Why Blog…Still?

Just imagine! Funny has been online for  over 12 years! Its first post in WordPress appeared on Christmas Eve, 2007, but that was far from the first word. Funny about Money was born on an ancient Apple platform that was (as I recall) dubbed “iWeb.” It was a pretty limited tool, but it did allow you to publish a daily squib that could reach an audience on the Web, if you publicized it enough.

Over time, personal finance blogging took off. I’d started my site after becoming enamored of Trent Hamm’s The Simple Dollar and thinking “I could do that!” Never occurred to me to try to make a living at it — as he apparently was doing. For me, it was something to occupy my mind while sitting in front of the television set, trying to cool the brain after reading too many student papers.

Television sets…remember those? Free TV shows that came in off the air, that you didn’t have to pay to watch? Wow! Those were the days.

Whatever. By 2007, FaM was getting large enough that it needed a stronger platform…plus it was apparent that Apple’s thing wasn’t going to last forever (it was discontinued in 2011). But well before its demise, I’d made blogging friends who urged me to switch to WordPress or Blogger. Of the two, WP looked like the least hassle and probably the least restrictive, so it was away to the Big Leagues.

It took awhile after making the jump to WordPress before I realized some people (other than Trent) were actually making money off these things. And that Funny was doing pretty well as PF blogs go…at one point it ranked among the top 50 personal finance blogs in the English language.

So I tried a few monetizing strategies. Adsense was a bust, IMHO. It seemed as though if I could get my junior college students to go to the site and encourage them to click on a few ads, I could make…ohhh…maybe ten bucks a month (what is that? $.000001 a word?). But was it really worth junking up the damn site? And having Adsense serve advertising for Scandinavian…uhm…escorts?

Advertising goods for Amazon? Well…okay. Maybe. If I knew a friend or reader wanted to order XXX or YYY from Amazon, I could post a link on Funny and talk them into clicking through to the desired product. One friend liked to order very expensive dog food, in quantity, from Amazon. This worked, a couple of times. How well did it work? Well…maybe it produced enough to buy a package of chewing gum.

Advertising my own books on the site? Uhmmmm…. Ooohkayyy. Sorta. Certainly not enough to plan a night on the town, though.

But I wasn’t writing Funny about Money to make money. I was writing it because it entertained me and passed many an otherwise boring evening in front of the television. It made contact with humans in the outside world. And who knows? Maybe someone out there somewhere was even helped by some tidbit of advice the site emitted.

Over time, I drifted away from mumbling on endlessly about budgeting, investing, retirement planning, and all things money. There are only so many ways you can say the same things over and over: get an educational or decent vocational training. Get a job. Live within your means. Build an emergency fund. Stay out of debt. Pay off necessary debt (such as mortgages or car loans) as fast as you can. Never spend more in any given period than you have coming in. Be prepared for a layoff by having a side gig or too and contributing your emergency fund with every paycheck.

Quite a few personal finance blogs survive, although the most interesting and well written ones were sold off by their founders. Get Rich Slowly, Budgets Are Sexy, The Simple Dollar, and many others are no longer written by the excellent creative minds that brought them to us. In fact, it really is true that you run out of ways to deliver the obvious advice, and there are only so many fresh spins you can take on that advice.

Blogs went out of style some time back. Younger folk, it appears, prefer to communicate online in staccato blurbs or images, rather than wasting time reading thought-out essays. Presumably reading has gone out of style, too — even though books continue to sell. What do you suppose people do with them? Use them as fireplace kindling? 😀

Style not being my thing, I continue to post at Funny. It’s been quite awhile since I’ve thought of it as a “personal finance” blog…now it’s just a “personal” blog. Actually, it functions as a writer’s journal, a kind of five-finger exercise to warm up before turning to something more serious. Or to paying work.

So I expect it to be around for quite awhile longer. Hope you will be, too!

