Cable competition

Great news! My town if finally getting a second cable provider. Currently, Comcast is the only game in town. However, Verizon and the town just signed a contract to allow their entry sometime later this year. The upshot of this is big savings for everybody. Towns with more than one cable provider generally have rates up to 20 % lower than single provider towns. I plan on taking full advantage of this as my cable bill (tv, Internet, and digital phone) is huge. I pay over $200 a month and hope to trim at least $40 off of this. I will look at Verizon's rates and then go to Comcast and see what they plan to do to retain this customer. Either way it is a win for the pocket book. Any savings that I get from this I plan to earmark for the kids 529 plans. The good old capitalist system at work.

How to get rich

Money magazine had an article last month profiling people who became rich through their own business'. The take away seems to be that the road to riches in this country comes through starting your own business. The problem with this is that for every success story there are many more failures. Still, the appeal of working for yourself is a great lure. These people all seem to have an original or at least novel idea and a sound business plan before they started. As I struggle to make my real estate business a money maker these stories provide me with incentive to keep working. http://money.cnn.com/galleries/2007/moneymag/0706/gallery.success_stories.moneymag/index.html

Striking a savings balance

One of the most difficult issues I find as I work towards building a nestegg for retirement, is striking a balance between leisure spending now vs savings for later. I have read of people who are so focused on saving every dime that they forget to enjoy life. On the other hand we all know of people who spend money like crazy in the pursuit of instant gratification. Finding a balance somewhere in the middle is critical to being able to enjoy your present while securing the future. I often find myself reevaluting how I budget my leisure money and it is the issue that I find myself thinking about most often.

Minor League Baseball

Friday we took the kids to see the Lowell Spinners. They are the Red Sox short season single A team. The dollar certainly goes a long way at a minor league park. The tickets were $6.50 and the seats were just about 15 feet down the right field line in the second row. Parking cost $5 (compare this to $40 for some of the lots near Fenway), food was $2 for hot dogs, $3.75 for beer. The people at the stadium are very nice and attentive and the quality of baseball was very good. Most importantly the kids loved every minute of it. I cannot reccomend minor league baseball enough as an inexpensive way to introduce young kids to pro ball.

The Big Green Egg

So I have had my large Big Green Egg for over a week now and thouhgt I would share my early results. In a word SPECTACULAR. This thing is absolutely amazing. For anyone who enjoys grilling, smoking, or bbq'ing I reccomend visting the user board of Eggers. These people are crazy about their eggs and their passion shows through. I have used mine 5 times in the 8 nights I have had it. I figure that at this pace I will recoup the cost of the egg in a year or so (money saved from not ordering take out or eating out) and will have much more fun.

http://www.biggreenegg.com/wwwboard/wwwboard.shtml

The madness of dealing with banks

I cannot believe the lack of customer service in the banking industry. I had a scheduled 3pm closing for an equity line of credit last week and was at the bank for over an hour. It actually took only 15 minutes to sign the docs with the rest of the time being spent waiting for the one service rep to help the many many people who were waiting. While waiting I heard horror story after horror story of bank errors that were costing people money and more importantly time and aggrevation. One poor lady had made an ATM withdrawl and the bank had debited her account twice. This had led her account to become negative and she was charged $35 in overdraft fees. The bank admitted their mistake and was going to reverse the second transaction and credit back the fees, but said that it would take 5 business days for this to be reflected in her account. She was in tears, asking how she was supposed to live with no money until then. I felt badly for both her and the service rep as I know there was nothing she could do, but what a disgrace that it ever came to this. Almost makes you want to stash all your money in the floor boards.

Top 10 reasons people dont stick to savings plan

well actually I am only going to discuss what in my mind is the number one reason why I have trouble sticking to my savings plan. The unexpected unbudgeted major expenses. Today I picked up my car from the service center after bringing it in for an inspection sticker and to see why my check engine light was on. Four days and $1800 later and I have to juggle my plan for the rest of the month. I fully anticipated spending five or six hundread dollars, because I do every time I bring it in, but wow what a surprise I got. The car seems to be the one thing that is most often a budget buster for people. Every now and again you will get a major unexpected home repair, but I can count on the car socking me at least once per year. On the positive side there are only 10 more payments to be made on it.

I am also attaching a link about the "other" costs of home ownership for any of you looking into buying your first home.
http://www.kiplinger.com/features/archives/2007/05/homecost.html

You should make sure you go into this venture with your eyes wide open.

Teach your Children

I saw the entrepreneurial spirit in my 8 and 10 year old today. They decided, along with our neighbor's kids that they wanted to set up a lemmon aide stand. I know it is very cliche, but I thought it was a great way to teach them a bit about money and economics. They were very excited when they had $20 in the til, but were less enthusiastic when told they would have to pay for their start up costs out of that money. After paying the $5 for the lemon aide mix and cups they had $15 to split 4 ways. Seeing them come up with different marketing schemes to drive their fledgling business was very intersting. They wanted to know when our other neighbors, who are selling their home, would be having another open house. My daughter thought that an open house crowd would be a good targed audience for their product. I believe that it is important to talk to my kids about the value of money and work. The lemon aide stand provided a good "classroom" for a lesson in personal finance.

smart long term investing

I worked with a very young guy who was extremely well read in the area of investing and personal finance. He was way ahead of the curve when it came to saving his money. He lived on a budget (unheard of for a 20 something male student) and invested every spare penny he could. The problem? He had a compulsion for picking individual stocks. He owned at least 20 and probably more individual companies. He knew that he should put his money in low cost mutual funds and let them grow over time, but he needed the excitement of picking winners and looking for the big score. Did he find winners? He had his share (as I said he was very well read and researched these for hours at a time) but overall he would have been much better off in low cost funds. It is not as fun, but you almost certainly will be better off in the long run. I have included a link that expounds on this premise and includes several examples of smart balanced portfolios with their performance over time.
http://www.marketwatch.com/News/Story/quarterly-update-lazy-portfolios-still/story.aspx?guid=%7B33325373%2DCDCA%2D4A95%2D9937%2D301D1E3E7E8D%7D

Index funds

When I talk with people who ask for advice on where to put their money I always suggest some type of index fund. I know it isn't sexy or excititng, but I don't think you can beat them. I found this on another investment blog, about a nobel prize winner who articulates the case for these funds much better than I ever could. http://www.freemoneyfinance.com/2007/05/nobel_prize_win.html.

