M is for Money

What did people do before the internet? It’s made searching for information easier and faster than ever before. Often, the information you gather can also help you save money. Here’s a little story about how a car enthusiast’s forum saved us several hundred dollars.

Recently Mr. M joined a car enthusiast’s online forum. I have no interest in these things, so this group fills his need to talk engines and wheels. Lately we had an issue with the subie, the wheels were making an excessive amount of noise. Mr. M was complaining about the tires on the car when I pointed out that there are more to wheels than just tires. It could be the wheel bearings for example. A light bulb went off in his head, he had seen something on the forum about wheel bearings. It turns out that our particular model car has issues with the rear wheel bearings going bad prematurely. So not only was he able to diagnose the problem with help online, he also learned that Subaru issued a bulletin about the wheel bearings. They wouldn’t recall the cars, but to preserve customer satisfaction they extended the warranty on the bearings to 100,000 miles. Armed with this information, we took the car in to our local dealer. They weren’t familiar with this particular service bulletin and were skeptical at first. But at the end of the day the car was fixed and it cost us nothing. I’m not sure we’d have the same result if we simply brought in the car for a bad wheel bearing since the dealer was not aware of the problem. But the internet and this forum gave us the information we needed to save some serious dough. What did people do before now, get screwed?

Do people get into debt a few dollars at a time or do they dive into the deep end with a few high end purchases? Each theory has its own proponents, fans of the latte factor would say that many small expenses add up to big trouble. But many people reject this thinking, after all how many lattes can you possibly drink in a year. It has to be the big purchases, the new house and the new car, that causes the ultimate downfall. But in looking at my own debt history, it was a bit of both.

Living beyond your means is living beyond your means, whether it’s $5 a day or $500 once a month. In my opinion, debt often stems from a spending problem. When you have a problem controlling your spending, it extends to all aspects of your life. You spend more than you should on your daily expenses, things like eating out and buying new clothes. But you also spend too much on the big ticket items too, like new furniture or a nice vacation.

Most of my credit card debt came from the small things, gas and groceries, maybe the occasional shopping spree at Nordstroms. There were a few bigger ticket items in there as well, emergency surgery for one of the dogs and travel for a destination wedding for example. However most of that debt was made up of many little things, to the tune of $20,000! Of course that wasn’t the only debt I had, there were the big purchases as well. I also had a $28,000 car loan and a $340,000 mortgage. I had debts both large and small.

People get into debt in big ways and little ways. It may be a latte a day or one blowout vacation a year. Or for a lot of people like me, a bit of both!


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Women’s numbers in the work force continue to grow, but at the same time their salaries lag behind. There are many theories behind the numbers:

1) That women choose to take lower paying but more flexible jobs
2) That employers continue to discriminate against women by paying them less than comparable male colleagues
3) That women don’t demand better pay, they settle for less

Looking at my own life, number three has definitely played a role in my career. In an earlier story, I told about the time I accepted a low ball salary offer. I realized in hindsight that I could have and should have asked for more. Apparently, I still undervalue myself. Let me share a recent example.

I am currently helping my business partner with a small contract he won. Before I started he had two questions, first how much was I willing to take on. He knows I still have a full time day job and that his project comes second. Two, how much did I want to be paid? I didn’t dwell on the pay question very much, but there was a method to my madness.

Since I already have a job paying me benefits, I don’t need this side job to cover things like health insurance or disability. If this contract were my sole source of income, I would have named a higher price. As it was, the number I gave is approximately 50% more than what I make at the office. It was in line with what my independent colleagues charge, though they take in much more because their rate then gets multiplied (usually by 2) to account for overhead and other expenses. My partner responded that it was much too low for me, he said we’ll charge X for you instead. X is nearly twice what I make at the day job!

The clients know me well, they have worked with me on other projects and apparently have no problem with the price we named. To them, I am worth X. Only I thought I was worth less. Would a guy have low balled himself?

I think much of this discrepancy comes down to the difference in how boys and girls are socialized. Girls are raised to be nurturing, giving and modest, never demanding. Boys are told to be tough and independent. These traits probably carry over when it comes to salary demands. Women will ask for less, often out of a desire to seem modest and agreeable. Men don’t feel the same social pressures and will instead ask for as much as they can get. If women want to catch up to our male counterpart’s salaries, we will need to stop undervaluing ourselves and start demanding to be paid more. What do you think, do women undervalue themselves?


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It’s all set, we’re honeymooning in Hawaii. My dad booked the tickets to and from Honolulu, where we’ll spend half of our time. But we still need to decide what other island(s) to visit. My initial thought was Maui, I haven’t been before and I’ve heard plenty of wonderful things about the island. But my dad, who has been to Hawaii more times than me, suggested Kauai instead. He thinks the island’s more natural state is more appealing than the tourist oriented Maui.

There is one advantage to Kauai, the Starwood chain hotel on the island requires fewer points than the ones on Maui. In fact we already have enough points for a 5 night stay in Kauai, the excess points could then go to pay for a hotel in Honolulu in addition. We won’t have enough points for the hotel on Maui for a few more months and it’s doubtful we’ll have an excess of them that we can use on another island. But this is one time where cost isn’t that important to me, we’re already saving lots of money thanks to my dad and the Starwood credit card. I need to decide which island we’d prefer. Anyone been to both islands or have a suggestion on where to go?


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Working for yourself entails a whole new layer of complexities and headaches, especially when it comes to taxes. As an employee, your employer has the burden of calculating and withholding the appropriate taxes. You only have to deal with them once a year, when you file your annual return. Being self employed means first understanding what taxes you are subject to, setting aside enough to pay them and then filing quarterly tax returns to the government. With my new side job in full swing, I am quickly trying to grasp what the tax man expects of me.

Payroll Taxes

Payroll taxes like Social Security and Medicare are paid by both the employee and employer. When you work for yourself you are responsible for paying both halves, basically double the tax. Social security tax is 6.2% or 12.4% for the self employed, Medicare taxes are 1.45% or 2.9% for those working for themselves. It’s easy to overlook the employer’s side of payroll taxes as an employee, when you are self-employed that additional 7%+ will eat into your bottom line.