KISSing the Bookkeeping

Recently Money Beagle put up a post ruminating about whether his bookkeeping system, which entails subtracting earmarked funds against net worth, is maybe a shade on the overcomplicated side. I’ve been thinking the same thing about my own baroque shekel-counting schemes: this stuff is getting out of hand! As one of MB’s readers remarked, it may be time to apply the KISS principal: Keep It Simple, Stupid.

Bank accounts grow like topsy around this place. Right now I have four personal bank accounts, a joint checking account with M’hijito, a business checking account, and a PayPal account for the business. To keep track of credit-card charges, I use yet another spreadsheet. Then there are the spreadsheets for the budget: one for monthly nondiscretionary expenses and one for discretionary spending. Taken together, these little fellows have spawned eight spreadsheets for me to keep up-to-date.

These were relatively easy to handle in Quicken, because Quicken links accounts so that when you make a transfer from one to another it will automatically register the transaction in both accounts, and because it’s very easy to reconcile an account in Quicken. But now that I’m keeping my books in Excel, reconciliation is an old-fashioned headache, and transfers require me to manually debit one account and credit the other. It doesn’t sound like much extra work, but when you have to do it, you find it’s easy to lose track of stuff. One already has enough pains in the tuchus in one’s life without having to deal with some more.

How to decomplicate this?


In the first place, at the time I was laid off, I had a $14,000 emergency fund, which I stashed in my checking account and used as a “cushion,” ensuring I would never overdraw the account and eliminating the need to keep track of it someplace else. Since the market had crashed with a resounding thud, I really didn’t want to invest this money, because I was afraid of losing even more than the $180,000 that had already gone down the toilet.

After a difficult year of trying to live without pulling down anything from the remnants of my life savings, the market has pretty well recovered and savings are nearing their former state of normalcy.

So, in the fall I let my financial manager know I could not continue to live on less income than my base expenses and I would have to start taking a drawdown from investments. He suggested that instead of incurring a taxable event each month, I should use the after-tax money in the emergency fund, since in reality there’s plenty of money in taxable savings to cover emergencies. So I’ve been using about $1,100 a month of that 14 grand to supplement Social Security, providing enough to pay the bills before the unpredictable and unreliable pay from adjunct teaching comes in. To manage this, I opened a tiered money-market checking account to hold the amount remaining from the original 14 grand; from that I disburse the $1,100 to regular checking once a month. I figure this fund will be exhausted by September.

Adjunct teaching pay has to go to cover the mortgage on the downtown house. My initial plan was to transfer only enough to cover my share of each month’s payment to M’hijito’s and my joint checking account, which exists to hold cash for the mortgage. To keep from diddling it away on daily expenses, I started stashing teaching income in the money market account. Obviously, though, to keep track of those two items—the fund I was now depleting for living expenses and the money for the mortgage—and ensure I didn’t accidentally spend some of one fund on the other purpose, I needed another spreadsheet, one that would keep track of the mortgage payment fund. Now we’re up to nine spreadsheets. Make that ten: there’s one tracking investments, too.

Then something over $11,000 came in from the insurance company to cover hail damage. This money had to be carefully sequestered, because if I diddled it away there wouldn’t be enough to pay the swarms of workmen. Reluctant to open yet another account, I stashed it in the money market account, along with the mortgage fund and the dwindling cost-of-living fund. This added to the potential for confusion exponentially, requiring yet another spreadsheet.

Meanwhile, the bank account holding the self-escrows for annual tax and insurance payments (I have to set aside $325 a month to cover property tax, car insurance, and homeowner’s insurance) also held the summer stipend I got for developing the online course last year. The summer money would, I hope, carry me through what I expected would be four months in 2010 with less income than outgo (it devolved into five months, but that’s another story). There’s now just enough summer money left (if my arithmetic is right) to cover half the cost of the new pair of prescription glasses.

Okay. That’s the “system” as it stands. Is there a way to decomplicate this system?

