Unfortunately, we have a home up for sale right now.  We’re lucky that the mortgage is very affordable and we have lots of equity, so we can wait it out to get the price we want if need be.  Renting it is also an option, and it would be cash flow positive.  But, man oh man, would we love for it to sell quickly!

There are so many great real estate deals out there right now.  There’s one in particular that we’d love to take advantage of–it’s a 1970s brick ranch that is getting close to foreclosure.  The gentleman who lived there passed away.  He had a reverse mortgage that amounts to ~$140,000.  We’d love to be able to grab it at that price and gut it (it’s probably worth $200,000 as is), then sell our current home and pay down the mortgage.

The result would be a house that’s exactly what we want with a huge back yard, close to a park, and our mortgage would be cut in half.

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We’re nearing the end of the month, and I think we’ve done a better job sticking to our budget (it takes practice) than we’ve ever done before.  We had a lot of odd expenses this month–I’ll be posting the details of the budget later–and we were still able to stick to it pretty well.  The secret…

We almost eliminated our use of debit cards except for gas and groceries.  For everything else we moved to cash in an envelope.  I can’t speak for the wife and her personal expenses, but I’ve been walking around with the same $10 in my pocket for over a week, knowing that it’s all I have left to “blow” for the month.  I can’t stand being broke, so there’s no way I’ll spend this money and be forced to walk around with empty pockets.

Three days to go until the end of the month.  I think I can get by that long without spending $10.

I found this great article while looking for ways to defer or avoid paying taxes for 2009.  Luckily, I’ve had a business for a while now, and I can attest to the fact that you get some big advantages.  Mine started off as a web design company, but that’s way too much work to do in addition to my regular job.  I’ve since switched the focus towards the occassional consulting job and, dum, dum, dum…

Blogging.

I’m not saying that I’m a full time blogger, or that that I ever expect to get rich from it.  However, I do make anywhere from $150-$200 a month on my blogs (I have several) depending on the time of year.  This allows me to pay for my phone, which I need to have for the consulting I do, along with my internet access, which I need for both consulting and blogging.  That doesn’t sound like a lot, but those bills are being paid with money that isn’t taxed, and in the long run it really helps.  I’m also able to buy computer equipment I need with the money I make from consulting, and that adds up fast!

We tried several methods in the past to establishing our monthly budget, but we were never able to stick with it 100%.  It always seemed like something was coming up to bust it.  But the few month I took off from gainful employment really helped set us straight because we were forced to live on a budget (a strict budget) for those months.  Now we’re making about 40% more than we were at my last job, and this month was the first budget we’ve made with the new salary.  The lessons we learned while money was tight are definitely helping us now.

1)  Write it down.  We tried the spreadsheet, and Quicken, and keeping mental tabs, but that didn’t work.  Now we have a notepad that we write everything down on, just like a check register.

2)  The envelope system.  I always thought it was silly, but it works.  We now only use cash for our personal spending money, and use envelopes of cash for things like the grocery store and dining out.  Knowing EXACTLY what you have left to spend makes a big difference mentally when you go to shop.

3)  Practice, practice, practice.  Don’t give up if your budget gets busted early on.  Keep working at it, and it will get easier.  For instance we now know that $450 is not enough for our grocery budget, and $500 is too much.  $480 is the right number for us, and that usually lands us within $5 or so.

So I just got around to doing my 401k rollover from my last job.  I’d already set up an IRA from a previous rollover, but I wasn’t sure if I could roll into that same IRA, but I called up Vanguard and found out that it was no problem.  Now, how to allocate?

My IRA with Vanguard only had about $25k in it, and I had everything in one fund–the Extended Market Index Fund.  I’m a big fan of index funds for a couple of reasons.  One, they usually have low turnover because they are basically run by computer programs.  That means low capital gains for taxable accounts, and low fees because they are run by a computer program, not a fund manager.  Computers work cheap!

Index funds also track the market in general, and that’s the measure of most funds–do they beat the market?  Rather than take the chance, I’ll just take the market.  The biggest reason I like index funds is that I’m just lazy.  I feel much more comfortable not having to worry about how conditions are changing.  Just give me the market at large and I’ll take it!