State and Local Business Taxes

Many states and cities levy business taxes on companies. When you work for yourself, you are subject to the same taxes that any other business would have to pay. As an employee, these taxes are hidden from you. They are simply the cost to do business. But as a business person you have to learn what those taxes are and when they are due. There may also be taxes to cover the state disability fund, unemployment funds and any number of other taxes that you never see as an employee.

Income Taxes

Just like everyone else, the self employed have to pay income taxes. When you work for a company, they withhold the necessary amount from each check and send it in to the IRS or state tax board on a regular basis. When you work for yourself you will need to set aside the same amount but you must also prepare and file your taxes on a quarterly basis. The tax man doesn’t like waiting for his money, so he demands payments throughout the year.

Learning about your Taxes

You will have to do some research to find all of the taxes your business will be subject to. Start with the IRS, their site has loads of useful information for the small business owner. But your search doesn’t end there, next you will have to check with both your state and local governments, the information may not be easy find. Unfortunately, ignoring your tax obligations will only create more headaches along with fines and penalties. Before going into business for yourself, learn about the taxes and obligations faced by the self-employed.


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Sunday evening I wrapped up my field work and headed to the grocery store. I had a lot more work to do at home but we needed a few items to make it through the week. I knew I would be busy in the coming days, so I bought a lot of prepared foods. A frozen pizza (or two), several frozen lunches and a handful of side dishes. I bought Mr. M some cereal, oatmeal and granola bars to snack on in my absence. It’s not as good as homemade, but will do in a pinch. I was shocked when the total came up, over $125! I only had maybe half a cart worth of wares. It just goes to show, you pay for convenience. Of course it’s still cheaper than eating all of those meals out, it has to be healthier too. Oh and it’s way, way better than expecting Mr. M to cook. I mean he would, but would I want to eat it?

I don’t know if I’ve ever been this busy in my entire life. I had a few years where I put in a ton of overtime at my day job, but even then I would take Sundays off. Not this time, the consulting job I’ve taken on has a very short deadline. The bulk of the work is due three short weeks from now, that means every night and every weekend must be devoted to this project. I spent all day yesterday out in the field and will head back out as soon as I’m done writing this post. At the price they are paying, I can’t complain about being tired or having no free time. I started working Thursday evening and by the end of today, I’ll have earned roughly half of that honeymoon. In another week that honeymoon will be fully paid for! If the contract lasts long enough, I’ll have to come up with more ways to use that money. What a nice problem to have.

I have no idea how to handle blogging on top of all that. I don’t expect to write anything earth shattering or ground breaking the next few weeks, it will probably be a lot of short little money musings. I hope everyone else’s 2010 is off to an equally prosperous start.

Even though I am a reformed debtaholic I still use credit cards on a daily basis. I’ve learned my lesson, I no longer carry a balance and I look for ways to maximize my rewards. These rewards were a big reason I decided to keep the credit cards, rather than go to a cash only life. So how much can you expect to earn in a year via rewards cards? For us, last year it totaled $900!

Chase Freedom Rewards Card

Unfortunately, the Chase Freedom card isn’t what it used to be. Long time cardholders, like myself, have a better rewards system than new card holders. I receive 3% cash back on gas, groceries and fast food, 1% cash back for all other purchases. You can cash in those rewards as soon as you reach $50, but it’s better to hold out. If you wait until you have accumulated $200 in rewards, you can turn it into a $250 check. Last year I received two, $250 checks.

Total: $500

Chase Subaru Mastercard

The Chase Subaru Mastercard offers a straight 3% cash back on all purchases, the only catch is that the rewards are paid in Subaru dollars. These vouchers are good at Subaru dealerships for repairs, parts and even the purchase of a new vehicle. As a new cardholder, we got a bonus with first purchase that helped build up our reward total. Last year we received $400 in Subaru dollars, which we used towards vehicle maintenance.

Total: $400

American Express Starwood Preferred Guest

Towards the end of the year I opened up a new account, the Starwood Preferred Guest card. This card gives you 1 point per dollar spent, the points are then good for hotel stays around the world. There are bonuses for new card holders, you can get up to 25,000 bonus points if you spend $15,000 in the first 6 months. We’ve passed that threshold in 3! We’ll use those points for hotel stays on our Hawaiian honeymoon. The hotels we can choose from cost upwards of $200 a night and we have enough points already for five free nights. It’s looking like our 2010 rewards will surpass what we earned in 2009, thanks primarily to this card and the bonus offers.

Total: $0 redeemed in 2009, big payoff in 2010

Finding the Right Rewards Card

To maximize your rewards you have to find the right card for you. Obviously the Subaru Mastercard won’t do you any good if you don’t have a Subaru (and aren’t planning on buying one). There are rewards cards that give you straight cash back, cards that give you points or vouchers and cards good for travel. There ones to fit almost any lifestyle or spending style. When you find the one that suits you best, you will receive the maximum rewards. As you can see, it’s possible to earn hundreds of dollars a year in rewards just with your regular spending.

What rewards cards do you use? How much do you earn in rewards in a typical year?

Last year’s plans to begin life as an independent company fell through. First the team that invited me to join them fell apart. My business partner and I managed to get ourselves attached to two other teams, neither of whom won the project! So I moved on, happy and secure to be an employee of a large firm rather than out swimming with the sharks. My partner wasn’t so lucky, he was already in the shark tank. He was let go from our current project before Christmas and has been scouting out opportunities since then. The other day he called me with some news, he’s landed a small contract and needs my help. Was I interested?

There are pros and cons to the situation. The task he needs me for should be rather short , at best it’s part time. That means I could keep my day job while earning extra money on the side – positive. But I’m already busy with work, the blog and planning the wedding, do I really have time to take on more? Also, my current employer may not be pleased if they found out I was moonlighting. I’m not sure this job will do much to further my career, I will have to help my partner from behind the scenes, so he will get any credit. But it will be an opportunity to strike out on my own, even though it’s small scale. All in all, it should be easy money.

We really could use the extra cash, last year’s home repairs wiped out much of our savings. We have a wedding planned and an upcoming honeymoon, neither of which are free. I’d feel stupid turning down an opportunity to make more, so I told him to send me the information. I’ll take a look at the plans, hash out what is expected of me and name my price. With any luck this little side job will lead to a happy, paid for, honeymoon. What it will do to my already high stress level remains to be seen.


