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Credit Scores

October 31st, 2013 at 10:25 am

If you're like me, you've wondered at some point how they come up with that strange "credit score" that all of our borrow, and many of our payments are affected by, if not controlled by. I was browsing the Experian site, and came across the following.


30% of your credit score is based on your credit usage
Credit usage refers to how much money you've spent on accounts that have credit limits, such as credit cards. Also called a utilization rate, it measures your total balances compared to the total of your credit limits. High credit usage or utilization rate is a strong indicator of credit risk and can lessen your ability to gain new loans.

31% of your credit score is based on your payment history
The most significant factor in determining your credit score is your payment history and making your payments on time. Late payments remain on your credit report for 7 years from the original delinquency date. The original delinquency date is the payment date that was first reported late by your creditor.

15% of your credit score is based on the age of your accounts
Having a lengthy credit history shows lenders you have an established record of managing your debt. Closing older accounts, such as credit cards could negatively impact your credit score. Experian retains closed accounts with no negative information associated with them for 10 years from the date they are reported closed. As a result, positive credit information remains on your credit report longer than most negative information, such as late payments.

14% of your credit score is based on the types of accounts you have
There are four basic types of credit: Real Estate Loans, Installment Loans, Credit Cards, and Retail Cards. Having a good mixture of credit types along with high quality accounts, such as a mortgage loan, shows lenders you can manage your credit responsibly.

10% of your credit score is based on inquiries or "credit checks"
Every time you apply for credit, a "hard inquiry" is placed on your credit report. Having too many hard inquiries could indicate to lenders that you're trying to overspend. Hard inquiries stay on your report for 2 years.


So that's at least how one bureau does it.

Updates, Not All Financial

October 29th, 2013 at 09:17 am

I guess I've waited long enough to post again here.

My mother and father are doing as well as can be expected. My father had a simple heart procedure - pretty much an external one-time pacemaker-level shock - to quiet his atrial fibrillation. Everything is now hunky dory, there. He also had a stress test and pretty much passed with flying colors. He has the heart of a thirty year old. Not bad for a 78 year old, I'd say.

On the not-so-good side, my mom's dementia is progressing. She's also been diagnosed with mild osteoporosis. My younger brother (divorced and kids are grown) moved in with them to help them out. My dad is in great shape, but he is still 78 years old. Getting old really stinks. Baby brother is now job hunting in the Richmond, VA area. I don't know the job market there, but he's always managed to do well. I'm just glad there's someone younger around in case my folks need the help.

MIL is now in a convalescent home recovering from her surgery. She's not extremely healthy, but they're very optimistic that they got all the cancer. They're still putting her through a round of treatment (I think radiation), but I think that's more precautionary more than anything else. She is slated to be back in her house before Thanksgiving.

My knee MRI results are "bad, but not bad enough for surgery." They didn't add, "So deal with it," but it almost sounded like they said it, to my ear.

On the financial front, DW has finished installing the new french doors. I really like them, and they came in a few thousand dollars under budget, but still a few thousand more than I wanted to pay. I will admit that the installers did a better and much quicker job of it than I could have done. I know they're better than the old doors, because when DW and I were on Facetime, she opened the new door, I immediately heard the train whistle from about ten blocks away. With the old doors, I'd have heard the train before she opened the door. DW also says they seal better than the old doors. Maybe this will get our utility bills under $100 per month. That's a milestone I wouldn't mind hitting. The bills were originally in the $400 per month range when I first started energy upgrades.

The painters have also finished repainting inside and out. When they started, I felt this wasn't really necessary, but they found some water damage, which was repaired relatively early. If they had not found that damage, I'm sure I would have had a much larger bill to fix the additional damage whenever the damage would have been later found. So, although I didn't want the house repainted, it was a good thing DW had it done, after all.

Debt repayment is progressing apace. The doors are two payments away from complete. We put them on a 0% card just for the convenience factor. We could wait longer to pay them off, but I'm just as glad that they'll be paid off before January. I hate credit card balances. DW's car payoff is going OK. Still a ton owed, but with a 1.19% interest rate, I'd rather leave my money in the mutual funds than pull it out for the car. We'll just cash-flow the payments. It should be paid off in less than two years, and maybe sooner.

I sent the "contract" about the Bank of Mom & Pop loan to DD2 and SIL2. I told them that there was no need for a signature - it's not like we'll sue them if they don't repay it - but I wanted to make sure everyone was aware of the terms. I included a "late payment" penalty of 1% per month after 90 days, but I set back the "first payment" date to January of 2014. They were happy with the terms (0% interest and about a ten year term), which is not surprising.

About my bonus... I'm quite upset. They still haven't paid me for my April bonus. They have reasons, but those reasons are now sounding like excuses to me. Things go more slowly over here, but we are beyond a reasonable delay, in my mind. I plan to speak to our CFO tomorrow to sort this out once and for all.

I will be traveling back to the US over the Thanksgiving holidays. I hope to see my folks and all of my brothers. All four of us children are planning to be there, but I haven't got the details of their planned visits. Time is growing short, so I need to get on the stick about this. It has been over 25 years since all four of us got together at the same time. Two of us live in Texas, though I reside in Dubai. One lives in the DC area. My folks are just outside Richmond, VA. Baby brother just moved in with my folks from Kansas. Maybe his move means we'll all get together more often, but probably not. We keep in touch by phone and such, but to actually get all of us in the same city has just not happened much. It is mostly my fault, as I've lived in Europe and the Middle East for much of my life, and traveled frequently for my entire adult life, rarely visiting when I'm not on the road.

DW and I slowed our mutual fund purchases to cover the water damage repairs. It turns out we pretty much skipped October, but we'll make it up in December, or when I get my bonus. I could pay off DW's car with the bonus, but it's ear-marked for retirement instead. That's part of the "great car compromise" DW and I made. DW's early move back to the US is having more of a financial impact than I would have liked. She has held off on buying new furniture, at least, other than the beds and other assorted items. Only one room really needs new stuff, but of course it's the living room. That's better than another Tempurpedic mattress, anyway.

Won't Power

August 25th, 2013 at 02:19 am

"Won't Power" is a new phrase I've just coined. It is the opposite of "will power."

How do you use your won't power? When you're at the store and you see a cute outfit that would be great for work, but that you don't have in your budget? You tell yourself, "I won't buy it." When you pass by the candy aisle at the grocery store, you tell yourself, "I won't need those calories." When you see the iPhone X come out, you say, "I won't need any new functions, my old phone still does what I need."

How do you develop "won't power?" You keep looking at the big picture down the road. Do you want a house more than you want those shoes? Do you want to fund your children's college more than you want that mocha latte? Do you want to get rid of your debt more than you want another 0.3 inches on your phone screen? Do you want to retire and travel to see your grandkids, or do you want to rely on social security to pay your electric bill?

I think I've got some problems keeping my won't power at full strength, but it's definitely better than it has been.

Lastly, the bane to "won't power" is "want power." If you really, really, really want that big screen TV, it's hard to muster the "won't power" to overcome the urge. Maybe tape a picture of your child and a photo of your diploma to your credit card. That should tend to limit the want power and reinforce the won't power, I would think.

