Finance Gets Personal

The phrase “living paycheck to paycheck” gets thrown around a lot, but the truth is, I don’t really understand what it means.

Here are some possible definitions:

1. Not having enough money in savings to survive for a reasonable amount of time without a paycheck (i.e., not having a three-month emergency fund)
2. Spending your entire paycheck (or more) and not saving any money (i.e., not making any financial progress)
3. Commiting so much of your paycheck toward debt-repayment and/or savings that you are dependent on your next paycheck to pay upcoming bills (i.e., me)

I’m inclined toward the first definition, but I’m not sure. What do you think?

(This post was included in the Carnival of Personal Finance, hosted by Lazy Man and Money.)

Photo Credit: self portrait as a custom framing consultant by Maproom Systems, used under Creative Commons licensing

I was so proud of myself last year.

In 2007, my big, fat federal refund was in my checking account by February 15. It was the first time I hadn’t waited until April to do my taxes. Believe me, I know where the city’s post office that’s open ’til midnight on April 15 is.

This year…not so much. Once I figured out how much I owed/was getting back, I put my taxes in a pile on the floor until April 13. And you know how that went…

So, boys and girls, it’s time to get organized for next year’s taxes. It’s actually really easy (or, at least according to my definition of “organized.”)

Step One: Find a manila folder, basket, cookie tin, etc., and label it “2007 Taxes.”

Step Two: Put all your tax-related receipts in it as you acquire them. Look at your 2006 tax return to see what you had - receipts for charitable donations, medical expenses, mileage…you get the point. Then put your highly efficient organization system somewhere that’s easily accessible so you will actually use it.

Step Three: Set a date to do your taxes. Yes, right now. Employers are required to send out W2s by January 31, and my Outlook calendar says I’m free on February 9, 2009, so I’m going to make an appointment to start my taxes that day. I’ll set a reminder for the following week to finish up. Voila! Right?

(This post was included in the Carnival of Personal Finance, hosted at The Happy Rock.)

Ah, done at last…until we’re audited, that is.

Actually, I think we did our taxes correctly.  We finished last night after work and I even had enough time to watch Desperate Housewives before I went to bed. 

It’s such a good feeling to be done!  We didn’t pay any money, and, instead of owing $1,000, we’re getting a net refund of about $200 - enough to pay for the sump pump we had to buy this weekend.

Perfecto!

Photo Credit: let go by dlemieux, used under Creative Commons licensing

Sorry my posts have been a little irregular lately, but I haven’t been eating my Activa have been trying to finish my taxes. 

I thought I was almost done, but it turns out I hadn’t started the state forms (I have to file two state tax returns since I live in one state and work in another).  Also, I screwed up the federal return, so we started over last night.  At 2 a.m., I was basically begging my husband to let me push the button on TurboTax online to file everything for $170 or whatever it would end up being, instead of trying to transfer everything to paper (you see, we’re being cheap and doing it in TurboTax online - which is free until you hit the magic button - and transferring it to paper forms and mailing it in…this is a pain because you can’t see the actual forms in the program).

Of course, our paper results and TurboTax’s aren’t matching for the states, but we think we are the ones doing it right.  Oh God, what have I gotten myself into?  Hopefully we’ll figure it out tonight.  I’ve stopped talking about it at the office, because everyone uses an accountant and is like, “It’s totally worth it, and I don’t have to worry if it’s right or not!”  Screw you guys.

The good news is we’re going to come out slightly ahead instead of owing $1,000 (I think). 

If you haven’t filed yet, you probably aren’t reading blogs right now, but good luck!  We can do this!

Photo Credit: stress by vidrio, used under Creative Commons licensing

Today I spent $244, most of which was unexpected.

