Monday, December 31, 2007

Holiday Spending Analysis

Well, I am back from the family vacation. Using a Quicken download, I added up the damage.
1. My fiance and I basically tripled the amount we normally spend on dining out - no suprise.
2. We dropped about $300 in unexpected clothing purchases. Although it might seem like a spending spree, we only purchased items we would need in the coming months for work. Furthermore, all of the items were purchased at huge, post-holiday sales.
3. Gifts - I stuck by my budget.
4. Splurge - I ended up with $400 in Fantasy Football winnings. Instead of saving it or using it to pay down debt as I intended, I purchased a new digital camera. Although I had a decent camera, it was huge and difficult to travel with. As a result, I always ended up without any camera. With the new camera, I got some great shots of my family over the holiday. Tomorrow, we are having "Christmas" with my fiance's family. Furthermore, I expect some good shots of tomorrow's "Chrsitmas" with my fiance's family. Finally, I have a honeymoon scheduled for August and my name will be Mudd if I screw up the photography. Great photos of the family and honeymoon - priceless.

Sunday, December 30, 2007

Too Many Accounts? Normal?

Checking and Savings: Nine Total
ING - Primary Checking and Saving Accounts
Local Bank - For ATM use, safe deposit box, and paper checks
Wells Fargo - Largely dormant accounts

Credit Cards: Eight Total
Amex Starwoods - Primary Card
2 Gas Cards
Citi AA - Airmiles (largely dormant)
Three Store Cards - discounts on clothes and home renovations
Business Card - Required by my job for business expenses

Investment Accounts: Four Total
Vanguard - Used for Vanguard Taxable Investments
Fidelity - IRA and Taxable Brokerage Accounts
Merrill - 401k (BTW - I don't recommend them)

Loans: Four Total

Thank God for Quicken, when I merge my books with my fiance's after the marraige, I am going to have even more accounts to manage.

For married couples, I would be interested in how many accounts are "normal."

Saturday, December 29, 2007

Our 2008 Financial Plan

1. Retirement Savings: My fiance has a generous defined benefit pension and I will continue to contribute(including company match) 15% towards my 401k plan. The 401K is invested agressively. The IRA approx. $100K is invested in a portfolio largely comprised of fixed income in a defensive position. As the market settles down, I am planning to move more of the IRA money into equity ETF's. Although we are both behind where we would like to be, we are making good progress towards a reasonable retirement.

2. House: I think I am upside down on my mortgage as my equity got wiped out. Will continue to improve the house gradually without borrowing. The ARM doesn't reset until July 2010 so I am not worried about getting whacked in the short term.

3. Cash Savings: We are funding the wedding and honeymoon. Our goal is to pay cash for everything and to avoid incurring any debt. On the bright side, we have no credit card debt. On the downside, our mergency fund took a big hit with her ring and paying off her credit card debts. By saving most of her check, we should be should be up to 4 months savings by the end of the year. My Tax Refund will go into cash savings. Stretch Goal: 6 months.

4. Car Loans: My loan is at 0% and will be paid off as slowly as possible. Her loan will be paid off 2009. In terms of debt load, our car loans are easily managed on our current income. When her car is paid off, we will continue to drive it for another 2 years and bank her "payment" towards a new vehicle.

5. Student Loans: Although we owe about the same amount on our loans, her loans are larger in relation to her income. Furthermore, we would like to have kids and forgoing her income for a while would hurt. Any extra free cash flow will be used to pay off smaller loans first. In light of the wedding expenses, I expect this plan will largely wait until 2009.

Peace and Happy New Year.

Must Stop Spending

Although I did OK with the Christmas spending, the post-Christmas spending has been a little bit over the top. Between eating out (we are on vacation), golf, and family things, it has been an expensive week.

On the bright side, most of our spending has been on necessities/staples at deep discounts. For example, I bought a shirt for work for $17 and my fiance bought a sweater for work for $30.

I am proud at myself for failing to purchase anything large. Having won my fantasy football league, I normally spend the winning on frivolous stuff. This year, it will help pay for the trip to see the family.

