Month: September 2015

Financial Goals Update – Fall 2015

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Happy Autumn!  We have closed our windows and have started to bundle up at night as the temperatures drop into the 40s and 50s.

We are also making progress on our financial goals.

pf goals 10-1

Mortgage

Our mortgage is 88.1% paid off, up from 61.9% in April.  There have been many sacrifices along the way to make that progress but we’d do it again in a heartbeat.  At our current pace we should own our home free and clear by the end of the year (well before our 30s).  The standard critic’s response to our situation would be that we had rich parents who paid off the house for us.  The thought is that there is no way that a couple could live below their means and aggressively save money instead of spending it.

One of the nice things about keeping detailed financial records is that I can go back and look at the numbers and say that 8% of the house was procured using inheritance/gift money.  The other 92% was earned and saved by our own sweat and determination.  Of that 8%, 0% was explicitly earmarked for house payments, meaning that when we received a lump of money we CHOSE to invest it into our house instead of spending it freely.

Retirement

Our retirement accounts haven’t changed much in value over the last 6 months thanks to a market correction in late August.  Our equity heavy portfolio is more volatile than a bond portfolio, but we are not worried about the anemic pace this year.  The market value of the portfolio has remained steady solely because we keep pumping money into retirement accounts each paycheck.  The important metric is the number of shares owned and that has been growing steadily over the past half year.

VTSAX

Just yesterday, Caterpillar announced that they would be reducing their employee count by 10,000.  A couple of months ago, another major employer in our area, Mitsubishi Motors North America, closed a factory with 1200 workers.  My heart goes out to these families.  For many, I suspect these layoffs will have devastating effects on their lives.  The pink slips being handed out are not because they are bad at their jobs, they are the result of global economics, something that the affected worker has no control over.  What we do have control over is how we manage and save the money that we have right now.

Deal of the Day Plus a Food Health Rant

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Tonight we took a family walk to Kroger for some ingredients for tomorrows dinner and to get exercise.  It is a 1.6 mile round trip, just long enough to stretch the legs.

Our garden is almost done producing after a rather miserly second crop of greens, so I was delighted to find a pound of organic spring mix on clearance for ¢99.  Shae peeled back the clearance sticker to find a second clearance sticker priced at $2.49.  I would guess the original price was $2.99.  Yay deals!

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We also picked up an avocado, but I much prefer Aldi and their superior pricing.

Then it was on to pick up some tortilla shells.  We cruised on over to the Mexican section and started reading labels.  I have been making an effort to eat healthier.  Our general guidelines are:

  • Minimize sugar intake (no soda, candy, fruit juice, or other high sugar empty calorie type foods)
  • High fiber
  • Veggies and Fruits can be consumed in raw form as much as desired
  • Limit red meat consumption (poultry or fish are preferred)
  • No trans fat and a watchful eye on the amount of saturated fat.  Poly and mono fats are fine.

Sugar hasn’t been a problem for us.  After you cut back on sugar you lose the taste for it and “added sugar” products taste disgusting.  High fiber foods are usually just a matter of looking for products marked “high in fiber”.  You do have to be careful though, as some breads and cereals can REALLY pack a punch.  The fruits and veggies ‘rule’ is to promote healthier snacking.  Instead of downing a package of chips, it is much more beneficial and filling to eat a piece of fruit.  The idea is stolen from Weight Watchers where fruits and veggies are zero cost items in a diet (meaning you can stuff your face).  Red meat is another area we haven’t had much trouble in for the simple reason that it is expensive.  A good steak will cost upwards of $6-7 pound at the supermarket.  Red meat is also loaded with saturated fat and cholesterol, two things that aren’t good for your heart.  Poultry is a cheaper healthier alternative and we have been making an effort to consume more seafood (although finding quality seafood in the Midwest is difficult).

Finally, I have been monitoring food labels for fats much more carefully over the past few weeks.  There are different types of fats and they are not created equally.  The worst type and the one you should remember if nothing else from this post is trans fat.  Trans fat is created during processing when hydrogen is pumped through oil to thicken it.  This process is called hydrogenation.  Trans fat is bad for your cardiovascular system because it raises your LDL cholesterol.  LDL is the bad kind that causes heart attacks by clogging your arteries.  The Food and Drug Administration, FDA, put a deadline for the removal of all trans fat from store shelves by 2018.  So, even if you forget everything in this soap box rant, at least Uncle Sam will take care of the really bad for you processed foods.

