M is for Money

This week I helped a friend pick out a special outfit to impress the new man in her life. He invited her to a Kentucky Derby party this weekend and she needed the obligatory springtime dress and oversized hat to go with the theme. She tried on easily a dozen dresses before selecting the most flattering one, but when she asked me to check the price my heart sank. This plain little dress was $250 and she still needed a hat, shoes and accessories to go with it. In total she spent nearly $600 on an outfit for just one date!

When it comes to the cost of dating, people often think of the price of dinner and a movie or tickets to a concert. But women tend to spend a lot of money just getting ready for the date, on outfits and shoes or on make-up and trips to the salon. My friend’s $600 outfit isn’t the only cost of her weekend date, the dress still needs to be pressed and she is planning to hit the tanning salon too. Add in all the personal maintenance and upkeep to stay “date ready” and you are looking at a lot of money.

I shared in her excitement about the new man and possible new relationship, but I didn’t envy the expense! I remember the constant pull to look my best, including new clothes for each special occasion. Dating may be fun and exciting, but it isn’t cheap and I don’t miss it.

I’ve never been a fashionista but even I know that certain items of apparel, like Crocs, are an ugly abomination. They’re clunky and rubbery and no matter what color you chose, they are not flattering. But under all that ugliness lies one comfortable piece of footwear. I have a pair or two, mainly for around the house or for working in the garden. I wouldn’t think of leaving the house in them, except under extraordinary circumstances, like this past weekend.

My birthday came around last week and I only asked for one thing, a trip to the San Diego Zoo. We don’t have the room for any more stuff and an experience would last a lot longer anyway. The one drawback to my grand plan – 8 hours on my feet. I sit at a desk all day long so spending even a few hours walking is sure to cause aches and pains. But I thought with a pair of Crocs I might, just might, make it through the day. Amazingly enough, the shoes were so comfortable I wasn’t even a bit tired by the time we left, I could have kept going until dark! So yes they might be ugly, but if you’ve got a long day on your feet planned, Crocs rock.

April 15th came around last week, the last day to file and pay your 2009 taxes. We knew that Mr. M was going to owe money because he didn’t have enough withheld throughout the year. But there are a few ways to reduce your tax bill, even after 2009 has ended. I decided to take advantage of one such method in order to eliminate the looming tax bill – we opened a traditional IRA for Mr. M.

Traditional IRAs are typically tax deductible and in order to encourage saving, the government allows you to open and contribute to one as late as April 15th of the following year. It’s one of the few ways you can reduce your tax bite after year’s end. In our case, I waited until the last minute and opened up the IRA with only a few days to spare. Mr. M doesn’t have any retirement funds in his name, thus far our retirement planning has consisted of 401k’s through my work. Opening an IRA for him allows us to divert more money to retirement than I can alone, and in this case it also eliminated what he owed in income taxes.

Opening the IRA didn’t change our net worth, I took $3000 from savings and transferred it to the retirement account. Due to Mr. M’s tax bracket and income, this saved almost $700 that we would have owed in taxes. Even better that money will be invested and allowed to grow tax free for decades to come. Unfortunately I still owed for both federal and state taxes and because of my salary and 401k, I can’t deduct IRA contributions. But for many people, a deductible IRA is a great way to save for retirement while limiting what you owe to Uncle Sam.

A few months back I lamented about a change in company policy that amounted to a delay in my annual raise. Instead of receiving reviews and raises on the anniversary of our hire, the entire company would go through this annual rite of passage at the same time. According to the notice our raises would be prorated to reflect the changeover, higher for those who had to wait longer for a raise and lower for those receiving two raises in one year. I wasn’t expecting much of an increase since I had heard grumblings from co-workers dissatisfied with their raises just prior to the change, so I was pleasantly surprised to see a 4.4% increase from before.

Not long ago my company started to lay off some excess staff, which makes my above average raise even more surprising. While the deadwood definitely needed to go, I question why the company chose to lay them off now after holding on to them for so very long. The lay-off news caused many employees to question their future with the firm, but the bigger raises will clearly change some people’s minds. It is certainly a mixed message the company is sending!

Personally, I am keeping my options open. In addition to the one opportunity on the table (to go work for my current client) I have another offer I am pursuing as well – to start my own firm. I met this week with my occasional business partner to discuss an upcoming full-time project and I am starting to think that working for myself will bring me greater satisfaction (but less job security). Even if these opportunities don’t pan out, at least I still have a job where I’m at!

As I hinted in an earlier post, there have been some big changes in my life lately. I am sure some may have speculated about the state of my impending marriage. Well Mr. M and I are still together, but another major relationship in my life has ended – the one I had with my parents.

