Yearly Archives: 2009

Paying An Adult Allowance, A Lunch Experminent

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I’ve decided to pay myself an experimental Adult Allowance!

Currently, as I mentioned in a previous post, I pay my kids an allowance.  A few months ago, joking around, I told my son I was going to start to pay myself an allowance too.  That got me thinking about potential savings from my lunch expense.   In the end, my joke was exactly what I decided to do!

Let me provide my previous background:

Prior to starting my “Paying myself an allowance” experiment, I was spending about an average of $12 on breakfast and lunch per day, for a total of $60 a week.  That’s almost $250 a month!!!  I like going out with friends for lunch, but I don’t like paying that kind of money.

So, I decided to pack breakfast and lunch 4 times a week; enabling me to save at least $40 a week.  This is effectively money that I would have spent by going out to eat with friends, so basically it’s free money for me.  If it wasn’t for this experiment, I would still be spending that money on lunches out at work today!!!

Yeah, the math doesn’t work out perfectly, I left a buffer for special situations that don’t occur regularly, like Co-worker birthdays, cost of packed food, etc…

So you might be wondering how I’m spending on my new revised lunch budget?…

drum roll….: 70 cents a day, $3.50 a week, $14.80 a month.

I’ve  been able to accomplish this by eating instant oatmeal for breakfast, and 2 eggs with ramen noodles (or a small bag of peanuts) for lunch.  The people I use to eat out with looked at me eating my lunch a little oddly at first, but they got use to it.  Plus, I still go out with them once a week, so I’m not a total lunch recluse.

The idea is to save that money in dividend yielding stocks, bond or money markets, then after 2 year, to start using the interest earned off of the investment for other things… maybe even an additional lunch out every other week.

Ideally, after my experiment is over, I’ll be so use to eating out only once a week, that I’ll probably just stick to it.

-MR

UPDATE:  This idea has been implemented as a Lunch Experiment as I describe above!  Read about my “Lunch Experiment” here!

 

Mortgage Free Idea #1

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What is my next move after I’m mortgage free?

I’ve been thinking about this a lot, I’ve had a lot of different ideas pop in my head.  My latest idea, the one I keep coming back too is going to sounds a bit crazy…  I’m seriously thinking about moving into a larger house and taking on a bigger mortgage.  I was a little hesitant to post this article, but since a reader asked in a comment recently, I figured why not share some of my thoughts…

Do I need a bigger house, technically no, our house is a little over 2,100 sq ft.  Then why do I want to do what I describe above?

My thoughts:

If I buy a larger house, perhaps around 2,500 to 3,000  sq ft., then I get to deduct the interest payment from taxes all over again.  When I get my current house sold, I’ll be able to keep all of the money from the sale, tax-free (another legal tax loophole up to $250,000 for a single to $500,000 for married jointly,  if they have lived in their house as their primary residence for a least 3 out of 5 years.).  I would then put the money in some type of investment mix that would produce a decent return that could either be invested or help with the new mortgage payment.

Sounds crazy, especially considering the big stock market crash we just experienced, but this might be the optimal strategy.

I’ll keep you posted on my final decision…

Roth IRA Emergency Fund

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I don’t have a traditional emergency fund, so I decided once my mortgage is paid off, I’m going to use part of my previous mortgage payment savings to fund into my Roth IRA as an emergency fund.

My Roth IRA previously was used just for active trading in a few high beta stocks.  This was my “play the market” fun money.  I had a great time with it, and I did okay until the “Great Recession” hit.  Most of my Roth IRA money was and still is in solar and Chinese stocks.

Roth IRA Emergency Fund Plan:

I’m going to take 25% of the money that I’ll be saving by having my mortgage paid off in February 2010 and start to funnel it into a money market or bond fund in my Roth IRA.  After a few years, when the fund hits $15,000, I’m going to change my percentage ration to a smaller ratio.

Why am I doing this, you might ask?…

The Money Reasons 🙂

  1. Any interest or dividend received grows Tax Freeeeeee
  2. If I sell a security, and incur capital gains, they are also Tax Freeeeeee
  3. I can withdrawal my contributions to the Roth IRA without any penalty.
    1. Since the money has already been taxed, no taxes apply!
    2. No age limit applies to the contributions either!!!
  4. It’s simple to get to the money!  As long as I don’t tap into the earnings…

I will have to make sure if I withdrawal money in an emergency to only withdrawal what I contributed.   So I keep track of my contributions in a separate spreadsheet.

I’ve seen some advice about this not being the best route to take because of lost future gains.  But currently, the amount that I’ll be contributing will be above and beyond what I’m currently contributing.  By doing this, I also get to take advantage of a great legal tax loophole!  Plus I’m max out my Roth IRA contribution amount allowed by the government (currently 5,000 + inflation).

Using a Roth IRA is one of the only ways to get the interest rates that so many books and blogs reference.  After all, regular brokerage accounts get hit with taxes…

What  do you think of my plan?

MR

 

Pre-Vacation Nightmare!

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Let’s travel back in time to last Sunday 11/01/2009, it’s 4:39 am in the morning and I’m about to get my son up to leave for our vacation flight.

Being half asleep, I bumped my son’s hamster cage by accident, but his hamster doesn’t move…  Hmmm, I bumped it harder this time ( intentionally), but again the hamster doesn’t move. 

This is not the way a vacation should start!

Yes, unfortunately, my son’s hamster is no more…  So I had a decision to make, tell him then, or not…

I decided “not“!  I called my mom and had her drive over and put the hamster in the freezer via a ziplock bag, so I could delay the decision until after we got back.  It was a hard choice to make…

My Options:

  1. Buy another hamster that looked identical to his, and possible lie to my son.
  2. Tell him then and there and deal with it.
  3. After we get back, tell him the cat ate it (just kidding).

After a lot of internal debating, I decided to go with option 1) “Buy another hamster that looked identical to his, and lie to my son.”  I would hate to lie to my son, but he’s only 9 and he still gets very attached to his pets (we already dealt with a gerbil dying a few years ago, not a fun ordeal).  After breakfast, the first thing he wanted to do before going school was to check on his hamster.  Luckily, since we decided to let him get an extra hour of sleep instead of riding the bus, he didn’t have time to do that.  At least that is what we told him.

So I went to PetSmart, to buy another Russian dwarf hamster.  Of course, the batch of hamsters that they had were not the right color.  His hamster had grey fur with just a slight bit of brownish tinge around the edge of it’s back, and a white underbelly.  The latest batch of hamsters had no grey and almost all brownish colored fur on their backs with a white underbelly.

Just my luck!  So, that would not do…  So I bought a different species of dwarf hamster that had what I thought was close enough coloring. 

It cost $15, not a lot of money for the price of a potentially happy kid (or at least not sad kid)…

So, did it work?  Sort of…

He said that “Twirly” looks like he’s a different color, but that he hasn’t seen him for a while and maybe he forgets what his colors look like…  I didn’t say anything to that remark…  So far, he hasn’t commented other than that statement.  If he continues, I won’t lie to him…

I’ll be walking on eggshells for the next few days!