M is for Money

Do you put off your shopping until the week before Christmas, then run around like a madman buying gifts? It’s easy to overspend when you wait to shop, saving money requires time and planning. So if you haven’t laid out this year’s gift giving or are waiting till the last minute, here are a few reasons you may want to get started now.

Limited Inventory

The recession is sure to limit consumer spending this holiday season, and retailers are prepared. They don’t want to overstock shelves and have leftover merchandise in January, so they are buying less and stocking less this year. Once an item is sold out, it’s unlikely they will get in more before Christmas. If you want an in-demand gift, you have to start early or risk going without.

Many people capitalize on this scarcity, hoarding up hot items and selling them for a premium on ebay and craigslist. You will certainly be paying more when the supply/demand market reaches this point, so start the search early.

No Time to Comparison Shop

So you’ve found the perfect gift, but is it at the perfect price? When you are in a hurry, you have no time to comparison shop or look for a better price. You take what you can get. Say you want to buy your significant other a digital camera for Christmas, would you buy the first one you see in the store? Many products, especially electronics, require research before buying. Also, with a little time and an internet connection, you can price shop across many stores to make sure you are getting the best price.

Free Shipping

Online shopping saves you the hassle of driving to the mall, but it might not save you money. Shipping costs have to be factored into the calculation as well. Fortunately many shops offer free shipping before the holidays, provided you don't need the gift in a hurry. Free shipping offers rarely apply to rush shipping, instead you will have to wait a week or two for your package. If you want to take advantage of free shipping, you have to shop early.

No Plan B

It’s Christmas Eve and you’ve promised Billy the hottest toy on the planet, but of course it’s sold out. So you buy something really expensive to make up for the broken promise. If you had started earlier you either would have snagged that toy or come up with a great substitute without the big price tag. When you wait until the last minute, there is no time to develop a Plan B. This leaves you vulnerable to overspending as you overcompensate for the lack of planning.

Shop Early, Save Money

Shopping early shows that you’ve planned out your holiday giving – and hopefully that you’ve made a budget. Preparation is half the battle when it comes to any task, even Christmas shopping. It’s very easy to get swept up in the holidays and spend more money than you mean to. It helps to have a battle plan and to get your shopping done early so you can sit back and savor the season. I’m normally a procrastinator, but not at this time of the year. I know that by shopping early, I have the time to find the best price and best product.


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It’s now Sunday afternoon and I haven’t had to cook in days. We’ve been grazing on the Thanksgiving leftovers since Thursday. I guess it’s somewhat frugal to cook a bunch of food ahead of time, but I admit I’m getting tired of the same stuff meal after meal. I’m going to freeze some of the turkey, my mom bought a 20 pound bird and sent it home with us. I guess my being a vegetarian is balanced out by the three dogs, but even they can’t eat their way through this much meat. Like I said, we cooked an excess of food.

This week's carnivals:

-Carnival of Money Stories was hosted by Mighty Bargain Hunter: The Money Pit
-Carnival of Personal Finance at Fiscal Geek: My First Travel Rewards Credit Card
-Being Frugal Hosts this week’s Money Hacks Carnival: Souring on Lending Club

I’m still exhausted from the Thanksgiving cooking marathon. Every year I go crazy and cook way too much food. When will I learn? I get some sort of thrill out of making a dozen dishes in a day, the cost and effort can be justified by the holiday. I buy ingredients I wouldn’t otherwise buy, like a $20 hunk of cheese. It’s yummy by the way. I also insist on making everything from scratch, the veggie broth for example. This is actually a frugal decision, soup stock is relatively expensive. I used ingredients I already had on hand or needed for other recipes to make the stock, so at most it cost me $2 to make. I used a lot of it, probably $10 worth from the store. Like I said, I went a little crazy with the cooking.

This year my mom and I split the meal making duties. She asked me to do a soup or salad, instead I did both. I ran out of time actually, I had a second soup planned! Then I also made bread from scratch and some pies. 3 to be exact, lemon, apple and pumpkin! I also planned to make a veggie entrée, but if you hadn’t figured it out by now, I ended up making 2. My mom suffers from the same disease, she made the turkey, gravy and cranberry sauce. She also made roasted root vegetables, mashed sweet potatoes, fruit salad and brussel sprouts. Oh, and she decided to make a pie too. So how many people do you think we were feeding?

We had a spread for a dozen or more, but we were only 4 for dinner. Well, you should also count the four hungry canines. On the plus side, we will be eating leftovers for the next few days. But is it worth the time, money and energy that it takes? It will be hard to keep this much food from going bad, the only word that comes to mind is excess. What is it that drives us to do this?


