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Saving: Every little bit helps

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The other day, J.D. at Get Rich Slowly posted an interview with his real-life “millionaire next door.” In a very interesting article, he made the point that you don’t have to earn a Wall-Street salary to accrue enough wealth to achieve financial independence. John, the interview’s subject, did it on a teacher’s salary. The trick, he says, is to spend less than you earn.

True that. I would add that it’s crucial to build your budget so that you do spend less than you earn by including a line item for savings, and then to foster the habit of saving everything else that you don’t spend on living expenses. Even if you’re fighting to get out of debt, at least some small amount of your total income can go into savings. Paid Twice sets the example for this strategy: despite setbacks such as the car crapping out, she and her husband persist in building emergency fund savings while beating back a debt load that started out at a depressingly large figure.

Thanks to the collapse of the Bush economy, I’m no millionaire, but I’m a great deal less perturbed about the pending layoff than one would expect, because I have plenty to live on despite the obligation to help with the mortgage on a second house. The mortgage on my own home is paid for and I have no other debt except a $21,000 loan taken out to renovate the downtown house. Suspecting the university would can me, I started setting aside enough money to pay off that loan last year and for the past several months have had enough to kill it. The reason I haven’t paid it off is that I felt I should hang onto the cash to make it double as an emergency fund in the event I lost my job.

I have, however, decided that next week I will pay off the Renovation Loan. Why? Because by the end of this year I’ll have saved another $24,000! That’s after setting aside enough to cover COBRA until Medicare kicks in and after paying the $1,200 for my car’s 90,000-mile service.

That will have happened because I don’t spend anywhere near what I earn.

First, I’ve always engineered the budget so that $200 a month goes straight to savings. While trying to accrue enough to pay off the Renovation Loan, I budgeted another $204 toward that (started out more, but GDU’s furlough days cut my net income by $180 a month). Once enough was saved for that purpose, I just kept on putting the extra amount in savings: a total of $404 a month.

Second, I have two side income streams, freelance editing and teaching. Every after-tax dollar from those activities has gone into savings. These income sources made it possible to accrue enough to pay off the second mortgage by the end of last year.

Having cut spending by $180 a month, in August when the furlough days end (so we’re told…), I’ll continue to put that much in savings, too. I should net about $5,000 from the three community college courses I’ll teach in the fall, and a conservative estimate of freelance income is about $200 a month, for a total of $1,600 between now and layoff day.

Staying on budget has allowed me to spend less than I put into the credit union accounts set aside for recurring expenses and for credit card charges (I charge everything other than monthly bills on the American Express card, pay it off each month, and collect a kickback of between $250 and $500 at the end of AMEX’s fiscal year). This means a fair amount has accrued in accrued in dribs and drabs and is just sitting in those two accounts. Here’s how that shakes out:

savingsfigs5-3-09

Projecting the amount the regular savings from my GDU paycheck should grow, by December 31, layoff day, I should end up with almost $5,800 to add to existing credit union savings:

savingsprojected12-09

Okay. Now let’s add to that the amounts I figure to net from teaching and freelancing, to arrive at the projected 2009 savings as of December 31:

savingsincprojected12-09

Amazing. The $12,380 I expect to squirrel away from net teaching and editing income plus routine savings from my GDU paycheck plus the $11,931 already on hand comes to $24,311.

That’s with a pretty conservative estimate of freelance earnings, and it doesn’t count the so-called “extra” paycheck coming in July, thanks to the crazy bimonthly pay schedule. Add another $1,200 (some of the “extra” paycheck has to be used to cover regular spending—it’s not really extra) and the vacation pay GDU will owe me in December (around $2,600) and you come up with a projected total of something over $28,000.

This will be my fallback fund in retirement. If utilities and healthcare bills exceed a given month’s income from retirement savings and teaching (as they will in the summer), this “cushion” will keep me from bouncing checks.

