Len Penzo dot Com

The offbeat personal finance blog for responsible people.

The (Dead)Beat Generation

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Should you walk away from your mortgage just because your home depreciated? So you refinanced. Or bought too much house. You divided the mortgage payments by your income, and decided you could swing something a few percentage points higher than the recommended 25—33 because the market was rising and your house would make you rich just by existing. You relied on speculation as an investment strategy (not even your own speculation, but other peoples’.) But your house got cheaper, maybe cheaper than what you bought it for. That’s called “losing money on an investment,” which happens all the time, but people think it oughtn’t when your bedroom and kitchen are inside the investment. The market might bounce back. If you’re 7 years in, lots can happen in the remaining 23 on a 30-year mortgage. When you lose money on a stock, your (invisible) bank account gets wiped out. Owe more than your vehicle is worth, and it might get repoed. But stop making payments on a house, and there’s a letter from the constable on the door, maybe some yellow tape involved — hard to keep that quiet from the neighbors. Also, people getting forcibly removed from “their” house (it’s yours and not the bank’s only after you pay the entire mortgage) make for striking photo and political opportunities. After all, bankers are evil. Meanwhile, it’s the working stiffs just trying to make ends meet who get raked over the coals. (Wow, a sentence composed entirely of idioms. Mike Lupica approves.) Some people who make enough to cover the mortgage dump the house anyway — the strategic default. They assume investment values only move in one direction. According to Experian, that includes 20% of defaulters. This is hiding behind the law. Stop making payments, and it’s not like you’ll be evicted that week. It takes months, even years. The idea here is to take the mortgage payments and put them toward, say, your credit card balance, figuring the lender will gladly renegotiate a contract you signed in order to get some sort of return on its investment. Some borrowers think this is fine because if the lender kicks you out, it’ll be tough for them to sell the house to someone else in a down market anyway. The lender at least wants the house to stay lived in. This is nonsense. Strategic defaults hurt everyone. A strategic default does to your credit score what O.J. did to Nicole. You’ll never be able to borrow either a) again, or b) until Congress and the White House decide that so many people need to improve their credit score that it just wouldn’t be nice to let something as insidious as that have such power over their lives. What’s the solution? Well, no politician of either party wants the other accusing them of standing by while old ladies and cripples are being kicked out of “their” houses. The government would then essentially renegotiate mortgage contracts, setting caps on future ones and insisting the lenders take less. Under this type of forced renegotiation, the borrowers don’t even have to sack up and face the lenders themselves. Besides, neighbors, professors, and the blonde lady on TV say defaulting is fine. And for PR reasons, lenders are hunting down deficient borrowers about as aggressively as the federal government goes after illegal immigrants. Say you walk away from your mortgage, mail your keys to your lender (this is how it’s done), then rent somewhere. Your (old) neighbor follows, then a third. No matter how swank a neighborhood you deserted, the lawns turn brown and the pools green because no one’s living in the houses. Which reduces the value of the remaining houses. Now the people who stayed behind and haven’t (yet) defaulted watch their homes’ values decline. Which means they’ll likely owe more than their houses are worth, making it more likely that those folks will default. Continue like this, and you end up with…Detroit. When you declare bankruptcy, you can renegotiate to protect yourself from creditors. But strategically defaulting is the opposite — you keep all your assets except the house and mortgage. So what to do? Four choices: 1. Man up, economize and make your payments. You’re obligated to the lender, yourself (to preserve your credit), any kids of yours (unless you don’t think you need to set an example) and society. If you steal from your lender, it doesn’t directly affect the rest of us, but it makes civilization incrementally more difficult to live in–the broken window theory. You don’t like that answer? It’s a house, for crying out loud. You need somewhere to live. No matter how much value it loses, it’s still better than renting and never building a dime of equity. Stop assuming that because your $100,000 house lost 10% of its value last year, it’ll lose a similar amount next year and by 2021 will be worth -$10,000. 2. Short sale. If you know you can’t make your payments, and you’ve exhausted every possible way of earning or otherwise securing money, call the lender and come clean AS SOON AS POSSIBLE. They’ll sell the house at a loss, just to get you out of there and collect their money. You’ll still be on the hook until the bank resells the house, but that won’t last forever and at least you can stop throwing good money after bad. 3. Ask for a loan modification. It’s begging, but your pride already left a while ago. 4. The Deed in Lieu of Foreclosure. Tell the lender, “Look, I can’t make the payments. Let’s not short sell, I’ll just give you the damn thing to get out of this debt.” This hurts your credit rating the least, and tells the lender not to worry about you being one of those evictees who pours concrete in the toilets and makes off with the copper wire. And next time, get a vanilla 30-year fixed-rate mortgage. About the Author Greg McFarlane lives in Las Vegas, winters in Maui, travels the globe and hates working for other people. He recently wrote Control Your Cash: Making Money Make Sense, a financial primer for people in their 20s and 30s who know nothing about money. You can buy the book here and reach Greg at greg@ControlYourCash.com. ...

