1 Million Dollars

Friday, November 28, 2014

Pay for living expenses with your 529

I just discovered something very exciting.  Did you know that you don't have to live on campus to use your 529 money toward living expenses?  Me either.  You can't claim more than the school says should be spent for living expenses and some vary that based on where you live, but my school does not.  They allow for $12,000 per year or $1000/month to be used towards living expenses.  Now, the only reason to use this is if you live in a state where there tax deduction for 529s or if the only other option is saving in a taxable account.  Always max out your Roth IRA before this.  Luckily I do live in such a state.  NY allows $5000 to be deducted from your taxes per person.  So a couple can deduct $10,000.

So, I am putting $833.33 every month into my 529 come January and pulling out $1000 every month until it is gone or I hit $12,000.  Since I did not know about this until now, I am putting $1000 in both November and December. Since at my top tax bracket in NY state I pay 5.25%, each $1000 will save me $52.50 in taxes.  How crazy is that.  So I'll save $105 this year and $525 in 2015.  Just for opening a 529 account and funneling money through.  The money sits the equivalent of money money market account so I won't make much but I won't risk the money I need. 

So check if your state allows you to do this.  If you are dependent, make sure they allow you to do this or give the information to your parents.  If so, see how much you save. 

Get your discount target gift cards online!

I was very excited to see target gift cards 10% off today from 6am-12pm in store.  I normally buy them for 3.5% off at cardpool, so that was really good deal.  Because of our normal spending of $300/year I decided to swing by my close target and grab them. But then I was told something great! You can buy them on target.com.   This is better because you don't have to waste gas or time out on black friday.  In addition, if you have a discover or chase freedom card online purchases are 5% back.  In store my best cash back offer is 2%.  In total, I saved over $20 for next years spending.  That is worth a few minutes time for me.  How about you?

So for you east coast people, you online have another hour.  If you shop at target, go get this deal! 

Thursday, November 20, 2014

Expenses During Buffalo's Snowageddon and Why They Pale Against the Real Fiscal Armageddon

People talk about the cost of working, and how you only need to save 70-80% of your income because your costs will go down when you retire.  This might be true for some people, but I don't think it is true for us.  We had a perfect example this week when we were stuck at home during a set of storms that hit the buffalo area.

Since we are home the food we are making is a little higher end (the meat store was open one of those days), the stove is on for longer, the electricity is on more and the heat sure is a lot higher.  Granted I am trying to do work while at home (and I do have a kid that makes that difficult) but I think most of the costs would be about the same.

However, I do have to admit I am not spending gas to get to work, which does save some money.  In this case both my husband and I will be working during the weekend to make the lost days up but if we were retired, we obviously would not.  That is about a $26 saving.  Granted my husband drives an hour each way for post-doc, five months ago that cost would have just be $6.  But let's go with $26.   Are the increase costs of staying home add up to $26?

The meat store was an increase of $5, plus some meals we normal eat on the weekends will have to be replaced for probably another $3.  But that is just $8, surely we did not spend another $18 just on utilities?  And honestly I am not sure.  I have not found an easy was of comparing utilities except for assume a 3% decrease of your costs by for every degree you lower the thermostat.   But that is monthly, plus we are not increase it for the entire 24 hour period, just while we are up. And that does not include water or electricity increases which I admit are very much increases while we are home.  Nor does it include the wear and tear of items at home.  Using my computer at home is likely to decrease years the computer useful for.  Same goes for the oven or microwave.  When I think about it, I don't think all of these expenses add up to $18, but there is a big expense I did not cover.

Health insurance
I spend a little over $140 a month for my share of health insurance, pre-tax.  My employer, well now, they send over $550 a month.  So really, I need an additional $550 plus the cost of taxes to cover my health insurance.  I know some people say, well what the ACA?  I am not holding my breath.  We might get something close but GOP won this last election and they want to get rid of it.  If the democrats don't come out in two years, we will have a republican president and congress and then ACA will be gone.  I can't trust democrats to get out and vote, because they don't.  So, I go with COBRA when I looking at expenses.