Babyboomers' Finances

August 3rd, 2013 at 04:23 am

http://www.zerohedge.com/news/2013-07-28/35-facts-scare-baby...

This article, which links to sources that may or may not be genuine or accurate*, makes quite a few interesting statements.

I don't know how true it is, but I don't doubt the vast majority of the statements. Some of them that give one pause for thought:

2. According to one recent poll, 25 percent of all Americans in the 46 to 64-year-old age bracket have no retirement savings at all.

8. Today, one out of every six elderly Americans lives below the federal poverty line.

13. A poll conducted by CESI Debt Solutions found that 56 percent of American retirees still had outstanding debts when they retired.

34. According to a recent survey conducted by Americans for Secure Retirement, 88 percent of all Americans are worried about "maintaining a comfortable standard of living in retirement".


That last one is at least a little bit encouraging. At least most people are aware that something is wrong. Maybe a few of them might actually do something about it.


* I didn't check the linked sources and I'm not vouching for the accuracy of any of the items listed in the linked article itself.

Vent or Explode

August 2nd, 2013 at 08:31 pm

Arrrrgh! Just got off the phone with DW.

Begin rant

DW and I used to have very significant non-mortgage debt. Through diligence and dedication, we paid off or sold off well over $100K in a relatively short period of time. We've been "except for mortgage" debt free for quite a while, and the money has been going to retirement accounts and investments since then, as well as accelerating the mortgage pay off.

We were left with our only debt being a relatively low mortgage principal due. Late last year, I had worked out an amortization schedule on that (remember, I'm still an Excel nerd), and determined we could pay the whole thing off in less than a year. I ran some numbers on a refinance and determined that the interest rate reduction wouldn't cover the closing fees over the period we could reasonably expect to pay off the loan.

Fast forward to now. DW is back in the US setting up home again in our "old" house, and she's spending like a Congressman who doesn't have an opponent for the next term. Between the BMP loan to the kids, a new bed (gotta be Tempurpedic, not just memory foam), a new garage door (yeah, that's an emergency, right?), repainting the outside of the house that really doesn't need it except for cosmetic reasons (paint is for protection, not beauty), the two sets of new French doors, and her new car LOAN... well the EF is gone.

She's starting to use the credit cards. I told her that I'm NOT cashing in any of the mutual funds for this (after tax, no penalty, but we're not going to touch any retirement funds until we retire). I guess now she's going to buy all new furniture and probably have the driveway re-paved.... Sorry, that's hyperbole and frustration, not actual plans. At least she hasn't mentioned all new furniture (yet?).

Anyway, all the work to get us out of debt is being thrown away. I let her get the car loan in a compromise, and now she's continuing - no accelerating - the spending without any more compromise.

To top it off, she's even asking to decrease the amount we had agreed to pay toward the mortgage in the "great car compromise." For that one, I told her a flat-out "No, we're going to pay the amount we agreed to." I even "threatened" to pay the note from here rather than transferring the monies to her account which has all the autopays. She agreed to keep that compromise, but I think that she just wants to make those Jones next door envious.

End rant

Now that I have that out of my system...

There's nothing she's doing that we hadn't planned to do over time, but she wants to do it all right now. The problem is that she's putting us back into debt and also killed our EF at the same time to do it.

Does anyone have any advice for me when I talk to her next time? I swear, this feels like she's an alcoholic who skipped out on an AA meeting to go to a bar.

Stewlash and E-Trade

July 21st, 2013 at 12:47 am

I finally got around to transferring some funds from an E-Trade account set up by a previous employer. The money has been sitting dormant for about a year. I really should have done it sooner. I've lost out on about 20% gains by not doing so. Oh, well. It wasn't a whole lot of money, but it was still money lost through laziness.

On the Dubai homefront, I made stew yesterday. Then I added a lot of vegetables and a can of tomato sauce, so it is now a stew-goulash crossbreed, which I have coined as "stewlash." It was really good, but as always I used too much black pepper, so it has a bit of a bite.

I ate about a third of it, and put the other two thirds up in the freezer for lunches over the next month or so. I'll make chili sometime this week after I finish cleaning the crock pot. I always soak the ceramic liner for a day before I hand clean it, both of which precede me putting it into the dishwasher. I hate crusty remains from bad dishwashers, and there's no such thing as a good dishwasher in my experience.

DW is getting the house in order. Houston has been getting a lot of rain, so the lawn is coming in nicely where we had to mend the DD2's destructive "improvements." We have mushrooms now, which is not bad, but I asked DW to put down some Daconil (a fungicide) to help prevent future brown patch. I also told her I have Banner (another fungicide) in the shed, and for her to be ready to put it down in a couple of weeks if brown patch encroaches regardless of the Daconil treatment.

While I was doing the E-Trade move, I looked at my Vanguard holdings. They're up about 20% for the year. I know that will dip when QE stops, but it sure is nice to look at it now. I only wish I knew when the dip was coming. Yeah... I know: "Market timing." But you know the dip is coming, as it is unavoidable mathematically.

Porcine Lipstick and Reality

July 14th, 2013 at 07:17 pm

I just got off the phone with DW. She's met with our financial advisor, and of course sent me forms to sign and instructions to follow. She said it might rain today, so we'll save a few dollars on watering the new sod we put in.

DD2 and SIL2 have started the structural changes in their new house, and found that one of the walls she wants to pull down contains the risers for the plumbing upstairs. She's bummed, but they're going to do an archway with support beams (rather than just a stand-alone column to conceal the plumbing) instead of only the breakfast bar with no verticals. I'm sure it will look fine.

The Bank of Mom and Pop has extended the credit line to DD2 and SIL2 to accommodate a new fence. SIL2 had great plans to put in a new fence by himself, but I'm not surprised he's not doing this one. I've done fences before, and even using a two-man auger, postholes are a pain in the butt to put in. He's not all that mechanically inclined, so they got a bid for others to do the fence. The old one is already torn down and the new one should be going in as I type.

DW asked why parts of our house are cold and other parts are not-so-cold. I told her it's because it is an old house, and DD2 doesn't run the ceiling fans, closes all the doors, and blocks all the air flow from the registers back to the inlets. I told her to just leave the doors open and all the ceiling fans running and that things would moderate. DD2 cannot be told anything that doesn't agree with her preconceived notions. She thinks that air conditioning should work according to her desires and not according to physics. I can't wait until she starts seeing the results of her ideas in her new place. Remember that I've done thousands of dollars in energy updates in my 1950's bungalow. She refused to do the updates in her 1970's Brady Bunch place.

The puppies are loving the yard, still. I, on the other hand, mopped the floors this evening. I miss the vacuum cleaner aspect of those two.

Credit Score update

July 13th, 2013 at 08:50 pm

I was going to go to bed, but I checked my credit score on Credit Karma just now. In my April 20th post about credit scores, I said that DW had a credit score approaching "deity," while mine was close to 100 points lower than hers. Her score was so high, I'd think that folks would PAY her to borrow from them.