It’s come about because I spend a lot less than I earn! Whenever I take a side job, I put the money into savings. My budget covers only the amount I make in my day job at the Great Desert University, and that budget allows for a $404 monthly deposit to savings—soon to be $574, after I pay off the Renovation Loan.

scenario-1bEven though I’ll have to spend almost everything I earn once the day job ends, I’m still planning to deposit at least $200 a month in savings. Assuming I put $10,000 of the accrued savings into my main checking account, things will be tight: in a month when I’m paid for only two weeks of teaching, I barely squeak by. However, when the community college checks come in twice a month, I accrue so much extra that unemployment during the expensive summer months will not cause spending to run the bottom line into the red. I should start August with $11,650 in checking and end it with $11,508. After that, as utility bills fall, spending money rises. After all the bills are paid in December 2010, I should have about $12,970, leaving me $3,970 in the black at the end of the year.

That’s $3,970 that will go into savings…

Recreational Shopping: A change of habit

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Spent most of today hanging out with two old friends. All afternoon, we bucketed around stores in the shiny new shopping plazas of the western suburbs. Specifically, we wanted to shop at Pier One and Target. We weren’t after anything specific: we planned just to peruse the stores as an afternoon’s outing. In a word, we were indulging in recreational shopping. Shopping for the fun of shopping.

In times past, an activity like this would lead to the diddling alway of great sums of money. I do enjoy (even covet) much of the stuff at Pier One, and Target is a posted danger zone for me. Today, though, I found myself not wanting to buy much. Matter of fact, you could say I couldn’t bring myself to reach for the AMEX card.

Pier One had some very pretty throw pillows, which I admired greatly. VickyC bought a pair, absolutely gorgeous, soon to look splendid on her sofa: marked down significantly. Also at a good mark-down, Kathy got an attractive desk lamp, which she’s been needing since she kiped her husband’s for her own desk. But you know…my sofa has four perfectly fine pillows on it. Old, maybe; a little stale to my eye, since I’ve been looking at them for several years, but clean and in good repair. A couple of years ago, I would have justified buying new pillows on the grounds that a) I like them;  b) it’s time to update “the look; and therefore c) I need them.

In the year or two since I’ve dedicated myself to a more frugal and simpler lifestyle, something strange has happened. Where before want would morph to need, now something has to be a real need before I feel that I want it. It’s not a deliberate, conscious change. It’s a change of habit that has gone on long enough to become part of my psyche.

At Target, I did buy one thing that to an outside observer might look like an impulse buy: a rope hammock. A couple of years ago, I bought one of those arc-shaped wooden hammock slings from Costco, the trees here at the Funny Farm still being too young to support the beloved old Eddie Bauer hammock that had survived into advanced decrepitude. The Costco hammock is made of sturdy outdoor fabric, allegedly an improvement over rope. It’s not. A fabric hammock collects dust, leaves, bird droppings, seeds, and various other debris. Whenever it rains, a puddle materializes in the low point; tipping the hammock to pour the water out digs a hole in the desert landscape below it. And a fabric hammock just can’t compare to rope in the comfort department: that weather-proof fabric is hot, ungainly, and ungiving. 

For quite some time, I’ve known Pawley’s Island has a hammock that probably will fit in the odd-sized Costco stand. And it’s one of the things I’ve planned to buy before the salary runs out. I’ve just been too lazy to order it online, a process I view, perversely enough, as a bit of a hassle. So when I spotted Target’s version, made of cotton (not a saggy artificial fiber), I grabbed it. If it won’t fit, Target will take it back.

I used my old hammock until it fell apart, something like twelve or fifteen years, both for loafing and for laying out laundered clothes to dry flat. The once barren yard now has plenty of shade, and I know I’ll use a more comfortable, less annoying rope number a lot more than I do the leaf-ridden, dusty, clammy fabric thing. So in this case, I think “want” actually does rise to the level of “need.” I need something to put in that fancy wooden hammock stand, so it won’t go to waste and so I can enjoy laying in the yard when the weather’s balmy. Which around here is most of the time.