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I just had a heart attack. Friday was the first day on the job for the electricians, who unlike the plumbers, only take cash. The plumbers got paid in plastic, to score some free hotel nights, but no such luck with these guys. We hadn’t so much as paid a deposit yet, so I left the checkbook out for Mr. M to pay them. I didn’t leave it in plain sight, but it was on the coffee table. Then I forgot about it.

It ended up they didn’t care about being paid that day, but fast forward until Tuesday and they were anxious to see some funds come Wednesday morning. No problem, when I got home I went to retrieve the checkbook. Only it wasn’t where I left it! I started scouring the coffee table, which has since been covered with mail, dog leashes, light bulbs and a million other things, but not the checkbook. I look on every horizontal surface in the house, checked my bag to make sure I hadn’t picked it up and went through everything on the coffee table again. Mr. M was out driving, bringing the dogs home from my mom’s. I didn’t want to bug him with the problem, but I was starting to panic.

I suddenly worried the checkbook had been stolen, it was left out and we had many unknown people in the house during that time. It had been several days since I last saw it. What if one of the contractors had swiped it? Friday we also had a drywall crew in to patch the walls, could one of them have taken it? Losing it would be disastrous, I would need to close our checking and we have dozens of automatic payments and withdrawals set up with that account. I wouldn’t want to change each and every one. I decided to do one more sweep of the house before totally losing myself to panic.

Our coffee table also serves as storage, it has shelves on one half and a cabinet on the other. I had checked the shelves several times, but not the cabinet. We hardly ever open it, but somehow, someone had put the checkbook in there! Thank goodness, I was already thinking about what steps would be next if I really couldn’t find it. I would certainly need to call the bank and put a hold on all of those checks and take other steps to protect our identity. What a hassle, all because I was careless with the checkbook. Lesson learned – don’t leave your checkbook lying around, especially when you have strangers in your home.


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How much money can you spend in a week?

I’m somewhere in the $13,000 to $15,000 range right now, with still a few more days to go. First there was the new plumbing - $7000, then the new electrical - $5200 and an entire house worth of new lighting fixtures - $1200 and counting. Then there are the car repairs, new clutch - $700 and installation of said clutch – another $700. Those are just the major expenses, there have also been a lot of little costs associated with the house repairs.

We have three dogs, who have to be removed from the house each day. I can leave two of them at my mom’s apartment, but the third is a screamer and would surely get her in trouble. Add in the additional gas to chauffer the canines around town and $27 a day for doggie daycare. The extra driving duties have turned my 20 minute commute into a 2 hour affair, leaving me stressed and exhausted. As a result, I’m buying more take out and spending more at the grocery store. I went to pick up a few items at the store and emerged $80 later, my willpower was gone and I bought a whole lot of “wants” not needs. Then I just feel bad about breaking the budget.

When I crawled out of debt I changed from a spender to a saver. Each dollar in my savings account is a testament to willpower and determination, a hard won battle against my spending demons. But now, even necessary spending gets me down. Plumbing that doesn’t leak and electricity that doesn’t burn the house down are important items, but it doesn’t make me feel better about the amount they cost. I don’t have enough set aside for the work, much of this will come out of our long term savings/emergency fund. It will take years to build that fund back up. Our net worth will go down this next month and the thought of it, is making me ill.


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Does the Christmas season drive you into debt? Do you have a budget for gift giving and equally important, do you stick to it?

I used to dive deeper into debt every holiday season. Despite the fact that Christmas comes the same time every year, I was never prepared for the expense. Never worry, no one went without - plastic always came to the rescue. Like many Americans, I would charge everything now and worry about how to pay for it later. Of course later never came, the balance just crept steadily upward year after year. It wasn’t until I changed some fundamental habits that I was able to kick the debt habit. One of those was my approach to the holidays.

A Holiday Budget

I never budgeted for the holidays, even though it was an expense certain to come. Then I attempted to budget, but it was never realistic. There are a lot of expenses associated with the holidays – travel to visit family, entertaining and gift giving. Don’t forget wrapping paper, tags and bows, they aren’t free. Add it all up and even a modest holiday will bust the budget of the unprepared. So the obvious starting point –set a budget.

There are a lot of possible expenses beyond the obvious, do you always go to a holiday concert? Buy new outfits for holiday parties? New Year’s Eve is close enough to Christmas that it should be included in your budget. I always include the cost of holiday baking, nuts, chocolate and many of the yummy ingredients are rather expensive. Be honest with yourself and make a realistic budget. Now you need to save up that money.