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Last week Stacking Pennies, who is getting married herself in a few months, asked about our wedding budget. Since I’ve never held anything back before, why should I start now? Except that I know with the topic of weddings, sharing our budget will certainly invite criticism. Somehow weddings seem to bring out the opinionated people and whatever I post, someone is sure to bash us for it. Oh well, you can’t please everyone.

A Rough Budget

Until everything is paid for it’s impossible to know exactly how much this wedding will cost. Right now we have a rough budget, somewhere between $15,000 and $20,000. We’re trying to stay on the lower end but won’t have any trouble paying the bill if we end up closer to $20k. At this point only two costs have been nailed down, the venue and photographer. The venue, including a $500 security deposit that will hopefully get returned afterward, is $2600 for a total of 10 hours. The photographer, who gave us a discount after I explained she was a little beyond our budget, is $2550 for 8 hours. Already you are looking at 1/3 of our prospective budget, with many more costs to come!

Some of Our Money Saving Ideas

We are doing a few things to keep costs under control, first we are keeping the wedding small. Some costs, like rentals and food, are directly proportional to the number of people you invite. We are also keeping the number of attendants to a minimum, at most I will have my oldest friend for a bridesmaid. Mr. M has already decided to have one of the dogs be his best man! Second we are planning a daytime ceremony with a brunch reception. It’s my favorite meal and it’s less expensive than dinner. Also, having a daytime reception makes alcohol and dancing less important, also saving us money. We’ll still have both, but it will probably be wine and beer and a DJ for the music rather than a full premium bar and a live band. I’m also planning to DIY as much of the decorations and accessories as possible.

The Big Expenses

The single biggest expense is going to be food and drink, I am estimating close to $5000. Hopefully we can find a good caterer for less. We will also be spending a lot on rentals, the venue only provides the space to hold a ceremony and reception. We will have to bring in tables and chairs and everything else that we need to keep guests comfortable. Also, since Mr. M is a set decorator by trade, we want to use his expertise and contacts to create the scene and set the atmosphere. So our budget includes money for décor and furniture above and beyond folding chairs and tables.

Where we are Cutting Back

We plan to spend less on areas that are less important to us, like flowers and attire. While having a beautiful dress is imperative, spending thousands of dollars on one is not. I have a decent dress budget, but I am hoping to find one for less by shopping sample sales or last season’s fashions. For flowers I am planning on doing the centerpieces ourselves and possibly the bouquets as well. Since having a live band is beyond our budget, we’ll be going the DJ route. We won’t have fancy invitations or stationary and for favors, I am thinking of doing a candy buffet. We will have wedding cake, I love cake, but it won’t be some fancy fondant covered creation.

A Big City Wedding

Unfortunately, a wedding in the big city is going to cost more than a similar affair in a more modest town. Our price tag isn’t cheap by anyone’s standards, yet I would say I am a budget bride. For example on the price scale our photographer is labeled $$ out of $$$$$, meaning she is on the inexpensive side. But in what world is $2500 inexpensive?? Our venue is also one of the cheapest in town, $1000 less than any place else we considered. There are many beautiful locations in the area that are way above our budget, often $5000 and up. As we continue to plan, we will be actively looking for ways to save money and places we can cut back. Unfortunately, given the high cost of life in Los Angeles, this still won’t make for a cheap wedding.


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There is a deadline hanging over our heads, in December 2010 the fixed rate period for our mortgage ends. At that point our mortgage becomes adjustable, the rate will change each year based on the economy and prevailing interest rates. I had hoped we would be looking for our next home around this time, our tiny starter home isn’t the one I envisioned living out my days in. But the collapse of the housing market has made that impossible, we owe more than the house is worth. Refinancing is also not an option, we are too far underwater. At best the house is worth around $250,000. Current loan balance - $320,000. So what can I, and everyone else in this situation, do to prepare for the inevitable?

Understand Your Loan Terms

It’s time to break out that paperwork and understand the beast you are dealing with. Every adjustable rate mortgage is different, the terms and rates can vary considerably from one loan to the next. Here the most important pieces of information to gather:

1) What index is the rate based on
2) What is the rate spread
3) What is the maximum amount the rate can adjust each year
4) What is the maximum rate you can be charged

Almost all ARM mortgages contain these vital pieces of information. The rate you will be charged is based on some published index rate, mine for example is based on US Treasury Bills. Then there is the rate spread, this is the additional interest that you will be charged on top of the index rate. Mine is 2.625%, so each year’s interest rate will be based on the current index rate plus 2.625%. Obviously this could lead to huge swings in payments from year to year, so most ARM have provisions limiting how much the rate can change from one year to the next. For example mine is capped at 2% up or down. That means regardless of what happens with the index rate this year, next year’s rate cannot be below 3.5% or above 7.5% (+/- 2% from the current 5.5% rate). There is also a maximum interest rate you can be charged, so even if rates run out of control the damage is limited. Mine is capped at 10.5%.

Calculate Your Expected Payments

With the information on your loan terms you can calculate how rate resets will affect your monthly payment. Look at the worst case scenario, the maximum you could be expected pay, and build a budget around that payment. Will you be able to hold on even if the worst happens? Most likely you won’t have to face that worst case scenario for a few more years, the economy is still hobbling along and governments are loathe to raise rates right now. In fact most rate resets this year will result in a lower monthly payment, not a higher one. My best advice if that happens – don’t blow the extra money. Either keep paying the old payment so the balance goes down more quickly or set it aside for a later refinance, but only if you won’t end up spending it.

An Exit Strategy

Like many people, I want out of my adjustable rate mortgage. While there is a chance that in the near future my monthly payments will go down, I know at some point further off both the interest rate and my payment will become much higher. This situation requires an exit strategy, before the house drags us under.

First, I am hoping that rates stay low through 2010. If that happens our rate should reset lower come 2011. Then, the 2% limit per year would keep the rate reasonable for 2012 as well. 2013 is the first year I expect to face a significant payment increase. I am doubtful we will be able to refinance by then though, so my plan is to save as much as possible and hope for a refi opportunity in 2014. For that to happen we will need the housing market to rebound along with stashing significant savings. It’s not a perfect plan, but it’s better than nothing.

