depressing those first few years (1999, 2000, 2001) to actually see less money in the account than what I put in. However, after missing a couple years (2002, 2003) due to tighter finances (house-wife thing), I've begun contributing again but in a different way. Both my wife and I contribute $300/month to our Roths, and when we get our refund now, $400 each goes towards maxing out our contributions for the year. It is becoming more difficult with the two kids going to a nanny 3 times a week (don't get me started on how much that costs!), but if there is any way I can manage continuing this investing, I am going to do it.
For our Roths, my wife and I have chosen Fidelity. She invests in FFNOX, Fidelity Four in One index, the Four being Spartan 500 Index, Extended Market Index, International Index, and US Bond Index. It's worked out well - no muss, no fuss. I have it a bit differently, with positions in the Spartan 500, but also in some small caps and a value fund. Fidelity has a pretty good amount of funds to choose from.
A couple final notes to be aware of regarding Fidelity and opening up a Roth account. There are a couple incentives out there if you are just beginning to look at this kind of thing. First, there is an offer from Fidelity, Fidelity $100 bonus, where you invest an initial $10,000 and you will receive $100 credit. Not bad to get you started. And you don't need to keep the $10K in there, just wait until you receive the credit and withdraw what you are not wanting to invest right away. There are other incentives like mileage programs American Airlines AAdvantage® members, but I prefer to stick to the cash. In fact, there is an entire thread at Fatwallet.com on the topic, FatWallet Forums - Fidelity - no longer any fees, 5.21% Money Market, $100 bonus.
Another great incentive to help you contribute is the Fidelity Investment Rewards credit card, Fidelity Investments. Basically, it's a cash back card which earns 1.5% on all purchases and deposits them quarterly to a linked Fidelity account. My wife earned an additional $400 contribution to her Roth last year as this has become our main credit card.
For a couple years when the limit was $3K, I contributed to my Roth in a lump sum (usually with my oversize tax refund). It was a little depressing those first few years (1999, 2000, 2001) to actually see less money in the account than what I put in. However, after missing a couple years (2002, 2003) due to tighter finances (house-wife thing), I've begun contributing again but in a different way. Both my wife and I contribute $300/month to our Roths, and when we get our refund now, $400 each goes towards maxing out our contributions for the year. It is becoming more difficult with the two kids going to a nanny 3 times a week (don't get me started on how much that costs!), but if there is any way I can manage continuing this investing, I am going to do it.
For our Roths, my wife and I have chosen Fidelity. She invests in FFNOX, Fidelity Four in One index, the Four being Spartan 500 Index, Extended Market Index, International Index, and US Bond Index. It's worked out well - no muss, no fuss. I have it a bit differently, with positions in the Spartan 500, but also in some small caps and a value fund. Fidelity has a pretty good amount of funds to choose from.
A couple final notes to be aware of regarding Fidelity and opening up a Roth account. There are a couple incentives out there if you are just beginning to look at this kind of thing. First, there is an offer from Fidelity, Fidelity $100 bonus, where you invest an initial $10,000 and you will receive $100 credit. Not bad to get you started. And you don't need to keep the $10K in there, just wait until you receive the credit and withdraw what you are not wanting to invest right away. There are other incentives like mileage programs American Airlines AAdvantage® members, but I prefer to stick to the cash. In fact, there is an entire thread at Fatwallet.com on the topic, FatWallet Forums - Fidelity - no longer any fees, 5.21% Money Market, $100 bonus.
Another great incentive to help you contribute is the Fidelity Investment Rewards credit card, Fidelity Investments. Basically, it's a cash back card which earns 1.5% on all purchases and deposits them quarterly to a linked Fidelity account. My wife earned an additional $400 contribution to her Roth last year as this has become our main credit card.
Thursday, February 22, 2007
Stocks
Over the past ten years I've made a little money in individual stocks, nothing major. The most was when my friend tipped me off about a health lab, whose sports drink just signed a big athlete. I bought 100 shares, tripled my money (less than 2K), and wished I'd bought more. I dabbled in a couple regional / local stocks like Xerox, Kodak, and Paychex and wished I'd held onto them. I got out, especially with Xerox ($4.25/share when I bought, trading ~$18 now) way too early and made only a few hundred. Since then I've owned Krispy Kreme (kept going down) and Exxon Mobil (kept going up) and sold one too early and one too late (you guess which). I've found I don't like that kind of excitement, especially now.
