Third Guest Post

My third guest post is up at Trendy Cheapo http://www.trendycheapo.com/budgetliving/phd-student-saving-half-income/ and for once, my guest post had nothing to do with real estate!  The author of Trendy Cheapo is a fellow blogger in the Save 50 group and my post is about my efforts at achieving that goal.  I am not even close but getting there will be an amazing journey.  So, head over and let me know what you think of my progress so far!

I found a new blogger group to join!

Many, many moons ago I joined J.Money's millionaire goal blogger's group.  Friday I updated my plan, and let him know.  When I did that I checked out a bunch of new and newish bloggers to the group.  Through that I found a new group.  It is a group that has a goal I want to reach.  A goal I doubt I can reach this year but I know I can reach it at some point, so why not join up now.   So you are sitting there going,  So what is the group?!
The group's goal is to save half of their income, after taxes are taken out.  This does not mean that you don't count pre-taxed savings, just that we are looking at the lower number.
Go check the two leaders out at YoungFinances and FrugalPortland.

With our daughter's expenses of over $12,000 for daycare alone which accounts for about half of my income, we can't afford to save half our total income.  My husband and I make about the same, plus we have our joint rental income.
Now this group is not strict, paying off debt counts as savings.
Right now I only have two debts we are paying off:
My mortgage which is 4.75%, minumum payment of $252.48, total balance of $45,040.31
Private loan through NYSERDA to replace my water heaters and furnace which is 3.49%, minimum payment of  $36.79 but this has been on autopay for so long, I don't know the total balance.  It started as $5150 and was a 15 year loan.  I am trying to get the information.

Keep in mind that paying interest does not benefit you, so this group only allows for principle payments.  That means I can only count $73 of the $252 payment as "savings".  Still better than nothing.  I believe I paying about $24 per month on principal towards the private loan though.
So, just with debt repayments I am "saving" $97 per month.
So averaging my rental income and our salaries, that would give us a savings rate of 2.33%.  Obviously that is way too low.  But wait!  We have not accounted for real savings:
We have a retirement savings of 16.4%, which right now is $625/month plus my pay in to my pension.  That brings up to 18.60%.  Not bad, not bad at all, but still short.

Well, here is where the rental comes in.  The income is variable so I don't account for it in the budget and it ALL goes to savings or debt repayment.
This is because we have debts we are not paying on as most graduate student do:
$17,000 in graduate student loans 0% for now, 6.8% six months after my husband graduates (Nov 2014 is the expected start of repayment)
$5,500 in undergraduate student loans 0% for now, 6% six months after my husband graduates (again Nov 2014 is the expected start of repayment)
$5402 in undergraduate student loans 0% for now, 6% when I graduate in three years (May 2017 is the expected date of repayment)

We already have set aside $17000 to pay off the graduate loans, so we just need to pay off the undergraduate loans and start an EF.   Prior to this, the money set aside for debt repayment and our EF were one and the same.
So assume we can either save or pay down debt by $4000 per year?  How much, as a percent, will we be "saving"?
So, that is up to 26% of our net income.   Not bad, but we still have a ways to go.   So my goal within this group is to increase income and decrease expenses until I can truly say "I am saving half my salary".
So who is with me?

I'm anti-529, normally, but not right now! Now is the time to get one!

For background, a 529 is a college savings account where the money can be used for undergraduate, graduate and professional degrees (medical school, dental school etc).  The money you deposit is not tax-deductible but the profit is tax-free, just like a Roth IRA.  In some states, though, the state gives you a tax deduction as well, for example my state, New York State.  However, if you use money from a 529, you cannot use the federal tax credit for the education expenses.  A way to get around this, is use money from your 529 for living in the dorms, if you are attending at least half-time.  There is a program that allows you to live off-campus, but not all schools are part of the program.  Check with your school.