Anyone with an ARM who hopes to keep the house will need their own exit strategy. You may be fine for the next few years, but by the middle of the decade having an ARM will become a huge liability.


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We haven’t decided where to honeymoon but we’re currently leaning towards Hawaii. It’s not the international destination we envisioned but it has several clear benefits, first it’s a heck of a lot closer. Europe or Australia will take an entire day of travel each way. Two, it’s a tropical paradise like Tahiti but without the language difference or long travel time. Unfortunately September is the hurricane season in the Caribbean, so we can’t go there. But the number one reason – my dad offered up 2 roundtrip tickets to Hawaii thanks to his excess of frequent flier miles.

We are currently using our Starwoods Preferred Guest card to rack up hotel points, but we were planning to pay for our airfare. The free tickets won’t cost my dad anything, he accumulates more airmiles than he can use thanks to his work. Plus it will save us the $1500 or so we expected to spend on airfare. Without those costs, we’ll be free to live it up while we’re there. Plus I know that Hawaii in certain ways will be more expensive than other destinations.

First, we’ll have to rent a car to fully enjoy the islands. I’ve been a few times before and know that a car is essential to fully enjoying the scenery. Much of the fun is driving around to see the sights and stopping at a beautiful little beach that catches your eye. I’ve checked and most hotels charge for daily parking, especially in Honolulu. So we’ll have to account for the cost to rent a car, gas it up and to park it. Because almost everything has to be imported to the islands, the cost of everyday goods is much higher than the mainland. Food and gas cost significantly more over there, along with that bottle of sunscreen you left at home. Then there are all of the (mostly yummy) souvenirs to buy. Even with airfare and hopefully most of our hotel costs covered, I don’t expect this to be a cheap trip.

I would like to do 10 days in the islands, perhaps 5 on Oahu and then another 5 on Maui. I’ve been to Honolulu several times and the big island back when I was a little girl, but never to Maui. It turns out Mr. M has never been at all, so it will still be a new and exciting destination for both of us. Any suggested sightseeing while we are there? This is way more fun than planning a wedding!


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If you’ve ever met a Boston Terrier then you know they are natural born entertainers. They love to make people laugh and always go over the top when guests appear. Simply put, they tend to be silly and don’t like to see people frown. Earlier this week when I was feeling blue I went off to mope by myself. But my three boys would have none of it, they kept pestering me. B, who has an emotional intuitiveness better than my own, wouldn’t leave my side. They refuse to let anyone be sad in their presence, so they kept at it until I cheered up. I often talk about the cost and responsibility of pet ownership, but not often enough about the benefits of having these furry friends in our lives. There are proven health benefits, like lower blood pressure and lower levels of stress. Then there are the mental health benefits, my three are some of the best therapists around. It’s impossible to quantify these benefits in dollars, but they do offset some of the cost.

This week’s carnivals:

Editor’s Pick! Carnival of Personal Finance hosted at Darwin’s Finance: Money and Etiquette – Dining with a Terrible Tipper

Yes I am Cheap hosts this week’s Festival of Frugality: DIY Your Wedding Day

The Dough Roller hosts this week’s incarnation of the Carnival of Money Stories: A Money Saving Wedding Idea in Action

I am fascinated by money stories from real life, be it my own stories or ones gathered from the people I meet. They often hold lessons that each of us should learn. Or they have a quality that each of us can relate to and empathize with. Often they are simply amusing or titillating, juicy tales always make for good reading. Obviously I have no qualms about sharing stories from my own life, they form the backbone of this blog. But when it comes to stories from the lives of my family and friends, where do you draw the line?

This week I had drinks with an old friend I had lost touch with. In catching up she shared several stories that would be perfect for the blog, interesting in their own right and with a lesson to share. In the recent past she has faced money and relationship issues, dealt with debt in a divorce and taken a new job working for a fabulously wealthy Beverly Hills family. These would all make great stories to share with you, but I am having second thoughts.

In order to maintain my anonymity I keep a low profile, no one beyond Mr. M knows that I write about finance on the side. In sharing her recent struggles, my friend has no idea she is talking to someone who might turn around and publish that same story. If in the future she were to learn about the blog, how would she feel about the stories that I wrote? Would she feel taken advantage of, would she feel I was trying to profit off of her life? I don’t want my friends and family thinking that my interest in their lives, and in their financial stories, is just blog fodder. I’m genuinely interested in what is happening with them, financial or otherwise. In the future I am going to be more cautious about the stories I share from the lives of my family and friends. I am sure there are other ways to share the lessons from these stories, without exploiting the friendship.

For all the bloggers out there, how do you handle stories from real life? Even if you disguise identities, often the players will recognize their own narrative. Do you stay away from these stories entirely, or have you found a way to illustrate the valuable lessons without compromising friendships?


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In the U.S. employers have many ways of dealing with sick employees, some provide paid time off while others do not. Even those companies that offer paid sick leave have different programs. The first company I worked for out of college had separate sick leave and vacation time. All employees were given 1 week of paid sick time per year. My current employer has a different program, sick and vacation time is combined under the umbrella term called “paid time off” or PTO. At a minimum you get 3 weeks of PTO per year, how you use it is up to you. There are advantages and disadvantages to each type, for both employee and employer.

The Traditional Separate Sick Leave

The traditional paid sick leave looks something like this, your employers grants you a specific amount of time per year that you can be out sick and still get paid. If you are out of work for any other reason, like vacation, that time has to come from somewhere else. For employers this has several benefits:

1) Unused sick leave is generally not paid to the employee when they leave the company, unlike vacation time

2) With separate sick leave ill employees are likely to use the time and stay home rather than come in both unproductive and infectious

Of course there are drawbacks for employers as well, for one it’s another program to administer and track. This has an effect on business overhead. Also, employees have a tendency to abuse the system, calling in sick when they are in fact healthy. This happens because sick leave tends to be use it or lose it, you won’t get a bonus for never calling in sick and you won’t get paid for that time either.

