2011 was definitely not my best year for earning, especially compared to 2010 and even 2009. I let my work slack off with moving to Portland 2010 and getting married and other major life stuff.

So I was not able to save as much this year as I would have liked. I also started investing back into my current business more and so the last few months I’ve been going negative on my savings! Yikes. Hopefully only a few more months of that and I can start saving again.

Total Debt Jan 2012

(change from 2010 in parenthesis)

Student Loans: $7512.01 (-$841.99)
Mom Debt: $67,000 (-$20,000)
Total: $74,512.01 (-20,841.99)

What’s in store for 2012

I’m hoping that 2012 will be a breakout year for my business to really start earning well again.

Other than that life has been pretty darn good. It’s still weird for me sometimes going into a grocery store and not having to think so much about what it will cost to buy food.

I will never forget that feeling of dread I used to get when shopping. I think it’s a healthy amount now.

Hope your 2011 was fantastic!

The cat was obviously in danger, and had vomited on every surface in my house, was rapidly loosing weight and acting strangely. There was no two ways about it, he had to be seen. I took him to the emergency after-hours vet.  The cat needed $600 in X-rays, some fluids and two separate specialists to see him and say “that doesn’t look good.”  My final bill was $1,200 and the verdict was the recommendation of an emergency exploratory surgery: price tag $5,000 – in addition to the $1,200 I’d already paid. (Please note: the key word here is exploratory–they couldn’t tell the nature of the obstruction, so were just going to check and see what it was–if his diagnosis were more certain, I may have chosen a different route).

I explained our financial circumstances to the veterinarian, who was more understanding than I expected, and she explained that with the fluids that the cat had, it may be possible for him to pass the obstruction naturally. She gave me some pointers of what to watch for, how to know if he was getting worse, and what to do if it did. I agreed to stay home and watch, where I would decide if it resolved or if he needed to go in for surgery. It was a scary couple of days, but he got better without surgery.

But what if he needed surgery? I couldn’t swing the $5,000.  I did get a lower quote from another vet for $3,500, but still, not in my budget.  I’d charge it. I shouldn’t, but I would. (I really love my cat, even though he eats the kids’ Barbie shoes…)

It turns out there is help for people who need veterinary care for their pets but don’t have the funds.

1. Call your vet and ask about payment plans, or even post-dated checks.
2. Shop around for a lower rate, or a second opinion. (You may have to pay additional consultation fees, but the difference may be enough to make up for it–that would have been the case with my cat’s recommended surgery for sure!)
3. Contact the local Humane Society. Some offer low-cost vet care, others can refer you to options in your community.
4. Contact community animal control centers and local small-scale shelters. (South County Cats in my area offers spay-neuter coupons for free).
5. Check your community vet-tech programs or Veterinary Medicine colleges. Many offer treatment in their training facilities for a reduced rate.
6. Other nonprofit organization such as IMOM.Org offer fundraising and grant options for emergency medical care.
7. Offer to swap labor such as kennel cleaning, grooming, laundry or janitorial services with a local veterinarian to work off your bill.

IMAGE CREDIT:Freedigitalphotos.net Maggie Smith.

Betterment.com contacted me recently and wanted me to take a look at their new site. I’d usually just ignore the email, but their site looked so pretty I decided, what the heck, I’ll take their call.

So, they set me up with a sweet referral site of my own, and I setup my account last week. The registration was pretty easy, but they do require a deposit verification, which I just completed this morning. So, you can setup an account in about 3 days or so. Pretty painless for an online financial account.

must verify your bank account with two small deposits

One things I immediately like about Betterment is how easy on the eyes the site is. I don’t know if I’m just used to be blinded on most financial websites, but everything about their site is very muted, and I really like it. It makes it easy to focus on the data and not be distracted. But I’m a design nut (not that you’d know it from my site…).

Once you’ve verified your account, you can setup your asset allocation. Betterment lets you choose between two main buckets: stocks / bonds. Simple. If you’re looking to invest but don’t want to get into the nitty gritty details, and just want things to go on automatic…well, Betterment is probably a good fit for you.