Anyway, I did want to diversify a little when I rolled the new money (~$50k) into this IRA.  I decided to break up the money into three different funds–$20k in international index, $20k in a mid cap index fund, and the remainder in old reliable, Vanguard’s Index 500 Fund.

As meandering as it has been in the past, I think I’ve discovered the direction I’d like to go with this blog.  Maybe an untapped market?  There are countless “I’m getting out of debt” blogs, but not many that I’ve found that address the situation we’re in.  So what do you do when you are debt free, financially secure, and make a pretty good income?

That’s what I’d like to concentrate on here.  What do you do?  Sure some of it is about living frugally, but we should also be talking about the fun things we’re able to do with our money and what we do for others with it.  I mean, isn’t that what we worked for?  Isn’t that why we saved and were frugal?

There are also a few things that are specific to our situation that need to be discussed.  Investment vehicles start changing, and opportunities are available to us that we haven’t had available before.

So I’m going to try to concentrate on those kinds of topics here–things that deal specificially with those of us who are doing well.  We’re not rich, but we’re on our way.  Let’s talk about how we’re going to get there.

I just finished filling out a lot of paperwork for my new job–lots of security stuff.  The job is in the gambling industry, and there is understandably some concern over security.  One of the pages I had to fill out was an acknowledgement that they’d be running a credit check.

I hadn’t thought of it before, but it makes total sense that an employer in the gambling industry would want to take peak at your credit report.  If someone applying for a job had financial problems or a history of financial problems they could be a possible source of problems later on.  I think the release said that they’d be checking for a history of bankruptcy as far back as ten years.

Despite the fact that Dave Ramsey says it doesn’t matter, I’m happy to have a high credit score today. 

The benefits of being debt free and having saved money never seem to end. If you are a regular reader of this irregular poster you know that I left my job back in February. Even at the time, we realized how fortunate we are to have the financial foundation that would allow me to leave.

But the opportunity that came about because I left my job has simply been amazing. Not only were we able to complete several projects in the last few months including finishing the remodel of my old condo (which was not getting done with me working every day), but we were also able to build a couple of websites we’d been planning to do one day. Just as we were getting to the “ok, what now?” point, I was offered a job on Friday that we’ve decided I will accept.

I had a couple of job offers during the three month period. But this job is perfect for me. It is full time telecommute, and the pay is 40% more…yes 40% more than my last job paid. It’s significantly more than I’d asked for my previous employer to pay me to stay on there.

If we’d been buried in debt or had no savings, I’d never had been able to leave my job, and would have never been in the situation to be open for the new job. We are so fortunate to be able to take advantage of the opportunities we are given and are really excited about our new venture.

Please, please, please–do what you can to eliminate your debt. Save as much as you can. Don’t put yourself in the situation that you have to do something you don’t want to do.

I was watching CNBC this morning and they were discussing the report released today that stated inflation wasn’t as bad as expected. In fact, inflation was called moderate. However, the price of flour has gone up 35%, and the price of eggs has gone up 40%. How is this moderate inflation? Simple–the cost of soft durables like furniture and other home furnishings remained flat. This offset the extreme rise in food and energy prices.

That’s why the report of moderate inflation doesn’t make sense to me.

Furniture prices may not have increased, but that’s probably because fewer people are buying furniture. After all, how can they afford new furniture with the prices on food going up so dramatically. Food is something they have to purchase every day. People seldom purchase furniture, especially if they already have furniture. The price is lower because demand is lower, not because inflation is in check.

For a more technical discussion, here’s an article.

I had a conversation with a friend last night who is interested in starting a business, a private practice of sorts.  Her idea is to buy a small house, establish her practice in part of it, and rent the rest of the house out to others commercially.  The problem is, she was thinking of getting a home equity loan on her current home so that she’s able to do so.

Why a home equity loan?  Because that’s the only way she’d be able to afford to buy another house.  This doesn’t make sense to me.  If you can’t afford to buy a house, you can’t afford to buy a house.  Period.

Why would you put your home and the equity you’ve worked for at risk like that?  Why not just rent?