Paid Time Off – Sick and Vacation Time Combined

A lot of employers have moved to a paid time off or PTO system that combines sick and vacation leave under one roof. It doesn’t matter why you are absent, the time gets charged to one account per employee. Many employers like this system because it is simpler to implement and track and less prone to abuse. Of course the drawback is that unused time is paid out to the employee when they leave the company, so it could cost more than having a separate sick leave that doesn’t get paid out.

It’s similarly a mixed bag for employees, on the positive side you potentially end up with more vacation time per year (provided you don’t get ill). Also you get the benefit of being paid out for any unused time when you quit the company. Unfortunately, if you do happen to get sick often, there goes your vacation. Also, with PTO you are likely to drag yourself in to work sick rather than lose precious vacation time.

My Own Experience

What has prompted me to look at this issue – well I am sick right now. I came down with some sort of flu/cold bug over the weekend and it’s persisted into the work week. I took Monday off hoping to beat back the big bad bug, but I returned to work on Tuesday. Since our time off is combined with vacation time, any days I miss due to illness are days I can’t use for vacation. With a wedding and honeymoon coming up this year, I’m trying to save up as many days as possible. If we had separate sick leave I would likely have stayed home another day or two to get better. FYI – our company does have a policy for serious, protracted illnesses. If you are hospitalized for more than 5 days, you can start charging the time to a separate account that has no limits and isn’t linked to your PTO. They aren’t completely heartless.

Which System is Better?

There is no perfect system when it comes to sick employees. Both PTO and separate sick leave have benefits and drawbacks for all parties, employers have to make the decision about what works best for their business environment. Most companies agree that having sick employees in the workplace is a bad idea. Allowing employees to take time off to recuperate, even if they must be paid to do so, usually benefits the business as a whole. Whatever the program your company has, make sure you understand your benefits to get full use of them.


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We don’t have a huge budget but we want to make our wedding day something special. One way of doing that is to add your own touch, by making the accessories and decorations that you need. Handcrafting these items imbues them with special meaning while saving precious dollars. I have a list of tasks and object ts that I want to personally create, first up is pomanders made with silk flowers.

Unfortunately this isn’t a budget friendly project. Pomanders are made with fresh or silk flowers and even small ones require a LOT of flowers. I have seen tissue paper versions as well that would work great for a modern or casual theme. I may make some of those in the future, but I don’t think they would hold up for the 9 months until our wedding. Using silk flowers allows me to make these well in advance of the actual day. I plan to hang them in a spare closet wrapped in plastic to keep them clean until September.

What You Need Per Pomander:

4” Styrofoam Ball
Ribbon
Hot Glue Gun and Glue
Approx 30 Silk Roses (2.5” across)
Wire Snips

Step by Step:

1) Snip off all of the rose heads from the greenery, leaving a 1 ½” stem to stick in the styrofoam. My flowers had wire stems so wire snips were needed to cut them off.

2) Use a cheap, wide ribbon to wrap once around the Styrofoam ball. This will help support the pomander when it is hanging.

Before tying it at the top, slip the pretty ribbon you want to use to hang your pomander underneath it. I then tied my pretty ribbon to the supporting ribbon. Use hot glue to seal the knots. Don’t worry about the ugly knots, they will be hidden by flowers at the end.

3) Starting at the bottom, take one flower head and put a bead of hot glue on the stem. Stick the stem into the Styrofoam ball. Continue to place the flowers into the ball. I found it looked best using concentric circles starting outward from the first flower. I would also test each flower before using glue to hold it in, some flowers simply looked ugly next to each other.

Continue until you’ve completely covered the Styrofoam, you may need fewer or more flowers depending on how tightly you pack them. It’s best to have a few extra flowers on hand to fill in any empty spots, this is one project where you don’t want to run out early! You can simply hang your finished pomander or add a ribbon or bow to the top. I made little swashes out of the same ribbon for mine, I thought it looked less fussy than a bow.

A few thoughts

You can use smaller or larger Styrofoam balls, but keep in mind the flowers will make the finished pomander much larger than the ball you use. A 3” ball will produce a 6” diameter pomander. Here is a 4" ball with one of the finished pomanders.

The number of flowers you need for each increases dramatically the larger the ball you use. The material costs make this project expensive, so search around for the best deal on both balls and flowers. I bought my Styrofoam at one shop, where they cost $1.00 a piece. I went to another shop for flowers, where I bought stems with a dozen rose heads each. The stems were $4 a piece or $40 for a dozen. In quantity, this puts the per flower cost at about 30 cents a piece. One pomander requires approximately $10 just in materials. My plans call for over a dozen pomanders to be used between the ceremony and reception! Ours will all hang in the background so using inexpensive flowers is OK, no one will see them up close. You may want to use better quality flowers if your pomanders will be front and center. Fortunately, the pomanders should be in perfect shape after our wedding and hopefully I will be able to sell them to recoup some of the cost.

PS - Sorry for the terrible photos, I am not a photographer at all!

Thanks to everyone who entered the contest to win a copy of the new personal finance book Your Money Ratios by Charles Farrell. The winners were picked by random, commenters number 6 Me in Millions and number 9 Judyy are our lucky two. I will be contacting you guys for mailing info, thanks for participating.

Let me guess, you don’t have enough time in the day. Work, home and family require a delicate balancing act, still not everything gets done. Despite being busy, you can’t forget your finances. Bills have to get paid, budgets need to be balanced and savings built up. So how can you stay on top of your money in a busy world? The answer is to automate as much of these tasks as possible, the set it and forget it approach to personal finance.

Automate Your Obligations

There are many ways to make paying your bills less of a chore. First, look for bills that can be paid in advance rather than monthly. Auto insurance often costs less if you pay for 6 months up front, plus it’s one less bill to remember each month. Other bills can be set up for automatic payment, the money will be deducted from your bank account without any action on your part. If none of these approaches work for you, set up a bill pay account through your bank. This service will put all of your bills in one place and allow you to pay each online. You will still have to take action to pay your bills, but having all of them in a central location will cut down the time it takes to pay each. Plus you don’t have to write out checks, find your stamps or fill in addresses.