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Dear Diary: A Night at the Oscars with Me and the Honeybee

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The other night the Honeybee and I sat down and watched the 82nd Annual Academy Awards, and I have to say it was the most entertaining show I've seen since Billy Crystal was hosting. Naturally, we recorded the event to avoid all the commercials. Here's my minute-by-minute take... 7:30 PM: The Honeybee and I send the kids upstairs and snuggle up to the fire before hitting the play button.   I've also got with me my trusty bag of Hostess mini-donuts (chocolate) and a glass of milk.   The Honeybee goes the other route: A big bag of peanut M&Ms which she has decided to wash down with a Jack and Diet Coke.   I know. 7:33 PM: WTF is this?   Is that Doogie Howser doing a song-and-dance number?   Yep.   But you know what?   As I watch Neil Patrick Harris start belting out his number it is obvious that he is a capable singer.   Who knew?   I'm now suddenly intrigued. 7:34 PM: As the openly gay Harris continues his number, two beautiful show girls cozy up to either side of him, seductively pawing at his body.   A mere mortal man would easily have trouble keeping his, um, composure.   "Look at Doogie!" I tell the Honeybee, "The guy isn't even breaking a sweat."   If that were me instead of Doogie, decency laws would force the director to cut to a crowd shot. 7:35 PM: Harris continues his show tune, and is picked up by three male models that would make Brad Pitt look like a nerd.   Harris continues belting out his number as he sits on their hunky shoulders.   "I bet he's sweating now," deadpans the Honeybee. 7:40 PM: Steve Martin and Alec Baldwin just brought down the house with a hilarious monologue.   I bet they threw out 30 jokes in five minutes and maybe two of them fell flat.   The best line was Steve Martin commenting on the movie-star good-looks of young actors Zac Efron and Taylor Lautner, warning how time eventually takes its toll: "Take a good look at me guys," said Martin, "This is you in five years." 7:41 PM: Penelope Cruz comes out to give the Best Support Actor award and she looks absolutely stunning.   What was Tom Cruise thinking when he let her go?   Between Katie Holmes and Penelope, I'll take Penelope every time. 7:42 PM: Of the five guys up for best supporting actor, I'm rooting for Christopher Waltz for his awesome job as the Jew-hunting SS colonel in Inglorious Basterds. 7:43 PM: Waltz wins!   His acceptance speech is beautifully done, quick and to the point.   "We're off to a really good start!" the Honeybee says.   I have to agree.   I'm almost 15 minutes into the show and I haven't eaten a single donut yet. 7:56 PM: Teenagers Mylie Cyrus and Amanda Seyfried come out to give an award.   Unfortunately, Cyrus stumbles badly over her lines, finally apologizing to the crowd.   "As you can tell, we're both kind of nervous," she says.   We? I'm sure Seyfried, who had delivered her part flawlessly up to that point, had more than a few choice words for her "friend" back stage.   Welcome to Hollywood, kid. 7:58 PM: Wow. District 9 is a nominee for Best Picture!   I'd vote for it. 8:08 PM: "What's wrong with Molly Ringwald?" the Honeybee asks.   Giving a tribute with Matthew Broderick to the late director John Hughes, she looks like the proverbial deer caught in the headlights.   Either that, or she was trying to do her best impersonation of the eyeball scene in A Clockwork Orange. 8:10 PM: Dairies all over America are working overtime to print new milk cartons: Judd Nelson is alive!   He just walked on stage with a few other 80s brat pack members including Ally Sheedy and Anthony Michael Hall. 8:15 PM: The first injustice of the night: The great Nick Park, of Wallace and Gromit fame, fails to win best animated short film for A Matter of Loaf and Death. 8:16 PM: The Honeybee begins fast forwarding through the rest of the "film short" awards.   Meanwhile, I eat my first donut.   Mmm.   Hostess minis. 8:20 PM: Ben Stiller comes out to present the award for best makeup dressed up in the Avatar blue-face get-up of the Nav'i - complete with a fuzzy tail.     Stiller's irreverence is the perfect antidote for a crowd that tends to take itself way too seriously. 8:30 PM: Robin Williams informs the audience, "You've just seen the Governor's Award. Later this evening the Governor's ball will be held, just one of many balls being held all over Hollywood tonight."   After I was done rolling on the floor, I ask the Honeybee if she heard that, giving her a wink.   Her curt reply:   "He said Hollywood, Romeo." 8:45 PM: Almost simultaneously, the Honeybee and I can barely contain ourselves as we joyously exclaim, "Hey, look!"   Was it Jack Nicholson?   No.   Arnold Schwarzenegger?   Uh uh.   A Led Zeppelin reunion?   Nope.   It's the musical director from Dancing with the Stars, Harold Wheeler, being introduced as the Academy Awards' conductor! 8:48 PM: Pinch me.   An albino just walked up on stage to take the award for sound editing.   What are the odds of an albino winning an Academy Award?     