When we went to the US, we got a new car for her. This put two new inquiries onto my account; that should've been just one, but I'm not worried about the inquiries. Inquiries are "negative" in effect on credit ratings. We also borrowed a healthy amount, increasing our debt-to-income ratio, which is another "negative."

So, what was the result of adding two negatives to my credit record? The score went up to nearly DW's level after nearly six months of just sitting where it had been.

As I said in the comments to the April post: I just don't understand credit scores or how they work.

Back in Dubai

July 13th, 2013 at 04:56 pm

Well, the hectic trip was "hecticker" than I imagined it would be. We made it to DS's wedding and met his bride's family. They seem to be really nice folks. Almost all of the older men at the wedding were US military veterans, from both sides of the family.

My parents were not able to make it to the wedding. I was warned that my mother has symptoms of dementia, but when we flew to VA to see them, I found out the brutal truth of the situation. My mom remembered me, but she kept asking my wife who she is. It is really quite sad, but my father is coping with it well. Luckily, they are well-set financially for their retirement, so his only worries are taking care of my mom.

DD2 and her hubby (SIL2) have closed on their house. They haven't moved in yet as they are having a lot of work done before they move in. They are replacing all of the floors and painting. I suggested they replace the windows and put in more attic insulation, but instead they are doing the cosmetic changes.

I helped SIL2 put in some purlins in the attic (like there would be purlins anywhere else). I left my nailer and compressor at his place and showed him how to determine if a wall is load-bearing. I also showed him how to brace back to a load-bearing wall for the additional purlins he's going to have to put in. DW is working with DD2 this weekend to help her paint the inside.

Their contractor has finally given them prices for some of the interior changes. His prices are in line with the amount of work to be done. In addition to our house-warming gift of $2K, we're making them a substantial "Bank of mom and pop" loan as well. We're making them sign some papers, but that's more so that everyone knows the terms than for any legal purpose. I seriously doubt that we'll do any legal action if they don't pay us back. Of course, I'm sure they will pay us back, else I wouldn't have approved of the loan.

I spent the remainder of my time doing repairs on the house DW will be staying in. She insisted on a new Tahoe, and I made her get the LTZ model. If you're going to have a new car, you might as well get a good one. We financed it with our CU, who offered 1.49%, but after negotiating the deal, the dealership asked what our interest rate was. He said he could beat it, and therefore our rate is actually at 1.19% through Capital One. That's not a bad rate, in my book. DW should have it paid off in about 1.5 years by the amortization schedule we worked out.

Homes in my neighborhood have fully rebounded from the "soft" hit they took during the downturn. Empty lots are going for exorbitant levels. The house beside ours is listed for $1250 per month as a lease, and it is significantly smaller and less well-kept than ours. Rental estimates for our place are about $2K. I have considered selling it, but every time I look at its value, it has gone up yet again. Right now, it has increased by over $60K in less than a year. Although those are unrealized gains, there's no way I'm going to sell until that pace of increase abates.

So, now we have a car payment again. I can't say I'm happy about that, but at least DW has a safe car to drive in. This trip also put our house payoff schedule back a few months. It looks like we won't have it fully paid off until the first quarter of 2014 now. Oh, well, the best laid schemes of mice and men oft go awry, as the Burns poem states.

I'll be back at work in the morning, and have already received about 10 phone calls about minor issues that needed my input. I guess I'll need to get back into office-work mode this evening. I won't be taking any more time off for at least 6 months.

Ramadan started this month. "Ramdan Kareem!" to those of you who follow the tenets of Islam.

Trip back the US around the Corner

May 27th, 2013 at 01:16 am

Well, DW and I are getting ready to head back to DS's wedding. We're going to do quite a few around-the-US trips as well. We got our airplane tickets and car rentals already arranged and paid for. Total out of pocket for two cities and about ten days is just at $700. That includes rental car, hotels, and plane. I used up some of my frequent flyer and frequent stayer credits for this, which made the price less than 30% of the fares and fees otherwise.

Our dogs go to the vet next week for their "preflight" check up. That should be all in order.

I have hired three people at work this week, and still have two more contracts to sort out. We're growing by the proverbial "leaps and bounds." My group has tripled in size since I arrived, and it looks like we're going to double again this year. That will be literally a 6 times increase in just two years. It's hectic, let me tell you.

DD2 has purchased a house. DW and I are going to give her $2K toward new floors. We're also helping DS pay for his wedding. June is going to be a "thin" month for us.

DW and I have worked out a compromise. She is going to get her new car. She's also going to live at our "old" house, at least until the car is paid off. We're going to use "her" money to go toward the car, then use "our" money to cover the remaining payments. Had we had more notice, we would have saved up for her car, but we're moving up her return to the US by six months due to circumstances beyond our control.

We also have to budget for her return trips to Dubai. I'll be staying on in our apartment over here. I've hired a "number two" in my group, and will be leaving him in charge when we return to the US. It isn't fair doing this right before we return, but he knew the score when we made the job offer. I'm really happy to have hired both him and our new operations supervisor. They wanted large salaries, but they're both worth it, in my opinion. Only time will prove out my beliefs.

Things are looking to be pretty good for June. I should know my bonus amount this week. I hope it is large enough to offset some of our upcoming expenses. It should be, but one never knows until the figures are written down and certified.

Credit Scores

April 20th, 2013 at 11:06 am

DW and I were looking at our credit scores on Credit Karma or Credit Sesame (no way I'm paying for curiosity information). Her score is up to "deity" level. Mine is still somewhat below "hero," probably in the "champion" range.

Basically, her score shot up by about 35 points to the "nowhere to go but down" range. Mine is still "very good," but there's a lot of both up and down potential. When we look at the basis behind the scores, we both score A in every category.

I'll never understand credit scores. Our credit has been married for over 6 years. Anything bad on mine from before should have fallen off.

Good thing we pretty much ignore these things. There's something about walking into a car dealership and saying, "We don't care about payments. All discussions will be referencing bottom-line, drive-out , we're-done-forever pricing. If you send me into the room with the lady who wants to sell me undercoating, pin striping, and extended warranties, I'll say 'yes' to everything she asks. Just be aware, though, that the number you and I come up with is the final answer, so you won't get another penny above that, no matter what you throw in for free."

We're currently saving to purchase our retirement home outright. I doubt I'll need a mortgage broker, and the title company will be someone I hire, not one hired by the bank or some other entity. I guess I've learned that doing things yourself saves money.

Still wish I knew why my credit score isn't moving at all. We pay our present mortgage on time every month.

Money, Debt, and Credit

March 23rd, 2013 at 03:49 am

CreditCardFree posted an article about her friend spending her tax return on unnecessary items.



http://creditcardfree.savingadvice.com/2013/03/22/backwards-...

This got me thinking about how I used to view things. I started to reply in the comments, but my "reply" turned in to a longer post than CCF's original musings. That, in turn, spawned this post.

In the US, and probably much of the developed world, "available credit" has become synonymous with "money." Think about how you were before you devoted yourself to paying down your debt: As long as you were still below your credit limit, you could afford to buy something.

