Our retirement accounts are rebounding nicely as is our taxable account. Granted we are still spending our other money but it's nice to see retirement heading back up. It peaked June 2015 at $575k and now it's back up to $545k.
Actually all accounts are up that are invested. It helps considering we're still a few months away from income. It's april and DH thinks maybe a job if he's lucky by July. His program ends May 6th and they told him 5 weeks to get a job just due to nature of interviews and offers. I'm praying he lands one he likes quickly. While the housing market is still on fire, I'm glad we didn't buy last year because of this uncertainty. I'm also becoming more certain we'll be renting awhile. Hope things continue as planned.
Archive for March, 2016
Our retirement accounts are rebounding nicely as is our taxable account. Granted we are still spending our other money but it's nice to see retirement heading back up. It peaked June 2015 at $575k and now it's back up to $545k.
Seriously I wrote a long piece that got lost about why 401ks fail. They fail because people don't save in them. Think I'm joking? I think right now people are talking about how difficult retirement is. But the reality of the lack of pensions hasn't even started to hit. When? I think when the first of Generation X starts to retire we'll see truly what the 401k is worth. I think the majority of Baby Boomers still had pension. I don't think that's the case for Generation X (I'm one) and very few of my friends have pensions.
So the other day at lunch with my DK2 preschool friends and their moms the talk turned to retirement savings. A few women asked about talking to a financial advisor. They were wondering about retirement savings. These women were asking about Roth IRAs and investing 401k. I guess its good they were asking. But seriously?
They went and bought expensive homes and cars (denali, audi, benz, infiniti) but are now asking about retirement? I think we're in big trouble if people who supposedly are "educated" have no idea about retirement savings. I wanted to hit my hit head on the table because more than a few said "oh I leave it to my husband." Um okay, chances are hubby is as clueless as the wife. I don't think people who have no idea how to save or invest probably haven't been doing it.
And no I did not open my mouth, I couldn't. What could I say? That you should have thought about trying to save for retirement before you bought a house so it could fit in the budget? That it should work out before and not after when you put it so low on the priority list that many are in their 30s!!! without any or minimal. I haven't meet anyone I would guess has 6 figures in retirement and they've had pretty good incomes for a long time.
But seriously have you ever spoken up in a conversation when people begin talking about retirement and saving? I find that now that DH and I aren't working I shut my mouth even more. I've never been asked "how are you affording to live?" Only two people we've meet has asked me did you inherit a lot of money or the lotto? Nope. But no one has ever assumed or asked if I were mustachian and did we save a lot? Do we live frugally?
I think soon enough the real problem of 401ks and people not saving retirement will become apparent when the majority of retirees lack a pension. I don't think it's occured yet because many boomers have pensions, but it will.
Have you ever told anyone you were on a budget? Or how to save for retirement?
I won $41 on my kickstarter diet bet. I did lose around 5% instead of just the 4% needed. I'm very happy to have lost the weight more than the money. The money helped but losing weight and getting healthier was a bigger motivation. Anyway I'm debating signing on to do the long term weight loss. This is going to take awhile I think to lose all the weight i want.
I haven't done my easter baskets or stuffed eggs and it's friday night. UGGH. But Happy Easter! We are doing an egg hunt and easter basket first ever at our house. We've gone to a friend's house to easter egg hunt but never in our own yard. We are also having my nephew over for prime rib roast. So nice we are doing our own thing with family. Makes it feel so homey. We're doing our own tradition. Before it was just us and people did their own family thing or it's sunday night. Now we have our own family thing.
This week it also started to click. I went to a friend's house for lunch on Wednesday and while chatting and kids playing it clicked. I felt like I was fitting in and making friends. I mentioned that it's a struggle to make new friends as we move and get older. That I can't expect friendships to sprout up overnight. Well with these women we've been seeing each other weekly since September with our kids in group speech every Wednesday. And here we are March and I felt comfortable and a click.
I feel like we are getting into a groove. Plus it helps spring is gorgeous. Did I mention how pretty and sunny it is? Did I mention how the days are suddenly longer and the sun doesn't seem to go down until 7 pm? That getting out is amazing?
I still pinch myself it's a dream. That a year ago yes I was stuck in seasonal depression mode. I had it every winter. And yes the days were shorter in January here. But at the same time my steps were lighter without snow and shoveling. My hands, head, and neck were warmer without gloves, hat, and scarf. I am wearing short sleeves already.