10 a.m. - Took my car for an oil change, tire rotation and a state inspection: $56 (this was the one I was expecting)

2:30 p.m. - Arrived to tea party bridal shower without adhering to the “Wear your best tea party hat!” instruction because I do not own such a hat and didn’t think it would be that big of a deal. Apparently it was, so I bought a kid’s Easter hat at a store down the street for $3.99 (and considered myself very lucky that it wasn’t $24, which is what I had presumed the going price for a tea party hat would be).

4:30 p.m. - Went to Old Navy to purchase a pink bodysuit and little pink and brown socks for my friend’s baby, who arrived early. I did pretty good with this one too - about $10 (on sale).

6:00 p.m. - Husband discovers sump pump has broken, new cracks have formed on foundation floor, and water is penetrating at the bottom of the foundation wall all around the basement. We spend half an hour dumping buckets of water out of the sump pump hole, and he purchases a new sump pump for $172.

Gee, what’s in store for tomorrow?

Photo Credit: Tea Party by ecospc, used under Creative Commons licensing

 
This afternoon, an unexpected hail storm blew through town. Seeing as how I was at work and we have uncovered parking, there was little I could do to protect my car (except run through the parking lot in high heels while dodging ice pellets and move my car into the underground parking garage across the street - which I watched others do to my great amusement).

So, I’m standing at the window in my boss’ office, listening to the hail pound against the building and thinking, “How much is my deductible again? How large does hail have to be to damage a car? Approximately what coin-size is the hail accumulating on the window sill? Dime? Nickel? Why are coins the standard measurement of hail anyway? My husband parks in a garage at work right? Because $500 plus $500 is $1,000. Thank God I didn’t raise my deductible to $1,000 - that would be $2,000!”

At that point, a coworker joined us and exclaimed that she was so glad she’d kept her deductible at $250 instead of raising it to $500, because that would have been $1,000 for both her and her husband’s cars.

This got me thinking some more. “Am I making a mistake by not having a $250 deductible? How many times have I had to pay my deductible - let’s see, once when that rock off a trucker’s tire broke my windshield (actually, I think I paid out of pocket for that one), once when my husband hit that car at a red light, once when I smashed my car into a pole during a snowstorm…”

However, after examining my car and finding no dents (hooray!), I’ve come to the conclusion that $500 is the perfect deductible for me.

Think about it: With a $250 deductible, you’re going to claim any little thing that happens to your car, which will drive up the price of your premium. By choosing a $500 deductible, you won’t be tempted to claim small amounts of damage (in fact, I would probably pay up to $800 out-of-pocket before making a claim to avoid the years of higher premiums). After all, car insurance is meant to cover catastrophic financial events, not a little dent in your hood.

So why not raise my deductible to $1,000, you ask? Well, for one, $1,000 is typically all of the money I have in my emergency savings since I’m working on getting out of debt. Two, I inquired about the price and it would only save me about $30 every six months. Perhaps when I’m well-off, I’ll self-insure for amounts less than a couple grand.

So there you have it: My virtually math-free way to determine which deductible is right for you.

(This post was included in the Money Hacks Carnival, hosted at Be Thrifty Like Us)

Photo Credit: Hail in Vancouver by Andriy Mishchenko, used under Creative Commons licensing

So far, my debt-reduction efforts have been leading to weight gain, not weight loss. After all, sitting in front of a computer for hours and not buying salads because they’re more expensive than burgers does not a thin person make.

I weighed myself on Monday and I’m at my highest weight ever - 143 pounds. Yeah, “boo hoo, tall girl!” - but I am seriously unhealthy.

Much like a person in debt, I possess the outward appearance of success - relatively thin, little beer belly carefully hidden by my empire-waist top, skinny arms and legs - but pinch me, and you’ll see that it’s all flab. Not to mention that I’m inflexible, haven’t tried to run a mile since high school and get sore from bowling.

Like getting out of debt, I figure that the first step to losing weight (beyond recognizing there’s a problem) is to stop digging (or expanding, as the case may be). This means that for the first time in my life, I’ve got to stop eating whatever I want. No more “get fat now, plan on getting skinny again later.” No more quarter pounder meals from McDonald’s. No more drinking regular Coke.