I make such a big deal about trans fat because in 2015, it is still found everywhere.  Looking at a nutrition label isn’t good enough because manufacturers are only required to list it if it exceeds 0.5 grams per serving.  It is far better to look at the ingredients list.  If “partially hydrogenated oil” is on the list, the food contains trans fat.  This kind of pisses me off because we went to a company picnic last night and the little thimble sized container of butter spread had a big red banner across the top proudly stating “No Trans Fats”, but flipping it around revealed the ingredients where PHO was the second ingredient.  0.4999 grams is not the same as none.

The easiest way to avoid trans fat when shopping at the store is also the oldest health trick in the book.  Shop the perimeter.  After looking through a dozen different shelf stable tortillas and only finding the most expensive one to not contain trans fat, we found a refrigerated package in the perimeter for half the cost.

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One final note about trans fat.  You can kiss canned frostings goodbye.  I made up my first from scratch frosting this past weekend for my Dad’s birthday cake and it was delicious (and much healthier than canned).

  • 8 oz cream cheese softened
  • 1/4 cup butter softened
  • 2 cups powdered sugar
  • 1.5 teaspoons vanilla extract

So there you have it.  My salad clearance deal and a rant about nutrition.

Frugal boy agrees so I think I am off to a good start on health by nutrition.

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Also here he is downing a roma tomato.

Adjusting Auto Insurance

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Yesterday the auto insurance bill came in the mail.  It is one of only a handful of bills that is not auto paid in our house.  The reasoning is pretty simple.  First off, it is not a monthly bill but a semi annual bill.  Secondly, it is wise to reevaluate the type and amount of coverage from time to time.

Our 2006 Pontiac G6 is getting close to the 10 year old mark so we were looking to drop certain coverages.

Comprehensive

One of the easiest changes we made (in my opinion) was dropping comprehensive coverage with a thousand dollar deductible.  Comprehensive covers damages to your car from wind, hail, flood, fire, theft, vandalism, or hitting an animal.  By keeping our car stored in a locked garage and driving predominantly in town, most of these events are unlikely to happen.

Savings: $24

Liability

In Illinois, motorists are required by law to have insurance and they are required to carry at least 25/50 liability.  What does that mean though?  25/50 coverage means that in the event of an accident, a single occupant of the other vehicle is covered for 25 thousand worth of expenses.  The second number, 50, means that if more than one person is injured in the second vehicle then the insurance will pay out up to 50 thousand.  Liability insurance protects you from having to pay the other party for damages they received because of an accident involving your car.  While the minimums sound high, they really aren’t.  If you consider the cost of medical treatment and legal battles a small fender bender could easily blow past the minimums in no time.

The general rule of thumb is to carry enough liability coverage to cover your net assets.  The last thing you want is to have a lien placed on your house or your wages garnished to pay the helivac bill of someone else.

We increased our liability from 100/300 to 250/500.

Cost: $14

Medical Payments

Medical payments cover your own hospital expenses.  One of the nice things about auto medical versus your personal health insurance is that auto medical will pay out for accident related injuries up to three years after the incident.  We increased our medical coverage from 5000 to 25000.

Cost: $11

Collision

Our existing policy had a $1000 deductible collision coverage and even though it made up 1/3 of our total bill we decided to keep it.  The math did not work out to increase the deductible to 2000 or to drop it entirely. Assuming our car has a fair market value of five thousand dollars, it would take 100 years of no accidents at the higher deductible/lower premium to pay the 1000 dollar difference.  Dropping coverage completely would save us $450 assuming we had no accidents for the next five years.  A single fender bender would likely cost over $1k in repairs.  Perhaps in a couple more years when the car has depreciated more we will drop collision.

Change: $0

In Summary

Our semi annual premiums will increase by $1.23.  We have less coverage to cover damage to our car, but quite a bit more to cover personal medical bills and to protect our nest eggs from lawsuits.  There is a saying that I read somewhere on the internet, “young people are underinsured, old people are overinsured”.  Insurance of all kinds is a gamble and it is helpful to reevaluate what kinds you need and how much as your life circumstances change.