It's just a very nice time of year and I can't wait for summer. I know I shouldn't gush over just the scenery, and for everyone who says moving is hard, it is. But it does get easier and better. And sometimes just looking at the positives makes it easier. FWIW, where I was I made LOTS of great friends who made life bearable. But every year I could feel the seasons pulling me down.
A house near to us went on the market for $868k for 4 bd/2.5 ba, 3028 sq ft with a 4400 sq ft lot. It went on 3/23/16. The craziness? It was bought last year 2/20/15, yes 13 months ago for $789.9k and no work has been done.
The house was built in 2012 and sold 6/1/12 for $669.9k. Then sold less than 3 years later for $100k more, but now in 13 months the sellers are asking $78k more than they paid or 10% appreciation. How much longer will this type of appreciation last?
The sellers are moving back to where they are from. They bought because of course you make money and renting is a waste. So if we had bought last summer before DH quit, with our cash and credit would we have made 10% in 6 months? I think maybe.
I'm sitting here pondering because we planned on looking this summer. But I'm really nervous this is going to turn ugly. That we'll again buy at the peak of the market in a market we don't fully understand.
Something interesting I found about our in general spending habits. We do often times spend money daily. But we really don't shop and buy stuff other than groceries. We do have many days of running out to the store for a sale or fresh fruit or veggies. I've found that it's almost every other day. But at the same time since we've moved and had no income we've really curbed eating out. Before I would say we ate out 3-4x/week. Usually one night during the week, Saturday lunch/dinner and Sunday Lunch or Friday dinner. So our eating out was running $200-300/month if not more and not counting special occasions.
Now looking at our spending, yes we do spend between $650-750/month on groceries. But our eating out is less than $100/month. This month we've eaten out $10 so far and haven't any plans to eat out the rest of the month though it might happen. Plus our grocery bill is weirdly under $500 to date and we are trying to clear the freezer and pantry so I predict we'll be under $600 for with 7 days to go. We've already bought the rib roast for Sunday which will a few days of leftovers.
So we talking with friends who have a deep freezer because they hunt. DH and I meet quite a few people now who hunt and I grew up eating a lot of hunted meat (smoked) and fresh fish. I miss it but DH doesn't hunt and we've not really had the opportunity to fish. But now we're in a place where it might be possible. We also live in a house with a garage. So buying a deep freezer after we buy a house is something we're discussing.
Even if we don't hunt (i'm interested in Elk), I just got elk burgers from friends and deer tenderloin from other friends, I was thinking maybe we could go an buy a quarter cow. It might be cheaper and something worth finally investing in.
What are people's thoughts about deep freezers? Do you have one and what do you use it for? Do you hunt?
I think of this year as more of a sabbatical for us than early retirement. We certainly don't have enough to retire now based on where we want to live. We might if we moved somewhere else. We might if we were heavy into real estate investing. But honestly that was never the plan. The plan was always to move and change careers and have a fresh start. Early retirement is probably still in the cards, I'll know more in 12 more weeks, but the move did hurt us financially but at the same time I think it'll pay dividends in our lifestyle.
But the hardest part of the test? The health insurance. First time in our adult lives we've been on our own plan. We've always had employer provided coverage and it's been generous. We've always not worried about what was and wasn't covered. Perhaps it wasn't clear but we had a "general" idea and felt entitled to call and ask.
Now? Well now we buy our own insurance, for which I am eternally grateful that we can even buy it. If not for Obamacare my DH would be uninsured and my kids would have pre-exisiting conditions of asthma and allergies. I would likely be on the fence as to weather I'd be insurable and I'd have a maternity rider probably and be very expensive. As it is we are on a HDHP of $6500 per person and $13k per family deductible health insurance plan. This plan basically covers catastrophic incidents but everything else we self-insure. It still costs us $700/month just to cover ourselves. We don't have dental insurance or vision.
Fortunately for us we've been knock on wood extremely healthy so far during our tenure. My DK have seen the dr for a flu shot and annual exam. They've gone to the dentist once in November and we paid OOP for that and refused x-rays but it still cost us $200/per kid. And an office visit has been $150. We also had an ER visit for stitches (DK1 head hit a post and needed 4 stitches) but I'm unsure as of yet the cost, I assume $500, waiting for my bill in the mail.
I've been to the dentist for the cost of $300 for cleaning and x-rays they insisted. My DH got in under the gun in August and has decided he won't go until he gets a job since once a year according to his last dentist was more than enough. He's got perfect teeth with no cavities or problems. Both of us did annual exams over the summer before moving and now we're about to come due.