A couple years ago I got involved with DRIPs (Dividend Reinvestment Plans). Basically a DRIP lets you buy an initial amount of shares (or sometimes a single share) and you then set up ongoing monthly investments (with as little as $50). Not all stocks are involved with this kind of investing, but some well-known ones do like Exxon Mobil, Citigroup, Pfizer and many others. I use Computershare (interface is not the best; was better when it was Equiserve). One thing you have to watch out for are the little fees some of the DRIPs hit you with. Some of the companies make you buy a single share and then you have to pay to have it sent out to you before you continue investing. Others require a fee at startup, whenever you invest, and when you sell. You can whittle down your choices until you get to one that interests you and is fee-free. My safe bet a couple years ago was Pfizer. I've invested $50 a month (and occasionally an additional $50-$100 here and there) and now have over 80 shares. My goal is to hit 100 shares, stop the automatic investments, and move on to another. The beauty is that Pfizer pays a pretty solid dividend and the DRIP reinvests it automatically for you. You can choose to have the money sent out to you, but why bother? At this point, I am almost picking up an entire share each quarterly dividend. At this rate, I'll be hitting the 100 share mark sometime around Christmas. Microsoft is looking pretty attractive right now. Maybe they're next...
A couple years ago I got involved with DRIPs (Dividend Reinvestment Plans). Basically a DRIP lets you buy an initial amount of shares (or sometimes a single share) and you then set up ongoing monthly investments (with as little as $50). Not all stocks are involved with this kind of investing, but some well-known ones do like Exxon Mobil, Citigroup, Pfizer and many others. I use Computershare (interface is not the best; was better when it was Equiserve). One thing you have to watch out for are the little fees some of the DRIPs hit you with. Some of the companies make you buy a single share and then you have to pay to have it sent out to you before you continue investing. Others require a fee at startup, whenever you invest, and when you sell. You can whittle down your choices until you get to one that interests you and is fee-free. My safe bet a couple years ago was Pfizer. I've invested $50 a month (and occasionally an additional $50-$100 here and there) and now have over 80 shares. My goal is to hit 100 shares, stop the automatic investments, and move on to another. The beauty is that Pfizer pays a pretty solid dividend and the DRIP reinvests it automatically for you. You can choose to have the money sent out to you, but why bother? At this point, I am almost picking up an entire share each quarterly dividend. At this rate, I'll be hitting the 100 share mark sometime around Christmas. Microsoft is looking pretty attractive right now. Maybe they're next...
Wednesday, February 21, 2007
403b Retirement Accounts
Since my wife and I both work for public school districts, we are eligible to contribute to the non-profit's version of the 401k, the 403b. They work the same - contribute with pre-tax dollars, the limits, the rules on withdrawals.
I began investing in Vanguard when I worked overseas for a year. The school matched dollar for dollar so I got a good start. Back in the states my father steered me into American Funds with a broker that helped him as he was getting closer to retirement. I had no idea, so I sat down with an advisor, set up a plan, and began contributing. I also rolled over the nearly 4K I had in Vanguard. Over the years I increased my contributions, eventually putting away over 17% of my salary. I stopped contributing in 2003 when I began taking a more active interest in my personal finances. Though I was happy with the funds I had (especially Europacific Growth Fund), I couldn't stomach the 5.75% front end load American Funds required. I haven't figured out what this load has cost me in the 6+ years of contributions nor do I want to know. I chalk it up as a learning experience, feel grateful that at least I began investing so early in my career, and take some comfort knowing that American Funds weren't hit especially hard in the market plunge in 2000.
Since '03 I've invested in Fidelity. I did my own research at Morningstar, found two or three funds I liked, but couldn't contribute nearly as much as before due to new obligations - house and wife. When I had my first girl, I stopped contributing altogether. Not only was money getting tighter, but I began realizing I wanted less taxable money at retirement. With our pensions, Social Security, and these 403b withdrawals, our taxable income would remain pretty high going into our 60s and 70s.
I now enjoy seeing the income generated by dividends, especially in my American Funds. However, unless something unforeseen occurs, my days of contributing are most likely over.