Ways to Save Up Beforehand

A budget is no good if your plan is to charge everything and pay for it later. The holidays are an expense like rent and food, it is possible to prepare. There are many ways to save up the money beforehand, one of the oldest is the Christmas Club. Many banks and credit unions have such a program, they withdraw a set amount each month from your checking account and put the money in a separate savings account. Typically you earn a modest amount of interest. You could use a Smarty Pig account for the same purpose. The idea here is to spread the cost of the holidays across the year, often this is easier than dealing with a large lump sum. But I take the latter approach.

Like a lot of people, I receive 26 paychecks a year. For simplicity, I budget based on 2 paychecks each month, the number I receive most months. This leaves 2 extra checks a year – bonus! I take a chunk of one of my 3rd paychecks and set it aside for the holidays. This is a pretty common approach.

Another way to save up for the holidays is to snowflake any extra money and set it aside for Christmas. Snowflake savings include refunds, rebates, side income from doing online surveys or freelance work. There are many ways to collect money and set it aside, at least to supplement your holiday savings.

Don’t Add to Your Debt

Christmas comes the same time each year, are you prepared? If you plan to spend money this holiday season, any money at all, is it budgeted? Save up for your holidays and break the debt cycle. Each habit you change will get you closer to the debt free goal.

Need more help with getting out of debt? Check out my series Deliverance from Debt

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I usually have my Thanksgiving meal all planned out by now. The shopping would be done and perhaps some prep work started. But this year, I’m seriously behind. I haven’t planned a menu, done my shopping or anything else. The house repairs and associated tasks, like shopping for new light fixtures, have taken up all of my time and energy. Mr. M was in favor of ordering a prepared meal from a local grocer, yuck. It would probably be bland and tasteless, I enjoy good food. Tonight I’ll need to hunker down and plan out a menu, I can grocery shop this week after work. If nothing else, the stores here are always open on Thanksgiving, and usually packed. It seems a lot of people don’t do their thanksgiving planning in advance.

This week’s carnivals:

-Carnival of Money Hackers hosted by Gather Little by Little: Financial Literacy Finally Gaining Attention
-The Festival of Frugality was held at Cheap Healthy Good: A Lifestyle Dilemma


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In a few short weeks I’ve had a second loan go bad with Lending Club. The first one was to be expected, I dabbled in lending to lower quality borrowers and paid the price. But my little E rated borrower is trying, they made a partial payment last month and a double payment this month to bring the loan current. I have a feeling they will continue to struggle, though I appreciate the effort. The latest loan to go bad is more of a puzzle.

The borrower earned a B rating from Lending Club, meaning they had good credit and no delinquencies. They borrowed $20,000 on August 25th and made the first payment a month later. After that, they fell off the face of the earth.

Lending Club automates payments, they withdraw the funds directly from the borrower’s bank account each month rather than depend on borrowers to mail in their payment on time. The automatic payment failed, meaning either the account had insufficient funds or had been closed. LC has attempted to contact the borrower several times via email and phone without luck. According to the notes in the file, the borrower’s phone number has been disconnected. Since they have been unable to speak with the borrower, the account has already been turned over to a collections agency. At best I will see a few of my pennies returned, most likely the loan is a total loss.

I can only speculate what happened but part of me wonders if this was outright fraud. The borrower made no real effort to repay the loan, it seems like they skipped town the minute they got the money. $20,000 is a lot of cash to be handed at once. The other delinquent borrower is obviously having difficulty, but they haven’t skipped out on paying. This person it seems never intended to repay the money.

I will continue to invest with Lending Club, but will be scaling back future investments. With something as risky as peer to peer lending, never invest more than you feel comfortable losing. Instead I will be looking for a safer home for the money I intended to lend. I work hard for my money, I don’t enjoy being defrauded by dishonest people.


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Someone please save me from this money pit! I knew my old house needed work when I bought it, but I also paid less than market price in exchange. A similar house had sold just a month prior for $25,000 more, making my place seem like a relative bargain. But fast forward several years and all of our houses are worth much less than we paid for them. It’s bad enough being underwater, now I have to shell out tens of thousands of dollars just to keep the place inhabitable.

The plumbers showed up promptly Wednesday morning to start the repipe job, but not an hour later I got a call – trouble. Apparently the drain lines are not in great shape, one is leaking and the entire system should be replaced. Additional damage - $3100 plus another day of work and disruption. I don’t have the money in our house repair fund so it will have to come out of savings. The grand total for the plumbing work - $7000.

Next week the electrical contractor will get started. We are having a new 200 amp service and main panel installed along with completely re-wiring the house. My tiny house has 4 separate breaker boxes, yet is only 1 circuit? It will be simpler to start over rather than try to puzzle out what is going on with the current system.