Now that we have a permanent loan modification, it’s clear that the amount I’m earning during the academic year will more than cover a full year’s mortgage payments. The departmental chair has assigned me two sections to teach next summer, the proceeds of which will be gravy.

So, New Plan #1: transfer 100% of September-May teaching income to the joint account as it comes in. Let M’hijito figure out how to allocate it, with his share, to cover the mortgage. Use the summer pay (June-August) to cover the extraordinarily high costs of living in Arizona during a 115-degree summer, and, for a change, actually run the air-conditioning when typing on a keyboard will raise a sweat.

New Plan #2: At the end of each month, transfer any money left from that month’s income into the savings account for discretionary spending.

These two strategies will hugely plump up monthly savings, which is used for things like clothing, car maintenance and repair, and house repairs. In the winter, there’s often $100 or so left; in the summer, a fair amount should remain from the teaching income—possibly enough to add up to around $3,000, plenty to buy clothes, keep the aged car running, and cover small emergencies.

Decomplicating benefits: Moving all academic-year teaching income directly into joint checking eliminates the need to keep track of how much of the money-market account’s balance should be held aside for the mortgage. That takes one moving target off the field. Transferring whatever remains in checking at the end of each month allows me to see, at a glance, what’s in savings to cover unplanned expenses.

Once the glasses are paid for, all that will remain in the Tax & Insurance account will be dedicated fully to paying tax and insurance. This will decomplicate another spreadsheet; here, too, the bottom line will show how much is available to cover those exorbitant costs.

And once the bills for the roof, the new air conditioner, and the exterior painting are paid, all that will remain in the money market account is the balance of the survival savings. When that’s depleted, the money market account can be closed. w00t! A whole spreadsheet gone!

By the end of the summer, here’s how I expect this to look:

Still complicated, but at least it shouldn’t take 10 spreadsheets to keep track of it.

Speaking of those spreadsheets, why do I need ten of the damn things? Right now I have two workbooks, one tracking cash flow (in all those bank accounts!) and credit-card charges and one tracking the budget, along with various schemes, projections, and retrospective summaries. Why am I doing this?

I think I’ll collapse these into a single workbook, leaving all the fevered calculations in a separate file. This will allow at least allow me to move back and forth between cash flow and the budget, rather than keeping two files open in Excel to enter routine transactions. This will reduce the number of pages where I regularly enter numbers from sixteen to five. That is, from these (some of which have been defunct for over a year!)…

to this:

And that, I suppose, is as close to minimalist as I’m gunna get.

Pay off debt or build savings?

Over at I’ve Paid for This Twice Already, Paid Twice invites her readers to think about the relative importance of paying off debt or building savings. Which should be a person’s top priority? It is, as she points out, not a clear-cut decision.

Some people say that there’s “good debt” (such as home and student loans, owed on property or training that eventually returns more than you pay…supposedly) and “bad debt” (everything else; especially credit cards). I personally would argue that there’s only debt, and debt is slavery. Debt forces you to stay in the traces until you pay it off or until you die, whichever comes first. Over at Debt Kid, Jessica describes experiencing the same revelation.

Freedom from debt is freedom to live as you choose. Period. If working brings you personal fulfillment, you can do it—and a debt-free worker is one who has a great deal more disposable income (to say nothing of more options) than one who labors under the lender’s lash. If you want to retire or devote your energy to low-paid but altruistic work, debt freedom will make either of those choices possible.

I’ve used savings—in direct contradiction of advice from money advisers—to pay off debt and never once regretted it. Here’s why:

1) Revolving debt cuts your purchasing power by the amount of the interest gouge. If you pay 18 percent for everything you put on a charge card, then each dollar you spend is really worth only 82 cents.

2) You don’t actually own anything when you’re making payments on it. The bank owns it; you’re just renting it.

3) For most mere mortals, the so-called tax benefits of mortgage interest are negligible.