What I really need is more birth control. I hate the idea of paying and am considering actually planned parenthood. Truth is that I had filled all our prescriptions for multiple 3 month refills before we lost our prescription coverage for both birth control and asthma. If we had to cover it now the asthma inhalers it would be $200 a month. Fortunately before we lost prescription coverage it was $20/month.
So while our monthly spending is pretty curbed right now I think the biggest factor in "early retirement" is the difficulties not having health insurance as a group plan. Being covered by an employer makes the plans much more reasonable and better coverage than can be bought as an individual.
Right now it looks like DH will be done at the end of April. He'll take sometime to pick a job but will likely start we're thinking July 2016. Basically we'll have gone a 10 months without employer provided health insurance or a paycheck. This experience has definitely made it eye opening how much money we'd need to retire early. Of course the plan was always to be Financial Independent by age 50 and retire by 55. Now I'm not so sure if we would want to do that. I'm worried that at 55 we might have enough to "retire" but what happens if we're back on this crappy health insurance? And worried about more prescriptions or ailments that come with age?
This experience has definitely brought to the forefront the idea that its not easy to retire early. Mr Money Mustaches buys his own health insurance now for $237/month for a family of 3. I can't speak for why it's so cheap but I will say that we're a healthy family of four and it's costing us $700/month for a plan that has higher deductible levels. So there is a lot of variance in "needs" when budgeting for early retirement. Plus his annual medical spending appears to be much lower than ours.
I'm just annoyed with irresponsible pet owners. I have to complain here because it real life I don't know what to do. I was walking DK2 in a stroller for nap yesterday and I saw a neighbor walking with her two dogs let them take a "dump" and not pick it up. I was shocked. In case it's not recalled I have a dog and always walk and pick up his leftovers. But what do you do? Confront this person just walking away? I felt not because sometimes that's me. Sometimes I have forgotten a bag and will come back and pick it up. But I think this woman didn't forget a bag, rather I don't think she ever does it. People who forget a bag have certain demeanor when leaving it behind. Besides the fact in our neighborhood there are SIGNS with dog litter bags to pick up after your dog!
I am annoyed I guess because recently I've found three piles of dog leftovers on my front yard and it's obviously a very large dog versus my small dog. Really? You can't be bothered to pick up after your dog on someone else's yard?
Then as I've mentioned this to a friend, she runs a doggy daycare, she says there are a lot of rotten owners out there. She ended up recently with a 3rd dog, a bull mastiff no less, because the owner dropped the dog off and refused to come back and pick it up. You'd think this was a one time thing? NOPE. This is the 6th dog she's had to rehome because owners come and drop their dogs off at her daycare and treat it like a shelter. Fortunately she's been able to place the dogs with other owners or her staff, but still the nerve and irresponsibility of these dog owners. She questions how they can afford to buy a "pure" bred dog and then pay for daycare for awhile then decide to just leave it behind for someone else to take care off.
Sorry for the rant. I'm just annoyed by owners I question their responsibility. Ugh.
I am still in my gym conundrum and testing out gyms. But something I've noticed for a long time that women are wearing a lot of workout clothes outside of the gym. That leggings are the "norm". Okay I am terrible about fashion and absolutely have no fashion sense. But I try to not do anything atrocious.
I thought you weren't supposed to be wearing these exercise leggings outside of working out because they are rather clingy and sheer? That the words "camel toe" came about because of these leggings? Or that Lulu CEO got into trouble for saying his legging weren't sheer people were too fat. So no leggings because it shows off the fat.
So did I miss the memo? Is it becoming acceptable and the norm to run around in yoga/exercise pants? Or are we still supposed to only wear them if we wear tops that cover flashing people?
Don't get me wrong I find them very comfortable but I'm uncomfortable with the idea of flashing people.
My neighbor's house is for sale. Very nice place and I'm sure there will be a bidding war. She's selling it because they want to cash out their equity and move to a cheaper neighborhood with a longer commute. That way instead of having bought their house for $420k with 5% down payment, she can have a bigger home, longer commute but put down 20% or more down payment depending on how much they make on the sale of the home.
The problem? EVERYONE (not me) has been telling them to just buy more home. She said they are doing it because they aren't able to live on her husband's paycheck and are dependent for her to work and cover the bills. Her husband pointed out if they sell and buy with more money down they can live on one income and she doesn't have to work and can stay home with the kids if she wanted. She works part-time as a nurse and makes good money. She isn't sure if she wants to stay at home full time but is sure she wants to live on one income.