The other day on the way home from a client’s place of business, I passed Scottsdale Fashion Square, formerly a regular hang-out. And it struck me that it’s been a good two years since I’ve been in that place. Then I realized I haven’t been in the tony Biltmore fashion plaza for many a moon, either. I simply have dropped the habit of shopping for fun. I no longer bat around stores to pass the time of day.

This, I expect, will be a permanent change. 

Is there anything that’s changed in your habits, either because of the current economy or as a result of a deliberate decision to alter the direction of your life?

Home Security: Cheap (sorta) burglar discouragement

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Argh!A fine young locksmith I met a few weeks ago came up with an idea that might help protect my priceless valuables from the wave of burglaries the neighborhood is enjoying. I’d asked him if he felt installing (ugg-leeee!) steel security doors was worth the extravagant cost, and he said all a burglar needs is a crowbar to bust through one of the things. He suggested instead that you install a sturdy solid-core door on your home office or a bedroom and put a good strong deadbolt on the thing. Put your computers and whatever else you cherish in the room, and then treat its door like any exterior door: lock it before you leave the house.

He also recommended bolting a fireproof, burglar-proof safe to the floor in the same room, to keep your papers, jewelry, and pistols. You should, of course, have a gun safe for any long guns you choose to keep. 

Lowe’s sells solid-core interior doors for under $200. A double security door to protect even one of the three sliding doors in back would run me over $1,000. Truth to tell, I own little of value; the only thing I’d rather not have stolen is the computer, which contains my entire life. A few negotiable instruments and my father’s Ruger also could stay, if the burglar wouldn’t mind too much.

The Lowe’s door guy pointed out that even a solid-core door is vulnerable a vigorous kicking job. The locksmith extraordinaire counter-pointed out that to break through a solid-core door with a heavy-duty deadbolt and a heavy-duty strike with extra-long bolts extending into the studs would at least give the burglar a sprained ankle. 

So this morning I ordered the door; this afternoon the Lowe’s guy came by to measure; tomorrow morning I’ll run past the locksmith’s to buy his version of a killer deadbolt. For less than a fourth of what one double security door would cost, I’ll get some modest protection for the office. The room fronts to the street, and a fiercely thorny rose bush grows under the window, so it’s unlikely the burglar will try to get in that way. The window has some serious security on it, anyhow.

Of late, our burglars have been a real squat-and-run set. They watch until they see someone leave, then they jump the back wall and break in a back door, race through the place in ten or fifteen minutes, and are outta there. Because they know it takes the cops about that long to get here, they move very fast. So there’s a good chance that a tough lock and a reasonably resistant solid-core door will discourage them. 

Hope so, anyway.

Utterly Deadly Pecan Pie

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OMG! Have you seen Mary’s Carmelized Banana Tarts over at Simply Forties? To die for!

Mary’s spectacular performance reminds me that I’ve promised, off and on, to put up my mother’s recipe for pecan pie, the one that used to dissolve my father. I think she got it from Marjorie Kinnan Rawlings’s Cross Creek Cookery, which came out in 1942. It it were me, I’d add some bourbon.

You need:

4 eggs
1 1/4 cups cane syrup
1 1/2 cups broken pecan meats
1 cup sugar
4 tablespoons butter
1 teaspoon vanilla
1 raw pie shell (store-bought or home-made) 

Preheat the oven to about 350 degrees.

Boil the sugar and syrup together two or three minutes. Beat the eggs not too stiff; then pour the hot syrup into them slowly, stirring. Add the butter, vanilla, and pecans. Turn into a raw pie shell and bake in a moderate oven about 45 minutes, until well set.

Zillowing around Phoenix

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Having perused today’s doom-and-gloom piece in the Times to the effect that property values in my neck of the woods have dropped 50 percent in the past three years, I was moved to visit Zillow by way of checking up on the current value of my real estate empire.

Buy me! Get original 1970s everything! Only $300,000!
Buy me! Get vintage 1970s everything! Only $300,000!