So, if compare your "working costs" against COBRA, I'm pretty sure you are going to come out ahead by working.  So please let my Smowmadegon encourage you to save and expect to spend more than what you live on now, because health insurance is not getting cheaper and we are just getting older. 

Tuesday, November 18, 2014

Paying Off My Husband's Grad Student Loans! How did we do it, and why did we have them?

My husband is within a month of the end of his grace period for his grad student loans and we are able to pay them all OFF!!!  A bill that would cost us $195 a month for 10 years will be gone with one click.  How did we do this?  Well, to learn that we have to go way back, to 2008.

DH and I were not married then but dating.  And we just started to talk money.  I found out he had $25,000 in credit card debt.  However, no student loan debt.  But, you know if you have to pick one, student loans can be better than credit card debt (at least the interest rate).  So we sat down and talked and came to a plan.  He decide to make some major cuts, and we changed much of our dating behavior.  He also increased the hours he worked.  Then, he called every credit card up and ask for a lower rate and for most of them, he got it!  But not all.  So next, he started looking a student loans.  I had just gotten a student loan for my last year of college, from discover.  They had no origination fees and because they were subsidized no interest for the year.  He jumped on it and moved $5500 of credit card debt into student loan debt.

Then, as he starting pay the debt down the 0% offers came rolling in.  He moved the rest of his debt to 0% offers (with 3% fees) and continued to pay the debt down.  Life went on.  We both applied to grad school and he got in but I did not.  He proposed and I agreed to go with him to buffalo.  At this time, the 10% tax credit for buying a house, up to $8000 was into effect. We started looking at rent, and house costs and realized we could buy a duplex and spend the same on the mortgage as we would for rent.  But with what down payment?  I had never spent the $5500 student loan I had, plus I had set aside $7000 in my traditional IRA for grad school so I could cover a small downpayment and lucky for us, duplexes in buffalo were going for $60,000-80,000.  We could afford a small one.

But, that was great and all but what about getting to buffalo.  That would cost $3000 plus renting while we were finding a place.  We had the summer to make this money up, plus we needed another $3000 for closing costs.

So we went to work.  We both picked up extra shifts at work plus he picked up a second job.  We cut the budget further and planned a tight budget for when we got to buffalo.  By the end of the summer, we had all the money we needed plus his debt was down to $5500 in student loans and a little less than $9000 in credit card debt.

We camped out as we drove across the country, living mostly out of food bought in the grocery store (which we stored in a cooler given to us by my mother).  We did get a couple treats but that was it.  We landed in buffalo, found a place to rent and off we went to find our new home.  It took the entire semester but we found a place that we bought for $60500 and closing was covered by the seller.  That meant our $3000 could be used as an EF.  And as soon as we closed DH moved the credit card debt to student loans ($8500), again being subsidized they charged no interest.

I was still trying to get into grad school, but having no success.  We started fixing up the duplex and I looked for a job.  I found a server job, making decent money ($20,000 for the year) that I used to pay for our wedding, and pay for the classes I was taking, to increase my chances of getting in the Master's program.  We finally found tenants and that money went into our Roth IRAs.  We got married as I kept beating my head into the wall of grad school admittance and finally got in.

However, beginning in a Master's program I received no aid and this was just when we found out that graduate students would lose subsidized loans.  So to cover me, DH took out another year of subsidized student loans ($8500), just in case.  However, I had enough from working that we were ok.  Then we found out I was pregnant.  Kind of scary, but we were not going to let it stop us.

We ended up using the rental money for daycare, plus we did get some tax aid.  But all through this, the $8500 sat with our $3000 EF in our high yield checking, growing and growing.    We kept the budget tight and soldered on.  Then something wonderful happened, I got into the PhD program and with that came a $25,000 annual salary.
We saved 15% of our income but the rest was split between daycare and debt pay-off.  Now, being in the program 11 months, we have enough to pay off both student loans, and yet still keep that $3000 EF.   We were lucky to get all of these breaks but we took advantage of them as they came along and work hard to get there.  And the reward is coming.  One less debt over our shoulders by the end of the month.