I'm still avoiding stocks for now

For me, I’m still avoiding stocks, so I decided to invest my initial $250 deposit into all bonds. Yeah, I know it’s not recommended, but bite me, this is my account and it’s called “personal” finance for a reason. Plus, I’m a former trading addict…so yeah, it’s all bonds for me.

No stocks for you!

The neat thing with Betterment is you can compare your allocation and returns to others in your age and income range. Here’s something interesting I found….for my age group, the higher income demographic has been doing much better at investing on betterment than the lower income group:

Rich get richer last year?

Hmmm...why is this? Why underperformance last year?

Any guess on that stat? Very interesting.

Anywho, once you get all setup, there is a nice overview page, although since my $250 hasn’t deposited yet, you don’t see much, but you get the idea:

The "Overview" Screen. Nice.

The Fees

So, how exactly does Betterment make money? I mean, all these fancy pants graphs cost money to build and manage right? Well, of course, nothing in life is totally free. It depends on your account balance but for most of my audience here (and myself) it’s going to cost you 0.9%/year.

So why pay that fee? Well, part of the appeal is that you get access to some nice index funds that normally have like 100K account minimums. Also, Betterment will automatically rebalance your allocation if it falls outside some set guidelines.

So if you’re like, “I just want to invest, and know it’s going to rebalance correctly, and not have to worry about picking individual stocks/bonds (with say, Sharebuilder)…then Betterment might be a good fit for you.

I’ll keep you updated on the status of my 100% bond account of course.

To sign up for your own account: Click HERE

I’d like to know, why it is unacceptable for me to withhold paying my taxes beyond the due date, however, the IRS is at liberty to delay payment of a refund due indefinitely and without interest.  What’s up with that?

We’ve got a whomping refund due this year as a result of the outstanding adoption tax credit. This will pay off our only remaining debt—an adoption loan, plus fund our emergency fund, and maybe even get us started on our savings for our trip to Sudan.

But alas, no news.

Actually, we’ve had news a couple of times. “Where’s my Refund” told us that the check would be here by June 7^th, and then a few weeks later was changed to say we’d be receiving a letter asking for more information (apparently the 300 page return and documentation that we sent them was insufficient?).

The letter arrived, but said our return was under review and we would receive either our refund or a request for more documentation by July 7, at the earliest.
July! ::whine::

I want to be debt free! Now!

Looking at the bright side, I suppose if they keep dragging their feet on this, I might have it paid off the old fashioned way by the time the refund check gets here.

Sincerely,

A Very Impatient Taxpayer

Finalizing our youngest daughter's adoption on her fifth birthday.

Note: This is my family’s tax story, not to be confused with actual tax advice from a qualified professional.

I’ve mentioned before that we’re an adoptive family. We welcomed our “bundles of joy” to the family in 2005 (daughter age 7 from the USA, now 12.5) and in 2008 (daughter age 3 from Ethiopia, now 5.5).

There’s a cool little feature in the tax code that gives you a credit to help offset your adoption expenses.  When we adopted our first daughter, the credit amount was about $10,000 and with our second daughter, I think it was up to $12,000.  It doesn’t fully cover the cost of adoption, but offset 1/3-1/2 of costs in each case,and really made the process much easier–especially since we’d used a lot of debt to make these adoptions happen.

The problem is that if you don’t pay that much in taxes, you spread your tax credit over several years—each year, getting back everything you paid in, until such time that that you’ve run out of credit to take.

Except for this year. This year, the tax credit became refundable. This means that you can get back more than you paid in, or even go back, and amend prior year’s tax returns in order to take more of the standard deductions and roll more tax credit forward to this year.

Before the flame wars begin, let me be clear: I don’t agree with this particular bit of tax code. I think it must have been an accidental omission of language when this year’s tax code was written. The idea of giving families back more than they paid in, is outrageous and borderline on irresponsible federal spending.  This was an unexpected change in the tax rules, and we were not seeking handouts when we started this process.

With all of that said, I’m still filing to take advantage of it.

We re-filed four years worth of amended returns, each working out to be 136 pages long with full documentation –every receipt and statement and bill accounted for to justify our spending to go back and take standard deductions and roll forward more adoption tax credit.