Automate Your Savings and Investments

It’s easy to automate your savings and investments. Almost all banks and brokerages offer automatic investment plans which allow you to transfer a set amount of money on a regular basis. No more putting off that emergency fund or IRA, once you set up the regular transfer you are done. Personally I have automatic investments going into both a Roth IRA and a taxable investing account. Even if I never lift a finger again I am building up savings for the future. Most online banks offer automatic monthly transfers from your regular bank along with better rates, the perfect place to stash that e-fund. Vanguard and T Rowe Price offer free automatic monthly investing for that IRA or investment account.

Autopilot Dangers

Of course there is some danger to a set it and forget it approach, what if something goes wrong? I’ve heard many stories of people ending up in collections or with a pile of late fees after an automatic payment doesn’t process. You still need to monitor your money with automatic payments to see that bills are actually getting paid and that you aren’t overcharged. You still need to monitor your savings and investments to see that they are growing as you expect. You still need to rebalance your portfolio at least once a year, though some investment houses now offer automatic rebalancing as well.

Set It and Forget It

We are all busy with our daily lives, it’s easy to forget to monitor our money. Fortunately there are many financial tasks that can be automated to save time. Even someone who finds finance interesting, like myself, doesn’t handle each and every financial detail. I prefer to automate my savings and investment so I can spend my energy doing other things. While set it and forget it might be oversimplifying things (you still need to monitor your money) this approach will help you achieve your financial goals while caught up in your busy life.


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It’s a new year, the perfect time to tackle the financial sins of the past. Whether it’s getting out of debt or saving for the future, the New Year means a new start. But often financial goals get overlooked when it comes to New Year’s resolutions. In a top ten list of the most popular resolutions, the only financial goal to make the grade comes in at number seven – get out of debt. No save up an emergency fund or start an IRA, where is max out my 401k? Not very popular is seems. If I had to make a list of the ten best financial resolutions you can make, it would look something like this:

10) No more late fees, bounced check charges or over limit fees

These fees are nothing more than wasted money, watch your finances more closely and pay your bills on time.

9) No new debt

The first step to getting out of debt is to stop taking on new debt. This is an easy way to get started towards the ultimate goal of being debt free.

8) Pay more than the minimum each month

It’s very difficult to get out of debt if you only pay the minimum. Start eating into that balance more quickly by paying more than the minimum each month.

7) Review your insurance policies

Do you have enough protection? Are you paying too much for your policies?

6) Track your spending for a year

It’s very enlightening to see where your money goes each month. Over a year you’ll get a very good idea of your regular spending patterns.

5) Fully fund your 401k or IRA

Or if you have started your retirement savings, start this year.

4) Make a budget

A budget will help you make the best use of your money.

3) Create an emergency fund

Emergencies are a part of life, be prepared by having enough cash set aside to cover the unexpected like an illness, injury or unemployment.

2) Make a plan, set goals for the next year and beyond

Simply setting a goal will help you to achieve it. Where do you want to be financially in one year, five years and beyond?

1) Stop living paycheck to paycheck

You have to break the cycle if you are ever going to achieve financial security. Spend less, save more and get off the money treadmill.


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I hate to do it to you, but it’s hard not to boast about our beautiful weather. At a time when the rest of the country is freezing its buns off, we’re busy toasting ours. It’s so warm, I might need to turn the AC on. Even more amazing, it’s been like this for over a week. Sure it will end eventually, but even then the worst isn’t so bad. Maybe a little rain, maybe a little chill. Nothing compared to blizzards and snowstorms, hail or tornadoes. Of course we pay for this beautiful weather, it’s the so-called sunshine tax. Everything costs more from gas and groceries to housing and utilities. On days like today, it all feels worth it. Stay warm out there!

Photo: Union Station by kla4067

The value of an object is the price it would fetch on the open market. This fact gets brought up frequently these days with regards to the housing market. It doesn’t matter what some online appraisal says or what your house was potentially worth a few years ago, the value is what a real person would pay for it today. But this article isn’t about a house, it’s about a car and how its value can depend on who you market it to.

Long ago in another life Mr. M was into car racing. He lost that need for speed about the same time he lost his brakes on a mountain road and ended up upside down hanging off of a cliff. Well recently the bug returned and he joined a forum filled with other Subaru enthusiasts. If you go to Kelly Blue book you would see my car is worth approximately $12,000. However, within this niche community of tuners, my car fetches a far higher value. It turns out my car is rather rare and coveted by those who like to modify and race their Subies.

My particular model was only made for one year, it has the more powerful turbo charged engine but without the fancy extras like a moon roof or leather seats. Now you can only buy either the basic, non-turbo charged model or the fancy version with the more powerful engine and all the bells and whistles. Guess what, bells and whistles add weight. So my car has all of the power minus about 200 pounds, making it faster than the fancier model. To the tuner crowd, this is worth several thousand dollars. In fact, we’ve received several unsolicited requests from forum members to buy our car! It’s not even for sale.

I never realized that my car had a greater value within this small sub-market compared to the larger used car market. I never realized that to certain people my car is rare and valuable. If and when we do sell it, we will market it to this community who will pay more for it. Next time you have something to sell, look for the right place to market it and the right people to market it to. There may be a niche or special community who will give you a higher value than the general population on craigslist or ebay.


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Yesterday I reviewed a new personal finance book, Your Money Ratios by Charles Farrell. This book lays out a path towards financial security based on a series of ratios, the fraction of your salary that should be put towards savings or allowed for debt in order to reach your goals. There are different ratios depending on your current age. Today I will take a look at how our household stacks up in the world of Your Money Ratios. Are we saving enough? Are we on track for retirement? I will look at each of the ratios presented in Your Money Ratios to analyze where the M household stands.

Capital to Income Ratio

This is the first ratio presented in Mr. Farrell’s book. Each ratio he discusses is accompanied by a chart giving the appropriate ratio depending on your age, ranging from age 25 on up to age 65, the prime working years. The charts are done in 5 year increments, since we are between agse 30 and 35, I will use an average of those two values. Keep in mind each ratio relates to your current salary. The capital to income ratio compares current net worth to current income. For our age:

Your Money Ratio: 1.0
M Household: 0.7
Verdict: FAIL

We are definitely behind on the capital to income ratio chart. Long time readers know that until recently, we were carrying a large amount of credit card debt and had little savings. We should pass the 1.0 mark some time this year at least!