They have to be astronomical.   It could be one hundred years or more before the Oscars ever see another sight like that again. 8:50 PM: Check that.   The same albino just claimed another Oscar - this time for sound mixing.   Good thing I'm not a betting man. 8:58 PM: Time for the traditional 15-second mention of the Oscars' ugly stepchild - the science and technical awards. "As an engineer, that really bugs me that they give no love to these guys," I complain to the Honeybee.   "Why should they?" she says as she downs the last of her Jack and Coke, "Nobody cares."   I tell her I care.   "Like I said..." she replies. 9:02 PM: Everybody knows I adore Sandra Bullock but whoever did her makeup tonight did her no favors.   That red lipstick makes her look like Bozo the Clown. 9:04 PM: Don't look now but it's Demi Moore - DEH-mi (not Deh-MI).   "Wow.   She's looking great!" says the Honeybee.   That she is.   DEH-mi is pushing 50 and she looks absolutely terrific.   Talk about cougar town - grrrrrrrrrr.     What was Bruce Willis thinking?   If I were Ashton Kutcher, I would send Bruce a thank you card every Valentine's Day. 9:08 PM: They're now playing the annual tribute to those in the Industry who passed away the year before.   "Why is Michael Jackson in the tribute? Does his Thriller video qualify him as a movie star?" the Honeybee asks.     I doubt it; she has a good point there.   Meanwhile, I'm still trying to figure out how the Academy could have left Farrah Fawcett out of the tribute.   Tragic. 9:09 PM: It's only fitting that Jennifer Lopez should immediately follow the Academy's tribute to the dead.   Come to think of it, they not only forgot Farrah, they forgot to include JLo's career in that retrospective too.   Time for another donut. 9:15 PM: Avatar just won the award for visual effects and director James Cameron looks ecstatic.   His movie has been getting trounced by The Hurt Locker, which was directed by his ex-wife Kathryn Bigelow, but now this win narrows the Oscar awards gap to 3-2 in favor of his ex.   There's still the four big awards to go, so this is anybody's contest. 9:18 PM: It had to happen.   The lone political statement of the night is made by some dude who raises a banner on stage during the acceptance speech for the best documentary award, which went to The Cove, asking us to "Text 'Dolphin' to XXXXX." 9:23 PM: Oops.   The Hurt Locker just took the award for film editing.   Kathryn Bigelow 4.   James Cameron 2. 9:33 PM: Uh oh. Somebody had a tailgater outside the theater before the show started.   Unfortunately, that somebody is an apparently very inebriated Buffalo Bill Cody, who just decided to jump on stage and accept the Best Actor award for Jeff Bridges.   Buffalo Bill is giving a rambling speech, punctuated by lots and lots of "yeah, mans." 9:34 PM: Buffalo Bill is still up there babbling.   Apparently his dad was the late Lloyd Bridges.   Who knew?   Meanwhile, we're at eight "yeah mans" and counting.   Hopefully, I have enough donuts to get through the rest of this. 9:36 PM: Cody finishes his speech and not a moment too soon.   I've got one donut left.   How many grams of fat are there in an entire bag of Hostess mini donuts? 9:45 PM: Sandra Bullock wins for Best Actress!   That's my girl.   I've always said she was a highly underrated actress - so this award is justly deserved.   In complete contrast to Buffalo Bill's acceptance speech, Sandra's is both touching and magnanimous.   She thanks all of her fellow nominees and even mentions her Razzie award for Worst Actress.   A real class act. 10:03 PM: If James Cameron wants to save face in his head-to-head Oscar battle with his ex-wife, he needs the billion-dollar grossing Avatar to take the last two awards, including the Best Director award. 10:04 PM:   This can't be good for Cameron: Barbra Streisand is presenting the award for Best Director.   Babs asks the crowd if it's finally time a woman won the award for best director.   Everybody knows what she thinks and, I gotta tell you, for Cameron it's now a lose-lose situation.   Even if he wins the award over ex-wife Kathryn Bigelow, I would half-expect Babs to hit him over the head with his statuette. 10:05 PM: Lucky for Cameron he doesn't have to find out.   Babs is smiling.   Bigelow just beat her ex out for the Best Director honor.     Bigelow 5, Cameron 2. 10:06 PM: The Hurt Locker finishes its evisceration of the mighty Avatar, winning the Best Picture award and taking its sixth Oscar of the night.   Avatar may be the biggest grossing movie of all-time (well, actually that depends on how you keep score), but in terms of Oscar hardware, it can't hold a candle to a lot of other films. 10:08 PM: It's finally over.   But even without commercials, the Academy Awards was still a marathon event.   In fact, Steve Martin just walked on stage and closed the festivities by saying the show had run so long that Avatar "now takes place in the past." 10:10 PM: While it looks like the Honeybee has squashed my plans for any after-parties tonight, it's not all bad.   I've still got one donut left. ...

