Solar Update – April 2017

solar-panels

My favorite time of year has come! The days are longer, the snow seems to be gone for good, and birds are chirping on my way to work. Spring is upon us. I’ve always loved spring and summer, but now I have even more reasons to embrace the seasons. No, not just because the kids are out of school and there will be less traffic. Because it’s sun season! As you know, we got some solar panels last summer and we enjoyed many months of free electricity. It was truly a sad day when I had to pay for my first electric bill in months after the start of a frigid winter. These things will spoil you…

But the sun always shine eventually and, boy is it shining! My March 2017 electric bill was $38. We are retiring the heating for the season and thus expecting a much lower utility usage, until late June when we have to kick on the AC. Even then, I’m thinking that the 12-13 hours of sunlight that summers in New England graces us with should be sufficient to offset the worse of the damage. I might have reached the electric bill break even point. If so, I am looking forward to negative balances (I don’t say that very often) for many months to come so I can run my heat for free in November.

Let’s raise our glasses to sunny days, tax credits, and free electricity.

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No Rest for Dead Presidents: My Dollars aren’t Lazy Bastards

What an awful headline. But I’m not feeling particularly creative today so it will have to do.

money

In an introductory investment post, I liken dollars to employees who must work to make my life better. Money has a significant advantage over us when it comes to working and earning potential. We get tired, we need sleep, our loved ones want our attention. Money has none of those conflicts so what reason is there for it to not be working tirelessly to free you from the rat race? In my case, my little dead presidents’ only duty is to slave away to improve my quality of life. Here are some of the ways I make sure they aren’t being lazy little bastards.

I structure my bank accounts deliberately: Some days I can’t even keep track of how many accounts I have. But the complexities of both life and banking regulations do not allow me to simply have a checking and a savings. While I have a checking account for my every day use, that is the lowest yielding account there is. I can’t keep all my money in a checking account. However, the highest yielding bank account is a CD (learn more about CD’s here and here) and there are penalties for early withdrawals. Since emergencies do not wait for CDs to mature, I also have a money market account which provides me with quick access to cash at a much higher rate than a checking but without the potential for a penalty.

I only use cash back credit cards: Your bank is making money off your use of the card, shouldn’t you do the same? My credit card gives me 1.5% cash back on everything I buy and on a monthly basis, the bank runs some specials at various merchants where I get an additional 5-15% cash back. For example, my tail lights went out a few weeks ago. We have both an Auto Zone and an Advanced Auto Parts in our area. However, our credit card company was running a 10% cash back special at Advanced Auto Parts. When it was time for my husband to replace the tail lights, I told him to make sure he went there. He spent $40 and we ended up getting $4.60 back (10% special + the 1.5% we would normally get). Of course, since there is no annual fee and we pay the balance in full every month to avoid interest, we are being paid to use our card.

I get educated: It’s hard to make or save money when you don’t know what benefits or features are available to you. I’ve discussed my solar adventures in the past. We got thousands of dollars in rebates courtesy of the U.S. Government for our investment in solar panels (if you pay taxes, thank you!). Although we would have eventually taken the plunge, we might have missed the opportunity for our big tax credit if we waited too long. There is no guarantee that the program will be available indefinitely or even beyond 2020. We also learned about the energy credits which we are on track to receive quarterly for 10 years. While they are small amounts, they will be offsetting nearly half of the cost of the system. So not only did we get a 30% subsidy, we are also selling some of the credits we produce over a period of time to offset the remaining 70% of the cost. That does not include our actual energy savings which have been pretty substantial (my March 2017 electric bill was $38. I live in a 3,100 square foot house in New England).

I pay debt aggressively: Debt is slavery. It’s crippling because it’s expensive. The best way to handle debt is to get rid of it as quickly as possible. My student loan interest is 5.16%. It makes no sense for me to carry that balance for 10 years (standard repayment) if it’s costing me as much as a moderate investment portfolio would cost. So when I graduated from an MBA program with a balance of $47k and change, I was determine to get rid of it by any means necessary. Two years later, my balance is  $11,600. I have saved myself thousands in interest and the amount that I did have to pay, I have able to deduct it from my taxes. So I have used the money I have in the bank and the money I earned working both my regular job and real estate to cut my balance and reduce my interest.