The downsides to a 529, beside not having the federal credit, include higher fees than other brokerage accounts, few choices and the ability to change funds only once a year.  Also, similar to 401k, and IRAs, if you remove the money for non-approved expenses, you have to pay a penalty.  Personally, because of these downsides, I avoid would prefer to avoid a 529 in many cases.  So, what would I normally recommend?  Well, do remember that you can remove any money in Roth IRA for tuition and fees for higher education, as well as any deposits, as long as you have had the account for five tax years.  I know what you are thinking, but what about retirement savings?! That is where having a 401k comes in.  If you are saving 20%, to cap out of your 401k, you need to earn $87,500.  The average person does not make that.  So, the average person can use their 401k for retirement savings and a Roth IRA for their children's college education.  Obviously, the lower income group would want to take advantage of the Roth IRAs for their retirement as well, which is what I am doing but once your income goes up, start using the 401k as well.

So why now am I recommending EVERYONE to get a 529, since I am so opposed to them?  Because right now, there is free money associated with it.  Bank of America started a website called grad save, which is like a baby registry for college savings which you then transfer the money you were given to a 529.  I honestly think it is silly, but here is the free money part.  For the next four days, they partnered with living social to give you a $50 gift card for $26.  You can only buy one card per beneficiary or owner.  However, doing this only took me 20 minutes.  What college student/ grad student earns $96/hr, which is what this trick is worth when you compare the amount of time it takes to do this, and what you get for it. 

So I opened a Vanguard 529 account with the minimum required ($25) because that is what company holds my state's 529.  I, then, opened a grad saving account and then went to living social and bought the gift card.  I received the gift card code within hours of ordering it.  I added the cash into the grad save account, and once the 529 is finished being set up, I will transfer the $50.  Once this happens, I will turn around and remove the money for class expenses for this year and close the account.

If anyone is interested in getting this deal, please feel free to use the link below to do so.

http://www.livingsocial.com/deals/491862?rpi=101339564&ref=personalized-link-box-101339564&rui=3021660

Second Guest Post!

Head over to Baking the Budget to read more about my real estate adventures in my second ever guest post.
http://bakingbudget.blogspot.com/
Baking the Budget is a wonderful blog that I have learned a lot from. It is not geared towards students but still is a valuable resource.

Another ING Deal-update

I mentioned earlier this month that my husband opened a Roth IRA with ING Direct with $1000 to take advantage of the deal that would get him an additional $76. And ING Direct, being wonderful has already deposited the extra $76. In just thirteen days, when most banks take three to four months for any bonus money.

This makes me happy, yet sad because ING Direct has been bought by Capital One and these wonderful deals are likely to be long gone very soon. I hope everyone takes advantage of the referral deal. If you do not know about the referral deal, it goes like this: you ask someone with an ING account to refer you, you open a savings account with $250 and then leave it there for 3 months and get $25 cash. Ten percent return without any risk, who could hate that?

Carnival of Personal Finance #317 – The Harry Potter Edition

My post on how to pay less interest on student loans without taking less students was included in the Carnival of Personal Finance- Harry Potter Edition. My first carnival and I am very excited. There are a ton of other articles at the carnival that I liked.

http://www.bucksomeboomer.com/carnival-of-personal-finance-317-the-harry-potter-edition/


Head on over and check some of the articles out, my favorite is Are Rewards Cards Costing You Money? but How To Build a 6 Figure Income Dividend Portfolio with $600 per month is interesting though I do not have $600 per month to invest yet. I am about $200-$300 short of being able to invest that much. But it is good to have goals so I try to look towards the future and get ideas of what I might want to do.

Free Money from BondRewards

I just cashed in 50 bondreward dollars for twenty-five dollars cash. I signed up for bond rewards in August of 2009 and this is the first cash back I have received. It probably will take me longer to earn the next twenty-five dollars because when you start off there are surveys to do to get 14 bond reward dollars. Even so, it should not take more then about another year.