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Valentine’s Day Giveaway: What’s the Biggest Money Argument You’ve Ever Had?

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The Honeybee and I are extremely compatible in almost every way, right on down to when it comes to our philosophy on money and how we handle the household finances. I understand though that, for upwards of 80 percent of couples, money can be a real source of strife in a relationship. When it comes to money decisions, I think the biggest knock-down drag-out battle the Honeybee and I have had was whether or not to bundle cable and internet services with one provider or go a separate route with individual providers. Not very juicy, I know. Like I said, we really do see eye to eye on most everything. Now we have had a lot of dumb arguments.     Just not about money. We've actually had knock-down drag out fights over whether we were going to go out to eat at a Mexican or Italian restaurant before. I've slept on the couch because I refused to back down on the color of a bedroom wall.   Well, I refused until I got tired of sleeping on the couch. We've also been known to have a shouting match or two  over whether a picture has been hung  in a level fashion (and whether or not anybody other than the Honeybee  or the  International Committee for Weights and Measures  would ever  care that it  was off kilter by six-thousandths of a micro-arc-second). Good times. Which brings me to my first giveaway ever! I happen to have two copies of Get Financially Naked: How to Talk Money with Your Honey that I want to give away for Valentine's Day. It is an absolutely terrific book  that co-authors Manisha Thakor and Sharon Kedar have put together that  is designed  to help reduce tension in your relationship by teaching you and your significant other how to communicate about money.    It is easy to read and very entertaining too. If you are interested, you can check out  my complete review of this book here. Here's  all you have to do to win one of them.   Leave a comment telling me about either: 1. The biggest money argument you ever had with your spouse, boyfriend, girlfriend,  significant other, or even your mom or dad.     - OR - 2.  The dumbest argument you ever had about anything with your spouse, boyfriend, girlfriend,  significant other, or even your mom or dad. That's it! The contest will run until 11:59 pm on Tuesday, February 9, Pacific Daylight Time.   At that time, the contest will be closed. I'll pick two valid entries from all the comments received by a random number generator.     Make sure you include a valid e-mail address, so I can contact you if you win. Your odds of winning are simply based upon the number of  comments received - and based upon my readership numbers, that means your odds are going to be pretty darn good! Good luck! ...

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My 2009 State of the Household Financial Report