I keep cash to a minimum: ‘Minimum’ is relative.  It doesn’t mean I only have $1,500 in the bank. I keep a fat emergency fund which correlates with my low risk appetite. The more risk adverse you are, the more money you want available to weather unpleasant unforeseen events. For me that number is a year’s worth of living expenses. Before the recession, the recommended amount was 3 months. After 2008, financial experts were recommending 6 months. I like to be cautious, maybe overly so, thus, I choose 12 months. Anything above that number is invested in various types of projects (or debt payments) that are meant to increase cash flow (or cut my interest expense).

Think of the ways you can make your money work for you. Idle funds are being eaten away by inflation and are not doing anything to improve your bottom line and get you closer to financial freedom. This is the value equivalent of throwing your money away.

Knowing the Investment Products

Investing can be overwhelming. The key is knowing what is available and where to start. There are many investment products. I will list them below and provide a high level overview of some of their features and inherent risks.

INVESTMENT TYPE FEATURES COMPANY BENEFITS BENEFITS RISKS
Stocks Capital appreciation & Dividend payments Capital & Market expansion Growth potential Volatility
Bonds Steady income & Capital preservation Capital investments Predictable returns Interest Rate Risk
Certificates of Deposits Steady income & Insured balances Low cost access to liquidity No risk Low returns
Real Estate Investment Trust Investing in commercial real estate Access to capital Diversification & real estate income Lack of transparency

De-clutter Challenge

are-you-up-for-the-challenge

In a previous post I briefly discussed money challenges and how people use them as extra motivators to either boost savings or pay down debt. Whether you’re saving for a vacation, a house or just want to improve your money management skills, you can never have too many tools or tricks at your disposal. This is why I encourage people to get creative about improving their financial behaviors. Not everyone gets as excited about personal finances as I do, so it doesn’t hurt to find a way to spice it up.

Today’s post is dedicated to the de-clutter challenge.

What is it: This challenge requires a little bit of elbow grease, but besides needing some motivation and patience, it  is not very difficult. We tend to acquire a lot of things over the years and the less we move the more we accumulate. Given that spring is in full swing, I think this timing is appropriate. Regardless of your financial goals, I think anyone can benefit from this activity.

This is spring cleaning with a purpose! Make a pile of everything you have not used in 12 months and separate the pile into 2 more categories. One is what you think you will use in the near future (maybe you broke your arm this winter and that’s why you haven’t used your skis, but you’ll be done with rehab soon and will be hitting the slopes for sure in 2018). The other pile what you don’t foresee yourself using, or anything that you have 2 of (newly weds, this is where you will shine! When I got married, I suddenly ended up with 2, if not 3, of everything. Seriously… I have 2 microwaves & 3 toasters). Take very good pictures from various angles (the more valuable, the better the pictures should be) and post your items on various sites for sale. I use Facebook, Amazon and Letgo. While I generally don’t mind ebay, I do not like that their listings expire every 7 days, making me a slave to continuously have to go back and relist the items.

Outcome: Results will vary, but the more items you have and the better the quality, the higher your revenue will be.

Variations: If you’ve already done that, try the same challenge with unused furniture. This will work well if you live in a college town where young students cannot always afford new furniture.

Why I like it: This is a great way to hit two birds with one stone.

If you love cash and your messy garage has been driving you crazy, this is the challenge for you.

“Two Seats have been Reserved in your Honor…”

wedding invite

I never liked that wording. I could never put my finger on why exactly but it’s not my cup of tea. I’m a fan of the more traditional “The honor of your presence is requested…” In part because I’m all about efficiency. The first one requires you to go in and note a number for every single card. We have enough details to attend to and this shouldn’t be one of them. However, this has also opened the door for people to decide your guest list by making executive decisions and inviting who they think you may have left out.

I received an RSVP card 2 days before the deadline from a husband and wife pair who decided that they were not satisfied with simply checking off the “Will Attend” box on the reply card. Instead they went back, scratched out the check mark and wrote “FOUR” on that line. Who are the other two people? I don’t know them. Maybe they wanted to invite their kids. It could be that 1 set of in-laws live with them. Hell, for all we know, their distant cousin Tim might be in town temporarily, on sabbatical from his Alaska fishing job and they decided to add him and his lady friend of the month to the invitation for a free night out, courtesy of my wallet.