The punchline:

The refund will be sufficient to pay off our last remaining debt (an adoption loan) and start our emergency fund, putting us 2-3 months ahead of our planned debt-free date.

Even though the check isn’t here yet, I feel 100 pounds lighter.

My thoughts feel clearer.

I feel free.  Like really, truly free.

The takeaway lessons to you are these:

1. Keep everything you ever use to  file your tax returns. One day the tax codes might change, and you’ll find yourself neck-deep in four-year-old receipts just wishing that you still had that medical bill or mileage record.

2. You too can stalk the IRS and see the status of your refund at Where’s My Refund? You’ll need to know the exact amount of your anticipated refund, your filing status and your social security number (for joint filers, use the social security number of the person whose name appears first on the return).

You can’t. That’s right, you can’t make more money. You can only earn more money. You aren’t the Treasury Department and you don’t get to print it up when you need it. Money must be earned.

Some of you will immediately respond with “semantics” because you like to argue and would rather argue than think. But there is much more to this statement than mere semantics. We are at a sad place where people seem to have forgotten that wealth at every level is earned at some level.

Too many people don’t understand that their money is a payment for a service rendered. They certainly don’t like facing the idea that the reason they don’t have much money is because they don’t offer much of a service, or don’t offer a service that is worth much.

Sadly, I have discovered that people don’t really want to earn more money . . . they just want to have more money. I guess the Money Fairy is supposed to slip into their bank account during the night and deposit money. Even the Tooth Fairy expects you to leave a tooth behind in exchange for the money. You give up the tooth and the Tooth Fairy gives up a little coinage. That’s how the Money Fairy works too: You give up a little work, a little effort, a little service and the Money Fairy shows up with a little money.

So if you want to have more money, read on.

2. How to have more money.

There are only two ways to have more money: increase income and/or decrease expenses. Hopefully a combination of both. This little principle works for government, business and individuals.

I’m not going to spend any time here explaining what you could do to increase your income, as that is up to you, your talents and the time available. And if you want to know how to decrease expenses just look at how you are spending your money and figure it out. It’s not hard to look at your spending to evaluate what you need, what you want and what you can live without. It’s all about priorities.

3. Set good priorities.

Your time, your energy and your money always go to what is important to you. When I was doing my A&E television show, Big Spender, I would spend ten minutes walking through someone’s house, another ten minutes looking at their checking account and then their credit card statements and I could tell exactly what their priorities in life were. I had a couple that spent 40% of their income on food. You can guess their size probably but it was more than that. Food was their obsession. It was their priority to the point that their bills and house and cars and even their appearance suffered. I had a father who spent more money on his three pack a day cigarette habit than he did on making sure his kid had a roof over his head and a car to ride in and milk in the refrigerator. His personal pleasure was more important than his family as evidenced by his spending. If you spend more money at the mall each month than you do on having a secure financial future, then looking cute if more important to you than being financially secure is.

Finances are like a good crime novel; if you want to know who is guilty, follow the money! Take a few minutes and evaluate your spending to see what your real priorities are and if yours need some realignment, then start now!

4. Get your mind right!

Each of these points I’ve made here are as much about how you think than anything else. It’s about getting your mind right. Begin to think in terms of earning money instead of magically making money. Get your mind wrapped around the simple idea of increasing income and decreasing expenses instead of easy way outs and get rich quick ideas. And most importantly get your mind right about what is really important to you. Is the temporary exhilaration of the moment more important than the long-term satisfaction that comes from investing your time, energy and money in things that really matter?

So here in the great Pacific Northwest, a common way to deal with this is to spend our winters at the movies.  We Northwesterners love the movies.

In the past twenty-three months of trying to get out of debt, I think I’ve been to the movies four times.  Typically on gift cards or part of somebody’s birthday celebration.

For those of you just starting out on the debt free journey, you’ll find insufficient entertainment funds to be a problem at some point or another. I promise.

Here’s 10 fun ideas that might help out.

