Christmas Shopping Plan

Me: iPad Air 2 - because I travel, I must have an iPad to keep from going crazy during long waits. Unfortunately, my iPad2 died.  I already bought it.

Wife: bike with carrier for the toddler.

Daughter: her first bike.

Son: he is 1. Any toy will do.

Bottom line: this is going to be a very expensive Christmas.  But, it will be cheaper than flying everyone to Texas this year.

Cashed in Defined Benefit Pension – Why it was a good idea?

(Note – the numbers below are a fiction designed to make the math simple. Before making the same choice, you will need to do the math yourself).

At a prior employer, I managed to become vested in a Defined Benefit plan before they “froze” it.   As a result, I was entitled to approximately $1,000 per month beginning at age 65.  BUT, they decided to give me an opportunity to take an annuity now (about $270) or a direct rollover to my IRA.  

Simply put, I chose the direct rollover to my IRA.  

Why? Flexibility.  Although my income right now is very good, I am in an industry that doesn’t have many 60-70 year olds.   When that time comes, I want to have the flexibility to act in my own interest. 

Used IRA to Pay off Student Loans

Although paying the penalty tax of 10% to make a withdrawal out of an IRA is harsh (plus the regular tax), we decided to make the plunge.   First of all, the amount of my final student loan was less than $10,000.  Second, the payment $325 per month was significant.

By biting the bullet, I was able to improve my cash flow during a time when daycare is hurting my cashflow.

The Blog is Back

Now that my little girl is getting a little more mobile, I am ready to start blogging again.

My Asset Allocation - July 2012

    

Essentially, all of our "investments" are in our tax protected accounts. Our taxable accounts consist almost entirely and are invested in savings accounts and CD's.


Investment allocation:

Domestic Stock 65%
Foreign Stock 7%
Bonds 15%
Cash Equivalents 13%


YTD Performance:
Account 1: + 7.14% - We are adding to this account on a bi-monthly basis. It is almost entirely invested in equity mutual funds.
Account 2: + 3.22% - A rollover IRA, I cannot add to this account. Almost all of my Fixed Income investments are in this fund.

Saving Money on Cable Bill

First of all, I have ATT Uverse which is vastly better than Comcast was. Nevertheless, my bill has been creeping up and I took some action to reduce my bill. First, I eliminated the sports package and then I cut back on my base package. Saved about $30 per month.

Bought a new car!

While I loved my Silverado and didn't want to sell it, it's guzzled gas and wasn't baby friendly. As a result, I have replaced it with a 4 cylinder Accord. With 0.9% financing and good resale on the truck, it was something that I had to do.

Best $66 that I ever spent

My wife and I just returned from our baby girl's 2^nd water babies class. I don't know who invented swim classes for 8 months old. I do know that they were GENIUS. Since she cannot swim by herself, my wife and I got to spend wonderful time playing with a little girl. Last week, I enjoyed it so much that I nearly cried.

Sometimes, spending money is worth it.

Comcast Defeat is Final

It took 3 years and many phone calls, but I have finally convinced Comcast that I don't actually owe them any money. Had they been able to manage the bill correctly, I would never have moved to ATT Uverse.

Saved $100 on Car Seats

My baby girl is growing and her days in the infant carrier are coming to a close. With that in mind, my wife and I decided to buy two convertible car seats for her. Although I am frugal, I am not going to skimp on something as important as my child's safety and the inconvenience a poorly designed seat would cause me. For a that reason, we bought a Britax Marathon for our family vehicle and a Britax Roundabout (smaller and cheaper) for my truck.

Using Amazon: We saved about $75 from what Baby's R Us wanted plus we probably save another $25 in sales taxes.

Connecticut to Tax Coupon Savings

Here in Connecticut, our idiot governor is planning on taxing savings from using coupons. If you save $1 using coupons, you end up owing the state 8 cents in "sales" tax on the purchase.

Isn't America Great!!!

Discretionary Match

Thankfully, my company provides an annual "discretionary" match. Friday, they announced they were making a contribution equal to 4% of my annual salary.

Thankfully, things are working out great.