Saturday, November 15, 2014

Three Weeks of Groceries, what a spendy time!

We overspent so much this last three weeks!  We spent $283.93, a budget busting $85.93 more than budget!  That is more than a weeks worth of food.  What did we spend it on?  Well we spent $48.13 on chicken because the meat store had a sale for 1.49/lb (.50 cheaper than the grocery store), but we had to buy 30lbs.  And we had bought a couple splurge items when Tops Market had some major sales and then we stocked up. 

So what are we going to do?  We are $357.28 over our spending with seven weeks to go and Thanksgiving and Christmas shopping is in there.  There is no way I can spend $14.96 a week.  However, we won't have to buy chicken for the rest of the year (and probably even longer) so I am going to take this as alright.  We will end up dipping into our EF to cover this which sucks but that is life. 

So what is the plan?  Because we know we are buying our turkey next week at Top's, we decide to not doing major shopping this week.  We are hitting wegmans for some basics on Sunday (which looks to cost less than $40) and then next Saturday will buy our turkey for .48/lb but we need to spend $25 more to get that price, so we will probably do the thanksgiving spending there and spend about $30-40 that week.  The week after we will see what we have left over from thanksgiving and go from there.  We may not be able to make up all of this money but we can do some fixes.

One of the best things I have learned from this is to change things up when they don't work.  It may work great one week but not work the next.  Don't be dogmatic, and you can take on anything!

Tuesday, November 11, 2014

Get out of the dorm! Save money by moving.

The semester starting to wind down and exams, papers and craziness is starting to ramp up.  But take a few minutes to see if you could move out of the dorms and save some money.  Depending on where you are, living in the dorms may be cheaper than renting a room or much, much more expensive.  How do you decide?

Well you need to add up all the costs associated with each.  Sometimes when you rent, utilities are included, like the dorms but often if you rent directly from a landlord instead of just a room, that is not true.  Ask the landlord what the average utilities costs are.  Google internet in your area and get an idea of that cost. Obviously there is no reason to have a landline because you have your cell, so ignore those ads.  You'll need a way to get to school, should you live near-by or farther out?  That depends if you work and if you have car.  If you don't have a car and can find an apartment on a bus line, that is often better than buying a car.  Remember you are likely to move once you graduate.  Never the less, include the cost of transportation if you did not need in, living in the dorms. Also, remember to add in food costs because you won't need a food plan once you are living on your own.

Then add up the dorm costs and remember to include that food plan!  Once you have everything added up, compare them.  Which is a better choice for you?  If staying put is better, obviously don't move but if moving is better check if you signed the dorm contract for the semester or the year.  If it is for the semester, then plan to move into a new place come spring semester.  If it is a year lease, then you have to do more work.  Every university has someone who oversees the dorms and if you are nice, they may be willing to allow you to break the lease without a penalty.  They don't have to, so don't be a jerk about it, but the answer is always no, if you don't ask.

Come January we will go into how to find a good apartment, from both a tenant and landlord perspective.  See you soon.

Saturday, November 8, 2014

Over Your Head: living paycheck to paycheck

A friend posted on facebook about trying to save but not being able to because every week there was new "surprise" bill.  She said she has cut every personal thing and still, she can't get above water.  Sadly, many of my friends agreed.  Honestly I was flabbergasted because some of her bills were not surprises, like car insurance.  But, when you are living on edge, I guess they can.  Personal finance bloggers often say, pay your car insurance bill every six month, but if you can't save that little bit every month, how does that save you money?  However, if you can pay your car insurance every month, you CAN pay it every six months.  It just takes a change in attitude and planning.  So, let's be about it. shall we?