I’ve always had a tumultuous relationship with my folks, for whatever reason our personalities are very different and they have a hard time accepting me for who I am. When I turned 18 I moved as far away as possible, 3000 miles to the opposite side of the country. Everything was going fine until my folks divorced two years ago, suddenly my mom decides to move to my neck of the woods. My initial instinct was to run, far far away. Distance was the only way I could deal with them. But we stuck it out (since we’re stuck with our house) and attempted to have a normal relationship with my mom. Unfortunately, that all blew up a few weeks ago when Mr. M was a little too honest with her.

My parents have never liked Mr. M and this was their chance to make their feelings known. I could understand their anger but when they announced they would no longer support our wedding or even attend, they crossed the line. Much of my life energy has been consumed trying to make them happy, trying to win their approval. I should have accepted that it is a hopeless cause, I make them unhappy just by being me. So for my own peace, and probably theirs as well, it is best we no longer have contact.

As if reliving all manner of childhood trauma weren’t enough to deal with, I also need to make a decision about the wedding. If you recall I wanted to elope, just Mr. M and I. But I thought eloping would break my parents’ hearts, so I planned a traditional wedding just to please them. We set a date, picked a location and put down deposits, all for people who are no longer coming! Now I need to decide, do we go forward with what we’ve planned, or scrap it all and elope. Scrapping our plan means losing thousands of dollars of deposits, going forward with our plan will require shelling out thousands of dollars we hadn’t planned to spend. It’s a lose-lose proposition and both choices are causing me nothing but grief, ironic for what is supposed to be the happiest day of your life. For now I’ve decided to put off the decision, there is no reason for me to make up my mind this minute. My emotions are too raw and my thinking too cloudy. Of course there is a lesson in this story, if you try to please everyone, you will end up pleasing no one.

I’ve been distracted lately and haven’t been keeping an eye on my finances like I normally do. I’ve managed to pay the regular bills on time, but I forgot one very important bill that only comes due twice a year – property taxes. It would have cost me hundreds of dollars in late penalties if I hadn’t been saved by the calendar.

Our annual property tax bill is broken up into two installments, the first due in December and the second in April. The bill itself arrives in late summer or early fall, so it’s on you to remember to pay it months later. I set aside money each month to cover property taxes, so coming up with the cash at tax time is never a problem. But obviously, remembering to pay it on time is still an issue. In this case I remembered on Monday, April 12th that taxes were due two days earlier on the 10th! I started to freaked out, I’ve never been late on the taxes before. I found the tax bill in my bag and my heart immediately sank, according to the paperwork it would cost me $200 more because I hadn’t paid on time. Stupid stupid stupid! I immediately headed online to pay the bill, hoping to find some mercy.

I was pleasantly surprised to see the online version of the bill said it would be past due if not paid by April 12th, the same day that I remembered to pay it. I can only figure the two day grace period was given because the 10th fell on a Saturday this year. I got lucky, very lucky. Of course there are things you can do to prevent this sort of slip-up:

-Don’t wait until the last minute
-Set up a reminder system
-Automate payments when you can

I think it’s time I developed a better system of keeping track of such things, relying on memory alone is prone to failure. In this case I was saved by the calendar, in the future I might not be so lucky.

I apologize for the lack of posts lately. My life has taken a sudden, unexpected turn, and it's all I can do to hold on and figure out my next steps. I'm finally starting to feel normal again and I'm hoping to get back to life and the blog in the coming weeks. Of course there are financial aspects to any major life event and I'll be detailing those in posts to come.

Despite the stock market recovery which started in March of 2009, some vestiges of the crash remain. I discovered one example recently while reviewing my taxable investments. In this case, the market crash has created an opportunity that did not exist a few years ago.

Closed Funds

There are generally few restrictions on who can invest in taxable mutual funds, but occasionally funds are closed off to new investors. This is meant to keep the fund to a manageable size if/when it becomes popular. Those who previously invested in the fund can still add to their holdings, but the door is closed to new investors wanting in. Well when the market crashed many investors pulled out their investments, leaving a void in their wake. To fill the void, some previously closed funds have opened themselves up to new investors and new money.

Reviewing my Funds

I noticed this as I was checking the performance of the mutual funds I currently hold. I wanted to confirm I was holding the best mix of funds for my goals and was researching what other options are available. Suddenly I realized that fund ‘A,’ a previously closed fund, was now open. Years ago when I was picking my investments, fund ‘A’ is one I really wanted to hold, but couldn’t. The fund I chose instead has been a bit of a dud, but without better options I stuck with it. Now, there are new opportunities on the table and it’s time to take advantage of them. I just changed my investment selection dropping the dud in favor of fund ‘A’ for the near future. I still need to call the fund company and move over the old fund’s balance to the new fund.

Opportunity Knocks

While the crash itself did great harm to portfolios everywhere, it also created new opportunities for investors like me. It opened the door to popular, previously closed funds. Now is a great time to review your investment choices to take advantage of these newly opened funds, it’s an opportunity that may not last.