Sunday, December 23, 2007

Tomorrow's Spending Frenzy!!

Because I fly to Dallas for Christmas, I have the choice of paying for shipping or waiting until the last minute to shop for family members. First thing the morning, the fiance and I are hitting the streets of Dallas looking for gifts.

Nephew - 2 years old - hitting up Toys r' Us - I love shopping for kids and will find something fun for him.
Sister & Husband - $50 at Bed Bath and Beyond, $50 at Lowes
Mother - $50-100 at Williams Sonoma

Stocking stuffers - probably another $100 on little things for everyone.

Lawsuit Abuse

Today, I found the following note in the New York Post. In one story, we can see why liability insurance costs so much. We can see why pools no longer have diving boards or slides. Even if the school wins the lawsuit, they will be out thousands of dollars in legal bills. With the NYC Diocese closing schools to meet budget, I expect they will close down the program within 2 years after their liability insurer has to raise premiums.

Ain't America Great.

BTW – Many HS football players are 5'8" and 160lbs. One year, Odessa Permian played for the Texas 5-A championship with a line that averaged something like 175.



December 23, 2007 -- The Brooklyn parents of a student player injured in a varsity football game are suing his former high school and coach for putting the second-stringer on kickoff duty against much larger opponents.

William and Elizabeth Garry's lawsuit, filed Dec. 14 in Brooklyn Supreme Court, claims that Bishop Ford High School, its athletic administrator and its football coach negligently placed their son, William Garry Jr., in harm's way.

Garry Jr., now 20, was so seriously injured in the 2004 Catholic A League title game that he has since had four knee surgeries.

"He was not a starter," said Garry Sr., himself a lawyer. "They placed him in the front line of the receiving team. He got hit by a really big kid. He should not have been put in that position. He's 5-foot-7 and 160 pounds."

And the school showed no sympathy, said his mom.

"There wasn't a phone call, there wasn't a flower from anyone," she said. "Nobody loved football more than my son. I just think there should have been some concern on their part."

Garry Sr. said the family has spent more than $11,000 on his son's medical bills.

School officials did not return calls for comment.


Insurance Company Kills Woman

In the interest of full disclosure, I am an attorney, a CPCU, and have almost 20 years in the insurance world. In addition, I have some experience as a personal injury attorney. I have never, and will never, work for a health insurer.

If you haven't seen the story, CIGNA has been accused of killing a young woman in California by denying a Liver Transplant. Teen Dies, Cigna Blamed

Anyone with a heart has to feel for the family of the girl; however, insurance policy should be based upon facts, not emotion. So far, we know the young lady was extremely ill with leukemia. She received a bone marrow transplant from her brother. Unfortunately, the transplant led to complications and her liver was failing. Furthermore, other organs were damaged. UCLA was willing to do a liver transplant; however, there is no evidence a liver would have been found in time to save the girl.

Apparently, CIGNA denied the initial request to pay for a liver transplant on the grounds it was experimental; however, they later changed their minds. It appears public pressure played a role in this decision.

In analyzing the coverage issue, we need to determine two things:

  1. Did CIGNA break the insurance contract?

    From what we know, CIGNA had some sort of appeals process built into their claims process and the appeals process appears to have been followed. Given the unique nature of her treatment needs, I don't believe it was unreasonable to have a 2nd opinion before spending an enormous amount of money on a treatment that may not work.


  2. Did CIGNA act in "bad faith" by denying the initial request?

    If the initial denial was a breach of contract, was it in "bad faith?" Given their response to the appeal, I think not.


My take – this tragic situation was not a case of an insurance company looking to screw the little guy. If not "experimental," the treatment was certainly aggressive. If you pull the claim file from CIGNA, I would bet the farm they had real doctors, not "bean counters", make the ultimate decision.


Saturday, December 22, 2007

Fiance Credit Card's Paid Off

When my fiance and I started getting serious, I sat down with her and discussed her credit card debt. While not the end of the world, it wasn't a pretty picture. In particular, a few careless late payments triggered penalty interest rates in excess of 25%. Basically, I organized her cards and set up snowball by paying off the smallest balances first.