Just like a trust fund baby that’s suddenly been cut off from the ‘rents, I’ve got to come to terms with my slowing metabolism.

Step 1: Consume 1,616 calories or less per day to be on pace to lose 1 pound per week…

(This post was included in the Carnival of Debt Reduction, hosted at No Debt Plan.)

Photo Credit: Day 103 (Curves!) by verymissberry, used under Creative Commons licensing

Carnivals I Participated in This Week:

Carnival of Personal Finance, hosted by Money Ning, which included my post Financial “I Never” with Finance Girl (I had a fun time writing this post, but no, I wasn’t really taking shots).

Carnival of Twenty Something Finances, hosted by The Bag Lady, which included my post Childhood Money Memories, Part I as an editor’s pick. This post was also included in the Carnival of Money Stories, hosted by The Financial Blogger.

Money Hacks Carnival, hosted by Mommy Gets Paid, which included my post Why Did We Buy This House Again?

Great Reads Around the Personal Finance Blogosphere:

Snowflaking Will Melt Your Debt and More! from My Super-Charged Life - for anyone wondering what “Snowflaking” is and how to implement it, this is a great compilation!

There Are No Victims In the Housing Bust from Pinching Copper - read through the comments too - this has turned into quite the controversy.

Was That $1,000 Really Free? What We Are Doing With UPromise from Can I Get Rich On a Salary - here’s a good overview of the UPromise college savings program, from someone with more than $40 in their account.

The Freeloader’s Toolbelt: 50 Tools to Help You Get Anything Free Online from Free Geekery - awesome list of freebie links! I think I’m going to sign up for some free magazine subscriptions.

Tell me if this sounds familiar:

You’re planning on giving your sister a $20 birthday present - probably a DVD that she’s been wanting. You get to the store, and the DVD is on sale for $9.99. “Great,” you think, “Now I can buy her the DVD and a CD.”

Stop right there.

If you want to get out of debt, you need to gift at retail price. This means that if you can find something that’s worth $20, but on sale for $10, you stop shopping and snowflake the newly found $10 to your debt.

The recipient will never know, and you won’t have to feel guilty about cutting your gift budget.

(This post was included in the Festival of Frugality, hosted by Rather be Shopping)

Photo Credit: Closeup of a gift tag by ashleyg, used under Creative Commons licensing

Well, we all know that Memphis is going to win the NCAA basketball championship tonight (OK, so I’m making that up - I could really mostly care less.)

But which city would win a financial battle off the court?

Let’s compare the financial stats of these two cities, brought to us by our lead stat keeper, Money Magazine.

Median Family Income
Lawrence, KS: $60,673
Memphis, TN: $43,620

Family Purchasing Power (Income with Cost-of-Living Adjustment)
Lawrence, KS: $64,409
Memphis, TN: $46,702

Sales Tax
Lawrence, KS: 7.30%
Memphis, TN: 9.30%

State Income Tax
Lawrence, KS: 3.50% - 6.45%
Memphis, TN:  N/A

Average State Auto Insurance Premiums
Lawrence, KS: $1,837
Memphis, TN: $1,672

Job Growth (2000-2006)
Lawrence, KS: 4.42%
Memphis, TN: 0.12%

Average Home Price
Lawrence, KS: $209,297
Memphis, TN: $115,135

Percentage in County with a Health Plan 
Lawrence, KS: 91.4%
Memphis, TN: 88.8%

Average Amount Spent on Vacations Per Year
Lawrence, KS: $7,256
Memphis, TN: $6,471
(Really?!  Not sure which is “better,” though)

The winner of the 2008 Financial Championship (brought to you by Finance Girl): Kansas!

Whether Kansas will win the basketball championship tonight, I don’t know.  But at least now all us financial geeks will have some interesting stats to throw around the bar.