Did you not think "I still have room left on my credit card, so I can afford this?"

From this revelation, I realized that "available credit" has become conflated with "money." If you thought that the two were the same thing, then there would be absolutely no reason to pay off debt with your tax return. Follow the reasoning in the next paragraph.

I have a $3000 tax return. I have a $12000 balance due on my $20000-limit credit card. Therefore, I have spending power of $11K. If I pay off my debt with my tax return, I have $0 in cash, and $9K due on my $20K balance. Therefore, I have "spent" my tax return for no gains in my ability to buy things. Therefore, I have "wasted" my tax return for nothing.

How many of you had thought processes similar to the preceding paragraph? You may not have thought it through quite so logically (self-anointed nerd, here), but does it not encapsulate how you actually thought about money and credit? They're the same thing in the minds of those who have not had the epiphany that "debt is bad" that most of us writing in the blogs on SA have had.

And this is why most folks don't understand us, and most folks are not paying off debt, and why most folks are going to panic again when the next downturn happens.

Money does not equal available credit. If you realize the wisdom in referring to them as "debt cards" instead of "credit cards," then you understand why we're paying off our debts. Maybe we should all start calling them "debt cards" instead of "credit cards" when we talk to others. Maybe we can start a trend that has a positive effect.

More likely, though, we'll get talked about behind our backs for not knowing the "right" words for those plastic swipe things.

Take That, Washington!

March 16th, 2013 at 03:34 am

Well, at least this year living in Dubai worked out. I just finished my taxes, and I owe a whopping ZERO dollars.

Plus, I'm getting a refund. I usually don't take my refund, and leave it in for next year's taxes, so this year, the tax package I used didn't give me that option hence the fact my last year's "leave it in" option is now this year's "get it back" requirement.

I realize that leaving my "refund" with the IRS means the government gets my money tax-free, but they need it worse than I do, and I prefer to have a bit more buffer at tax time than most people. Besides, it's their money anyway. Just ask them.

Next year, I'm going to have to pay quite a bit in quarterly payments, which is a bit daunting for me. The way my pay is structured worked out for me this year. Next year (2013 taxes) is going to hit very hard. I hope they don't make too many changes at the last minute (sequester and end-of-year changes like 2012, anyone?) since the quarterly estimates are going to be hard enough to figure out without last minute changes.

There goes the Budget!

March 14th, 2013 at 08:27 pm

I got a call from DS a few days ago. He has decided to marry his (now) fiancee. They've been dating about three years. She graduates in May. They're getting married in June. At least they waited until after college to get married. DS has been out of Uni about three years, so he's just now hitting his stride on earning potential.



The problem is that we had not planned to come back to the US until July or August. Two months isn't a lot of time to change our plans, and we have promised to "help out" on the wedding. How much we help will probably depend a lot on how well DS is doing with his income. If he's making wise choices, we'll help more. If he's not making wise choices, we'll help less. We really can't make that decision from a distance.

DW and I are thinking of giving the new couple a gift of enrollment in Dave Ramsey's class. I don't really agree with 100% of DR's teachings, but you can't argue with success. I am about 99% sure DS has put himself in over his head in debt, due in large part to my past performance which he witnessed. It's never too early for him to start to think about retirement. There's no way to plan for retirement while "improving" your credit score.

Anyway, this is only a bump in the mortgage-pay-off road. If we get my bonus on time, then we should be able to overcome any difficulties that this wedding will cause with our budget. If we don't get the bonus on time (you'd have to know our CFO to understand why this is a possibility), then the timing of the wedding will hurt. DW and I have decided to slow down the mortgage pay off and concentrate on vacation/wedding savings instead.

I am certainly blessed to be saddled with the "good" problems I'm now facing. Of course, I've worked for over 30 years to get this overnight success. God's been smiling at me recently, and I'm really thankful for His help. (I apologize to those of you that might find this last statement offensive; however, I am obliged to acknowledge Him in my current situation.)

Paid a Stupid Tax

March 3rd, 2013 at 02:08 am


Followers of Dave Ramsey know what a stupid tax is. For those of you who do not know, a stupid tax is money you lost, spent, or had to pay for doing something that, in hindsight, is stupid.

In our case, DW and I are intent on eliminating our mortgage. We are so intent on it, that when a milestone presented itself as being "in reach," we reached out and grabbed it by paying more than we had planned for February.

Well, the bank statement had a $12 fee... What the heck?! It's "free checking!" As I live overseas, I cannot make a direct deposit. Therefore, free checking requires a $1500 minimum daily balance. Well, we dipped below $1500 for a couple of days, and whammo! $12 down the tubes.

Now, a lot of folks would tell me to go to the bank and complain to get my money back. I have a very strict code of ethics. If I were in the right, I would definitely complain - loudly and long - until I got the charge rescinded. In this case, though, I was in the wrong, and therefore will pay the fee.

The real kicker is that we have enough money in our other accounts that we could have easily transferred the money before sending the payment and avoided the fee altogether.

I hope it is "lesson learned," and we don't incur the onerous fee again. I think the $12 amount is outrageous, and when I get a chance, I'll be transferring my accounts to my "other bank." We have avoided doing this so far, only because of all of the direct withdrawals we have coming from the current account. The twelve dollars is our incentive to make the effort to get away from what Clark Howard terms "the big monster megabank."

Not such a good trip

February 15th, 2013 at 02:45 pm

I finally get to go to East Timor day after tomorrow. When I arrived, I went straight from the airplane to the helicopter. I didn't even clear Timor L'este's customs or immigration, but I get to on the way back. I have one night to overnight in town.

DW hurt her back while I was over here. The boss is helping out by getting her to the doctor and physical therapy. They're doing some kind of massage, steroid, and machine-assisted (shock and ultrasound?) therapy, but it isn't helping. There's nothing I can do from over here.

This job has been the definition of "snake bit." Every time we fixed something, something else was found to be wrong. We go "back on contract" tomorrow morning, which means the folks paying for this excursion start getting money from the client again. At least we saved them on the two-year contract overall.

The only good outcome from all of this is that I have had nothing but "no spend days" since I've been here. DW was left with minimal funds and there is absolutely no way to actually spend money here offshore. DW has an account with several thousand dollars in it at her fingertips. Were it an emergency SHE deemed worthy, she could spend it, with the understanding that I reimburse it immediately upon my return. Apparently, in her mind, doctor visits and medical treatments are not emergencies.

I wonder what IS an emergency in her book? I'm thinking "alien invasion or asteroid strike" apparently.

Oh, she has credit cards, as well. I did not leave her without resources. I travel fairly regularly and on short notice, so we have contingency plans set up for just such instances.

This means that we'll be 100% back on track for the mortgage pay off. Although it is still 8 months off (maybe more, maybe less), I can almost smell the smoke of the paperwork. I hate this part of paying off things; the anticipation when it is still a bit far off.

Hit the Emergency Fund

January 25th, 2013 at 02:51 am

On January 10, a notice went up in the elevator that on 21 January 21, the barriers and building access systems would be activated, so you needed to have your cards.