Bond Rewards is similar to ebates and upromise except they send you emails that are worth .05 bond reward dollars (or $.025 cash). I normally received about enough email to get .50-.60 bond reward dollars ($.25-.30 cash) a month. They just started allowing you to update your profile every six months for another 5 bond reward dollars ($2.50 cash).

In the entire time I have had bond rewards I have only used the cash back portion of the site twice. Normally ebates or upromise are better deals but bondrewards had a tire purchasing site that the other two do not and bondrewards does double cash back on different sites, this changes monthly. They do require you to make one purchase to get cash back but given that I will need tires again, I do not see that as a problem.

Combining deals

I have mentioned on here using cash back sites like ebates, using cash back credit cards and buying gift cards on discount but I just discovered I could use all three and save more.

Mr. Rebates is a cash back site, I have used it occasionally but it is not my favorite. When I found out about it, you had to request a check and it did not seem to be anything special. I stuck to ebates and upromise and have since added on bond rewards. A few weeks ago though I wondered if any of my websites that I use to buy discounted gift cards were on the cash back sites. I looked at my normal sites and the answer was no. However, I happened to get an email that day from Mr. Rebates and thought I would check there as well. It just so happens that Mr. Rebates gives 1% cash back for cardpool. Cardpool is my favorite site to buy discount gift cards from because they accept american express and my american express gives me 2% back into my 529.

Now if I combine all these, the gift cards, the cash site, the cash back credit card, I can save some serious money. Now, I rarely find gift cards for groceries or gas but I always find gift cards for petsmart. I spend $62/month on prescription cat food and litter for cat. That is over three percent of my monthly expenses and that don't even count that we have to have him seen once a year to keep his prescription. So over a year I spend $744 at petsmart, if I buy the gift cards at cardpool I'd only spend $677 a year. But if I just make one extra stop at Mr. Rebates first I get back another $6.77, plus if I use my american express I get another $13.54 back. By using all of these deals together I save $87.31/year, over a 11% savings plus I bring my cat spending down to less than 3% of my monthly budget.

You can't buy gift cards for everything, nor can you use cash back sites or credit cards for everything but when you can, why not combine them to spend the least you have to, to get you want?

Textbooks

My first semester at college I spent $700 on textbooks, some used and some new from the on-campus bookstore. My last semester at college I spent $300, some used and some new but I bought online and from private sellers. A savings of $400 per semester adds up to $3200 over the four years at college.

When I started trying to save money on books, I started by buying online at barnes and noble. Going to barnes and noble through upromise gave me three percent back on my purchases as well. This cut my costs down to $500 per semester and I thought I was doing well.

Then my last year rolled around and my DH and I started dating. He was even better than me at finding deals on textbooks. That year I checked half.com, amazon, textbooks.com, abebooks.com and campusbooks4less.com. Not one site had all my books for the best price but by checking them all I found all my books for cheap. If I had known about these sites at the beginning of college I would have been able to save more or work less.

Citibank's credit cards were hacked

As I was reading some of my favorite blogs I came across an article about hackers hacking into citibanks and stealing credit card numbers, emails and names of cardholders. If you have a citibank credit card, like I do, please go read this article and check your credit card purchases online. If you get an email from "citibank" about your credit card do not follow the link.


Read more at
http://www.fivecentnickel.com/2011/06/10/citi-credit-cards-hacked-what-it-means-for-cardholders/

New Financial Website

I received from daily worth about a new FREE website https://www.gosimplifi.com. This site is similar to mint.com or quicken that you add your assets and liabilities but it does not ask for your passwords and you can update it as much or as little as you like. I just spent about thirty minutes adding all my information and it had pretty simple directions though a few confusing parts.

I think their budget part of their website is bad and will not use it but the net worth part was great. I ended up having a higher net worth than I thought and it forced me to write down and think clearly about my current goals. I normally write my budget and net worth in excel and it is fine but this site help remind you and gives you advice. Not all of the advice is useful and the site even admits this, but all of it is worth considering. I would very much recommend this site for almost anyone.