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Our "household Constitution" requires the Honeybee, who is the family's household CFO, to deliver the family financial report every January to yours truly, the household CEO. For years, the Honeybee has painstakingly tracked and recorded our finances using a Microsoft Excel spreadsheet.   Last week she completed updating that spreadsheet for 2009. Having reviewed the latest numbers I am pleased to report that the state of the Penzo household is currently very good. This report is divided into three sections: 1. Net worth estimate as of December 31, 2009 2. Long term financial performance since 1999 3. 2009 Financial Performance The Big Picture As of 31 December 2009 the household net worth was just a notch under $700,000.   This represents a net increase of five percent from 2008. Overall, assets increased four percent while liabilities increased one percent. On the liabilities side, other than the mortgage, we have no loans, credit card debt or any other obligations.   That, ladies and gentlemen, is called financial freedom! The mortgage balance increased by one percent last year because I made two tactical decisions: 1)   refinance my 15-year fixed-rate mortgage to a 30-year fixed-rate mortgage, paying a little extra up front in order to lower the payments even further to help cushion the financial impact of a potential job layoff; and 2) Taking the money we have been allocating for over a decade towards extra mortgage principal payments and temporarily holding it in a separate savings account.   Back in June 2009 I explained my reasons for temporarily holding back the extra principal in this article. With respect to assets, I estimated our household personal property, which includes things like our two cars,   furnishings, jewelry, and collections. In January 2009 the house was officially appraised at $440,000; my local real estate blog noted that home prices in my community were essentially stagnant from the period from December 2008 to December 2009. Cash holdings decreased largely in part due to a drop in the value of some stock options I am currently holding. I track both our total net worth as well as net worth minus home equity.   I do this as a simple reminder to myself that our house is not to be considered a piggy bank that can be tapped whenever we have an urge to scratch an itch.   By this latter measuring stick, the household net worth is a much more modest $375,000 - although that represents an increase of 13 percent over the past year. Long Term Financial Performance 1999-2009 This long-term data reveals trends applicable to typical households with a genuine commitment to living within their means.   These long-term data allow us to glean additional insights regarding the advantages and benefits of sticking to a disciplined budget that just can't be seen over shorter periods of time. Keep in mind that, because the Honeybee is a hard-working but unpaid stay-at-home mom, our household has relied on only one income since our first child was born in 1997. For those of you in your twenties and thirties, not to mention those who may be questioning whether early scrimping and saving is really worth all the hassle, just take at look at the next chart.   It is a graphical representation of the Penzo family household expenditures between 1999 and 2009 as a percentage of my total take-home income, which excludes withheld taxes, paycheck deductions for health and other benefits, and contributions to my 401(k) plan. Let's analyze some key areas of this graph. Loans Worst Performance:   48.2% (!) of take-home pay   (1999) Best Performance:   8.9%   (2009) Current Impact: 8.9% Now, when looking at this summary chart of the household expenses over the past 11 years, the most glaring item is the red line on the chart.   This is the percentage of my take-home income dedicated to loans and, as you can see, in 1999 it was literally off the chart!   For the record, in 1999 exactly 48.2% of my take-home pay went to cover a car loan and the mortgage on my house. My original goal was to get this number down to 38%.   My assumption for this was the generally accepted 28% maximum for the home loan and an additional 10% for auto loans.   I realize conventional wisdom says the percentage of take home pay devoted to the car loan can be as much as 20%, but I prefer not to devote that much money to an auto. Generally, high debt-to-income ratios are usually the biggest hardship for those who are just starting out. The good news, however, is that over time those who hate to pay interest and choose to live within their means should expect to see less of their take-home income consumed by loans.   As the graph shows, this is clearly illustrated in my particular case. Look at how that red line plummets over time!   Each time that red line drops the choking vice-like grip of your debt eases until, before you know it, you no longer even notice it! For me, the first significant drop in loan expenses occurred in 2000 when we paid off our first car loan.     We bought another car in 2002 but the loan on that car was retired in 2005, resulting in the second significant drop in loan expenses. Key Takeaway: When you no longer are committed to servicing loan debt you suddenly find yourself with more money available to put towards... Savings Worst Performance: 1.9% (1999) Best Performance:   20.4%     (2006) Current Impact:   14.0% Next, we'll focus on the lime green line that represents my contributions to savings.   Keep in mind this is only cash savings extracted from my take home pay.   It excludes my contributions, for example, to my 401(k) retirement plan that are automatically deducted from my paycheck. Notice the impact that the loans had on our savings (not to mention all of the other expenses) in 1999.   That year we were only able to sock away a pitiful 1.9% into the emergency fund.   The irony, of course, is this is the very time when we were most vulnerable to defaulting on those pesky high loans that were eating up most of my take-home pay! As time passed, however, we were able to begin building a significant savings cushion. Key Takeaway: For those who can minimize their debt load, the ability to save increases over time. Utilities Worst Performance: 7.0% (1999) Best Performance:   5.5%     (2000, 2001, 2006) Current Impact:   6.9% Over time, our utility bills have thankfully managed to keep pace with my increasing take-home pay.   