1. Netflix. Get yourself lost in a series (or ten) that are major time sinks.  Glee, Eureka, Heroes, whatever your thing is (I happen to know I love anything that Netflix has tagged “quirky”). Extra budget credit if you cut your cable and go Netflix only. (I did!)
2. Board games. Yes, I’m serious. There’s some really good ones out there.  My family is currently hooked on Bananagrams and a few card games intended for families with math-learners at home. Sleeping Queens is a favorite math card game. We’ve also gone back to the Hoyle manual and learned a bunch more traditional card games.
3. Geocaching. If you haven’t tried this, it’s fun and practically free. Most modern mobile phones have some kind of GPS locator that can be used.  You’ll want your raingear (or snow gear) but if you’re like me, you can handle some weather in the name of adventure.
4. Search out free entertainment. Check the library, local universities, community arts newsletters and more for free lectures and exhibitions. Many local museums also have a “free first Tuesdays” or a “pay as you’re able” day.
5. Consider a membership. This year, we were gifted a family membership to a zoo and aquarium. This zoo has an outdoor zoo, large inside nature area, and aquarium and a very, very large playground.  We can pack a picnic lunch and make a day of it. Oh, and the parking is free.  It would have been well worth it if I’d just bought the memberships in the past.  I think in the future we’ll alternate park membership—this year the zoo and aquarium, next year the science center, etc. That way we won’t get too tired of any one park.
6. Church. Yes, I’m being serious.  As we’ve gotten more involved with our church, we’ve found many opportunities to serve and have fun. From making dinner for the homeless shelter, to enjoying discounted or free organ concerts, we’re enjoying our time and serving or community.
7. Volunteer. Walk dogs at the animal shelter, do laundry at the senior center or wash dishes for the soup kitchen. You’ll be surprised at what you learn from those around you. I’ve also found that it helps me to stop that feeling like I need to be keeping up with the people around me.  Being around those less fortunate than I helps me to be less of the spoiled brat that got me into this situation.
8. Build your side hustle. Build up some cash to get out of debt with.
9. Take a class. Free classes are available online at udemy.com.  Ever want to learn Welsh? Now’s your chance!
10. Mentor others. You won’t be doing this for long before you have others approaching you asking you to help them get out of debt.  Save some time to mentor friends and family in the ways of living debt free.

So I’m looking for an online checking account that I could use as my wife and I’s primary checking account. I’d prefer to have something with no fees and some sort of mobile deposit option. Here’s the options I’ve researched so far…

Online Checking Account Options

Bank	Rate	Cash Back	ATM Fees	Monthly Fee	Overdraft Fee	Bill Pay	Min. Deposit	Photo Deposit	Outgoing Wire	Link
Ally	0.50%	0%	$0. Unlimited refunds	$0	$0	Free	$0	No	$20	Visit Site
BankSimple	N/A	0%	N/A	$0	N/A	Free	N/A	Yes	N/A	Visit Site
Citibank Basic Checking	0.05%	0%	28,000. No refunds	$8		Free	$100	No	$18.75	Visit Site
E*Trade Max Rate	0.05%	0%	Refunds with 5K balance	$15	$5	Free	$1,000	No	$25	Visit Site
Everbank	0.51%	0%	No refunds	$0	$3/day	$8.95	$1,500	No	$25	Visit Site
ING Electric Checking	0.25%	0%	35,000. No refunds	$0	$0, 7.25% APR	Free	$1	No	$25	Visit Site
Nationwide Bank	0.10%	0%	4 Free, $1.50	$5	$25	Free	$500	No	$25	Visit Site
Perkstreet	0%	2%	27,000, $2	$0	$25	Free	$25	No	N/A	Visit Site
Schwab	0.25%	0%	6 free, $9 refunds.	$0		$7	$0.01	No	$25	Visit Site
USAA	0.10%	0%	10 Free, $15 refunds.	$0	$25	Free	$25	Yes	$20	Visit Site

*List of online checking accounts and their fees, advantages and disadvantages. Assumes a $1,500 daily balance, no direct deposit.