For starters, I specifically addressed the invitation to Mr. and Mrs. Smith*. Not to The Smith Family. That may have gone over their heads, but it was a calculated move. Furthermore, while I think they have kids, their kids are at least high school aged. If they don’t attend my wedding, I’m certain they can watch themselves while mommy and daddy are away for a few hours since they only leave about 15-20 miles from my venue. Given the fact that I was paying per person for each guest, I think it was quite presumptuous of them to assume that I must host their children (or whoever, because frankly, I don’t even know who they intended to save the other 2 seats for) if I invite them. There was no attempt made to call me or ask if it was ok. Just a change to my invitation and my guest list count without my input/permission. Maybe they were hoping they could sneak it in without me noticing.

I set the card aside and I contacted them about this “evident mistake” they’ve made in “accidentally” sending a card back with the “incorrect number of guests” (hehe). I eventually heard back and was advised it was for their (as I suspected) teen aged children. Since I am a take-no-prisoners kind of person, I dealt with this the best way I know how: I sent an invitation for two. Not 3, not 4. TWO. I will either have 2 of them at the wedding or 0. They declined. The attendance of the Smith family was 0.

To be clear, Mr. and Mrs. Smith are distant family friends and were not invited because of their direct connection with me. They were invited as guests of my other family members. So they’re essentially guests of guests, inviting other guests. What do we call that? 3rd hand guests? Which makes the situation even more ridiculous.

People love to tests your limits. This is why I am a firm believer in setting boundaries and remaining consistent. Otherwise, we run the risk of putting people’s comfort so far ahead of our needs that we find ourselves in precarious circumstances that may impact us for a long time. If I allowed every couple to bring 2 additional guests, I would have had a 500-person guest list, a 6-figure wedding and a massive amount of debt.

We are expected to be responsible and spend only what we can afford. Bride and grooms are often criticized, by the very people they hosts, for having a lavish affair. Yet, they continue to insist on creating a situation where we overspend on the most expensive portion of the wedding. No thank you and be gone.

The only people invited are the ones listed on the invitation. If you’re a guest, please refrain from “suggesting” anyone else unless you’re writing me a check.

*Names have been changed to protect the guilty and etiquette violators.

Path to a Million: 2017 Q1

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This is my first update since the initial posts (announcing the start of the series and the pilot post). Things are going well, maybe better than I expected because a great thing happened: tax season! *eyeroll* (take some time to read this post about why it’s not a windfall you should rejoice in).

However, in my case I can rejoice just a little. Part of my big refund had less to do with my lax W4 allowances, but because we had some credits for energy efficient updates, primarily in the form of solar panels and we were able to use the cost of depreciation to offset our rental income.

Tax season came through for some serious debt reduction which had a snowball effect on our net worth. It will reduce our liability (once I get around to actually making the large payment) and free up cash that was normally going to satisfying my monthly student loan payments, to put towards investments/savings. This really does show the positive effects and importance of eliminating debt. Of course, we continued to pay down all our other obligations as well, but using our refund to all but eliminating student loans will make the most significant impact.

 

NW

 

Last quarter, I recorded my net worth at $369,922. This time, it’s $389,213, up $19,291. This represents an average increase of just under $6,500 every month. Although most of that is achieved by reducing debt, it’s a start, and a very good one. Debt plays significant role in our financial struggles and if we can consistently decrease our debts over time rather than add to them, we have the right attitudes and the necessary tools to build wealth, because the idea is that, once the debt is gone, we can use the same disciplined approach towards investing to gain even more speed towards financial independence.

*See Pilot post for more info on loans.

Frugal Fridays: Reception Details

This is my version of throw back Thursday: Some of the best finds from my own days of wedding planning.

reception

It’s the little expenses that creep up on us. That’s what every couple is told to watch out for. You budgeted $2,000 for your dress but the slip is $120, the bra is $80 and a veil is $300. Oh you think that garter is cute? That will be $30. It never ends. And that’s not just your dress. The reception costs will sneak up on you as well. Your keepsake box will run you $15 to $30. Don’t forget taxes, shipping for the things you can’t get in town, etc.

I couldn’t allow the unexpected to bust my budget, so I hunted for deals like a man lost in the Sahara hunts for water. Here are some of my deals:

1) Small gift bags for my favors: less than $70 for 100 from Amazon
2) Matching color tissue papers to stuff them: $9 for 100 from Amazon
3) ‘Mr. & Mrs.’ wood chair hangers: $15 (50% off sale) from Amazon (I never actually used those as I forgot I bought them!)
4) Personalized hanger* – $3.99 (+$10 for shipping). This was a one-day sale. These are usually $19.99-$25.99. from Etsy

*All items except for the hanger were shipped for free, saving me a lot of money as well.