Often people are told to make monthly budgets but that sets you up for "surprise" bills that only come every six month or annually.  I recommend everyone make an annual budget and go from there. 
My budget looks like this:
house insurance
car insurance
taxes of house
house repair
fun money
school cost
baby expenses

Every bill I could think of is on there, and then under it is a list of things to add to the budget when I get more money including replacement costs of things like computers, large household items like a fridge or stove, everything.  I may not be able to put money in everything but I can start.  That helps me know where to put extra money if I get it or if I get a raise, if that ever happens.  
Can you see something is missing though?  I have no emergency fund on that list.  And I have a very good reason for that, my extra money goes to my emergency fund (EF).  Most of that money is from the rental but also little things like if I use amazon gift cards, that I get from swagbucks, instead of cash, I put the cash in my EF.   Everyone does need an EF, though many young people don't have one.  And that means putting those surprise bills on a credit card.  But even if the EF starts with $5 a month, that is a start.  And for young people starting is the most important thing.  Once you start thing snow ball.  Many of my bills are annual or semi-annual so I have a slush fund every month and except for a few months out of the year the slush fund grows (and throws a little interest into my EF).  So, what are some things you can do TODAY to stop living paycheck to paycheck?
Join swagbucks
Join My Points
Find a cheaper insurance company, my choice is Geico but check EVERYWHERE
Join ebates if you shop online
For that matter, see if shopping online is cheaper
If you pay for electricity, unplug everything!  Don't leave your computer plugged in or put it on a power-strip.

And if you are buy your own groceries check out money saving mom and cut your groceries spending at least for the one month.
By the end of the year you will have enough to change your car insurance to every six month which will save you an additional dollar.  And all of that will add up to a small emergency fund that will keep growing.   Just don't stop, keep the snowball growing and in no time you will not be living paycheck to paycheck.
If you have an idea that will help people stop living paycheck to paycheck, let us know in comments! 

Sunday, November 2, 2014

Financial Carnival for Young Adults- November Second Edition

Maria @ The Money Principle writes Don’t Make Debt a Worry: Try These Business Tips - Don’t look at your bank statements, you think to yourself. If I don’t see my debt then it isn’t there.

Alexa @ Defeat Our Debt writes Should You Take a Vacation if You’re in Debt? - Your debt is stressing you out. Work is stressing you out. And you just need a little break from the normal day to day grind.

Alexa @ Single Moms Income writes Another Great Way to Give: Operation Christmas Child - I’m completely convinced that giving back to people whether that be with a thoughtful note, big batch of cookies, or small gift is one of the best ways you can make a difference in not only the world, but also in yourself.

Brad @ Enemy of Debt writes Motivational Monday: Mistakes Pave The Way To A Greater Success - I caught a segment on a popular morning news program in which the CEO of Google was being interviewed.

Larry @ KrantCents writes How to Save Money – Everywhere - Saving money is my passion! I consider myself a value shopper although I do very little actual shopping.

Natalie @ Debt and The Girl writes One of My Reasons for Working Hard… - Last Wednesday, I got to see one of my idols and favorite musicians: Paul McCartney.

Cat @ Budget Blonde writes Do You Worry Your Kids Will Feel The Struggle? - I recently had the pleasure of being on the Stacking Benjamins podcast with the lovely Paula Pant of Afford Anything and of course Joe himself.

Justin @ iPlugin writes Apple just sold 10 Million new iPhone 6 and 6 Plus units - The new iPhone 6 was recently released and, in its first weekend alone, Apple sold over 10 million units, which was better than their previous record of 9 million that was sold during the weekend launch last year of the iPhone 5.

Danielle @ TeacHer Finance writes How Does Cash Advance Work? - A cash advance is very similar to a payday loan, except the terms are generally a bit longer.

Aaron @ Aaron Hung writes Watch out for these Back to School Spending Mistakes - Much to the chagrin of children everywhere another school year is about to start, and that means that parents across the country are busy stocking up on school supplies.

Justin @ Edward Antrobus writes 6 Ways Shoppers are Deceived! - Brands and advertisers use specific marketing tactics to convince shoppers to make purchases There are some tactics that they use that, while not illegal, border on being unethical.