I had applied for my card in November, but - with typical Dubai efficiency (NOT) - I still had not received mine. I waited until two days before the "drop dead" date to finally go to pick up the access cards.

Well, even though I had a receipt that said all fees were current up until July 9, 2013, it seems a new fee was due at the end of the year. Note that had they issued the card when I applied, this fee would not have been due, and I would not be in a position to need access cards in two days.

The fee due was about $4,000. I called my landlord who said, "No, I'm paid up through July." Yes, he had the same receipt. As I needed access, I paid the fees, then wrote a synopsis of the problem and copies of all bills and receipts to the landlord.

As I now had access to all of the paperwork, I worked out the amounts. My Landlord has to pay over $6,000 per year for maintenance fees, facility-access fees (gym, beach, pool, etc.), and parking fees. In addition there is a general-fund fee that goes to who-knows-what. How would you like to have condominium fees at that level? That's what the high price of living in Dubai is like.

Landlord has promised to refund the amount. I don't know when or how we can get the money, though.

DW and I went out and got groceries at a new store last night. They had American items like pop tarts and taco mix. We cannot even find chili powder over here - we did find cumin and cayenne, so we have the basics of our own - so we spent a bit on some "home country" food we wouldn't normally buy. It came to just under $200 for maybe 6 bags of nearly nothing. Just to give you an idea, a can of red kidney beans is over $4. DW likes beans in her chili, and also decided to make "Three bean casserole" this week. I don't think she realizes that instead of being a frugal meal, over here, it is going to run about $30 for a single casserole.

Anyway, we're now low on our EF for the rest of the month until the Landlord repays us for his fees. As an aside, we have to pay our rent in a single check for the year, so he already has our money until next November.

Lottery Winner

January 16th, 2013 at 08:01 am

There is an article out today about an unemployed guy buying an $8.00 lottery ticket and winning $1 million. Good for him! He got a check for $670K after taxes were withdrawn.

Now, I seem to remember that they just raised the tax rates, and a quick check on Yahoo finance shows that anything over $450K is taxed at nearly 40%. That means that he'll owe $340K to the US government alone, although only $330K was withheld.

Now, with any State income or sales tax, I'm pretty sure he's going to already be below $640K.

He said he tithed 10%. Assuming that was $67K (ten percent of his take home), he's now down to $570K.

He bought two jeeps: $520K. And now he's made an offer on a house. For convenience sake, I'll estimate $250K for that.

He just won the lottery, and he has no job. He has a paid-for house and $270K in the bank. I will guess he has a lot of credit card debt, so I'm going to arbitrarily put his bankroll at $220K right now.

How long do you think it will be before he's borrowing on his house to pay bills? I'm guessing no more than 2 years. After all, this guy immediately started spending after he got some green in his palm.

Dreams, Wishes, Goals, and Plans

January 14th, 2013 at 04:26 am

I saw a post on the forums here where the OP stated (paraphrased), "I want to save more and buy a house some day."

That's a dream. Dreams are things we like to think about as if they might magically happen. Most of us like to dream about what we'd do with our money, jobs, and family (and to our bosses and neighbors, sometimes) if we win the lottery.

The idea of what we do here at SA is "goal setting." A goal is an objective with the following criteria:

1. A time frame in which to accomplish it
2. A metric that tells us what the goal actually is.
3. A plan that gets us to the metric within the time frame.

Taking the original quote above, we can turn it in to goals with plans instead of dreams with wishes.

"I want to save more" becomes "I will save $25 per biweekly paycheck, putting $1300 into a Roth IRA. I can do this by cutting out four beers (plus tips) at my local pub every two weeks."

The time frame is 1 year. The metric is $1300.00 in a Roth IRA. The plan is to cut back entertainment spending.

"(I want to) buy a house someday" becomes "I am going to save $50,000 within 10 years to purchase a $250,000 home with 20% down and no PMI. I will do this by setting aside $200 per paycheck in a mutual fund account with a target date of 2023. I will get the $200 by turning off my cable TV, scaling back my cell phone plan in 14 months when it expires, bringing my lunch to work 4 days per week, and quitting smoking."

The time frame is ten years. The metric is $50,000. The plan is to cut back on entertainment, luxuries, and bad habits.

Note that neither plan counts on pay raises, but also that neither plan expects a job loss. I feel that these two occurrences are "plan changers" whether to the good or to the bad. In other words, either event will require a re-working of the goals, metrics, and plans, but both are more or less beyond my direct control.

I used to be the first guy from the quote. I am pretty much the second guy, now, when it comes to planning instead of dreaming.

Do you know why most people don't hit their savings target? Because they don't aim at anything; they wish for it to happen.

So, when I buy a lottery ticket, I used to say, "I'm just doing a little retirement planning."

Question While Listening to Dave Ramsey

November 27th, 2012 at 04:23 am

I know his name is a curse word to many, but I like to listen to DR for a variety of reasons. The least of which is that I like to hear the stories of people who have gone from staggering debt to financial security with great effort. What I have learned is that most of them changed their way of living to become debt free, and it is that "change of modus operandi" that I listen for to decide in my head if the person screaming "Debt Free!" is going to remain debt free.

As I've posted before, I put myself into considerable debt over a relatively short period of time due to a variety of reasons. Lost job, contracting business that barely paid the basic bills, retail therapy, and plain ol' stupidity being four of the major causes. Note that my divorce didn't even make the top four.

Well, I sold some stuff including a lake house and a third car, both of which I didn't need, and concentrated on paying off the other loans and such. Right now, I have no debt except my primary mortgage. I'm within a year of paying off the mortgage. I have plans to start purchasing houses to use as rental properties during my retirement for an income stream.

I was listening to Dave Ramsey, and someone with a remote house and payment called to ask about selling the house or keeping it for rental income. Dave asked the caller, "Would you borrow to buy that house?" Now, simplistic questions don't fit every situation, and my situation is different.

I can pay off my mortgage 100% within a year. At that point, I plan to save up $80K as a down payment on a second house, which I plan to purchase when I return to the US. I have no plans to live in my current house again, but it is in a neighborhood that is appreciating at about 6% to 10% per year, plus I can get rental income of about $1000 per month after taxes and insurance. I see no reason to sell such a cash cow. I can reasonably make $150K off of it if I do sell it, though.

My secondary goal, after I save the $80K, is to start saving for a second and third home in the same neighborhood, for eventual retirement rental income. As I'm the spreadsheet king, I have the financials worked out fairly well.

So, after hearing Dave's question, I am questioning myself as to whether I am doing the right thing. I have basically no bills, so everything I make goes into investments such as mutual funds and real estate. I plan to be real estate heavy, because God stopped making land, but lots of folks are still developing mutual funds. I just feel more comfortable with a house in hand versus a number on a piece of paper.

What would you do? Pay off the mortgage and buy property, or sell the house and invest in mutual funds?

Or something altogether different?

Editorial note: I know that many folks reading this are in debt and would love to be having this "problem," but believe me when I say I have not arrived here without a ton of effort and not just a few months where I was glad that the light still came on when I changed the calendar. You're reading about someone who has made it down the road after a very rocky start and quite a few missed turns and flat tires.