The Savings Ratio

The savings ratio doesn’t vary by much, for the under 45 set Mr. Farrell recommends 12% of your salary be set aside for savings. Above age 45, he increases that percentage to 15. This is based on you starting to save money at age 25, wait longer and these percentages will not suffice. So how do we compare?

Your Money Ratio: 12%
M Household: 24%
Verdict: PASS

In an effort to make up for lost time, we save a rather high percentage of our salary each year. This includes retirement savings (401k and Roth contributions), taxable investments and cash savings. I am not including the 401k matching contributions or my company’s ESOP plan, which would push us up to about 45%!

Mortgage to Income Ratio

This ratio compares your current mortgage balance to current income, not the starting loan balance. Obviously as you move towards retirement and pay down the house, this ratio should drop.

Your Money Ratio: 1.95
M Household: 2.7
Verdict: FAIL

Mr. Farrell obviously doesn’t live in Los Angeles, where such ratios get thrown out the window. His advice for the maximum mortgage debt to income ratio is 2.0, a very conservative number for high cost of living areas. Even after the market crash it would be hard to find a place in LA at 2 times our (large) income. Here, it feels normal to stretch a bit on housing costs. As you can see, it’s not hampering our ability to save. I think this ratio works great for those of average income, but as you climb up the income ladder your living expenses become an ever smaller fraction of your salary. Hence it is possible to pay a lot towards a house and still have a lot to live on.

Education Debt to Average Earnings Ratio

I’ll have to dive into the past on this one, our student loans are all paid off at this point. Mr. Farrell suggests limiting your education debt (student loans) to no more than 75% of your average earnings over the first 10 years of your career. So if you think your average salary for your first 10 years in the workforce will be $100,000, you should take on no more than $75,000 in education debt.

Your Money Ratio: 75% average income for first decade of career
M Household: 7%
Verdict: PASS

I only had a $5000 loan to repay, compared to a starting salary of $40,000. Hence my education debt ratio is/was very low. Obviously my income has grown quite a bit in that first decade. Mr. M hasn’t completed college and carries no student loans.

The Investment Ratio

I talked about this investment ratio a bit in yesterday’s post, it is the split between stocks and bonds in your investment portfolio. For all but near retirees, Mr. Farrell recommends a 50/50 split between stocks and bonds. This is very conservative.

Your Money Ratios: 50/50
M Household: 85/15
Verdict: FAIL

Obviously to Mr. Farrell I am a risk taker, our percentage of stocks is much higher than he recommends. We will slowly shift towards bonds as we age, but I don’t see us reaching 50/50 until we’re closer to age 50!

Disability to Income Ratio

How much of your income should disability insurance replace? Mr. Farrell suggests 60% for those aged 55 and younger, as you get closer to retirement this number drops eventually reaching zero. His suggestion is based on buying your own individual policy, which is exempt from income taxes. Policies through your workplace are subject to income tax, hence you would need a higher percentage in order to meet your needs.

Your Money Ratios: 60% (individual policy)
M Household: 60% (workplace policy)
Verdict: Mixed

I do pay for disability insurance through my work, but as Mr. Farrell points out it might not pay out enough for us to live on. It looks like I need to research individual policies as well, to supplement or replace my workplace one.

Life Insurance to Income Ratio

Life insurance is meant to support your family and help pay their bills in the event of your untimely demise. As you move towards retirement, your insurance needs drop because the dependence on your income drops.

Your Money Ratios: 11.0
M Household: 1.0
Verdict: FAIL

I do not carry much life insurance right now. We don’t have any dependents to worry about and Mr. M should be able to handle himself. But, eventually we want to start a family and we definitely need to increase our insurance before then.

Final Verdict

These are all of the ratios Mr. Farrell lays out in his book. As you can see, the verdict is mixed when it comes to our current financial status. We meet some of the milestones while failing miserably at others. As we continue to save and build wealth we should catch up and pass the benchmarks for our age.

The Giveaway

Want to learn more about Your Money Ratios or see where your household stands? The publisher has given me two copies of the book to giveaway to readers. Simply leave a comment below to enter, winners will be chosen at random on Tuesday the 12th of January. Open to US and Canadian residents only, sorry.

Recently I had the opportunity to review a new personal finance book, Your Money Ratios by Charles Farrell. Finance books like this one exist because everyone has questions when it comes to money:

How much should I be saving?
How much insurance do I need?
What is a reasonable amount of mortgage debt?

Mr. Farrell attempts to simplify financial planning by laying out appropriate ratios that can be used to answer each of these questions and more. It’s a one size fits all approach to finance since a ratio can be applied to any situation, whether you are a low paid wage slave or CEO of the company. So does this approach work and where does this book fit within the pantheon of personal finance?

Overview

Your Money Ratios is written for those with no financial acumen, it is a basic book appropriate for beginners who have no idea where to start. Mr. Farrell’s approach is logical and linear, he lays out the big four of personal finance – savings, investments, debt and insurance, and gives appropriate ratios for each based on your current age. How much mortgage debt should a 40 year old have? Based on Mr. Farrell’s ratios, no more than 1.8 times your salary.

The entire book is based around one goal, getting you to a comfortable retirement. The assumption is that you will retire around age 65 and will need approximately 80% of your pre-retirement income. Mr. Farrell’s ratios are meant to guide you along that path, no other. His suggested savings and debt ratios are tailored with that goal in mind, follow the steps and it should be an easy journey to retirement.

The Positives

This has to be one of the easiest personal finance books to read, it is simple to understand and logically written. Even an elementary school child can grasp the financial concepts that Mr. Farrell presents, so this book is accessible to anyone, especially those with no interest in personal finance. Mr. Farrell’s suggested ratios are also attainable, no need to eat ramen everyday and save 50% of your salary. The savings ratio is rather modest in fact, so you can balance today’s needs with tomorrow’s goals. I also like that Mr. Farrell addresses the least fun part of personal finance – insurance. It’s easy to overlook insurance and the role it plays in protecting your finances, Mr. Farrell makes a convincing case for why insurance is an integral part of your plan, not just another bill to pay.