Lo! Zillow’s estimate of my house’s value is $293,000! That’s $61,000 more than I paid for it five years ago, an increase of about 4.75 percent a year. Not great appreciation on investment, but one heckuva lot better than the negative numbers we’ve experienced in stocks and bonds.

Meanwhile, the downtown house that M’hijito and I are copurchasing comes in at $177,000, a whopping $58,000 less than we paid for it and $34,000 less than we owe. That’s more like the stock market we know and fear. 

Our lending agent at the credit union points out that the depressed value in what ought to be a stable centrally located neighborhood came about because a high number of foreclosures is pushing prices downward. Indeed, the house directly behind his was foreclosed; the bank recently unloaded it for $153,000, and the house is 100 square feet larger than M’hijito’s. 

That house was bought and lost by a speculator who was halfway through renovations when he defaulted. The kitchen and front rooms were redone, but the rest of the house is stripped down to the concrete and needs significant fix-up. The yard, of course, also needs a lot of work. Meanwhile, a house at the corner of his street and a main drag is valued at $227,000; that place has been in foreclosure not once, not twice, but three times. It presently has an auction sign out front. 

Even though things aren’t looking so good there, the lender says we should wait another nine months before assuming our shirt is lost. She says their appraisers have found that when a series of foreclosures pushes values down in a neighborhood, prices start to recover after about that length of time. In discussing the matter, she remarked that the area, within walking distance of the new light rail line, can be expected to recover its value over the next few years.

Assuming we believe Zillow’s Zestimates (a big assumption, that), it looks like our real estate investments are about a wash just now: a gain of $61,000 less a loss of $58,000 leaves us $3,000 to the good. Still better than the stock market, eh?

Out of idle curiosity, I checked the house SDXB sold five years ago, one street to the north of me. Zillow values it at $314,500, up from the $215,000 or so he got for it. The slum house directly behind his (well, “formerly his”), which was allowed to run to ruin by its original slob owners, then absorbed into Mr. B***’s rental empire, then sold at the top of the market to a couple who did some serious fix-up but soon divorced and turned it back into a down-at-the-heels rental, supposedly is worth $305,000. 

La Maya and Bethulia’s house, around the corner and in the ritzier part of the neighborhood, sports a $392,000 Zestimate, almost a hundred grand more than they paid for it. My old house, about two blocks away, is valued at $243,000, having been bought out of a short sale for $253,000 a year ago. I sold the house to the woman who defaulted on it for $211,000, so even given the foreclosure, the house’s value has increased over the past five years.

My old friend’s house in Moon Valley shows a value of $273,000, a lot less than I would expect but still more than she and her husband paid five years ago. They’ve put more into the house’s renovation than it has allegedly appreciated. Interestingly, Moon Valley, arguably a nicer area than mine because it’s free of bordering slums and is built around a very attractive country club and golf course, seems generally to be exhibiting depressed property values; five years ago I couldn’t touch a house in that area, but now many apparently are worth less than the house I’m in.

And what about my beautiful old house in the Willo Historic District, a place my ex- and I were crazy to have sold? Five hundred and eighty-one thousand dollah.

How crazy were we to have sold that place? Crazy as foxes. His house—the one we moved into—is now $607,500. Allegedly.

Mwa ha ha! 

I'm only $299,500...and I have a LAWN!
Only $299,500...and I have a LAWN!

Of all the shacks in my present and past real estate empire, my current house is far and away the nicest. M’hijito’s is cute but needs more fix-up to qualify as cuter than cute. My house is newer than the ex’s, ever so much more snazzily renovated, with a real garage and a gas range and beautiful Mexican tile and skylights in three rooms and a gorgeous pool. The house in Willo is now 80 years old, all very quaint and all very expensive to keep shored up; it’s sandwiched between three heavily traveled streets with a fire station just down the road. My house has a beautiful park within a three-minute walk, and it’s located so far from every main drag that it’s quiet—something you can say about very few houses in grid-patterned Phoenix. Yet, like all the other houses, it’s centrally located, and soon it will have easy access to the wonderful light-rail system.