Later this month, her final payment will go out to Citibank.

Best of all, I got to sit down with her and show how her monthly budget looked without any credit card payments. Got a great smile out of her.

Friday, December 21, 2007

Cheaper to Drive - No to Riding the Bus?

After running the numbers, I was sad to find out using the Park and Ride + the express bus was not a cost effective way to get to work. After looking at the numbers, it is clear I would need to save 10 more miles per day to make the savings on gas/wear pay for the bus ticket.

Nevertheless, I am planning on taking the bus 2-3 times per week to work. In addition to cutting down on my fuel cost, I get to avoid the hassle of fighting traffic. The downside is being at the mercy of the bus schedule. In particular, the last bus out leaves at 5:35pm. For that reason, I don't think I will become a total user of mass transit.

The other option: Take the bus to work and have my fiance pick me up on the way home. On days when she stays late, this might work.

Money Laundering - Relationships and Men

While at lunch with some male coworkers, we got to talking about hiding money from our significant others. Much to my suprise, I wasn't the only one with a strategy for stashing cash the lady doesn't know about. Laughing at our strategies and rationales, we joked we were money launderers.

The Hows:
1. All of us our on budgets for "cash" taken ou to fund everyday spending.
2. In terms of the family, both partners knows he takes out $XYZ dollars per week/month.
3, Instead of spending all the money, all of us save money off the top for "other" uses.

Reasons for laundering:
1. My case - I am trying to have a $1,000 in cash in my firesafe for emergencies. To fund the cash emergency fund, I try to save $10-20 per week by cutting back on things. So far, I am up to $250. After I finish fund the stash, I plan to keep it up and use the savings for Christmas gifts each year.
2. One Guy - he likes having a little extra money to play with at the casino. To fund his fun, he cuts back on his weekly/monthly fun to save up for casino trips.

Sunday, December 16, 2007

Andy Rooney - "If I were rich..."

After watching my Cowboys fall to the Beagles, I accidently caught the end of 60 Minutes. As a result, I got to hear Andy Rooney go on and on about what he would do "If I was rich."

Andy - You are RICH!!! When you got suspended in 1987 without pay, it was reported you were making $7,700 per week. Assuming you managed to get a raise in the past 20 years, one would expect you are making $500,000 to $1,000,000 per year in salary. Having lived in NYC for 20+ years, we can assume you own a multi-million dollar co-op on the UWS or UES.

More importantly, you continue to make a great salary well into your 80's. While most 88 year olds are trying to make do on a fixed income, you are collecting a six or seven figure income.

By any standard, you are rich. Don't pretend you aren't.

ING Referral Bonus Works

Friday, ING sent me an e-mail indicating my account was credited with $20 for sending a friend and my fiance to them. Since the fiance got $25 for opening the account, our family made $45 on the deal.

Good for ING. Now, I need to sign up my sister.

Gambling Winnings - What to do?

Each year, I participate in a Fantasy Football league. For $100, I get to talk trash to my friends and have a great time following my team's successes and failures. Thanks to my monster brain (aka blind luck), I have done very well and most years I have ended up in the black.

This year, my team did very well and I made up my entry fee with weekly wins and the best record in the regular season. If I manage to make the SuperBowl (go A. Peterson and P. Manning) next week, I will end up with a $200-300 net gain.

In the past, I considered my entry fee as "gone" and any winnings "found money." As found money, I tended to blow it on fun stuff I wouldn't normally by myself.

This year, I am planning on "spending" my winnings on something responsible. I am thinking it could help with the huge oil heating bill I expect in January.

Peace and Merry Christmas to everyone.


Saved over $100 on Parka!!

Instead of waiting for the post-Christmas season sales on winter coats, I went to LL Bean and Cabelas hoping to get a good deal on a coat. With a HUGE snowstorm coming and temps below 10 degrees coming, I decided to risk giving up a few dollars for comfort in frigid weather. As luck would have it, I managed to save over $100 on my expected budget.