In 2009 equivalent dollar terms, our utility bills have increased over 30% over the period from 1999-2009.   I attribute a big part of that to the growing size of our household. In equivalent-dollar terms over the past decade, here is a breakdown of how much our utility bills have increased: Electricity: 4% increase Natural Gas:   4% decrease Telephone/Cellular:   54% increase Sewer/Water/Trash:   10% decrease Cable/Satellite:   175% increase (!) Key Takeaway: Technology costs money.   If you aren't careful, telephone and cable/satellite television bills can outpace the rate of inflation - and increases in your paycheck. Property Taxes Biggest Impact: 6.7% (1999) Current Impact:   4.4% I am extremely fortunate that our property taxes, represented by the white line on the graph, continue to drop as a percentage of take home pay thanks to California's Proposition 13.   I expect this number to continue to drop over the long run.   Before Proposition 13, property taxes were capable of doubling every couple of years, and putting significant numbers of people at risk of losing their homes to their inability to pay the outrageous taxes.   Hopefully, you live somewhere that has similar restrictions on property tax increases. Key Takeaway: Count your lucky stars if you live in a place with property tax restrictions. Groceries Worst Performance: 10.1% (2009) Best Performance:   6.9%     (1999) Current Impact:   10.1% The trend is gradual but unmistakable.   The brown line that represents our household grocery bill is slowly increasing.   Since 1999 it has more than doubled in real dollars and I expect it will probably nearly double again over the next 10 years as our 12-year-old son, Matthew-the-Bottomless-Pit, begins to enter his teen years.     Luckily my income has managed to keep up with the increase in the grocery bill over the last ten years, but I expect the slope depicted on the graph will begin to steepen just a bit over the next ten years or so. Key Takeaway: Paybacks are a bitch.   I know I cost my mom and dad a fortune in groceries when I was a teenager and soon Matthew-the-Bottomless-Pit (God love him!) will be doing the same to me. Bonus Tip: Yes our grocery bill is large, but did you know our food bill would be as much as 20 times higher if my family of four ate most every meal at a restaurant?     You can see the complete analysis here. House Expenses Worst Performance: 19.2% (2006) Best Performance:   1.6%     (2001) Current Impact:   16.5% This category includes everything we spend to improve the house, from this year's block wall, to our new energy efficient front doors.   From plumbing repairs to paint and home owners insurance.   We also include the exterminator visits, lawn care, remodeling expenses, and even the cost of the furniture and wall clocks.   As the house is getting older, a bigger percentage of the money is going toward maintenance and less is going to the other stuff. Key Takeaway: The cost of owning a home is expensive and goes way beyond the mortgage. As I mentioned in last year's report, the long-term graph clearly shows that for younger households that are just starting out, say with a new house and car, by the time the everyday expenses are taken care of, there is very little left to devote to discretionary income.   The lesson here hasn't changed: Serious household CEOs have to be extremely vigilant in ensuring that budgets are adhered to because the money here can be so tight that the temptation to pull out that credit card and run up a few charges that you can't cover at the end of the month will be great. Needless to say, the Honeybee and I really sacrificed in the first couple of years.   In fact, for the first couple of years, as you can see from the graph we did not even track entertainment as a separate expense because we spent so little on it.     At that time, our entertainment was basically tracked by our ATM withdrawals. But the same graph should inspire you, for it clearly proves that disciplined households that are committed to achieving financial freedom will begin to reap the fruits of their hard work in a relatively short amount of time. 2009 Financial Performance Finally, here is an illustrative breakdown of my “outflow”, or expenses, for the year in the form of a pie chart.     The money that makes up the pie chart comes entirely from my take-home pay, which excludes withheld taxes, paycheck deductions for health and other benefits such as additional life insurance, and contributions to my 401(k) plan. So, in essence, this represents how we chose to allocate our take-home pay for the year. As you can see, the chart is broken up into various categories.   Essentially, by looking at it you can see that three percent of my take home in 2009 went toward medical and dental expenses, while fully ten percent went to groceries. The chart to the right shows the changes in where the household income was allocated from the previous year. On the positive side, I am happy to see that, thanks to the home refinance we did last January, the household had seven percent more take-home income to allocate to other areas in 2009.   In fact, our only liability is the mortgage and it takes up a measly nine percent of my take home pay. The mortgage is low enough now that even if I did get laid off from my high-paying engineering position, we would be able to make our payments for probably years (barring a catastrophic health event or natural disaster) even if I was unable to ever find a similar job. The entertainment expenses were lower because last year we didn't go on a major family vacation, unlike in 2008 when we went to Maui for ten days. Thanks to the lower mortgage bill in 2009, we had more money to devote to our savings. On the down side, we spent more money last year on maintenance for our aging (but paid for!) automobiles, and our house which is now 12 years old and getting to that stage where things are starting to need replacing.     The biggest expense last year was our decision to spend almost $7000 to replace our dilapidated wood fence with a brand new block wall. Well, that's it for this year's report. In Conclusion... I can't impress upon you enough the power that keeping track of your finances gives you.   Another benefit of keeping detailed records like this is it instills an immediate sense of purpose toward improving your financial situation.   It also allows you to set goals. If you aren't already doing so, I hope this report encourages you to take control of your own finances. ...