She was telling me and asking how the heck we were living with no income. I told her the truth. We saved a lot of money and live cheaply. We've always lived on one income and I think that it's the way to go in today's society.
She said that coworkers, family, even their parents suggest buying more house with the equity they are getting. No one is suggesting they "downsize" and move somewhere cheaper. But she feels that not having the pressure to work and knowing they can afford the car payments, student loans, and mortgage on just her husband's income would be huge. I agreed that is would be incredible to do it. I did say I hate long commutes, but I can see the enormous benefit of living on one income.
What astounded me was when she said they were doing this to "downsize"spending (I mean really I'm not sure most on this board would say they could afford their house in the first place having put down only 5%), makes financial sense. Yet people are encouraging them, friends, relatives, real estate agent, to upsize in price of the home and spend money. Keep the payment the same but go up since you have so much more to put down.
Seems logical but not when the budget was tight to begin with. I think people go a bit crazy with mortgages and student loans. I think that MANY people justify both a larger mortgage and large student loans as "good" debt and don't really look at the big picture. They don't see how tight it could make a budget. Or how it could be useful to try to stay within certain income parameters. People who care about you actually encourage in some ways overspending. $50k student loans? Sure you'll get a job. Housing at 35%? Sure your income will grow.
I find it astonishing because lenders approve the loans and your friends and family support the idea.
I am starting to think we preach financial responsibility. But if our own friends and family encourage "good" debt and stretching ourselves financially, how can people be financially responsible? How can you learn if everyone else is doing the same? Or egging you on?
Okay everyone talks about how to pick real estate and we touched on bad house in good neighborhood versus great house in bad. But what factors are involved? What's important in buying a house?
1. Condo versus house? Let's assume you can't afford a house in your chosen neighborhood but you can buy a condo. Which is it? Condo let's say is closer to work but house is farther way? How important is a commute?
2. If you did buy a condo what if you can't afford a 2 bd but only 1 bd?
3. If you could buy a house in your chosen neighborhood what if it were only 2 bedrooms instead of 3 bedrooms?
4. What if the house only has 1 bathroom? It also depends if there is a logical area to add a second bathroom. Or is a second bathroom unnecessary?
5. Do you buy a house in the "right" neighborhood but on a busy road? What if it's not in a neighborhood but a commuting traveled road?
6. Do you buy a home with a bad layout and not easily fixable due to constrained lot size?
7. Is it ever worth to buy a home fixed up or better to always buy a fixer?
8. Is it worth looking for a bigger lot with an older house or newer house on a smaller lot?
9. What about buying next to places likes a little strip mall or gas station? It's nice to have things but at the same time is it less desirable to be next to things?
I heard a quote from my old realtor. The time to buy a house and move up in size/price/location is during a recession. Yes you'll sell your house at a loss but you get a better deal. But the time to sell your house is during a boom. Then all the "negative" faults of your house, too small, one bathroom, busy road is more likely to be overlooked by the buyer and bought without question.
What do you think?
I don't watch much cable, I do watch television but only streaming. I've never watched any reality tv show. I sometimes catch the voice auditions but nothing else. I do admit to reading star, US weekly, in touch in line grocery shopping or target. That is really my secret shame (I love reading the trashy mags I don't know why).
But seriously I have to look up most reality tv stars and see what they were on and who they are. I never watched Keeping up with the Kardashians, but I have to ask "who watches that crap?" Why are they still on and around? All I ever see on msn or cnn or any news sites is Kanye West and Kim Kardashian story. And the stories about them are TERRIBLE.
They are terrible people no matter how much money they make and what they are worth. Prior to this lastest twitter spat, I thought, "they must be doing this for rating and money." Now I really think they have no idea what sort of horrible people they are and completely delusional. Worse yet is how our society worships them and allows them to be constantly covered. I cringed reading Kanye West was $53 million in debt and wondered how the hell did that happen? And then Kim K posts nude selfies and thinks it's great and wants adulation? I just wonder why people will get tired of them, I am praying soon.
When will we get rid of reality shows and these horrible people who become "reality tv stars?" Do you watch any of these shows?
So what is the struggle with dieting? Well the truth is it's hard to waste food. Before this "change" in lifestyle I would usually eat my kids leftovers. But then now I have to throw it away. I can keep some stuff, but today we went out to eat Froyo during "happy hour" and you get a cup for $2. So I got a cup for each kid and neither child finished. Since we were out I previously might have finished the leftovers but now I have to avoid all leftovers.