The Negatives

First, a one size fits all approach to personal finance is rather limiting. It’s impossible to encompass each individual situation in one number, hence some sections of the book may not apply well to your life. Personally I exceed both the debt and savings ratios, perhaps because my above average income makes it easier to have high debt and still have enough left over for savings and expenses. My biggest beef though, Mr. Farrell takes an extremely conservative approach to finance. I need to repeat that, Mr. Farrell takes an extremely conservative approach to personal finance. For example, the investment section recommends a 50/50 stock bond split for everyone except near retirees, even 25 year olds with decades to go in the workforce. I understand his reasoning, a conservative approach is easier on casual investors who aren’t savvy enough to understand the risks they are taking. But this approach will alienate some readers, especially young workers who need his advice to get on the right path. They aren’t likely to listen to someone who recommends an investment split usually reserved for people their parent’s age.

Sections I Especially Enjoyed

There is an entire section of the book devoted to Social Security and the myths surrounding the future of the program. Generally young workers think that social security is going broke and won’t be there when they retire. This may be true, but it is an unlikely scenario. More likely, the program will still exist in a diminished form and you will only get a portion of the money promised to you. Unfortunately there are those with agendas on all sides helping to propagate these myths, a little reality is nice for a change.

Is Your Money Ratios for You?

In general, readers and followers of personal finance blogs are more money savvy than the rest of the population. For you, this book may be too elementary. It is really aimed at those with no money knowledge whatsoever, people like my dad! For the average American this is a great book to get introduced to personal finance. It’s easy to read and even easier to understand.

Check back tomorrow for more with Your Money Ratios and M, a look at how I stack up against the money ratios in Mr. Farrell’s book.

Another year has come and gone and for the most part, it was a positive one. On the financial side we are doing much better than I expected, of course the rebounding market had something to with that. At end of 2008 our net worth was around $33k, now a year later we’re hovering around the $80k mark! If we can keep up this pace of gains our financial future should be secure. On the personal front, Mr. M and I are finally tying the knot. It only took 7 years, LOL. So a wedding and a family are in our future and I’m sure financial planning will only become more complicated from here on out. So let’s look back one last time at 2009:

Savings – Poor savings accounts, they got raided last month to pay for house repairs. This is as low as it goes, everything has been paid for and next year’s goal is to build back up our savings. We still have the bulk of our money in a FNBO savings account, rates are generally low across the board and I haven’t found the motivation to move it.

Bonds – We continue to add to our snowflake bonds. It’s fun seeing how little chunks of change build up over time.

Sharebuilder – No trades.

T Rowe Price – We’re sticking with a $500 a month investment spread across a variety of funds. I actually want to invest more each month, but that will take a backseat to rebuilding savings.

Lending Club – We have a small amount invested with Lending Club, but it will never be a major component of our portfolio. We’ve had problems with two investments (loans) in a short period of time.

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

Wells Fargo 401k – In December I upped my contribution to 10% of my salary, this fund should really start to grow now!

Company ESOP – our company stock is structured as a retirement plan. I should receive a statement sometime this quarter on 2009’s value and stock allotment.

Roth IRA – I finally opened my Roth IRA at Vanguard and currently contribute $100 a month. Increasing our monthly investment is on my to-do list.

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 December the first installment of our 2009 property taxes were due, the remainder is due in April. I set aside $400 a month to cover property taxes and annual insurance bills.

Dog Fund – Still at $0, someday I hope to actually have some money saved for doggie emergencies. Lately they’ve come up quickly and often so I haven’t been able to get ahead.

Misc Fund – used for irregular or unexpected expenses

House Fund – Drained! Nothing left, in fact it’s about -$8,000 currently. I will need to rebuild this fund, after I rebuild our savings.

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.

Wedding Fund – set for September 18, 2010! My mom gave us some of her contribution as a Christmas gift, which helps explain the big jump.

Christmas Fund – obviously Christmas has come and gone, but the bill doesn’t come due for a few more weeks. One benefit of using plastic to pay, you get an extra month to fork over the cash. In the meanwhile my money is still collecting interest in the bank.

Care Credit – once again we have a balance on our Care Credit account. It is zero percent interest until the end of 2010, of course it will be paid off well before then.

As predicted our net worth dropped this month compared to the previous month due to some large home repair bills. Fortunately, everything has now been paid for. Unfortunately, this old house still needs a ton of work. With any luck we should be able to turn our fortunes around this month and start rebuilding that emergency fund.

Here’s to a prosperous, healthy and safe 2010!

Did any of you take a DIY approach to your wedding? I’ve helped friends with floral arranging, putting together programs and making centerpieces. Now I’m looking for ideas on DIY projects for my own wedding. We would like to craft a unique wedding, but we don’t have a lot of budget to work with. Handmade details, like wedding invitations or homemade centerpieces, add that special touch without adding a lot of cost.

Right now I’m looking at projects I can do in advance, like these pomanders made from silk flowers. Earlier I bought parasols off of craigslist, I want to stain them and decorate them with ribbons. These are projects I can do now, well in advance of the actual day. Other projects, like invitations, have to wait until later. I think a big drawback to DIY is the time commitment, I don’t want to find myself working like a dog towards the end to get everything completed. I’d like to lay out the tasks I’ll take on along with a timeline for completing them, so I don’t wait until the last minute or take on more than I can accomplish. I’m known for taking on too much, this is a time I need to keep it reasonable.

So, what were your DIY touches? What resources did you use? It’s easy to fall into the trap of spending more money while thinking you are saving money, this happens on DIY projects when you go overboard on materials. How did you save money on your DIY projects?


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Is everyone having a wonderful New Year? Hopefully you’ve recovered from your New Year’s Eve celebrations at this point. We went to a friend’s party and stayed out way past my bedtime. I think I’ve finally caught up on sleep. Unfortunately it’s back to work for me tomorrow, no rest for the wicked.

Wedding planning is taking up too much time right now, yesterday I drove to the venue to pay our deposit and get some additional information for planning. Today we met with a photographer who fits our price range (barely). It’s going to be hard to stick to a budget, the costs start to add up quickly. Also I’m having a hard time deciding what is most important and what can be cut. Right now I want it all! As with many things in life, something will have to give. I’m not about to go into debt over a wedding.

Happy New Year everyone, may all your financial goals come true.