4) If you own your home outright, the absence of a mortgage payment increases your real take-home pay enormously. I couldn’t live on my net income if I owed on my house or had to pay rent. I paid $100,000 for my first house, for which I put down $20,000. Until I paid off the loan, I owed $9,960/year on the PITI. In the best of times, that $100,000 earned $8,000 a year in mutual funds. Paying off the mortgage freed up $830 a month for living expenses and savings. Taxes and insurance on my present house, purchased with the proceeds of the sale of my first paid-off home, are about $2,200 a year, meaning that today I have to set aside about $183 a month to cover those annual bills. That’s a far cry from an $830/month bite…which at the time I paid off the loan represented half my monthly take-home pay.

5) Where real estate is concerned, in normal market conditions (which one day will return), when a house is paid off and appreciating in value, the money you put into it is growing just as it would grow in a conservative investment, at about 6 to 8 percent a year. Thus the $100,000 I paid for my first house yielded $211,000 a few years later, allowing me to buy my next house in cash. Once a house is paid off, you’ll never lack for cash to keep a comparable paid-off roof over your head.

6) This is not true while you’re paying on a mortgage, because the mortgage interest eats up the gains created by the property’s appreciation in value. Over 30 years at 6 percent, a you’ll pay $115,838 in interest on a $100,000 loan; in other words, you’ll pay $215,828.45 for your $100,000 house. If you’d put that extra $115,838 in mutual funds over the same period, the compounding interest would have been paying you, not the bank. Paying just $200 a month extra against principal would cut your payback time from 30 years to 16 years and 3 months and drop your total interest gouge to $57,386.

7) Clearing off  debt opens the way for larger and faster savings. If you could afford to make a payment on a car, a house, or a credit card, then once you’ve paid off the debt you can afford to put the amount of the payments directly into savings and investments.

So, in a way, debt pay-down is a form of saving.

On the other hand, in recessionary times when one’s income is at risk, you need a substantial emergency fund. If you find yourself starting out during a recession, your first priority obviously should be to stash enough to live on for at least six months, preferably longer. IMHO the ideal emergency fund contains one year’s worth of your present net income.  Once you have it, though, you’re justified in devoting every extra penny to paring down debt of all kinds.

In good times or bad, saving should be part of your agenda. But since freedom from debt makes your money go further and allows you to save substantially more, getting out from under debt should be your top priority.

Stuff tsunami

Spent all of yesterday afternoon at a little party helping a friend go through her deceased mom’s clothing. Some of it. The challenge: decide which pieces, in about ten huge bagsful, should go to the consignment store and which should be yard-saled or sent to Goodwill. Press, fold, and box the consignment-worthy stuff; bag the yard-sale stuff.My friend has already earned enough to take a nice vacation by consigning earlier rafts of the mom’s clothes, and she still has many bags and boxes of stuff left to go. So far, she’s made $1,500 selling clothing through consignment. I’ll bet she’ll tote another $800 worth to the store today.

Mom was a lively gal, very funny and charming. She LOVED clothes, and shopping for clothes was her main source of entertainment. Mother and daughter often shopped together. Most of the stuff they bought wasn’t very expensive—Mom worked at WalMart. But she had a real flair, and quite a lot of it is very cute. She was a sucker for sales, and so much of it was bought at deep discount.

The result was that her apartment was chuckablock full of stuff, stuff, and MORE stuff. The clothing alone, as you can imagine from the prices it’s fetching, was enough to stock a boutique. Then there were the mountains of perfumed bathing supplies, makeup, and various bric-a-brac.

Well, she always looked nice.

As a confirmed cheapskate, this habit amazes me. She was far from wealthy. The only reason she finally got out of a cheap rental in a less-than-ideal part of town and into a little condo was that near the end of her life she inherited a small sum of money. I find myself wondering how much better she could have lived—or even IF she could have lived better—had she bought about a sixth of that amount of clothing over the years and done something else with the money.

I don’t know whether she paid for the stuff in cash or ran a tab on a credit card. Either way: she ended up with money out of pocket and a vast clothing collection in house. Many pockets, we might say, with little or nothing to put in them.