We are also bringing the electrical system up to code, which means adding additional outlets. As if that were not enough, we will also add additional lighting to both the interior and exterior of the house. For example our back stairs are currently a death trap after dark, we need some lighting back there. The front porch light fixture doesn’t work, neither does one of the bathroom fixtures. I estimate we will spend at least $1000 on new light fixtures in addition to the wiring work. The contractor’s estimate, not including fixtures, currently stands at $5200. Hopefully that job doesn’t grow in scope like the plumbing did. I don’t have enough saved for the electrical work as it is, like the additional plumbing I will have to dip into our savings to cover the cost. On the plus side, it will be no problem earning that bonus on our new credit card!


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I’ve been a fan of rewards credit cards for years. I started first with a straight cash back card, then earlier this year I added the Subaru mastercard to our wallets. That card pays you 3% on all purchases, but it comes in the form of Subaru dollars. Already we’ve collected $400 in Subie bucks, which will be used to install a new clutch in the coming weeks. Now I’ve decided it is time to add a new type of rewards card to our wallets, a travel rewards card.

The next year of our lives will be expensive with some major home repairs and a wedding to pay for. Hopefully the wedding will be followed by a relaxing honeymoon. My goal is to use our major expenses to help fund the honeymoon by using a travel rewards credit card to pay for the purchases. But which card to choose?

Travel rewards cards come in many forms, the most common being airline or hotel rewards cards. These cards turn your spending into points or miles that can be redeemed for free flights or free hotel stays. Most have some type of annual fee, generally waived for the first year, and bonuses for the first time you use the card. Weighing the benefits of one program versus another can get complicated, the rules for how you accumulate rewards and the redemption policies vary greatly between different cards.

Airline versus Hotel Rewards

The first decision to make is what type of card will benefit you the most. If you hate flying and only do road trips, well then an airline card would be useless to you. Conversely, if your regular travel is to stay with friends or relatives, you don’t need hotel rewards. For our situation, I first looked at where we would like to honeymoon.

While we don’t have a specific destination picked, we are leaning towards an international trip. The rewards needed for a free international round trip airline ticket are high, probably higher than we could achieve in the next year. On the other hand, wherever we go we will need a place to stay. I decided that hotel rewards made the most sense for our situation, from there I had to decide which card to choose.

Starwood Preferred Guest Card

The Starwood Preferred Guest (SPG) card from American express is one of the most popular hotel rewards cards. There are also cards offered by Hilton or more general travel rewards cards like the ones offered by Orbitz and Capital One which can be used for hotel stays. I chose the Starwood card for several reasons – first, we don’t have an American express card, which is the only card accepted at Costco. Second, there are no blackout dates for rewards. Finally, they have hotels in most major cities around the world, so wherever we decide to go we will be able to use our rewards.

There are currently two promotions for new card holders, you get 10,000 points the first time you use the card and 15,000 bonus points if you spend $15,000 in the 1st six months. With our planned car repairs, home repairs, Christmas spending and wedding preparations, I think we can get that second bonus. Including the one point for each dollar spent, we would have 40,000 points within 6 months, good for 3-6 nights depending on the hotel we choose.

Travel rewards cards aren’t the right choice for everyone. In most cases I prefer the flexibility of a straight cash rewards system. I choose the SPG card because we are currently planning to travel and will spend enough to take advantage of the bonus offers. I compared room rates from hotels.com versus the number of points it would take to book the same room. Those 40,000 points are worth around $700, a return of 1.75% for current customers or 4.66% if those points came courtesy of the new cardholder bonus. Not a bad return for money we already plan to spend.

“A bird in the hand is worth two in the bush”

I’m so bummed, my perfect wedding venue is not meant to be. I got a call this week from the manager, because of the hassles with the city they’ve decided to stop holding weddings there. It’s disappointing, nothing else I’ve found comes close to it. Everywhere else is more restrictive and more expensive. Plus I had started planning for the space, I’m not sure my ideas will transfer to another location. We checked out another spot this weekend, but it’s too close to the freeway and the noise was unbearable. I’m back to square one.

This week’s carnivals:

First, stop by tomorrow when I host the next edition of the Carnival of Personal Finance. It’s always a great carnival featuring information across the personal finance spectrum.

-The Carnival of Money Stories hosted at Gather Little by Little: Hit and Run!
-Carnival of Personal Finance was hosted by Canadian Finance Blog: Have the Bailouts Killed Financial Responsibility?
-Money Hacks Carnival at True Adventures in Money Hacking: Lending Club Some Interesting Updates


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We’ve signed a contract to have the plumbing in our house replaced. Unfortunately it’s going to cost more than I expected. Our house is tiny and some of the plumbing was replaced by the previous owners, so I expected to pay only a few thousand. But we got three separate estimates, all in the $4000-$5000 range.