My existing coat, which I liked, was available at LL Bean in the correct size. Unfortunately, the new models have this ugly fur on the winter hood and has down insulation. At $200, the price was right; however, I decided to check out Cabelas.

After considering coat options, I narrowed my choices down to a $200 GoreTex (I like GoreTex) with Down (I hate down) and a $189 model on sale for $159 without the GoreTex or the hated down insulation. After settling on the cheaper model, I got to checkout and found out it was actually on sale for $89.

Best of all, it worked like a charm digging out of the snow this morning.

PS - Cabelas has great customer service. When one of my jeans got damaged and I thought it was not my fault, they replaced them - no questions asked.

Thursday, December 13, 2007

Post Christmas Sales - Waiting

When I moved to the northeast in 1999, one of the first things I did was purchase a winter parka. Now that it is showing its age, I am looking to replace it.

Since I am stuck home in a snowstorm, I got to thinking about how buy a new coat as cheaply as possible.

The Plan - Wait for the Post Christmas Sale.

Sunday, December 9, 2007

Net Worth Calculation: Include Value of Pension?

At my former employer, I earned a vested “defined benefit” pension starting when I turn 65 years old. Because I left the company, the pension benefit is frozen. I know what I will receive (assuming the company and the pension benefit guarantee fund don’t go under) a fixed monthly payment of a certain amount.

To determine the value of the stream of payments, I considering building a discounted cash flow model; however, any DCF analysis would be flawed without access to the appropriate mortality impact on the future cash flows.

Luckily, I know some people in the annuity business. From them, I have a fairly accurate estimate of the cost of purchasing an annuity to replace the pension.

Question: Should the present value of the pension be considered when calculating Net Worth? Opinions are welcome and desired.

Saturday, December 8, 2007

CompUSA - No Store Closing Sales Yet

If you haven't heard, Compusa is going to close all its stores after Christmas. Since we were in the area, the fiance and I decided to check out the local store. At this point, they didn't have anything up to suggest they were going to move pricing to close out inventory.

Sunday, December 2, 2007

I want my Income Taxes Back

My local paper is running a story about problems with the IRS and the AMT. It seems our idiots in Congress haven't passed this year's "fix" and the IRS is threatening to delay sending out tax refund checks.

Because of my job change, I have significantly overpaid my taxes this year. If the AMT doesn't apply to me this year, why should my refund be delayed?

Saturday, December 1, 2007

Free Bus Passes

Reading through our office newletter, I noticed a note on 10 free bus rides offered by Connecticut's public transportation agency. Apparently, they think giving someone 10 free rides (plus a hotline for advice on "how to") can increase ridership.

My take - great idea. Since replacing the Saab with the SUV (aka - the guzzler), I have been considering public transportation and/or carpool options. With this program, I am going to give it a shot. There is a park/ride not far from my house and they swear it is an express bus to a building a block from my office.

Honestly, I don't believe I will take the bus everyday.
1. I like to run errands on the way to/from work. I expect I will need my car at least 1 time per week.
2. My fiance and I are considering a carpool. Once she finishes her masters program, we hope to carpool 2-3 times per week. Unfortunately, it means I get to work 1 hour early.

As for riding the bus, I did it for over a year when I lived in Manhattan. My friends, all from the city, thought I was nuts for taking bus from the UES to Murray Hill instead of the subway. Although faster, the subway was dirty and crowded. On the bus, I could read my Wall Street Journal in peace. The buses tended to have working AC in the summer and heat in the winter.

Christmas Decorations -Starting A Stash

How did you start your Christmas decoration stash? I don't own any Christmas decorations. As the only single person in my family, it was my job to fly home to see the my parents and my sister's family. For that reason, I never bought any Christmas decorations. No tree, no "stuff", no nothing.

With marraige in my future, I am thinking it might be a good idea to start thinking about decorating my house. Any good ideas for frugal Christmas decorations would be appreciated.

One thing I will do for sure, I will get some basics in the post-Christmas clearance sales.

Thanks and Merry Christmas to everyone.