My Thoughts

• Ally – No ATM fees is awesome. Rate is decent. No overdraft fee with a linked savings account, nice.
• BankSimple – Looks really sweet, already signed up for waiting list
• Citibank – Pass
• E*Trade – Pass
• Everbank – No ATMs where I live. $8.95 fee unless
• ING Direct Electric Checking – Lots of ATM’s but no refunds on non-partner ATMs is a bummer
• Nationwide Bank – 3K to avoid $10 fee. No thanks.
• PerkStreet – Way too many restrictions for me. Doesn’t seem worth the hassle.
• USAA – Great customer service, nice mobile options for iPhone/Android
• Schwabb – Billpay restrictions no cool.

Any recommendations?

Image Credit: Freedigitalphotos.net

PFM, OFM and Online Banking— managing your finds online is all the rage these days, and if you want to get a handle on the big picture that is your money, you really should consider adding these to your personal finance repertoire. I’ve been using the Mint.com OFM now for about two years, and I’m a big fan.

Here’s how to navigate the world of online financial tools to find the one that is right for you.

Know the terms:

PFM: Personal Financial Management

OFM: Online Financial Management

Aggregator: pulls information from many sources to display them all in one place. (A non-aggregating platform would require a lot of data entry).

Know your style.

• Do you want to manage cashflow, or see the big picture or meet goals?  Depending on what works for you, you’ll have better luck with different platforms.
• Do you use obscure banks or tiny credit unions? Depending on the types of financial institutions you’re working with, you may be able to use a broad-scale aggregator or need a subscription-based system which can provide the level of customization that you need to add in those smaller financial institutions.
• Collect all of your account information – logins, passwords, etc to begin the process.

I’m pretty lazy about this, so I selected an aggregating financial management platform. I use Mint.com but there are several others out there. If you choose to use an aggregating platform, you’ll have to use all of your user IDs, passwords and security questions and answers to connect your accounts via the PFM platform you select.

What’s out there?

While not an exhaustive list, here are a few of the available platforms and their abilities and details.

*GreenSherpa is the only PFM platform that I am aware of which will manually add in a smaller bank or credit union for a user, in addition to the standard list of banks available to the back-end aggregating software that most PFM platforms use from a company called Yodlee.

What can a PFM do for you?

While a system like the envelope system can keep you on budget, a PFM can track long-term trends for you easily. For instance, in our household, we noticed that on average, our entertainment expenses were about $200 higher in the summer months. Why?  No AC in our house! We were always at the mall or the movies hiding out from the heat. As a result, we saved for two months and bought a freestanding air conditioner, which has kept the summer budgets in much better shape.

In Mint, I can track how much I spend on a category, or even with a particular vendor (a key measure of success for me is reducing the volume of transactions at a favorite local coffee vendor that rhymes with five-bucks).   I can also plan ahead for goals such as retirement, and funding the kids’ college and getting out of debt. It keeps me honest with myself and gives me a good picture of where I’ve been.

My Goals

I still start the budget out on paper every month, and then transfer it to Mint.com’s budget screen.  From there, I watch the green bars turn yellow as they approach their budgeted amount, and red as they hit it or go over.

With my husband and I working separate shifts, it also helps as a great way for us to check-in on the budget on days we can’t sit down and go over it. Since it matches our bank accounts by automatically aggregating everything, what you see is really what you get…or “got” as the case may be.

Are you using an online budgeting system? If so, which one? What do you like and dislike about it?  We’ve used mint.com for two years now and the only thing that still seems to be missing is cash-flow projections, though we really know that fairly well. It would be nice to be able to enter our income projection into it, and work from that (this is why we still budget on paper first, and then adjust budgets every month). Otherwise, we love it!

However, he is thinking of now buying new because,

“The interest rate on a new car is a lot lower, 1.9% vs 4 or 5%”

Now, my friend is one of the smartest people I know…but this is just terrible logic, right?

On a $40,000 loan, a 2 or 3% rate difference isn’t going to make a dent in even just the first year of depreciation on a new car.

I know if I ask for advice, everyone is going to scream, “Stupid! Go for the used car”….

but,

Are there ever any reasons to buy a new car? (I can think of a few…mostly not financial though!