Large purchases

I find that I am very disciplined about curbing my spending until I see something major that I want. I will go for weeks without spending any money on "luxury" items. Then I will see something that I want and I find myself splurging on it. Case in point, I saw an article in today's Boston Globe about a charcoal grill that I am now planning on purchasing. This is no ordinary little kettle grill, but a $900 140 lb monster called the biggreen egg. Now, a little history on grilling and me is in order. During the spring and summer I love to cook outside and will grill at least 2 or 3 times per week. I also have a collection of 5 grills already (although I really only use 2 of them and one of those is for tailgaiting at Patriots games) one of which is a major purchase from years gone by. The Biggreenegg will become my new grill of choice, although I will continue to use my Cajun grill as well. This brings up an interesting question in regards to saving for the future. How much do you sacrafice in the present for the good of your future. I am trying to balance my enjoyment of life with my goals of saving for the future. I believe that if you can afford to do both and have your debt under control (none to very little) that you should not feel guilty about spending for present enjoyment. Life is too short not to suck the marrow form it as much as you can. That being said I hope to have my new "baby" in time for the Memorial Day weekend.

Net worth

As an exercise in where we stand financially I calculated our net worth today. Our assets are mainly in two areas. Our 401k accounts are just under 50% of our assets with the other large chunk being the equity in our home. We have about 60,000 in equity accounts and another 50,000 or so tied up in real estate investments. Our liabilities are almost all accounted for in the mortgages on our house, with our credit card debt under 5k. Most of the credit card debt is 0% interest and will be paid off by Feb. The rest of the debt is in the 2 car loans one of which will be paid off in 11 months. Over all our net worth comes out to just over 800,000. Not too bad, but we need to get more agressive in our savings. We currently put about 45k per year into our 401k and SEP IRA which is about our maximum. It will be a good motivational tool to check this number periodically to see how we are doing.

First time home buying

We own our own home. We bought it in 1995. Before this we owned a condo in Beacon Hill in Boston. In addition, I have been involved in real estate as a form of investing for the past 4 years. I work with younger people who for the most part are either still in school or have recently finished. I find myself talking to them frequently about saving money or buying their first home. I am amazed at how much more aware they are about saving money than I was at their age. However, for some reason the whole concept of buying their first home is a much harder thing for them. Today I was talking to Allen about how much home he can afford. He is struggling to find the right priced home and to budget monthly expenses. There is tons of information about how to find the best mortgage etc., but not enough about how to budget etc. It is one of the biggest mistakes that young people makes and fortunately not one of the many that we made in our youth.

http://www.interest.com/mortgage/05112007_mortgage_mistakes_interest_rates.html

This is a basic but valuable article on a great site for first time prospective buyers.

targeted savings

So along the same lines as my post on auto savings I decided that the time had come to start saving for Bat and Bar Mitzvah's. With 3 and 5 years until these ultra expensive events now is the time. I set up equity accounts for each kid in my Vanguard account. I made the deposits automatic and set it up in the 500 index fund. This is fairly risky and aggressive for money that will be needed in 3 years, but I am rolling the dice. The cost of a Bat Mitzvah can run north of $10,000. At $100 a month for 36 months we are looking at $3600, far short of the expected price tag. That being the case a couple years of 8-10% returns could help to close the gap. In any event, just setting up the account and planning for the future makes me feel more optimistic about things.

Dice K

Watching game 1 of the Sox Braves doubleheader. dice k looks good through 2 2/3 innings. Has a sharp curveball working. He appears to be a great athlete, not your traditional overweight non athletic pitcher. More along the the lines of Greg Maddux. He is fun to watch on the mound, the way he changes speeds, works all sides of the plate. When he finally gets comfortable with the umpires (figures out strike zones) and gets a routine down he is going to be something special. As long as the starters can stay healthy (big if when you have 2 40 somethings and Josh Beckett in the rotation) these guys should be very good.

Rain Rain

so it is a really dreary Sat. morning. All little league and softball games have been postponed. Seems like a good time to start organizing things on the financial front. I just opened up 529 plans for my two children. I am really late doing this as they are now 10 and 8. That has always been my problem when it comes to financial planning and savings. I have good intentions, do the necessary research and prep, but procrastinate when it comes to pulling the trigger. I have been meaning to do these accounts for years, but have just now Finally done it. Now that it is done we will move to grow the accounts as quickly as possible. I have set them both up for automatic deposits everymonth of $100 per kid and will add extra whenever possible. Thank goodness for automatic contributions and for 401k auto savings. This is the only I am able to maintain any sense of discipline.

first blog entry

This is my first entry in my new blog. I have enjoyed reading other's accounts of their struggles and successes regarding personal savings. I believe that starting to document my day to day efforts to grow my retirement nest egg will help me to become more disciplined in this pursuit. At least that is the concept behind this.