Retail Therapy has Causal Link to Sadness

November 16th, 2012 at 01:27 pm

A few of you may remember my post where I talked about spending a lot of money when I lost someone very close to me. Well, according to this link, sadness apparently causes people to make bad financial decisions.

http://www.livescience.com/24801-sadness-financial-decisions...

From the article:
'"Our results suggest that individuals who are sad after the death of a family member might exacerbate their financial hardship by making intertemporal choices that favor immediate consumption more than is wise," the researchers wrote.'

What I find interesting is that being behind on everything tends to make people feel bad - which must be close to being sad - which might cause them to become even more behind due to bad decisions.

I know that I did exactly what the research indicates. Anecdotal, assuredly, but still it jibes with my personal experiences.

Randomness

November 14th, 2012 at 09:43 pm

DW and I just signed the rental agreement for our new apartment. We are moving to the Palm Jumeirah, the man-made islands here in Dubai that look like a palm tree from the air. We got a sea-view where you can see the Burj al Arab, the Burj Khalifa, and the indoor ski slope. DD and her husband are coming to visit in December, after we're all moved in, so they'll get to see the view from our window.

As I've been reading the posts of others, I keep seeing people who are trying to save to "retire before we're XX years old." I don't think I'll ever fully retire. Part of my job requires travel. Right now, I'm in negotiations for a job in Australia. If the negotiations come through, I'll take DW with me. For the cost of a plane ticket, she'll get two weeks in Australia at the company's expense. Often, the hotels I stay at are resort hotels or similar. Why should I retire and pay for the vacations out of my own pocket. I may have to work for 8 or 9 hours each day, but I often get weekends off, so there's still time for tours and short excursions.

Does anyone know where Credit Karma and Credit Sesame get their real estate value estimates? One of them has me listed at about 75% of my US house value. The other has be listed at about 20%. Neither of them is right, but how can one of them be off by so much?

Apparently, I have a credit card I don't even know about. It says I've had it for like 5 years, and it has no balance (and never has had a balance). I'm going to call the bank and ask them to send a new card to my US address. DD can bring it with her when she comes. I won't use it, but I hate to have the credit without the card. I don't want to close the account, but it won't affect my credit score if I do, I don't think. 0% of X is the same as 0% of Y credit available.

Speaking of credit cards and Credit S and K, it looks like my score has finally recovered from my depression spending. The Amex that I let go into collections is still showing on one of the reports, but it's gone from the other two. Of course, I paid it off when I started recovering, but it was still hanging around as a reminder of my "don't get a hoot" days from a few years back.

Looking back, letting the bill go ended up being a good thing. Because I did that, I got fed up with banks and bills altogether, and paid off everything. All's well that ends well, I guess.

DW and I are trying to decide if we should buy a house now or wait a bit longer. Interest rates are probably at all-time lows, but the closing can take quite a while, so we'd have to make time to come back to the US for all the paperwork. I'm not sure how my oversea's pay would count toward salary. I guess I'll need to talk to a banker when I make my trip back to the US.

Speaking of the trip back, I was scheduled to leave today (my time), but had to postpone due to job happenings. Basically, a customer had an emergency, which forced me to cancel my reservations. In the end, it turned out that I could have left after all, but now it is too late. Oh, well... things happen.

Next week is DW's birthday. I asked her what she wanted. She said, "new clothes." I told her she'd have to buy them herself. Trust me. She and I don't see eye-to-eye on fashion. Maybe I'll get her a burka. One of the problems with budgeting is that you don't have extra money "hidden" to buy surprise gifts. I really have no clue what to get her. She specifically said not to get her any Pandora charms, which is one of the reasons I got her the bracelet. It gave me a fullproof gift to get her every occasion. I guess I cashed that check too many times already.

The Deposit made it

October 22nd, 2012 at 02:23 pm

Apparently, CITI didn't want me to look for the deposit right away. They wanted me to wait until a new business day. They never mentioned it in the email that told me the deposit had been made and to go check my balance.

The good news is that our US CITI account is now open and ready for business.

Next step: Open the Dubai CITI account and figure out how to do the transfers. I'm waiting until after payday for that one. The last time I tried banking stuff over here, I lost my money for over a month.

The Disappearing Deposit, a new tale

October 21st, 2012 at 04:21 am

If you read my first "Disappearing Deposit," you know that it dealt with using a broker to send money from Dubai, where I live, back to the US, where I'm going to return. Eventually, I got my money back, and sent it via telegraphic transfer back to the bank in the US.

Well, being cheap, I found that I can get a CITI account here, and a CITI account in the US, and using their online tools, transfer money between the two accounts.

To get a free account over here, I have to keep about $1000 in the account at all times. To get a free account in the US, I have to keep about $1500 in the account at all times. I decided to open the US account first, as it is a bit harder to do from a distance.

I won't go in to all of the problems with CITI and its online account opening algorithm, but I will mention one of them. To sign in to my account the first time, I had to give my account number, which they never sent by mail, by email, or by any other means. I had to call them to get my account number so I could sign in.

When I signed in, the balance was zero. The problem with that is that I had $1600 withdrawn from my Chase account two days ago, and I have an email from CITI telling me that my account deposit has been made and to go check the account.

Another phone call, and all I'm getting is "I'm sorry, but that department is closed." So much for "24 hour service" that they advertise. At least I did get to speak to a human who kept apologizing, but who had no clue what to do.

I'll call back later to see where my money is. Is it any wonder that people hate bankers nearly as much as they hate politicians and used car salesmen?

After I track down this money, I'll be opening my Dubai CITI account. I am not looking forward to my my first attempt to do an online transfer between the accounts. I hope it does end up being free, and I hope that it also is as easy to do as I was told when I asked about the possibility of doing this at all.

Financial Blinders

October 5th, 2012 at 05:15 am

There are two types of financial blinders. I have used both of them.

The Bad Blinders
These are MUCH more comfortable to wear than the Good Blinders (coming up). These blinders allow you to look at your finances - or not look - and not see the debt piling up. These blinders let you borrow 100% of your house loan, get zero-down car loans, get and run up several credit cards and tens of thousands in their debt.

The benefit of bad blinders is that you get a very good credit score, until you wear them too long or something else interferes. You also get to have lots of cool things like new cars, big houses, the newest cell phone and computer.

The detriment of bad blinders is that eventually your habits catch up with you. The first time you have to decide which bill not to pay because your loans, credit cards, mortgage, utility bills, and Starbuck's addiction add up to more than your income, your eyes open up and you see the result of living beyond your means. Yes, no matter how much you earn, you can spend more than that with very little effort.

At the point where you see "rich people's income" and "poor people's balance" you find out the bad blinders only stopped you from seeing the truth that paying thousands in interest every month only benefits the institutions receiving the payments.