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Buying Glasses? 3 Facts Your Eye Doctor Doesn’t Want You to Know.

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Oops, my bad. This is a guest post from some guy who wasn't who he said he was and was trying to make a few bucks off of an affiliate link.   Still, I can attest to the information  within this post as being accurate, as I too buy my glasses and contacts on-line - so I will keep this post up.   But I  have since removed the offending affiliate links from this post. As an added bonus, with the new information given to me by Patrick at Cash Money Life regarding this character, I thought it would be fun to add some editorial comments to this post. This past week I was reflecting on how I was able to save money in 2009 and I realized that one of the ways, purchasing eyewear online, wasn’t very well known by most people.   (Editor's note:   Actually, he was reflecting on how he could make money by duping dumb bloggers like me.) I first found this out when I read this article in the New York Times about do-it-yourself eyeglass shopping. At first I didn’t pursue this; I had become so used to going to the eye doctor every year and purchasing glasses there.   (Editor's note:   I'll bet this guy has 20/20 vision.) A few months ago though when I went to buy my new pair I was told it would cost me over $300 and I honestly didn’t have that much in my bank account. So I decided to go home and look online to find a less expensive alternative. That night when I looked online I found that the same lens I was looking at was half the price. I couldn’t believe these brick-and-mortar stores had such a high profit margin. How could this be?   (Editor's note: Why don't you tell us, "Jared?"   I assume he was watching a Subway Sandwich commercial when  he made up that moniker.   I'll bet this guy's real name is Ben Dover.) According to the New York Times, “a glasses frame that costs less than $25 to make in Italy can retail for at least $150 at an optical shop in the United States.” Unbeknownst to most people, these stores are making absurdly large profits.     (Editor's Note:   I've always had trouble with words that are singular but spelled plural.   For example, am I the only one that thinks "a glasses frame" sounds a bit off?   To me it sounds better, if it were "a glass frame."   Same thing with "scissors."   Why isn't it a "scissor?") The New York Times went on to say “If ever there was a market ripe for the intervention of the Internet, which allowed consumers to find discounts on best-selling novels, digital cameras or Hawaiian vacations, eyeglasses would be it.”     (Editor's Note: When it comes to ripe markets begging for intervention, the Times forgot peddling advertisements disguised as  "guest posts"  to clueless bloggers like yours truly.) I began digging into this more and I found that there are several well-known blogs dedicated to purchasing glasses on the Internet.   It was there that I found answers to all of the questions I had.   (Editor's Note: You mean you discovered there were ways to make a few bucks peddling eye-wear advertisements disguised as  "guest posts"  to clueless bloggers like yours truly.) In particular, I want to share with you three key points that I discovered that many eye doctors and brick-and-mortar eyewear shops probably don't want you to know: 1.   All I needed in order to buy glasses online was a prescription and a PD measurement from my eye doctor.   Doctors are required to give this to you.     (Editor's Note:   True.) 2. Customer service at some of those online stores is fantastic.   You can call them for help finding the best frames and lenses for yourself. (Editor's Note: That is true too.) 3. If you do need your glasses adjusted it is very easy to learn to do it yourself, or you can go to a local optical shop and they will do it for a very small fee.   (Editor's Note: Again, true.) I called my eye doctor for my prescription and the next day I purchased glasses online. I have bought two pairs now and both have turned out to be great.   (Editor's Note: Somehow I don't believe that.) To be honest, I believe the quality of the glasses is even higher than the glasses I bought in the store.   (Editor's Note: Higher, not likely.   The same, absolutely.) The process is not only easy, but it has also saved me a lot of time. (Editor's Note: Dat be true.) Now, I not only buy my glasses online, but I also shop for my contact lenses online too!   Each box of contacts that I purchase online saves me $20.   (Editor's Note: Imagine that!   Obviously, he is trying to score points with multiple affiliates in the same post.   Ah, the joys of capitalism!) Popular websites that sell contacts include...   (Editor's Note: You know what - if you're interested in buying contacts on-line, just go to Google and type in the words "contact lenses.") If your resolution this year is to save money, I strongly recommend you try shopping online for your eyewear.   (Editor's Note: My apologies to my readers.   I'll try and be more careful next time.) ...