What would have happened if she had put, say, $200 a month in savings instead of into pants, tops, skirts, loungewear, and dresses?

Would it have mattered? She suffered diabetes and failing kidneys. Saving $2,400 a year wouldn’t have extended her life, and it’s hard to imagine that the occasional plump bank statement would have done much to make her life better. If buying clothes made her happy, why not? She supported herself adequately and didn’t depend on anyone else financially.

The only downside, of course, is that the clothing collection poses a huge burden for her two daughters, each of whom has spent uncountable hours trying to deal with a Himalayan range of outfits. Yesterday three women spent five hours sorting through bag after bag after bag of stuff. Even after we kiped the things we wanted, we still filled four big baskets to overflowing for consignment and repacked a half-dozen big black yard bags with yard-sale stuff. And that was only a tiny part of the job my friend faces. On the other hand, going through all the stuff reminded us of her mom, a great old gal who should never be forgotten.

She lives on, in her clothes.

Lemonade from a financial lemon

Can I Get Rich on a Salary tagged me a while back with a challenge to tell a story of making lemonade from a personal finance lemon. Since iWeb doesn’t do pings or pingbacks, I didn’t notice, and so I have to apologize for running a bit late with this. But…do I have lemons? Let’s raid the tree.

Tartest: is that a word? The tartest lemon I’ve picked to date was when my father disinherited me. He disapproved of my leaving my husband of 20 years, a gentleman I married largely because he exactly fit the description of the kind of man my parents wanted me to marry. While divorce proceedings were under way, my father secretly got together with my soon-to-be-ex and engineered a revision of his will.

The original terms were that when he died, his wife would get the interest from his investments and then, after she was gone, I would get the principal. He had about $100,000.

When I left the marriage, I took almost $100,000 in community property, plus a small amount of alimony and $40,000 of sole and separate property. I had no job. In early 1980s, $240,000 was not a bad grubstake. Relying on what I expected to inherit from my father, I figured I could grow my freelance writing business so that by the time the alimony ran out, in about six years, my earnings plus interest off investments would carry me all the way through retirement. This, it must be admitted, was one of the stupidest ideas to which I have ever subscribed.

Luckily for me, a full-time teaching job came along at a satellite campus of the Great Desert University. It was pure serendipity. Little did I know how broadly God was smiling on me: I had no idea my father had effectively written me out of his will, and, with my pending-ex’s collusion, had done so in a way that I had no chance of breaking the new will. Neither he nor the ex ever told me that he had changed his will.

He died of a stroke at 84. Not until then did I learn that $1,500 a month went to his wife, whom I disliked with some fervor. Her mother had lived to be 103 years old, and so it was reasonable to expect that the widow would live long enough to collect the entire pot and nothing would go to me. By way of delivering one last back-handed slap across the face from beyond the grave, my father made me the executor! This meant I would have to write a $1,500 check every month for the next five and a half years to a woman who had long made a hobby of making me miserable whenever she found an opportunity.

After about five years and six months, the fund would be drawn dry.

Even though I had a reasonably decent job, nontenurable English faculty do not earn much. I was in my late 40s when I started working and contributing to the university’s 403(b) plan, leaving me nowhere near enough time to accumulate a decent retirement fund. Because I had been a society matron most of my adult life, I had few credits toward Social Security; no matter how long I worked, I could never come close to the (modest!) maximum Social Security entititlement. If I was not to spend old age in dire poverty,Ineededthat money.

I called my financial advisor and asked him what to do. He suggested putting it in a short-term corporate bond fund at Vanguard. In the early 80s, the fund was doing quite well, and as investments go, it was conservative enough that no one could say it violated my fiduciary responsibility to the widow. My lawyer revealed that I could pay myself a thousand bucks or so each year as compensation for serving as the estate’s executor, which helped a little.