First a lesson in hiring contractors – always check their license. The first company we got estimates from sounded great, but when I checked on their license I found out it was expired! For California homeowners, go to the website of the Department of Consumer Affairs. They have an easy to use database that will give you the status of any license (go to License Verification under the For Consumers Tab). To protect yourself, only hire licensed contractors. First, they have to put up a bond in order to operate. If you have a dispute, you can put a claim against that bond. Second, they must carry liability and worker’s comp insurance. If one of their employees is injured on the job, it is their problem, not yours. With an unlicensed contractor, you are personally liable if any of their people are hurt on your property.

The second company was licensed and professional, but their price was over $5000 even with Mr. M doing a portion of the work. We decided to go with company three, who specialize in house repiping. They will do all of the plumbing work in one day, on the second day their drywall installers come to patch and repair the walls. Their price was also a little lower because this is the only type of work they do. It will cost us $3900 to replace our original 1920’s plumbing with all new copper pipes. I figured the price would be closer to $3000, but all of the estimates were similar so I was obviously optimistic! This only covers the supply lines, the drain lines were replaced by a prior owner and don’t need work at this time.

Homeownership is expensive. Not only do you have the mortgage payments, property taxes and insurance to cover, you also have maintenance issues to deal with. Old homes like mine often have deferred maintenance, work that should have been done in earlier years. Portions of our plumbing are over 80 years old, it’s amazing it lasted this long. The new pipes come with a 50 year warranty, even if we keep the house for decades I should never have to worry about the plumbing again.

Up next: electrical. Those estimates have not come in yet but they’re sure to be painful!


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A friend of Mr. M is in need of help. She recently made the move to Los Angeles and has been couch surfing or sleeping in her car while she saves up and finds a place of her own. She had just landed a job when her world came crashing down, her car with all her worldly possessions was stolen. She was left with just the clothes on her back.

Mr. M went down to the police station and brought her back to stay with us. We bought her clothes and toiletries, some things to get her through the next few weeks. We’ve been ferrying her to downtown to catch the bus to work and letting her stay in our spare room for free. But we do expect her to stand on her own two feet soon and have told her that the charity ends at the end of the month.

I’m not very happy about the situation. I don’t enjoy sharing my space, especially with someone I barely know. But she is a sweet girl and I feel sorry for her. I would hope if the situation were reversed, that someone would show me the same kindness and take me in. This type of charity does not come naturally to me, I prefer to write a check and let someone else deal with the problem. But I’m trying to learn to be more generous, less selfish and more involved with my fellow man.

Unfortunately it’s also strained my relationship with Mr. M. He didn’t exactly ask if it was OK to bring her into our home. Her problems and her drama take up his time, drawing attention away from things that we need to do like plan a wedding. Hopefully she pulls it together and gets her life on track, but I have my doubts. Like many people she is looking for a quick fix, the easy way out. Long term success doesn’t work that way. Are we crazy to take in this woman, or is this the only charitable thing to do?


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This recession has many causes - corporate greed, an excess of debt and poor planning. But when it comes to individuals and their financial woes, it is clear that a lack of financial literacy is a major factor. Because of this, financial education for the masses is finally gaining attention on a national level.

Like many people, I learned about money the hard way. I made every mistake in the book, ran up too much debt and had no savings. I was living paycheck to paycheck, without realizing how precarious my situation was. I had no money management skills because I was never taught any. For whatever reason, we are each on our own when it comes to our financial education. But soon that may change.

Given the huge scope of the economic collapse, policy makers can’t ignore the factors that created this mess. Many are realizing that Americans are financially illiterate, unable to grasp even simple financial concepts. Providing some amount of education into basic money management and financial concepts like interest, compounding and amortization would go a long way to helping people manage their money. Unfortunately there is no one right way to handle money, but there are many wrong ways to go about it. A financial education will provide the foundation for good money management, but it won’t guarantee success. So where will this education come from and what will it teach?

Last January, a presidential advisory panel on financial literacy recommended mandatory financial education for K-12 grades and a course for college students before they take out student loans. Unfortunately, there is no funding to implement these ideas. Meanwhile several states have taken up the initiative themselves, though most still have no financial education requirements.

What to teach is even less clear, money management is rooted in basic mathematical principals which can be taught. But good financial habits like saving money every month and avoiding consumer debt require regular practice, most school aged children don’t have the opportunity to develop these skills. Hence many experts feel that employers should step in to help educate their workers on finance. Unfortunately, most workplace money education is limited to presentations by financial companies looking to gain control of your money, they are not without motive.