Some food when at home I can save. But otherwise it's not so easy. I find it difficult now because I'm eating very planned calories. So even at home it's hard. It's so easy to justify finishing off the leftovers instead of wasting them. But now I just can't.
Perhaps one day but something people never tell you is how not "wasting" food and being "frugal" can cause you to gain instead of losing weight.
Are we in a housing bubble? So here is some quick facts. Our neighbors are about to list their 4/2.5 bath, 2006 sq ft house for $630k. They think it'll go in a bidding war for much higher $650k+, they are probably right. They bought it in 2012 for $420k and have sunk in $50k probably. She said they only put down 5% and most people they knew were putting 5% or less down. So where are these tighter lending standards?
However the house next door to us also bought 7/2015 last year 4bd/2.5ba, 2006 sq ft for $571k. So in 8 months the same size house, same location, same condition has increased in $60k if not $80k more? That means it's increased 10.5% in 8 months. Right now since 2012 my neighbor's house has increase 50% in 4 years if not more with 10.5% coming in less than 8 months. This seems like a lot.
My neighbor is selling to cash out equity and put down 20% on their next house. Yes she said in 2012 they put down 5% and many people they know are putting down 5% or 0%. When apparently it's supposed to have gotten "tougher to qualify for mortgages." So let's assume people are putting 0% to make calculations easier.
At $400k @ 4% = $1910/month mortgage (they pay $2500 PITI we're going to use $600 TI/month), with a DTI 25% = $10k/month income or $120k.
Last year the PITI for $570k $2721 mortgage + $600 TI = $3321 PITI, with a DTI 25% = $13,284 ($160k gross salary).
Now at $630k = $3008 mortgage + $600 TI = $3608 PITI DTI 25% = $14,432/month ($173k gross salary).
If we go on the presumption that it will grow by the end of this year in 8 months 10% the cost of the same house will be $700k = $3342 mortgage + $600 TI = $3942/month PITI, DTI 25% = $15,768/month income ($189k gross income).
So I guess I can see how housing affordability can go from $120k combined income to $189k in 4 years but it seems like an awful lot be able to afford the same home. Incomes I doubt have grown that much. The needed income had to have risen 57.5% in 4 years to stay at the same level of affordability.
Either people are stretching more. Incomes have increased more. Or potentially we are in a bubble, but when will it pop? Or will it never pop and this is the new level of home prices for the area and it might just stay flat for 10 years until incomes catch up?
I think it might level off and not go much higher because I think incomes need to catch up. I believe it might not drop to 2012 prices, it might not drop at all, but it might stay steady until people are able to catch up affordability. Of course this assumes that nothing during this period causes people to lose income.
I'm nervous about buying. I'm also unsure how long to sit out of the housing market because it's nice to stay put and know your housing expenses. My DH is of the opinion that if you are ready to buy then buy. But what is nothing you like comes on? I wonder if we should maybe rent? Rents are not keeping up with home prices but it would mean moving.
What do you think is going to happen?
I forgot to mention that I'm doing the diet bet. I needed a kick in the butt to get back on track with eating right and exercise. UGH. I started on monday. Personally I've always struggled with eating right over exercising. I actually find it relaxing to carve out time to exercise. Even with kids I used to pay $80/month and go to the YMCA daily to work out with free childcare.
Right now I'm doing insanity at home but I don't find it as motivating as doing classes for a hour at the gym. I also find it harder to work out with the kids around though I do get up at 6 am before everyone and work out. I sort of like the routine of a gym and class so I'm thinking about joining a gym again. My DH is pushing yes because actually I'm one of those people who even use it on the weekend. I find I need the destressor.
Now to win this diet bet however I can't just workout and lose 10 lbs. I have to lose the weight and keep it off. I have all my baby weight I never loss from baby #1 (whose 6 now OMG!) I didn't gain with baby #2 but those 25 lbs well they are still around. Time to get serious about losing weight.
I started on Monday. Anyone else doing diet bet? Do you continually do kickstarter or do you move onto the transformer? Anyone win a maintainer?
Also I'm considering the 24hr fitness pass from costco for $649 for 24 months. Unfortunately it's a super sport club next to me so I have to buy the $649. If we lived elsewhere it would be $399 for 2 years and a much better price. But at $27/month I am thinking I might buy it because it works out to 1 class a week for $9 which is what people pay to work out at Barre, hot yoga, or pilates. But the childcare is $24.99/month 1 child and $19.99/month 2 kids. That would bring up the cost for 1 child to around $50/month or $6 a drop off. I'm debating whether it's worth the investment. What do you think?