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One-Year (Belated) Anniversary

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Earlier this month, on December 11th to be exact, my blog had its first anniversary. Thank you to everybody who has helped make this site grow over the past year! I originally started this blog as a little diversion to keep me busy. In July of ...

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Talkin’ Turkey: Evaluating My Thanksgiving Dinner Scorecard

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This year Thanksgiving dinner is at my house. We'll be serving dinner for 16 people including my sister and her family, my mom and dad and the Honeybee's folks. You know, since he came out to visit a few weeks ago, my father-in-law Tony has taken over a lot of the chores around the house, including fixing the water heater (and saving me $400 in the process). It's not that I'm lazy, mind you.     It's just that Tony likes to keep busy, so who am I to stop him if he wants to tighten a few loose screws, paint a bedroom or two, and perhaps even do a major renovation to my bathroom and/or kitchen while he is vacationing here? Needless to say, that's why I made my go-getter father-in-law the executive chef in charge of preparing this year's Thanksgiving dinner. Hey, what kind of guy do you think I am?   I'm certainly not prepared to ruin Tony's Thanksgiving by telling him his only job is to sit down all day and do nothing but watch some lousy football games and stuff himself silly with turkey and mashed potatoes - Tony is a guest in my home, after all. Besides, I'm going to be Tony's trusty sous chef.   Before you laugh too hard, you need to know that I am normally the family cook - I can more than handle myself in the kitchen.   And although that didn't sound quite right, I trust you know what I mean. As for the menu, after much deliberation, Tony and I decided to keep things traditional and settled on the following menu: Turkey Herb stuffing Mashed potatoes Yams Green Beans Salad Dinner Rolls Dessert (Pumpkin, Apple, and Cherry Pie) Sparkling Apple Cider So with the menu in hand Tony and I made a grocery list and then set off to do some grocery shopping. We brought the Honeybee along with us too because we needed somebody to drive. Our first stop was at our local warehouse-type store, where we bought the turkey, a monster apple pie, and a couple of other items.   For the record, the turkeys at the warehouse-type store were not only fresh, as opposed to frozen, but they were also about ten cents per pound cheaper. After that, we went to our neighborhood supermarket, where we bought the rest of the stuff we'd need for the Thanksgiving feast. As you can see, off to the right I have included a breakdown of our grocery bill. Keep in mind that a couple of the items I bought at the warehouse store have been pro-rated to account for the fact that we only use a portion of what we buy for the actual dinner. So, for example, although we bought 48 ounces of canned olives in eight cans, I'm only counting two cans (12 oz.) on my Thanksgiving dinner scorecard. In total we spent just over one-hundred dollars for our Thanksgiving meal this year, which is very reasonable for 16 people.   We didn't make a conscious effort to make the meal as cheaply as possible - Thanksgiving dinner is a meal I prefer not to scrimp on.   However, if we did I am certain we could have shaved the total grocery bill by probably 20% by focusing on buying only store-brand items.     Then again, keep in mind that, as my name-brand vs. store-brand taste test experiment showed, you can't assume anything with respect to taste and quality - sometimes the name brand is better, and other times, the store brand label is actually better. A Few Observations... After looking at this scorecard, I couldn't help but notice a few interesting facts: 1. The biggest expense for the entire meal was NOT the turkey. "But, Len, how could that be?" Maybe it's because when it comes to Thanksgiving dinner, my family considers the meal's most important course to be dessert.   Sad, I know.   Anyway, after purchasing almost eight pounds of pie and the mandatory whipped cream, we spent a whopping $22.16.   Meanwhile, the 22-pound turkey we bought cost us less than twenty bucks.   I don't know what is more disturbing: The fact that we bought over $20 worth of dessert, or the little voice inside my head that keeps telling me eight pounds of pie might not be enough. 2. You can get some really awesome deals at your local grocery store. Did you notice the price we paid for those russet potatoes?   Ten cents per pound is an absolutely ridiculous deal to be offered by any grocery store not based in Idaho.   Especially when you compare that to the price we paid for the potato chips, which comes out to $2.79 per pound if you do the math. 3. It's always cheaper to eat at home. I dare you to find a restaurant that will put out an awesome Thanksgiving dinner with all the trimmings, plus appetizers, for 16 people in a family-friendly and comfortable atmosphere for just over $102.   And that's before the tip. On behalf of my entire family, we'd like to wish you all a very safe and Happy Thanksgiving!   :-) Oh, and if you find you happen to need a little extra pie on Thanksgiving Day, drop me a line - we've got plenty.     I think.   ;-) Hey! If you liked this article, please be sure to subscribe to my RSS feed! ...

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