Whatever initiatives come out of this crisis, money management will remain a skill that most people have to learn on their own through trial and error. A basic financial education will certainly help consumers and individuals make better financial choices, but it won’t teach them the habits necessary for financial security.


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Last weekend we made the trek out to the suburbs to see the community where my mom plans to live. She has put a deposit down on a house under construction and needed to make a few decisions. But, she is having second thoughts.

She loves the area where she currently lives (near Caltech in Pasadena), but houses are scarce and beyond her price range. She could afford a condo, but she doesn’t like them. She did find a townhome she likes and listed at a price she can afford. But she put in an offer on a similar one before only to see it bid above her means. Also, it is half the size of the house she is looking at in the suburbs. The area she currently lives in has the restaurants, shops and cultural events she likes to attend. But staying there would mean giving up on the big house and a yard that she desires. It would be an urban lifestyle, with the accompanying loss of space and privacy.

The house in the suburbs is about as different a lifestyle as you can imagine from the hip, city vibe of Pasadena. It is in a newly built, gated community adjacent to an office park. It looks like any other new housing tract, the dwellings are decent and large without being remarkable. The lots are rather small and the houses close together, not unlike places in the city. Everything is newer and cleaner than the city most certainly. Plus the house is huge, over 2700 sq ft and has many of the features that modern families want – walk in closets and a large family room. The feel of the area is very different too, though not unlike most suburbs. You have long stretches of walled off neighborhoods punctuated by office parks and strip malls. Before you think this lifestyle is cheap, think again. Even with another hour added to your commute, you are looking at around $400,000. The townhouse in Pasadena will likely go for $500,000. Neither is an easy choice.

My mom moved from a city where the houses are huge and can’t seem to accept that here in this city, houses are smaller. More so, she moved from a lower cost of living area. She lived in a big house in one of the best neighborhoods in the city. She doesn’t have the means to live in the equivalent place here in Los Angeles, and I think this has wounded her pride. For her, the house itself is as important as the location. She appears willing to trade the lifestyle she likes for the house she wants. But as I said, she is having second thoughts.

Would you choose the urban lifestyle, though it means living in an apartment? Or would you choose the longer commute with the house and yard?


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Hi, I’m Miss M, and I’m an internet addict. Surrounded by technology, parked in front of a computer all day long, the symptoms are not obvious. But take away the drug, even for a minute, and suddenly I realize just how addicted I am. This morning, the internet stopped working!

I tried all the usual tricks - restarted the computer, the modem, the router. I tried unplugging and reconnecting all the cables. I gave it time to warm up, I tried reasoning with it. Finally, I broke down and called tech support. For forty five long minutes I stumbled through their instructions, the Indian lady was very kind and patient but her accented English was also very hard to comprehend. There was a lot of “can you repeat that” on my end. Quite clearly she was simply reading from a script and having an equally hard time understanding me! We went through all the steps, including the ones I already tried. Then we got to the more advance stuff, they reset and reprogrammed the modem remotely. We tried fixing the connection settings, but nothing worked. Finally she had to put me on hold while she spoke with the “techy” tech support. She was going to create a ticket and the technicians would take a look, most likely there was a problem in the line that they would be able to fix. The worst case scenario, two days until a technician could come to the house. But they would call within an hour with an update.

I felt lost, unsure of what to do with myself. Should I try to work around the house or head to a starbucks for some wifi? I decided I should at least stay home for an hour, in case the techs needed me to do something on our end. And miracle of miracles, before the hour was up I noticed the light on the modem shining brightly. The internet was back, hallelujah.

This weeks carnivals:

-The Money Hacks Carnival at the Financial Blogger: The Freelancers Union
-Carnival of Money Stories hosted by Christian PF: You are the Company you Keep
-The Carnival of Personal Finance at the Centsible Life: What You Lose When You Cash Out a 401k

I overheard some interesting conversation at a housewarming party earlier this week. An old friend “L” just moved into a new apartment and had a few girls over to see the new place. L has a long history of living beyond her means with the mountains of debt to prove it. She is one of the few people I know to turn to debt consolidation, which helped pull her out of the hole. Unfortunately it sounds like she has fallen back in again. But what struck me most was her, and some of her guest’s,current attitude towards financial responsibility.