Marissa @ Thirty Six Months writes You Should Always Seek Value - To get yourself financially free, to make good investments and to get through life in a calm and relaxed manner – you should always seek value.

Marissa @ Finance Triggers writes Best Way to Collect Superannuation Funds during Retirement - If you work in Australia, then you are likely to have at least one superannuation account set up to help you out financially during your retirement.

Sam @ The New Business Blog writes Want to be Successful? Avoid These 5 Emotionally Charged Habits - There are, to be sure, many things that contribute to your overall success. Things like your attitude, your ability to lead, your people skills and so forth all have a big influence on it, no doubt.

Katie @ IRA Basics writes 4 IRA Withdrawals that Actually Make Sense - Withdrawing funds from a traditional IRA before a person turns 59 ½ usually means that they’re going to pay a lot of taxes and penalties.

Lily @ Paying Debt Down writes Some Facts to Consider before Filing for Bankruptcy - For many consumers the thought of having to file bankruptcy can cause quite a bit of anxiety.

Bob @ Dwindling Debt writes Looking for a Store Credit Card? Don’t Look Here -

Andrea @ So Over This writes Self-Employment Is Not For Everyone - Over the past year I’ve realized that my readers are divided into two different factions.

Hadley @ Epic Finances writes Stock Investing Myths and Truths Part 4 of 4 - Even though there's plenty of information about what works and what doesn't when it comes to investing in the stock market, many myths still refuse to die.

Lenny @ Best Money Saving Blog writes Stock Buybacks are Booming! - After faltering for a couple of months, buyback announcements from many major US companies shot up to a three month high recently, putting 2014 on track to be one of the biggest years ever for buybacks.

Amy @ Money Mishaps writes These are the Biggest Money Mistakes Couples Make When Divorcing - When people get divorced, it's the spouse who hasn't had a whole lot of experience with the family's finances that often ends up on the short end of the stick.

Jack @ Money Saving Ethics writes These 5 Savings ‘Tricks’ might not be so good after all - Even the best intentions that you have for saving money can sometimes lead to financial problems.

Matt @ Budget Snob writes Investing Doesn't Take Genius Intelligence, Just Common Sense - A quote that's attributed to Albert Einstein goes something like this: "Insanity is doing the same thing over and over and expecting different results."

Danielle @ Saving Without a Budget writes Common Money Mistakes - If you're not keen on throwing your money away, the mistakes below should definitely be avoided.

Jay @ Daily Fuel Economy Tip writes How to Save on Gas – Uncommon Ways - I will describe a few less common ways you can save on gas – I hope you will find them useful.

Oscar @ Money is the Root writes Paying Off Debt Smarter and Faster - There are few things better for your financial health than paying off any debts that you have as quickly as possible.

Daniel @ Make Money Make Cents writes The Expenses of Buying and Owning a Home - From finding the perfect mortgage with the appropriate fees, to the year round upkeep and maintenance, this investment requires a lot of time and capital.

Mario @ Adventures in Frugal writes What actually makes us fat? Or my plan to lose 15 pounds of vacation weight without breaking the bank - I look at empirical data to help figure out what actually makes us fat and use it to make a plan to lose some vacation weight

Diana Hliva @ Essante Organics Worldwide writes 3 MEANINGFUL REASONS TO BE PART OF ESSANTÉ ORGANICS - Be your OWN boss We are not going to say this is easier than the other guy, but it can be more profitable to your pocketbook and is definitely healthier for your body. With great power comes great responsibilities; but hey, why should you work and take orders from someone else when you can be the boss?

Natalie Bacon @ Financegirl writes My New Favorite Goal Tracker App - Today, I'm revealing my new favorite goal tracker app. It's easy, effective, and free. I'm so glad I found this little gem!

Gretchen @ Retired by 40! writes Throw a Frugal Birthday Party - Throw a Frugal Birthday Party

Jerry @ Motive Finance writes What is Credit Life Insurance? - A form of life insurance offered when you buy a car? What?! We get to the bottom of credit life insurance for cars.