Withholding Evaluation Time

Because of a new addition to our family, our tax refund is a little larger than it should be. As a result, I will be reviewing our tax withholding on Monday.

Never give Uncle Sam a free loan.

Camera finally arrived from Adorama

My new Nikon D7000 arrived today from Adorama. While it was certainly a splurge, I plan on using it to create priceless (to me) photos of my daughter and family. Sometimes, spending more is OK when you get the quality you want and cannot get a discount.

My photographic Equipment:

1. Nikon D7000 Body
   
2. Nikon 18-200mm VRII lens – for most uses
   
3. Nikon 35mm and 50mm f/1.8 lenses for low light situations. For anyone who needs a good, inexpensive lens, you cannot beat the price of the 50mm F/1.8D at $100.
   
4. SB-600 Flash

A prayer for the people

In the aftermath of the tragedy in Arizona, I think we should all say a prayer for everyone impacted by it.

The Big Splurge – New Nikon DLSR

Although my current Nikon DLSR is perfectly functional, I have found great joy from taking better and better photos of my baby girl. To accomplish that, I have invested relatively small sums in a dedicated flash (which improves flash photos noticeably) and a 35mm f/1.8 lens (which allows me to take photos indoors without a flash). Both upgrades have allowed me to get photos of my baby that are priceless – to me.

Although I am often frugal, I splurged mightily on a new Nikon D7000 camera with a spectacular, pro 28-300mm lens. Did I need it? No. Will I enjoy it? Absolutely. My thoughts: Nikon cameras are well made and should last for years. My father's Nikon camera and lenses from the early 1970's still work perfectly. While DSLR's go obsolete faster than film cameras, Nikon lenses last for decades. Although expensive, I expect to be using this lens when Baby E graduates from high school. Going forward, I expect my photography kit will look like this:

1. Pocket Digital Camera – replace them when they break. Never spend more than $200 on one.
   
2. HD Video Camera – I love mine, but editing is a hassle. I will keep it, but favor still photos.
   
3. DSLR Camera Setup:
   
   1. Nikon D7000 Camera
      
   2. Nikon SB600 Flash
      
   3. Nikon 28-300mm f/3.5-5.6 VR (for most uses) lens
      
   4. Nikon 35mm f/1.8 AF DX lens
      
   5. Nikon 18-55mm and 55-200mm DX lenses from older camera
      
   6. Nikon 50mm f/1.8 AF

Taxes: Refund or Pay More

Today, I started working on my taxes for 2010 using Tax Cut software from H&R Block. For the most part, I plugged in last year's numbers into this year's tax code. My preliminary conclusions:

1. It looks like I won't be getting a refund. Since I had a child during the year, I expected my taxes to go down. Each year, I try to have my withholdings set up so that I have a small refund.
   
2. I need to give more money to charity in 2011. With the child on the way, I forgot to make some of my annual contributions to my favorite charities: the Salvation Army, the Universities that my wife and I attended, and the American Cancer Society.

2010 Investment Returns - Report

While it is important not to count one's chickens before they hatch, it was nice to get positive returns in 2011. The 401k was up 15%. Unfortunately, the IRA, which contains most of my fixed income investments was only up 4.5%.

Savings v. Debt Reduction

Even with internet banks, the rate available to savers is not great. For example, one of my banks, ING Direct, is paying about 1% on their savings accounts and CD rates top out at 1.25%. While the 1% interest rate easily demolishes the 0.20% rate paid by Bank of America on savings accounts, the after tax return is barely worth the effort.

Instead of putting money in savings vehicles like CD's and/or money market accounts, I recommend directing any excess cash to paying down debt. Instead of earning 1% on savings, you can save 15% on credit card debt, 4-7% on car loans, and 5% on mortgage loans by reducing the principal balance of those loans. The only downside is that you may give up some flexibility by paying down the principal on a loan. Think about it this way, the mortgage company is not going to let you get the $1,000 principal payment you sent them with your tax refund money.

Don’t forget Coupon Codes

If you are buying anything online, don't forget to google the name of the vendor and "coupon code" before you order something. We got 25% off of our photo printing order from CVS using this strategy.