The Good Blinders
A couple of two or three years back (that's Texan for "a while ago"), we threw away the bad blinders and put on some good blinders. We made drastic changes and sold one car for what we owed, gave away another car that I loved (still do, actually) but someone else needed more than we did, sold the vacation home we really didn't need - or could afford - again only breaking even. In short, we first got rid of things we really didn't need.

Now, the good blinders came in to play. These blinders let you ignore income you don't really have. If you make $1200, and have fixed bills of $1000, you only have income of $200 to play with. The old blinders would let you look at the gross income and ignore those medical payments, FICA, and other deductions. Why not? If you can ignore the fact that the amount of the actual check is already accounted for, and more, then why not also ignore the above-the-line deductions that also can't be spent?

So, now, the good blinders allow us to have the wife's check go directly into a stand-alone account that doesn't exist; at least, it doesn't exist on our balance sheet. We also don't have any retirement accounts. What do I mean? I haven't retired yet, so that money doesn't count toward our finances.

These new blinders aren't terribly uncomfortable. Sure, every once in a while I check the balances in the accounts, but overall, we keep the blinders in place 99% of the time, and are just waiting until one of the peeks lets us give our jobs their two week notice. I haven't even written one of my Excel spreadsheets to see when we will have enough to retire. We have very lofty retirement goals, so I know we're not there yet. We're throwing every penny at the funds so it really doesn't matter if I know when we will get there before we arrive. There's no way we could send more and still eat.

Yep... these blinders may not be as fun to wear, but the end of month bill payments take up a lot less of our time.

Habit forming and habit breaking

October 2nd, 2012 at 02:23 am

Living in Dubai, I can't listen to radio shows, and TV from the US is non-existent except for prime time stuff on Netflix that I mostly don't watch. My solution is to download and listen to podcasts.

I was listening to one podcast - I don't remember the show, but probably Dave Ramsey or Clark Howard - and the host and author were talking about how we do things by habit. They said that if we can change our habits, we can change the way we do things. There were couple of interesting points that the hosts made that got me thinking.

The first point was that occasional rewards followed by multiple non-rewards actually cause a compulsion to do the action that may or may not be rewarded more than a constant reward or non-existent reward would cause. The author used video games and slot machines as his examples, and stated that cigarette companies vary the amount of nicotine cigarette-to-cigarette, as well, to give the user only an occasional "fix." Whether any of this is true about intentionally doing the occasional reward to get more response doesn't really matter. I think that it makes sense that an occasional reward does cause you to appreciate it more and therefore do it more. We stop playing tic-tac-toe once we realize you can never win against an opponent who plays correctly, or other kids' video games because they are too simple and you never lose.

The second point that caught my attention was that you have triggers that cause you to do the habitual behavior. The author used getting ready for work in the morning as the example. If you're like me, you do your morning routine in order, and if you vary the order, you're likely to forget something. I can remember going to work without a belt on occasion for varying my order of prepping and dressing.

Why am I posting this here? Because I think I can use this to my advantage both to eliminate some of my bad habits, and possibly to develop some good habits.

I drink many too many carbonated beverages. Every morning, I take one out to the car with me. For the last two weeks or so, I've made the effort NOT to take one with me. The first couple of times, it was hard. Now, I don't even miss the drive-time caffeine. Also, I have to force myself not to open one as soon as I arrive at work. This is just a start to get me to change my behavior. I think it would also work to eliminate the "coffee cup cigarette" or "mid-morning sweet roll" or whatever compulsion item one of you readers might be experiencing.

The author mentioned that you need to get a trigger to do a new habit. I'm trying to figure out a way to apply this "habit" to my finances. In reality, though, I think I've already got a good balance where this is concerned. My wife and I have our weekly "date night," which means we go out somewhere and have a nice dinner and drinks, but don't splurge. We've had only one splurge in the nine months we've been here in Dubai. The splurge was intentional and planned weeks in advance, so it really wasn't so much a splurge as a reward. We frankly needed a nice night out with friends, so we set aside a few dollars to enjoy without guilt.

What kind of trigger can I set up to avoid my soda? Or more precisely, can I identify the triggers that cause me to crave the soda and then eliminate the need? Time will tell. Also, what financial behaviors might I be able to develop? I already do the month-beginning transfers, investments, payments, etc. I don't really know if there's anything else I can do on that front.

Reappearing Deposit

September 28th, 2012 at 06:22 am

After two more visits and another telephone call to the US, we finally got a call from our local agent that we could come in to pick up our money.

At this point you may be thinking "he got resolution," and - eventually - we did, but the story has quite a few twists in it. Please, read on to see what I deal with over here in Dubai.

During the call, the agent said, "The German bank only sent XXX amount, so you won't be getting back your whole transfer payment."

Needless to say, I disagreed fervently, and even eventually mentioned, "Not only did you not perform the service that was contracted, you had my money for four weeks. In actuality, you should be paying me interest, not cutting my refunded amount."

I decided this was better discussed in person, and went into the office where I made my initial transfer, along with my copy of the contract. Again, they said that "since the money has already been converted to US currency" I'd only be refunded the amount of the returned deposit, less fees for the conversion, fees for the new conversion back to local currency, and less the fee for the initial transfer.

No deal. I said again that they were going to give me the entire amount for failure to perform according to the contract. The agent made a call, and said, "OK, we'll refund the whole amount."

Again, the story does not end there.

The agent then started working with another agent, going through the drawer, counting money in their machine, filling out forms... basically spending more than five minutes before having me sign 3 different forms (without a lot of explanation), and finally handing me a bundle of money and saying, "Goodbye."

I then counted the money right there on the counter where I was given the money. Stashed right there in the middle of what was more or less a pile o $250 dollar bill equivalents was a single $125 equivalent. I pulled it out, and put it with the other bills of the same denomination and kept counting.

I came out $125 under the amount I was due. They then made another big show of balancing the guy's drawer, even going to the point of grabbing a briefcase from the back full of $3.00 bill equivalents, and finally gave me the balance I was due.

My wife, who was there at the time, asked me if I felt they shorted us on purpose. My answer, "Definitely. That's why they made the big show. They saw I never did anything but count the money. They only needed to recount it themselves to see I was shorted. They showed no surprise or suspicion that I might have shorted them. The whole refund show was a fabrication to try to get us to walk away without counting."

I got all my money.

No, I won't be using this shady group ever again. Instead, I'll be paying the bank more, for more security.

Things I've Learned

September 23rd, 2012 at 11:42 pm

Like most Americans, I was never really taught about finances. I was shown how to balance a checkbook, but when it comes to investing, saving, credit, or myriad other financially-related items, I was completely ignorant. I knew so little, I didn't even know where to learn about any of the things I knew I was deficient in.

I've always been smart. Why was it I knew nothing about money? Because I was so ignorant, I didn't even know where to start looking to get the information. Due to this, most things I know about money, I've learned by doing the wrong thing for the right reasons. This post is to illustrate my mistakes, and the corrections I now make as I pass 50 years of age.

Buy Quality
I used to shop around for the best prices on furniture, appliances, on everything, really. My idea of a good deal was finding something that cost less but did the same job.