Paul Vachon @ The Frugal Toad writes Are You Making One of These Top 4 Money Mistakes? - We all make mistakes and finances are no exception. In fact, most Americans typically struggle with personal finance due to a number of reasons chief among them a lack of personal finance education provided to school age children. Here are the top 4 money mistakes and some practical advice on how to avoid making them in the future.

Little House @ Little House in the Valley writes Life Can Be Busy - I’ve actually had some success turning my work into a profitable venture. Since I have to create lessons for my credential that I use in my middle-school classes, I’ve taken it one step further and now sell those plans and activities on Teachers Pay Teachers and it’s going really well!

Miss T. @ Prairie Eco Thrifter writes 3 Things to Do Before House Hunting - Because we had heard that house hunting is a difficult and emotional process, we decided to do some work in preparation for the purchase.

Mario @ Debt BLAG writes A reader asks: “What should I do with a $75,000 cash windfall?” - I give a reader advice on what I think to be the best way to handle $75,000 in cash with an eye toward the long term

Natalie Bacon @ Financegirl writes Why I’m On A Student Loan Repayment Plan Where More Money Than Necessary Goes Toward Interest - It may cost me more in interest per month, but here's why I'm on the standard student loan repayment plan.

Erastus @ Wise Dollar writes Etrade Review: Investing Made Simple - My Etrade review covers the online broker and the tools it uses to set itself apart from other brokers. Open an Etrade account and get up to $600 cash back!

Erastus @ Sprout Wealth writes Why Do You Earn Extra Money? - Many like to earn extra money for a variety of reasons. Why do you make extra money on the side? What purpose do you use to drive you to earn more?

Erastus @ Frugal Rules writes MOTIF INVESTING REVIEW: GET UP TO $150 CASH BACK! - My Motif Investing review covers this unique broker and their themed based investing approach. Get up to $150 with a new Motif Investing account!

Jeremy @ Modest Money writes Credit One Bank® Visa® Platinum Review - This Credit One Bank® Platinum Card is a card that can be useful, but should be handled with extreme caution. First of all, this is a card focused on folks with miserable credit. The card is marketed as a tool to rebuild deplorable credit scores. And it can! But if you don’t keep up with it, things can be worse for you than they were before. For the right customer, this card can be a strong ally, however.

Glen @ How to Save Money writes Swapping to Save Money - Start swapping instead of spending

Gretchen @ Retired by 40 writes Throw a Frugal Birthday Party - Throw a Frugal Birthday Party

Mel @ brokeGIRLrich writes How to Find Free Samples - Keeping a kit stocked with necessities is a big part of my job, so I'm pretty skilled in finding the best freebie deals out there! Check 'em out!

Saturday, November 1, 2014

Updated Millionaire Plan November 2014

We now have $24150!  We are only $850 short of our goal of $25,000.  $25,000 is my gross income and it is also the minimum expenses we have for a year, excluding health insurance, work related expenses and daycare.  Given that we put aside over $1300 a month that means that by next month I should be reporting to you that I have a full year of expenses all set aside.  I can't wait!  Let's hope the market does not screw this up for me.  :)

So where do I go next?  My next goal is to add COBRA to my year of invested expenses and that costs about $600/month so I need to save an additional $7200 for a total of $32,200.  Looking at what we put aside I could get that saved in less than six months, if the market does not crash.  So let's also think about my next goal which will be my husband's higher salary of $41,700.

Things are starting to come along, but we are in a weak spot here.  Either jobs goes and we can't save this amount.  We are lucky to have low expenses and multiple streams of income (2 jobs and our rental), but to me they are not enough.  I am going to keep working on decreasing our expenses and increasing our income, both with adding streams of income and increasing our wages.  I am in the process of working on a grant that would increase my income from $25,000 to $30,000 if I get it, but who knows if I will.  But if I get the grant, I lose access to both my 403b and my pension so we are considering front loading the 403b and leaving more room in my husband's.  But that is a story for a future post.  See you soon and keep saving!