So…whatever’s happening, none of us seem to have lost 50% of the value of our homes. As in other parts of the country, the real estate crisis works on micro-local levels. If you bought in one of the new Styrofoam-and-plasterboard suburbs that were tossed together on Sonoran desert habitat the developers were blading at the rate of an acre an hour, you got shafted. But if you bought in town, sticking to a centrally located part of the urb, you spent a little more on real estate, got block construction and a big yard, saved a lot on gasoline, and probably did OK on your investment.

Life at the Funny Farm: This and that

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What a lovely quiet day here at the Funny Farm, as far away from the Great Desert University as one can get. Cassie and I hung out for an hour or so at the park, one of the nicest neighborhood parks in the city. I’ll try to remember to take the camera tomorrow.

Weekday mornings and afternoons, with the kids in school and most of the grown-ups at work, the park is almost empty, except for a few SAHMs playing with their toddlers on the climbing array and the swings. When the weather’s nice (which is most of the time), it’s a perfect bumhood retreat. I’ll need to get a new day pack (the old one wore out a couple years ago and, in the absence of hiking and camping, got tossed) so as to carry some drawing and painting gear over there, and maybe some fine iced tea.

Gardening  

dcp_2463From there it was off to Baker’s Nursery to pick up some flats of dichondra. Last time I was there, two or three weekends ago, they had flats of woolly thyme, which I craved to plant between the flagstones off the back patio. Those were gone, so I had to settle for dichondra, though I did find a few small pots of woolly thyme among the herbs, plus some delicate Corsican mint, a couple of low-growing perennials, and two sprigs of hugely invasive and practically unkillable myrtle. The flags, which until recently hosted a little dichondra and a lot of flowering burr clover, were invaded this winter by a noxious little weed that turned into a wiry, ugly mat and killed off the more pleasant weeds. 

Beer Ice Cream

dcp_2461Before turning to the twin projects of digging up the rest of the weeds and planting the new stuff, I tossed together a nice lunch of spaghetti with walnuts, fresh tomato, and basil. At this point I discovered that placing a cold beer into the new deep freezer for as long as it takes to boil a pot of spaghetti and then pouring it into a frozen mug results in a delectable, ice-cold slushy. Very nice!

And so to luncheon on the back patio, where gazing at the new crop of Meyer lemons forming on the tree out back led to a rumination on…

Flat Lemon Juice

Yes. I finally had to pick the last of this spring’s bumper crop of huge lemons, larger than the oranges—some were as big as small grapefruits. Squeezing them produced large quantities of lemon juice. 

At first I started freezing the stuff in muffin tins, a quarter-cup per container. These chunks will be handy for cooking. Just now I have two large freezer bags full of them.

dcp_24491

 

Then SDXB remarked that pouring the juice, a cup at a time, into small ziplock bags and laying them flat to freeze is a much handier way to store the stuff. It freezes into a thin, flat layer. To use a teaspoonful or a tablespoonful, all you have to do is open the bag and break off a small amount. This way you don’t have to defrost more than you need. Tried this. It works.

dcp_2448

So now I have another couple bags of lemon juice in this format. Shouldn’t have to buy any lemons before the next crop comes ripe!

 

 

 

Cultiver Notre Jardin

dcp_2453The iris came up prettily this spring. The new ones sport an interesting color combination of gold and violet. They didn’t last long—a single 100-degree day fried them.

However, the short blast of summer heat tricked the Easter lily cactus into thinking it was time to bloom, and so it produced its own brief display of startling color.             
 
So it goes.

dcp_2456

Consider the Lilies of the Field

They toil not, neither do they spin. This first day of peremptorily claimed vacation offers a tantalizing view of what life will be like in unemployment. Think of it:

Day after day of hanging out at the park, walking or bicycling the canal, schmoozing with friends, visiting nurseries (and botanical gardens and museums and free midday concerts , tending to one’s garden, puttering in the kitchen. 

How can I count the ways that I can’t wait?

🙂