What I have learned from this mistake is that spending $200 three times over 6 years is actually more expensive than spending $500 once in 10 years. Find items that are well-made using good materials. Solid wood furniture is worth at least 3X what the glued sawdust furniture you get at Wal-Mart costs, and even 10X more if you buy something with a dense grain. It will just last longer. Same with buying a name-brand, researched refrigerator or car. Buy something that is well-made, but feel free to buy used or to bargain for the price.

Everything is negotiable
When you find that the TV you're looking at getting to replace your old TV is the last one they have and a display model, you should be thinking, "Opportunity!"

Managers are busy people. They have to be concerned with all of their employees, their stock levels, their profit, their sales compared to last year, and customer satisfaction, among other things.

Managers don't really have time for every customer, so they are more inclined to find a fast answer, as long as it balances a few of their objectives. Due to this, they are more inclined to cut a few percent off a sale so they can get back to their "real" duties. So, when making large purchases, find a reason to call the manager and ask for a discount.

The last item or a display item are ideal for this. If you have kids, your stuff will be scratched or damaged cosmetically at some time. Go ahead and purchase something that's gently damaged cosmetically, especially if the damage "doesn't show." The side of a dryer can be scratched or slightly dinged, but you'll never see it, for instance. Ask for a discount. If you get it, you just "made" money.

Get Yours
The first two houses I sold, I had to make realtor-suggested improvements before I put the house on the market. These were little things, but I realized that I could have paid for these improvements earlier and lived with the better house rather than preparing a better house for my buyer. Now, I make improvements and repairs and upgrades as soon as I can.

Get Paid for What You Do
This is similar to the paragraph above, but it doesn't pertain to salary or wages. What it means is that you should make improvements that pay you back.

I spent $25K at least 5 years ago to install insulation and other improvements in my 1950's bungalow. This is a no-brainer, but most people in my neighborhood have not yet done it. I now save at least $200 per month on my energy bills (in the Houston summer). I figure I'm no more than $15K down just counting the insulation. If you add the AC unit, radiant barrier, ridge vents and windows, I'm no more than $5K down on my improvements. On top of this, my house value is at least $40K above where it would have been without the improvements. The longer I keep the house, the more money I'll "earn" on these improvements.

Don't Spend your increase
The easiest way to get breathing room in your budget is to ignore bonuses and pay increases. Sure, you got $10,000 more this year over last, but if you keep the same budget, this is an increase. If you now decide you can afford that $35,000 car, you've actually lost money.

This can also be applied on a debt repayment plan. If you retire a $150 payment, use $30 to reward yourself each month - to get breathing room - rather than adding the entire amount toward the next bill. Of course, if you're like me, you only do this on occasion. When I get a bill, I put every penny I can find toward it.

I realize this sounds counter to the title, and I guess it is, but what I mean by this is to not spend all of your increase just because you can. Instead, save part of it rather than seeing all the new stuff you can finance with it. You should still reward yourself for your gains, but don't use it all for "new stuff."

I need it
This is how my wife and I decide we shouldn't really buy something. When we see an impulse buy item, we'll tell each other in a very effusive voice, "I need it!" We then laugh and walk away. Most stuff you buy in this manner is absolute crap. Why buy something you're not going to really use or enjoy?

Debt is Dumb
Debt means "I want this so badly, I'm willing to pay more for it than they're asking." The one SLIGHT exception to this is a home, but that's only if you buy below market and the value increases. That's not what has happened to most purchases made in the last 8 years.

Debt means you're impatient. I wrote a spreadsheet to show that saving and buying later saves you thousands of dollars, even at 6% payments with 2% savings interest. What it normally means is you buy later for MUCH less. What normally happens is people are too greedy and impatient to wait until they get that new car, boat, or ATV.

Just save until you can pay cash. You'll be surprised how often you then decide NOT to buy and to use the money for something "better" like retirement, a home, or college for your kids.

Do you really need a new BMW today?!

The Disappearing Deposit

September 22nd, 2012 at 05:08 am

As a continuation of my last post concerning my telegraphic transfer from Dubai to the US: I continued to go to the sending agency here in Dubai for updates, waiting enough time to prevent them from putting me off by saying the paperwork was still going through.

Eventually, I was told that the problem was at Chase Bank's end in the US.

I called Chase, and after more than 30 minutes, I found out that - just as suspected - it is the US Government preventing the deposit. Little Hitler has some power, and is illegally preventing me from moving my money. I've done nothing wrong. I've done nothing illegal. They have no right to this obstruction. My rights as a US citizen (to my property and my free use thereof) are being violated.

All of that aside, it will take Chase four more days to return the money, so I can then go to the bank in Germany to get my money... which will probably take another week or more after that to finally get the cash back here in Dubai so I can again try to get it transferred to the US so I can pay some bills. Thankfully, I keep enough emergency fund in the US to go a couple of months without immediate cash.

The long and the short of it is that I have $8,000 in electronic limbo, and I won't get it for at least a week. I have lost the use of this money for nearly a month.

Thanks, Uncle Sam. I now know the true meaning of the sentence: "I'm from the government, and I'm here to help you."

Hazards of Overseas Living

September 16th, 2012 at 09:42 am

I am a United States citizen living in Dubai, United Arab Emirates. Firstly, let me say that the title is not talking about the present political difficulties taking place in the Middle East. In fact, Dubai is fairly immune to such disturbances because only about 10% of the population is Arab. Most of us here are expatriates, such as myself.

The hazards I refer to are best illustrated by my present predicament. On September 2, 2012, I sent a wire transfer back to my US bank account, so I could pay my US-based bills. To do this, I need to convert the money into dollars - which costs me money. I then need to give the money to someone to send it - which costs me money. The money then arrives in the US, where my bank charges me a fee for receiving it - which, you guessed it, costs me money.

Naturally, I try to minimize the charges involved in me transferring the money. For the last four months, I have been using an agency set up to transfer money out of the UAE. This was saving me about $15 per transmittal, as I only saved money on the "sending" fee, and not on the exchange or receiving fee. The previous option was using my UAE bank for the transmitting business.

My money from this transfer has not yet gone through. Today makes 2 weeks I have been waiting. I have initiated an investigation. I believe what has happened is the US government has held up the transfer; probably waiting for me to prove I am not laundering funds from Iran. If this turns out to be true, I will be upset. The government has NO RIGHT and NO JUSTIFICATION to make such an arbitrary decision as to hold up my funds transfer. They can record it, and then investigate it, and THEN, they can bring charges if necessary.

My transaction is from me in the UAE, to me in the US. There's nothing illegal about it, and the government has no probable cause to stop the transfer. They are being a-hole bureaucrats, and this is why everyone hates government employees. They're all little Hitlers, given the chance.

So, I have several thousand dollars in limbo, and I'll have to use the bank (at a higher price) for my next transfer. The bank not only costs more, but it also takes longer... at least it takes longer if I don't count this attempt.

I just have to wait, and hope for the best. I've heard of things like this taking up to six months to resolve over here. How would you like to "lose" several thousand dollars for six months or more? I know how I feel about it. I can't say, though, because I try to keep my blog PG rated, at worst.


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