My wife brought 2-3K of pre-tax investments in Oppenheimer Funds into our relationship, and continues to invest a small amount every paycheck into a Fidelity account. We'll probably end this after this school year.
I began investing in Vanguard when I worked overseas for a year. The school matched dollar for dollar so I got a good start. Back in the states my father steered me into American Funds with a broker that helped him as he was getting closer to retirement. I had no idea, so I sat down with an advisor, set up a plan, and began contributing. I also rolled over the nearly 4K I had in Vanguard. Over the years I increased my contributions, eventually putting away over 17% of my salary. I stopped contributing in 2003 when I began taking a more active interest in my personal finances. Though I was happy with the funds I had (especially Europacific Growth Fund), I couldn't stomach the 5.75% front end load American Funds required. I haven't figured out what this load has cost me in the 6+ years of contributions nor do I want to know. I chalk it up as a learning experience, feel grateful that at least I began investing so early in my career, and take some comfort knowing that American Funds weren't hit especially hard in the market plunge in 2000.
Since '03 I've invested in Fidelity. I did my own research at Morningstar, found two or three funds I liked, but couldn't contribute nearly as much as before due to new obligations - house and wife. When I had my first girl, I stopped contributing altogether. Not only was money getting tighter, but I began realizing I wanted less taxable money at retirement. With our pensions, Social Security, and these 403b withdrawals, our taxable income would remain pretty high going into our 60s and 70s.
I now enjoy seeing the income generated by dividends, especially in my American Funds. However, unless something unforeseen occurs, my days of contributing are most likely over.
My wife brought 2-3K of pre-tax investments in Oppenheimer Funds into our relationship, and continues to invest a small amount every paycheck into a Fidelity account. We'll probably end this after this school year.
Goals - Long and Short Term
Before I go too much further, my family's long and short term goals should be stated. With two little kids (both under 2), their future is a priority of ours. We would like to save or invest enough to pay for half of their college expenses (wherever they go). We want to both retire near 55 with no mortgage or other debt. Retiring with $2 million in investments outside of our pensions should be attainable.
Over the next 3-4 years, however, we want to cut our credit card debt to less than 5K while keeping our interest income from savings deposits and bonuses over 5K. Our Roths will be fully funded and we will gain a full 100 share position in our first blue chip stock and begin on our second. Both cars will be paid off, we will increase our equity, and dig ourselves out from under Sallie Mae.
These are just a few of each, as others may present themselves or some may turn out to be less important.
Over the next 3-4 years, however, we want to cut our credit card debt to less than 5K while keeping our interest income from savings deposits and bonuses over 5K. Our Roths will be fully funded and we will gain a full 100 share position in our first blue chip stock and begin on our second. Both cars will be paid off, we will increase our equity, and dig ourselves out from under Sallie Mae.
These are just a few of each, as others may present themselves or some may turn out to be less important.
Tuesday, February 20, 2007
What Is This?
Welcome to With a Wife and Two Girls, a personal finance blog detailing how a middle class white man, 32, with a wife, 31, and two little girls is surviving financially in Upstate New York. Week by week, I'll post updates on our investment portfolio, financial goals, credit cards, bank accounts, and other finance-related issues affecting my family.
Today's post shows my family's finances as they stand right now. I'll go into more detail about each item as time goes on, but these are the broad strokes.
Our investments include:
Today's post shows my family's finances as they stand right now. I'll go into more detail about each item as time goes on, but these are the broad strokes.
Our investments include:
- $74,000 in 403b accounts with American Funds and Fidelity
- $33,000 in Roths with Fidelity
- $2,300 in Stocks
- $1,500 in Savings Bonds (both EE and I)
- $2,000 in personal savings
- $17,000 in home equity
- $500 in silver
- $4,000 in various investments for the kids (detailed later)
Our liabilities include:
- $158,000 mortgage
- $48,000 in student loans (damn wife!)
- $14,300 in car loans
- $18,000 in credit card debt
The debts we owe are pretty substantial, but the worst part (credit card and car loans) are at 0% and this isn't going to change anytime soon.
Tomorrow I'll focus on our 403b accounts.
Deal of the Day:
$100 Chase Free Checking account bonus with Direct Deposit by March 31st. Requires $100 in new money and the following coupon code: 2945382127083393 Good luck!
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