Each month the fund returned an amount that was about 30% to 50% of the monthly drawdown. Thus although the balance dropped steadily, it did not dwindle to the disappearing point as fast as my father planned.

There was nothing I could do about the will, despite the circumstances in which it was changed. The wife’s daughter was a Superior Court judge, one renowned for making capricious decisions, and so not a lawyer in the county would touch the case. Although several agreed that my ex had committed malpractice by representing my father while we were engaged in divorce proceedings, I could not get any lawyer to represent me.

My father’s widow survived him by about five years, falling short of her mother’s longevity by some fifteen years. When she passed, about $40,000 remained in my father’s estate.

Forty thousand was a heck of a lot better than the nothing my father had in mind. Thanks to some smart investment advice, I managed to retrieve almost half the money.

Meanwhile, the teaching income was not quite enough for me to cover the $840 mortgage payments and have enough to live without running up debt. My plan had evolved so that it had me saving all the after-tax alimony payments toward retirement; in fact, each month I was having to use one or two hundred dollars to make ends meet. Nevertheless, I managed to save about $60,000.

So, when the alimony ran out, I pooled the inheritance and the amount I’d saved from the five years of alimony income and used a chunk of it to pay off the $80,000 mortgage on my house. This left about twenty grand still in savings while it gave me a de facto raise in pay of $640 a month, after I had set aside $240 a month for taxes and insurance.

Just before the bubble started to inflate, my house was worth three times what I’d paid for it; I sold it and bought a more nicely renovated place with a bigger yard and a pool, a good long way away from the noisy intersection and crime zone that had cop helicopters parked over my roof at 11:00 p.m. every Friday and Saturday night, and I paid for the new place in cash.

No matter what anyone says, it’s great to have your house paid off. That ain’t lemonade: it’s fine white wine with overtones of summer citrus.

A step to improve the finances

Mrs. Micah issued a challenge to readers and bloggers to describe one step, no matter how small, that they are taking to improve their financial situations. As a matter of fact, I’ve come up with something but haven’t had time to blog about it, what with the past week’s technoadventures.

Thanks to a reader’s comment, I figured out how I could pool my biweekly paychecks so as to “pay myself” on a bimonthly basis. This ensures that there always will be enough money in the account that dispenses payments, by EFT, to the utility companies, the Renovation Loan lender, the life insurance provider, and the long-term care insurer, and it allows me to fund the “piggy bank” account for credit-card charges once a month: on the first, rather than on whatever cockamamie date a paycheck arrives.

First, I funded a dormant checking account at the credit union with my state income tax refund of $1340, almost as much as one of my paychecks. I added another couple hundred bucks to bring this bankroll up to the amount of a single paycheck.

July’s first payday happened quite close to the first. I put that check in the newly grubstaked “pool” account. This brought the balance to the amount of one full month’s pay.

From that I funded the “piggy bank” account for the credit-card budget and the account that dispenses automatic payments-not with half of what is needed but in full, for the entire month.

Friday, July 18, was this month’s second payday. The credit union, apprised of my new scheme, automatically transferred the paycheck into the “pool” account. That brought the balance back up to the equivalent of one full month’s pay. On the 31st, I’ll make my regular transfers for savings from the “pool”: to the Renovation Loan repayment fund, to the property tax/homeowner’s insurance/car insurance fund, and to indulgence savings.

In Quicken, I renamed all my credit union accounts so my titles jibe with what the CU calls them at its online site, simplifying the books and cutting the likelihood of making an error.

Next time I’m at the credit union, I’ll arrange to have automatic transfers from the “pool” made on the 1st and the 31st. Ta DAAAA!!! No more fiddling with online transfers.

Everything except paying the credit card bills will be done automatically.

No more fiddling with Quicken and manual transfers. No more worrying about whether enough cash will hit the credit-card “piggy bank” to make the monthly budget. No more hating GDU’s ever-changing bimonthly pay schedule.

Now that’s what I call stress relief!