Somehow the subject of debt was brought up and L remarked that debt has been a continual force in our lives since our college days. I proudly told her that I had finally kicked the habit and paid off over $20,000 in credit card debt in a year. “Whatever”, she said, “I’ve paid off at least $30,000 in the last three years”. I got the impression that was only a portion of the debt she is carrying (truly frightening when you consider I make 2-3 times her income). But she is no longer scared about her poor credit or being in debt. In her mind, the recession has put everyone in a similar place and only one small emergency away from financial ruin. It’s the new normal and she is just the average American. Besides, if she loses her job she will just declare bankruptcy. No big deal, everyone is doing it.

Then there was her friend R, who is going through the mortgage modification process. She asked if I had done mine yet and when I told her that I don’t qualify for any of the programs, she insisted that I was wrong. Apparently she doesn’t qualify either, but is forging the paperwork to make it appear that she does. She has no guilt about it, not in a world where corporate responsibility has gone out the window. Her basic mindset was, the banks got their bailout, why shouldn’t I? It’s hard to argue with the sentiment, but that doesn’t make it right. I got the impression that she can’t afford the house, loan modification or not. She is creating a fake business to make her income appear high enough to qualify for the program. I have the opposite problem, too much income and too many assets. It does make one wonder why they chose the responsible path.

This recession and resulting corporate rescues have taught Americans a bad lesson, that financial responsibility is pointless. First you have people like L, who see the financial ruin of others as a rubber stamp for their own bad decisions. Then you have people like R, who see corporate bailouts as a license to cheat the system. Both types are learning that financial responsibility is for suckers, those not creative enough to work the system.

So what is your take? Have Americans lost all sense of financial responsibility and is the government bailout of irresponsible banks to blame?


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It’s been several months since I started investing with Lending Club and there have been some interesting developments recently. Do you want the good news first or the bad news? As the eternal optimist, I’ll start with the good.

One loan has been paid in full – early. I don’t know the circumstances behind the early payoff, perhaps the borrower landed a windfall or just needed the loan to cover a temporary shortfall. They made only 3 payments in the life of the loan, the last one to pay off the balance. I didn’t receive much interest as a result, but it does allow me to relend the money immediately. This was a “B” grade loan, meaning the borrower had pretty good credit. I hope he (or she) is enjoying that new airplane!

Now for the bad news, one borrower is officially late. They have apparently engaged the services of a debt consolidator and are working on a payment plan. They only made a partial payment for October, which is still considered a late payment. Based on the notes in the file, a payment plan has been worked out and it appears they are expected to make the same monthly payments as before. I have a feeling this loan will never be fully repaid since it was taken out in July and already the borrower is in trouble. I should have known better, this is one of the few low grade investments I made. While most of my investments are in the upper credit tiers, B’s on average, this loan was to an “E” credit borrower. As one would expect, poor credit means a poor likelihood of being paid in full. The payments made so far only represent 8% of the total loaned, hopefully they will get closer to 100% before totally defaulting.

Loan defaults are a fact of life for lenders. The higher risk of lending to people with poor credit is offset by charging them higher interest rates, my B grade borrower had a rate of 12.2% compared to 16% for the E credit borrower. Obviously in this circumstance, the rate spread should have been higher! The 30% interest charged by the credit card companies doesn’t seem so steep in light of borrowers who default almost immediately. All I can do is hope for enough “good” loans to offset this one bad investment.


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Some a-hole hit my car the other day. It was Monday evening, the end of the working day, when I walked to the garage to hop in my car and head home. Parking at my building is ridiculously expensive so I pay $150 a month to park a few blocks down the road. I’ve been parking there for years with no more damage than the common door ding. Even in the dim light of the garage I immediately noticed a problem, bright yellow streaks on the passenger side of my car. Someone had hit the side of my car and taken off without leaving a note! The rear passenger door and fender are bent, along with the damage to the paint and the flashy new yellow stripes on the side of my car. Sigh.

I asked the garage attendant if he had heard or seen anything - no. Do they have any cameras or records of who comes in and out - no. Unfortunately there is no way of knowing who hit my car. I know it’s not a regular because I’ve never seen a yellow car in my remote corner of the garage before. So I called up my insurance and reported the incident, given the extent of the damage I believe the repairs will be more than my deductible. I’m worried that insurance will hold the claim against me, but why am I paying $250 a month for auto insurance if I’m not going to use it? A-holes like the guy who hit my car are a major reason why insurance rates are so high here.

I know it’s not easy confessing to our crimes. I once tagged a neighbor’s car while trying to park, I immediately manned up and left a note on his car. Once he got an estimate I paid for the repairs out of pocket. If only everyone were so honest, we’d all benefit in the form of lower insurance rates. Meanwhile I’m paying for someone else’s mistake, both in the cost of insurance and the cost to repair my car.


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New I Bond Rate (Nov 2009 – May 2010): 3.36%

The latest I Bond rates were just announced and the news is slightly better than what we got back in May of this year. Starting November 1, 2009, I Bonds will earn a 0.3% fixed rate of return (up from 0.1% earlier in the year). Inflation has returned to the picture as well. The semi-annual inflation rate for all I bonds is 1.53%, way above the nearly negative 3% rate used back in May. I Bonds earn a composite rate consisting of the fixed rate plus an annual inflation rate. For I Bonds issued between November 1, 2009 and April 30, 2010, the compound rate of return will be 3.36%.

Keep in mind that the rate on I Bonds will fluctuate every six months, but you will always receive the fixed rate of return on top of current inflation. For example, bonds purchased in the previous six month period will earn 3.16% (the 0.1% fixed rate plus the annual inflation). Previously these bonds earned nothing due to the negative inflation rate. I Bonds are a quick and easy way to get some inflation protection without taking on much risk.


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Net worth updates aren’t so fun anymore. The predicted market pullback started at the end of the month, eating up both prior gains and some of my new investments. Our net worth increased, but by less than what we save each month. It was a spendy month, nothing special just higher than normal spending for our daily expenses. October was a special month – 3 paycheck month! I used the extra check to set aside some money for Christmas and to refuel some of our spending accounts. I wished I could have saved some more…

Savings - I’m still replacing the money I used to pay the car insurance up front. We still have the bulk of our money in a FNBO savings account.

Bonds – After a hiatus of a few months, we are once again contributing to our snowflake bonds. A little here, a little there.

Sharebuilder – No trades.

T Rowe Price – We may invest $500 a month, but the balance only went up $50. There goes that sucking sound again.

Lending Club – We have a small amount invested with Lending Club and are adding more as part of our retirement plans. There have been some interesting developments lately.

Fidelity 401k – from a former job, I no longer contribute

Wells Fargo 401k – I save 8% of my salary and plan to increase that as soon as the Care Credit balance is paid off towards the end of the year.

Company ESOP – our company stock is structured as a retirement plan

Roth IRA – I finally opened my Roth IRA at Vanguard

Savings Accounts – this is where we set aside money for future expenses. Since I know we will spend this money eventually I do not include it in the net worth

Property Taxes – In the interest of big goals, I’ve dropped our monthly self escrow to $400 as a result of our property tax reduction.

Dog Fund – To cover our 3 boston terrier’s care and expenses, it’s been hovering near zero for much of the year. Once I’ve paid off the last of their medical debt I’ll be able to build this fund back up.

Misc Fund – used for irregular or unexpected expenses

House Fund – It’s time to get serious about fixing up the house so I’ve started saving money for repairs. We’re hoping to do the plumbing and electrical later this fall

3 Month Fund – this fund is part of my plan to smooth out Mr. M’s irregular income. I will try to rebuild this fund in the coming months.

Mr. M Tax Fund – we’re setting money aside to pay taxes on Mr M’s independent contractor earnings. Most of his recent jobs have been W-2 employment so I haven’t needed to set much aside.

Wedding Fund – planning for August or September of 2010

Christmas Fund – I set aside money to cover the cost of the holidays, presents, decorations and more

Care Credit – This will be paid off in November

At least the month ended in positive territory. Unfortunately the increase in our net worth was less than what we save and invest each month, such is the life of an investor. Hopefully this short term pain will mean long term gains.


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I may have found our wedding venue. Saturday my mom and I visited a relatively unknown property in Pasadena that would perfectly suit my daytime garden wedding dreams. Unfortunately, it is quickly becoming popular and there was quite a crowd for the tour and information session. It is one of the cheapest and most liberal places in town, you get the grounds for 18 hours and can use whatever vendors you like. But there are some definite drawbacks. They are currently changing management and possibly changing ownership. The property is on the market, but at an asking price of $35 million and with the many constraints on the property as a historical landmark, a sale is not certain. Also many of my preferred dates have been taken already and with the management changeover they are currently not booking anything! They were taking names though, you could put yourself down for a certain garden and a particular date. The new management will start calling in a few weeks to make the bookings. I chose an open date at the end of August to save myself a spot. In the meanwhile I’ll keep looking at other venues.

Afterwards my mom and I went to a little teahouse for lunch. While the place was a tad on the snooty side, the food was absolutely delicious and not a bad value. For $10 I got a sandwich, oversized side salad and some potato side dish. Stop by the Scarlett Tea Room in Pasadena some time, reservations are recommended.

This week’s carnivals:

-The Festival of Frugality at Gather Little by Little: Pet First Aid
-Carnival of Personal Finance at Money Crashers: Group Legal a New Workplace Benefit